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The Internet of Things outpaces other technologies: IDC

The Internet of Things outpaces other technologies: IDC

Carrie MacGillivray of IDC discusses how business can identify and capitalise on the potential opportunities from IoT.

The Internet of Things (IoT) is outpacing other technologies and has shifted from being a supply driven concept to early indications of real demand.

Enterprise awareness and willingness to invest in IoT is becoming a reality, said Carrie MacGillivray, program vice president, mobility services, IoT and network infrastructure at IDC.

We are starting to see ROI from industries that are deploying the technology, said MacGillivray in her keynote at the Internet of Things Conference 2014 in Auckland

IDC defines IoT as a network of uniquely identifiable “things” that communicate without human interaction using IP connectivity. The ecosystem components that support IoT solutions include devices, connectivity, platforms, applications, analytics, security and professional services.

Billions of things, trillions of dollars

IDC forecasts a worldwide IoT installed base of 30 billion by 2020, from 9.9 billion in 2013. This represents a compound annual growth rate of 16.8 per cent, compared to 10.9 per cent for other technologies, she said. Global revenue opportunity from IoT, meanwhile, is forecast to grow from $1.33 trillion in 2013 to $3.04 trillion in 2020.

The opportunities for both vendors and customers are vast, but relatively few people or companies know how to identify and capitalise on the potential opportunities of IoT.

Read more: Most ANZ businesses unprepared for IoT, lack policies on wearable tech: ISACA

Smartphones, tablets and smart TVs are things that humans interact with, she said. But there is a myriad of things out there that can communicate without human interaction.

Locally, on the shop floor, it could be two end points exchanging information. Or it could be sensors in cities that can be connected to systems for streetlighting, garbage collection (trash cans will indicate when receptacles are full), and water maintenance.

Boston, for instance, installed park benches that had solar panels, where people can charge their phones. The benches have sensors that capture noise level and other environmental factors and report these to the city.

A manufacturer is looking at IoT to help sell more toys at Christmas. The plan is to put sensors on the packaging so they can find out where the toy is on the shelf, and if the customer has interacted with it.

Read more: The information security-plus professional

Just being able to save 1 per cent using IoT can lead to huge outcomes, she said.

At FedEx, for instance, fuel savings of $447 million will bring 22 per cent improvement to its net income. At Ford, reducing costs by $1.13 billion means 18 per cent improvement to profits, and at Coca Cola, $350 million worth of improvements will bring 3.5 per cent improvement to net income.

Riding on the third platform

MacGillivray said IoT is the “perfect example” of how big data, cloud, mobility and social – the convergence of technologies that IDC refers to as the ‘third platform – can come together.

Read more: MYOB app allows users to manage their accounts and cash flow from their smartphones

Big data, she said, allows organisations to create better decisions, faster. Cloud technologies allow flexibility and scalability. Mobile technologies connect remote assets and field processes, while social technologies allow businesses to create machines that can ‘tweet’ and give real-time indications of their conditions.

Strategic discussions are taking place in the boardroom on what IoT is going to do for the business.

Carrie MacGillivray, IDC

Read more: CIO to COO: Lessons from the cloud

She said vendors want a piece of the IoT market because it has such potential. In the past six months, she has seen an increase in vendors developing meaningful solutions that were deployed to their customers.

New IT leaders like GE will emerge from IoT – and vendors like SAP and IBM are keeping an eye on them.

These companies have not been traditional competitors but in IoT, they become ‘formidable’ competitors, she said.

She said there are big opportunities in the business to business and business to consumer market if interesting solutions using IoT can be absorbed earlier in the value chain.

Read more: CIO Upfront: Big data, dumb data: When AI and reality collide

Strategic discussions are taking place in the boardroom on what IoT is going to do for the business, she said.

A key question that can aid businesses working on IoT is, “how is it going to help our customers and partners?”

In the intersection of vertical and horizontal markets, such as retail and asset tracking, business can find the “use case” for IoT by asking: “What business problem is being solved?”

Read more: IDC’s top 10 predictions for New Zealand CIOs in 2015

Opportunities and challenges

Other speakers at the conference discussed the challenges and opportunities emerging from the rise of connected devices.

New revenue streams are going to emerge for those businesses who have the vision to see how their big data can be harnessed by cities seeking to engage better with their citizens, said Ronli Greyling, principal consultant Arup.

“The opportunity to make lives better by sharing data and making business better by receiving in exchange valuable insights, is going to become one of the critical ways smart businesses engage and build relationships with their customers,” said Greyling, who is seconded to Sensing City.

Sensing City is a social enterprise set up in Christchurch to “develop a new industry based on using information to manage urban living”.

Recognising that the rebuild of Christchurch, with a spend of $30 billion in a short space of time, was too valuable an opportunity to miss, the organisation is working on several projects projects harnessing data, by employing a range of sensors, to provide inputs into every part of the rebuild planning process.

Explaining the digital masterplan approach, Greyling gave examples of the range of data sensors which are already providing data in Christchurch. Sensors are being installed on street lights; public data comes from transport networks; private data comes from building owners; and citizens are opting in and providing data from devices connected to the IoT and otherwise.

The question of data privacy was inevitably on the agenda and Greyling noted that they were going slowly and testing the citizen’s philosophy around data privacy

With the rise of the IoT, organisations must also ensure that they can protect and verify the identity of every device that connects to their environments.

Bruce Hubbert, Aerohive Networks

Matthew Saunders, director of digital innovation, Westpac, talked about meeting the needs of urban customers with a range of small pilots to see how and if customers wanted to use the IoT and devices to interact with Westpac.

Saunders’ recommendation was to experiment and test to see what customers really wanted and would value using regularly.

Coming to a bank near you - cashflow advice and data delivered through Google glass while you are shopping, he stated.

Bruce Hubbert, technical manager at Aerohive Networks, pointed out a new security concern arising from the growth of connected devices.

Intercede says that, whilst protecting sensitive data will continue to be of the utmost importance, the rise in connected devices raises a new security concern - namely how to trust the identity of these devices, according to Hubbert.

Because of this, enterprises and other organisations must shake themselves out of the mind-set that that online security is simply about protecting data, he added.

“With the rise of the IoT, organisations must also ensure that they can protect and verify the identity of every device that connects to their environments.”

Send news tips and comments to divina_paredes@idg.co.nz

Follow Divina Paredes on Twitter: @divinap

Follow CIO New Zealand on Twitter:@cio_nz

Read more: The Internet of Things calls for a different mindset

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