The Internet of Things (IoT) has rapidly become one of the most
familiar — and perhaps, most hyped — expressions across business and
technology. That hype, however, is entirely justified and is backed up
by the numbers.
The world will see 25 billion Internet-connected things by 2020,
and Gartner estimates that the IoT will produce close to $2 trillion of
economic benefit globally. These things are not general purpose devices
such as smartphones and PCs, but dedicated objects, such as vending
machines, jet engines, connected soap dispensers and a myriad of other
examples.
Clearly, the IoT will have a great impact on the economy by
transforming many enterprises into digital businesses and facilitating
new business models, improving efficiency and generating new forms of
revenue. However, the ways in which enterprises can actualize any
benefits will be diverse and, in some cases, painful.
Currently, IoT technologies — and business models that utilize IoT —
are immature. Despite this immaturity, there are already sporadic
examples of existing and planned uses across a wide range of industries.
Enterprises will need to make plans and preparations now or risk being
left behind by their faster-moving competitors.
The Impact of the Internet of Things
The way that the IoT is leveraged by enterprises
varies substantially by industry. Utilities achieve significant cost
savings through the use of smart meters and associated infrastructure,
while insurance companies are able to reduce risk and offer new value
through sensors that track car users’ driving habits.
It is essential for enterprises to understand how the IoT can enable
transformation of their business and industry. At this early stage of
experience with the IoT, we recommend that enterprises experiment with
small-scale projects to gauge benefits while also monitoring what is
happening in other industries, as a source of ideas.
Gartner recently completed a survey of business and IT executives
that noted manufacturing and retail are two sectors with particularly
high expectations of the IoT. Utilities, industrial sectors, connected
cars, healthcare and consumers are other verticals at the forefront of
IoT investment. We see that leveraging IoT in vertical industries will
definitely revolutionize the traditional way of doing things. These
changes will lead to major opportunities for providers too.
The Business Case
The lack of a compelling business case is a major
impediment to IoT growth for enterprises. This is not so much because of
a lack of a business case, rather that the business cases have yet to
be discovered.
The business justifications almost certainly exist, but they have not
yet been articulated and quantified by most enterprises. For those
struggling to find their place in the IoT-enabled landscape, a
compelling business case must be developed before large-scale deployment
can happen. As a result, we can expect a prominent role for the
tech-savvy CxO in exploring the potential of the IoT, and for service
providers that can help to identify the opportunities.
Creating Value From IoT Data
Data originating from things creates a vast pool of
information, threatening to overwhelm established resources and
traditional approaches to information management. However, the
processing and analysis of this data will generate much value for
enterprises across many business functions, creating new, far-reaching
opportunities for digital marketers.
Deconstructing the IoT, mapping its processes, data and deployments
and integrating things will become a top priority across a vast area of
roles and industries. Customer relationship management vendors and users
will find themselves impacted by the IoT as application leaders will be
challenged by waves of new devices, more granular data on customers and
the creation of new touchpoints for customer interaction. At the same
time, manufacturers face the challenge of retooling for the IoT era and
bringing products to market ahead of nimble startups and data-centric
rivals.
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