As the idea of ‘Internet of Things’ (IoT) and an increasingly connected world gains attention, there is still plenty of debate regarding the real value of this rapidly expanding new marketplace.
As I see it, the IoT can produce three types of business benefits in both the commercial and consumer sectors. How we measure the value of these benefits will be critical to the long-term success of the widening array of IoT vendors and the organizations that are leveraging their innovative technologies.
Gartner is predicting the IoT will tie together approximately 26 billion units by 2020, and IoT product and service suppliers will generate over $300 billion in incremental revenue by that same year.
Yet, only 6 percent of the respondents to a recent ISACA survey were aware of the term “Internet of Things,” and 92 percent have concerns about the information collected by Internet-connected devices.
THINKstrategies believes that these concerns stem from a lack of education regarding the various benefits that can be derived from IoT technologies and real-world use cases. Instead, too many organizations and end-users are more aware of the potential privacy issues surrounding their connected devices as a result of the NSA scandal and other revelations about misused data.
While these concerns are healthy and raise legitimate questions about the potential abuses that can arise from monitoring objects and the people who use them, the real benefits of these new network capabilities far outweigh the threats.
These benefits fall into three primary categories:
The first type of benefit is derived from the ability to more quickly and effectively react to a milestone incident or problem when it occurs. These can be expected events or unanticipated issues. In either case, the IoT connection enables the service provider to identify the occurrence and respond accordingly.
For instance, today’s IoT technology can recognize when a transaction occurs or a part fails, and initiate a series of pre-programmed or ad hoc actions to respond to that event. Depending on the situation, quick response can prevent extended downtime, improve service quality, save money and even lives.
Today’s IoT technologies and services are also employing increasingly sophisticated business intelligence (BI) and analytics to determine when the data generated from remote devices and objects suggests that a potential problem or opportunity is likely.
This predictive capability can enable a service provider to replace parts before they fail based on their usage patterns. It can help companies better anticipate consumer demand based on their current behavior. This capability can also improve operating efficiency and produce greater customer satisfaction.
The exciting possibilities of the IoT are exemplified in those use cases that change the way products and services work and create entirely new market opportunities.
The health implications of today’s ‘wearables’ is a clear example of the transformative power of the IoT. These devices can not only monitor user behavior and biorhythms to quickly react to problems or anticipate an issue, wearables can connect people to their health providers in a more measurable manner that can increase their quality of care while reducing the cost of service delivery.
There are many other examples of reactive, predictive and transformative benefits being generated from the IoT. In some cases, these benefits will be obvious and in others they may not be readily apparent.
We are only at the early stages of quantifying the value of these benefits and finding ways to demonstrate the value in tangible terms.
IT has faced the challenge of measuring and reporting its value for years. Now, it must help its business counterparts figure out how to do the same in the brave new world of IoT in order to make the case for further investment in these innovations.
Kaplan is Managing Director of THINKstrategies (www.thinkstrategies.com), an independent consulting firm focused on the business implications of the on-demand services movement. He is also the founder of the Cloud Computing Showplace (www.cloudshowplace.com), and the host of the Connected Cloud Summit (www.cloudsummits.com). He can be reached at email@example.com.
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