The internet of things (IoT) landscape has evolved rapidly over the past few years owing to the proliferation of smartphones and other internet-supported devices, thus enabling enterprises to expand their businesses. IoT forms a key component of business digitisation, allowing enterprises to be responsive in the face of market fluctuations. Embedded smart devices enable a sharper assessment of the value of the assets in business operations. The application of IoT across the business supply chain ensures production efficiency and smoother delivery of services to end-customers. According to a survey conducted by Gartner in February 2015, “Mass Adoption of the Internet of Things Will Create New Opportunities and Challenges for Enterprises”, there will be around 25 billion internet-connected devices by 2020, providing economic benefits of up to $2 trillion globally.
tele.net takes stock of the various opportunities and the business case presented by IoT for enterprises, the enablers and requirements for its success as well as the key challenges in its adoption…
The primary advantage of interconnected devices is that they bring efficiency in business operations. These devices can serve as important tools in business operations. IoT is being leveraged by various industries in different ways. Recent data on the adoption of IoT solutions across several enterprise segments highlights the business benefits of its uptake.
In the transportation industry, around 117 million barrels of oil can reportedly be saved over 10 years by using connected vehicles that can analyse routes and enable the efficient use of fuel. Further, in the manufacturing segment, it has been seen that the deployment of such solutions to manage the physical production line has helped avoid interruptions and mitigate supply shocks. Meanwhile, in the mining industry, companies are experimenting with driverless trucks as a means to bring down production costs. Such solutions allow firms to monitor inventory as well as reduce prices.
In health care, IoT helps streamline everyday patient processing and conduct patient check-ups remotely using connected devices, thus reducing the administrative and resource costs that come with scheduling routine visits. Meanwhile, retailers are incorporating radio frequency identification tags within anti-theft tags to manage their inventory. Apart from these, utilities, industries, and educational organisations are investing in IoT. Incorporating IoT across various enterprise segments is resulting in a shift from the conventional way of providing services.
In addition, IoT helps enterprises better connect with their customers. Given the increase in the number of product and service offerings, customers look for the best possible experience regardless of their location and how they are connected. Thus, superior customer service and highly efficient supply chains are often the reasons behind a differentiated offering. Good or bad service and experience are almost immediately shared on social media and social networks, which impacts future demand for the enterprise’s offerings. Even in non-crowded markets, enhanced customer service and internal efficiency can improve the competitiveness of the product line of an enterprise. Thus, IoT allows enterprises to offer instant remediation and support to their customers in order to remain competitive in the market.
Robust data infrastructure: For the successful adoption of IoT, enterprises require a robust data stack that can manage large volumes of data. The stack should be scalable to allow connection with multiple devices and systems that carry business signals. In addition, it should be able to assimilate other external data sets that are required for business analysis, and handle data that is generated at very high speeds.
Instrumentation strategy: Enterprises that have been successful in deriving benefits from IoT have strong control and influence on their data generation and collection. This requires instrumentation of all interfaces and devices used by consumers and partners. This instrumentation helps in profiling user activity as well as the environment in which it takes place. Profiling enables enterprises to understand the factors impacting product adoption and sustained usage.
Analytics: Enterprises invest in analytics to determine strategies based on blended and enhanced data that is ready for exploration and visualisation. Successful enterprises use consumer data, processes and business workflows and test new activities against predefined models. This helps in deriving valuable insights on consumer behaviour towards their products and services.
Adaptive strategy: IoT allows enterprises to rethink their products and marketing strategies using insights and analysis of their big data in order to improve user experience. The products need to be adaptive to the changing user environment, profile and intent. User history can be used to determine the changes required in the products and services. This would require a unified customer model with a comprehensive record of all user actions, behaviour and interactions with the product. Meanwhile, marketing strategies can be adapted as per the user’s environment.
The challenges faced by enterprises in moving their systems to IoT are largely technical. Some of these issues are related to security, power, latency, integration and storage. The primary challenge for the adoption of IoT is security and privacy. As more devices get connected in the IoT ecosystem, the number of decentralised entry points for malware also increases. Meanwhile, more layers of software, integration middleware, application program interface (API), and machine-to-machine communication create more complexity, resulting in additional security risks. Further, remote sensors as well as increased monitoring activity expose the controlling access and ownership of data to greater risks. As IoT solutions are expensive, enterprises tend to go for low-priced devices which could be vulnerable to tampering.
Apart from this, IoT systems integration and testing is a challenge owing to multiple platforms, numerous protocols and lack of operating standards. The rapid evolution of API consumes the resources of the project team and reduces their ability to improve core functionality. Meanwhile, with many players involved in IoT, multiple standards may emerge based on various requirements across devices, capabilities and cases. Barriers such as inertia, budget priorities and risk aversion also impact the adoption of IoT by enterprises.
Vendors and service providers in the IoT space need to address such issues without compromising on product quality. In addition, technology players must reassess the traditional approaches to cybersecurity and enterprises must identify management techniques in an environment involving vast numbers of connected devices. In the coming years, these challenges are expected to provide new business opportunities for technology companies, tool developers, system integrators, device builders and cross-platform integration companies.
According to recent research by BI Intelligence, “The Enterprise Internet of Things Report: Forecasts, Industry Trends, Advantages and Barriers for the Top IoT Sector”, the enterprise sector is expected to account for 39 per cent of the 23 billion active IoT devices by 2019. Further, it will be the largest of the three main IoT markets, including home and government. The report further estimates that by 2019, the overall spending on enterprise IoT products and services will reach $255 billion globally, with a compound annual growth rate of 40 per cent. The manufacturing industry is currently the chief user of IoT devices and the total IoT investment by this industry will reach about $140 billion over the next five years. Apart from manufacturing, the transportation, warehousing and information sectors are likely to invest heavily in IoT systems and devices over this period.
While issues pertaining to security and privacy are impacting the uptake of IoT services, Gartner expects that over 20 per cent of enterprises will have digital security services for protecting business initiatives by end-2017. This indicates that enterprises are already moving towards resolving the current challenges in the IoT ecosystem. In addition, mapping data, processes and deployments will be essential for companies looking to tap the IoT opportunity. Going forward, with the successful deployment of the IoT ecosystem within production processes, enterprises will be able to benefit from an interconnected world, to deliver quality and differentiated products to end-consumers