Luciano Cunha Luciano Cunha
Feb 6, 2014 1:00:00 AM

In the hype cycle for emerging technologies Gartner analysts published in August of 2013, the internet of things is close to reaching the top of the “peak of inflated expectations.” Gartner believed that it would take more than 10 years for the internet of things to reach a “plateau of productivity,” where innovation can pay off. However, in the months since then, it appears that the internet of things is receiving quickly increasing attention from companies and industry observers. Today, we take a look at the potential of the internet of things for businesses in general. In two following blog posts, we will consider the implications of the internet of things for manufacturers (scheduled for February 18) and construction companies (February 25) more closely.

Huge, rapid growth and contrasting outlook in consumer vs. business markets

Gartner expects that—not including computers, tablets, and smartphones—26 billion objects will be connected to the internet by 2020, generating more than $30 billion in service revenue. It is probably too early to forecast reliably how many of these connected objects will run in businesses and how many will be in consumer’s homes or part of consumer technology. So far, the internet of things has found a very different kind of acceptance in the consumer and business markets. In the consumer market, a dozen companies are participating in a consortium, founded in early 2013, where they seek to advance the internet of things to enable for consumers a connected, data-rich reality, facilitated by innovative products that can improve their lives. It did not take long for the backlash to arrive. When recently Google acquired Nest, some journalists presented this event as a “coming of age” of the internet of things. Other commentators quickly pointed out that the risk of data-gathering intrusion in your home might not be worth the devices’ convenience. Some analysts and technology experts went on record saying that they would immediately replace the Nest thermostats and smoke detectors in their homes with other models.

Some analysts and experts expect that, for consumers, the internet of things will present burdensome security and technology management issues, and may result in overly intrusive products and marketing efforts directed at them. As the internet of things makes inroads in healthcare, where connected devices could, for instance, keep tabs on patients’ critical values and report them to clinics and care providers, concerns about privacy and data protection are rapidly becoming more pressing.

High-value opportunities across industries

In the enterprise realm, there are many high-value applications for the internet of things, and one hears little of the concerns voiced in regards to the consumer reals. While adoption of the internet of things may entail that the complexity of companies’ technology environments may increase even more, most of them already have the resources and bandwidth to manage additional elements incrementally. And, the potential benefits are substantial. Smart use of the internet of things can facilitate improvements in business processes, risk reduction, cost savings, efficiencies, more effective quality assurance, innovative business models, and other advantages.

RFID technology, widely used in supply chains, is an early example of how the internet of things can help businesses control resources with greater efficiency. With more advanced, versatile, and robust sensors that connect equipment, materials, and facilities with the internet and companies’ ERP systems, they can accomplish much more.

Improvements in process and resource management

In manufacturing assembly lines, for example, connected sensors can ensure proper alignments and measurements of components. In case of any variance or inaccuracy, they can initiate a variety of steps, depending on what makes most sense: direct the manufacturing robotics or other machinery to make a correction, remove the part from the production line, or flag an operator.

The internet of things can also serve to facilitate regulatory and standards compliance and maintain environmentally sound conditions. In facilities where environmentally hazardous materials are in use, sensors can monitor the movement and state of these substances and their surroundings. If conditions are not acceptable, the sensors could trigger automated clean-up, alert operations managers, or temporarily suspend production processes.

You can easily imagine many possible applications. One scenario that has already found adoption by a number of companies in their facilities and datacenters is monitoring the usage of electrical power. By tracking how the equipment in data centers and production locations uses power, devices can help businesses assess and control their use of electricity, resulting in potentially large savings as well as environmental benefits. In the supply chain, the internet of things can help companies make more efficient and less costly use of logistics services, optimize warehouse management, and enable workers to use their time more productively.

Creating new service offerings

One very promising application for the internet of things is an extension of the business model to develop and offer services. Consider the possibilities. A popular example for this is Mercedes-Benz, the maker of automobiles including Smart Cars. In many cities in the U.S., Canada, and Europe, you find fleets of Smart Cars available in the car2go service. Embedded sensors behind the cars’ windshields recognize the chip cards of service users and exchange account validation, location, and status information with the company’s data center. Consumers, who pay by the minute, can pick up and drop the cars anywhere within the service area. Car2Go is growing into more cities, competes successfully with car rental and car sharing businesses, and also contributes to sales of Smart Cars.

Similarly, equipment and device makers could add lines of service to their offerings. Connected devices can gather and broadcast a wealth of data regarding the performance, usage, and maintenance needs of products manufacturers place on customer sites. Based on that information, companies can help their customers forestall equipment breakdowns and the associated downtime and expenses, delivering greater value and profiting from an additional source of recurring revenue. Enterprises can also take advantage of the internet of things internally to achieve some of the same results.

Infrastructure and asset management requirements

There is no question that the internet of things will complicate the lives of IT managers. Devices will have to be acquired, deployed, tracked, and maintained. Information coming from them will need to flow into company systems and communications. IT and business management will also need to create a strategy that articulates what companies want to achieve by means of the internet of things and how it will connect to existing business processes. Software tools to accomplish these tasks are available today, including from STAEDEAN.

In the next blog post, we take a look at the opportunities and impact of the internet of things in the manufacturing industry. As always, please connect to share your ideas and experience.


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Luciano Cunha Luciano Cunha
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