Internet of Things

Opportunities Beyond the Hype

In recent years, there has been a lot of excitement about the Internet of Things (IoT) and its potential to transform the way businesses operate and the way we interact with technology.

Many applications, such as smart cities, can, however, seem quite abstract and far removed from businesses’ everyday realities at first. Unfortunately, this fosters a lot of skepticism towards the technologies that make the Internet of Things possible. It also reinforces the perception of IoT as a hype with little real world benefit and leads to organizations prematurely dismissing this field as a new area of growth.

Looking beneath the surface, real, economically viable, benefits can be uncovered. In fact, a number of early adaptors have already begun to integrate some of these technologies into their operations. To realize the technologies’ benefits, however, technical implementations must strictly follow business needs.

Cisco estimated (as of 2013) that 19 trillions dollars of economic value would be created by Internet of Things technologies until 2023 alone. What share of this pie an organization may be able to claim for itself is determined by how well it understands the key concepts of the Internet of Things and how it translates them into concrete benefits.

Benefits to be realized by IoT technology

What is the Internet of Things?

The Internet of Things, also referred to as the Internet of Everything, describes the interconnection of devices (sensors, machines, interfaces, etc.) via the internet. Although this idea may not sound revolutionary at first, it offers many opportunities to make companies more efficient. By breaking devices out of manufacturer silos, for example, companies can rethink the way the resulting information is processed and acted upon. This also allows early adoptors to gain a competitive edge by taking automation to an entirely new level.

For the purposes of this article, we distinguish between two types of IoT applications:

  1. The product is a connected “Thing”. Many products will have their own value proposition outside of being connected but are enhanced by being connected to the Internet. E.g. Smart TVs, Smart Fridge
  2. A company’s processes (sales, manufacturing, marketing, etc.) are enhanced by implementing a comprehensive IoT system.

In general, turning a product into a connected “Thing” mainly serves the benefit of providing additional Customer Value, while an improvement of processes achieves cost reductions, efficiency improvements and risk mitigation. Oftentimes, however, synergies can be leveraged between these two types.

How is an Internet of Things Application Structured?

To describe the structure of such a system, it is easiest to use the human body as an analogy. The sensors and actuators in the Internet of Things represent our nerves and muscles respectively. These are connected to one another via the central nervous system. The central nervous system in IoT ensures that time-sensitive tasks are carried out without delay. To ensure the robustness and safety of the system, the central nervous system will even keep operating when the brain (i.e. the cloud) cannot be reached due to a temporary fault. Conscious decisions or analyses concerning the operation of the whole system occur in the cloud, the cognitive layer of the application.

Most companies will already be familiar with technologies that operate on the two bottom layers. An example would be a machine that shuts down automatically when problems are detected. In the human analogy, this corresponds to instinctively withdrawing your hand when touching a hot surface.

The cognitive layer, however, is a feature of an Internet of Things system. Lifting the information to the cloud allows for a focused analysis of the collected information. More so, similar to the brain in the human body, the cloud allows for a purposeful orchestration of the various “things”, according to changing circumstances. This layer is also used by human operators to control the system.

This approach also relieves the individual things of the need to know about the business processes behind their operation. Much like your arm does not need to be aware of the purpose of its movement even when it is performing critical tasks. This allows new machines or actuators to be added easily and efficiently without affecting other components. The system is designed with scalability in mind from the start.

Because the applications of IoT vary widely between industries, we have grouped descriptions of their potentials and implementations into the following categories.

Internet of Things in: