The number of smart “things”—from thermostats to refrigerators to smart clothes—is growing thanks to demand in the consumer market. Gartner predicts that by 2020, about 26 billion smart, connected products will be in service. That’s an average of 3.3 devices for every person on the planet, not including the projected 7.3 billion smartphones and tablets that will be available.
But don’t think that the IoT will only affect and benefit consumers. “The Internet of Things will create greater economic value for all organizations, and for the global economy,” says Peter Sondergaard, senior vice president of Gartner Research.
According to a report by the McKinsey Global Institute, the IoT business has the potential to deliver as much as $6.2 trillion in new global economic value annually by 2025. The same report predicts that 80 to 100 percent of all manufacturers will be using IoT applications by then, leading to a potential economic impact of as much as $2.3 trillion for the global manufacturing industry.
Not only are the potential returns huge for manufacturers, but the IoT also promises to minimize, and possibly eliminate, massive information gaps around real-time conditions on factory floors, product use, and even equipment maintenance. This will help manufacturers minimize errors, be more flexible with managing late-stage engineering changes, and ultimately accelerate new product introductions.
Naturally, many companies will want to have a piece of the trillion-dollar pie and take advantage of the benefits associated with the IoT. Manufacturers who want to enter the IoT business should consider the following:
What does IoT mean for your company?
Each company will find different opportunities in the IoT, but all companies share the desire to increase revenue, scale efficiently, and set themselves apart from competition. Manufacturers starting from scratch will need to transform their business models so that they are both effective and lucrative.
According to Don Fike, vice president and technical architect at FedEx Corporate Services, there’s no reason IT can’t take the lead in leveraging the IoT for business benefit. “A good place to start is to take a look at your business processes and how they might be impacted by some of the sensor technologies and real-time capabilities,” he says. “Step back and say, ‘How can this change my business process?'”
The potential your products have to be smartly connected.
If a manufacturer decides they want to bring connectivity to their products, they must evaluate which part of the product lifecycle they need to concentrate on, as products can be smartly connected either from a design or a service perspective.
Designing connected products also requires the integration of hardware production and software design. Both processes depend on good design to succeed, but the approaches are very different. Hardware production calls for product design and engineering in a linear and lengthy development cycle. Software design, on the other hand, happens in short, modular loops and requires support from different kinds of designers and programmers. Manufacturers must make sure it can handle both capabilities.
Is your IT department ready for the IoT and its security issues?
Companies need to make sure they understand the technology they are working with, as well as the security implications and privacy laws. “Everyone recognizes that security is an issue, but not everyone is implementing stuff in their software to really respect it,” says Russell Fadel, CEO and co-founder of ThingWorx, in a recent article.
The IoT, and all of the IP-addressable devices that come with it, will create new areas susceptible to attacks designed to either compromise the device or gain access to the enterprise network (think of the recent Heartbleed bug). IT teams must be ready to routinely monitor these devices, protect them from spam, viruses, and malware, and also be prepared to address new security issues as they arise.
Of course there are some companies that may evaluate themselves and discover that they do not have the capability to enter the IoT business. While there is huge value for companies who find a way, any business transformations must be aligned with the overall goals of the organization.
Are you having the IoT discussions in your organization? How are you deciding if you’re ready to enter into the IoT business?