The hot buzzword IoT, but IoT is a massive area, but it’s of interest, when we talk about the transformation of business, its interest applies across just about any industry, any vertical market is looking at IoT technologies, says Scott Raynovich, Principal Analyst, Futuriom.
IoT technologies range anything from a specialised chip for a device, to a giant software cloud that’s running analytics.
Scott Raynovich said that there were lots of cloud-based, automated apps – even a cocktail maker. There are so many buckets of IoT tech, he said.
He added: “But the real question I like to ask is how this going to transform business is, how is this going to allow business operators to either stay in business or be more efficient or deliver more profitability to their shareholders or deliver more functionality to their customers. So you can look at – and this information comes from a variety of sources, including companies and places like the Harvard Business Review, which sadly I read, but these are kind of the buckets that I’ve seen over time where things get thrown.”
In IoT you have predictive data analytics, so big data algorithms crunching a lot of data and tells you what’s going to happen, how you can avoid things like a truck engine failure. You can speed up the development cycle with IoT because you have so much more data and telemetry. You can implement just about any cloud service with IoT.
You can alter your supply chain, you can know ahead of time when you’re going to run out of something and have an automated machine order it ahead of time, without humans being involved. You can connect these many digital systems together. A lot of the IoT activity in retail, you walking into the store and the store knowing more about you and being able to provide better customer service.
So, many different applications for IoT, yet also many moving parts and of course security, which we’ve covered in the last panel. So let’s talk about some – I’m a real-world guy, I like real examples, give me examples in the real world, right? So there’s lots of them, there’s actually stuff happening. We know about the industrial automation story, Rockwell is collecting data from all these devices and crunching algorithms, figuring out how their factories are running and when things aren’t running properly and trying to predict maintenance.
You have Southern Company, which is a big utility provider, trying to optimise how they respond to service outages and give their drivers better information about where to go, when to fix the problem, especially if there’s a storm, for example, to restore power quickly. So on offshore, I’m sure you’ve all heard about predictive maintenance in IoT, lots of predictive maintenance applications using sensors to make sure everything’s operating correctly. Then in automotive you have a lot of stuff going on and this is an example of the V2X vehicle, the vehicle communications standard, helping safety and autonomous driving. So lots of real-world examples.
Let’s go on to my favourite application, making cocktails. So I found this interesting, this is a German company, Keith & Koep which makes this hyper fast industrial cocktail mixer, which can mix 60 different ingredients and make a cocktail for you in six seconds. I mean that’s about a smooth an application of IoT that I can give. Clearly the advantage here is that they do this at festivals, bit rock festivals, where you just need to move a tonne of cocktails in a hurry. But it has other – it’s multidimensional, they also know they contract their supplies and automatically know when they’re going to run out of something and have it be ready, so instead of somebody running around looking for lemon juice or something, the machine knows, so just a great example.
Real quickly, where does all this happen? Well there’s Futuriom, we did a bit report last year on IoT, we found there’s just so many buckets of IoT technology, starting at the top, specific enterprise applications to the software platforms which range from analytics to connectivity platforms, like Cisco’s Jasper is one of the more famous connectivity platforms, to the cloud platforms, the Amazon and the Azure, they all have their own IoT cloud platforms. Then of course you have the communication services and the standards, how you communicate to the devices through these new low-power LAN networks that the service providers are running, he concluded.
SAP survey also shows IoT/digital transformation connection
According to an SAP Digital Transformation Executive Study, companies leading them toward digital transformation are significantly more likely to have invested in IoT technologies than have other companies, 76 percent to 52 percent. And at SAP’s SAP Leonardo Live conference in Frankfurt, Germany, earlier this month, the company pitched IoT solutions to speed innovation in multiple industries, introducing new IoT products aimed at digital transformation. Similarly, at Cisco Live last month in Las Vegas, IoT for digital transformation was also on the menu.
Meanwhile, just last week in Bangkok, Thailand, the IoT Business Platform (AIBP) conference focused on “Understanding IoT Needs of Business in Thailand,” highlighting “insights and key issues related to adopting Internet of Things (IoT) in Thailand … [and] digital transformation of Thai enterprises.”
Are we there yet?
The momentum seems clear. My big question, though, is exactly how IoT drives digital transformation. In a statement, the president of Inmarsat Enterprises put it this way: “IoT acts as the eyes and ears of organizations, and its value comes from how the data it collects is used to improve effectiveness…”
That makes sense, I guess, but it comes off as a bit broad. Given the numbers in these two studies, leveraging IoT for enterprise digital transformation still seems more like an aspirational goal than a firmly rooted reality.
I wouldn’t bet against it coming to pass by 2020, though. While there’s still an enormous amount of work to be done before most enterprises can fully book the benefits of IoT, the technology is so powerful and the percentages of companies committed to trying is so high that IoT-powered digital transformation almost seems inevitable.
Growth beyond IT applications
The 451 Research survey report on IoT found that over 65% of IT and IoT decision-makers plan to increase their IoT spending in the next 12 months, with an average spending increase totalling nearly 18%.
While the majority of current use cases are focused on IT applications, future projects are predicted to focus on industrial applications. Some of the biggest industrial enterprises, including GE, Siemens and Schneider, are investing billions in their IoT platforms.
Tech products and services in particular are vulnerable to the “digital vortex” of rapid marketplace change. The ability to scale and quickly adopt and adapt new technologies will determine longevity.
A report by PricewaterhouseCoopers named multiple factors that are enhancing the utility of IoT and ultimately driving its growth:
- AI: Data has become an organization’s most valuable asset, but it is only useful if it is actionable. Artificial intelligence helps make data actionable, supporting enhanced IoT applications that enable predictive, prescriptive and adaptive analytics. Artificial intelligence will continue to heighten productivity and expand business opportunities beyond anything previously possible.
- Proliferation of connected devices: IDC projects that the number of internet-connected devices will grow to 80 billion by 2025. These devices will generate 180 zettabytes of data per year, in contrast to 4.4 zettabytes in 2013 and 44 zettabytes in 2020.
- Cloud/fog computing: Cloud computing paved the way for IoT, and now fog and edge computing is furthering its growth, extending cloud capabilities closer to connected devices and facilitating the operation of compute, storage and network services between end devices and cloud computing data centers.
- IT/OT convergence: As information and operational technology have begun to interconnect, mountains of previously unavailable data are being generated and captured. The coming together of these historically siloed departments means more informed decisions, reduced operational costs and improved production processes for the manufacturing industry.
Driving digital transformation
The ecosystem of IoT and its supporting technologies are driving digital transformation, enabling growth through the strengthening of current business models and the creation of new offerings, services and products.
IoT will be used within enterprises in areas supporting digital transformation, including:
- Discovery of new business opportunities — The gathering and analysis of massive data sets generated by IoT devices can help companies gain a more accurate and comprehensive understanding of their customers’ use cases and preferences. Previously unseen insights into their offerings can turn into new products, services and ways to create value for their customers. These insights will also be used to proactively augment current products and services based on access to real time data.
- Improved customer experiences — Customers today expect simplicity and 24/7 accessibility. IoT-enabled big data analysis can help businesses build a better platform, tool or strategy that will improve consumer experiences through multiple touch points. With a comprehensive understanding of customers, businesses will be able to personalize their marketing efforts, positioning relevant products and services to each customer. On the service side, access to complex, real-time data will enable businesses to streamline workflows and better react to urgent issues. These advancements will free up personnel resources to interact with customers and better anticipate their needs, enhancing satisfaction and engagement.
- Boosting efficiency and reducing costs — One of IoT’s greatest utilities lies in its ability to reduce costs and increase productivity through the automation and integration of processes. The combination of data-driven insights and sensor-integrated systems presents the opportunity for businesses to improve operations in multiple areas, including inventory and human resource management, security, energy and safety compliance.
- Increased agility — As organizations break free from slow legacy IT systems, they can become more nimble and responsive to current market trends and demands with greater speed. This frees technology and personnel resources to focus on strategy and innovation.
Harnessing the power of IoT
It’s clear that digital transformation is highly beneficial — and unavoidable if businesses want to remain competitive. This transformation requires a solid understanding of the forces driving it. IoT is a major force, with the ability to create unprecedented value as companies shift how they do business. They stand to gain greater operational efficiencies, significant cost savings, greater customer engagement, competitive advantage and more as they integrate IoT into their business models.