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The Internet of Things and the Enterprise Opportunity - Jim Tully

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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