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The Internet of Things (IoT) is still in the midst of a tug-of-war between strong demand and continued growth in the chip crisis. Despite semiconductor shortages and other headwinds such as supply chain issues, political unrest and regular outbreaks of COVID-19, the number of connected IoT devices is expected to reach 14.4 billion this year and 27 billion by 2025.
Soon all possible things will be able to connect to other things, and everyone with an online device, which will lead to profound changes in behavior. It is almost universal that the US has 97% mobile phone coverage. 85% of Americans own a smartphone, 77% own some type of computer, and more than 50% use a tablet. 31% of Americans are “always on the Internet.” More and more American homes are using automation solutions, from smart security and lighting systems to cleaning robots, water sensors and even egg counters. This hyperconnectivity is driving new lifestyles, expectations, attitudes and behaviors of American consumers.
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Smart devices are not only enabling people to participate in the Internet of Things, but are changing the way people work. It is estimated that about one-third of Americans use voice commands to search the Internet or make purchases. The use of touchless sensing and gesture recognition to interact with devices is also steadily growing, from controlling car interfaces to operating medical devices. Mixed reality devices allow surgeons in different locations to collaborate, employers can onboard and train staff, and players can immerse themselves in exciting games. As the ever-expanding Internet of Things spurs the development of the metaverse, other categories of engagement will also become immersive.
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Consumer expectations are soaring
The rapid adoption of IoT has created limitless opportunities for businesses. But it also increases stress. Consumers are willing to connect and engage more, but on their own terms: they remain loyal as long as suppliers respond immediately; they expect consistent service and a seamless flow of information across physical and digital channels; they expect context experience and hyper-personalization; they care about data security and privacy more than ever.
IoT helps disintermediate by connecting businesses directly to end consumers. This means that while IoT has great potential for success, it is by no means guaranteed. Businesses must meet customer expectations for experience and engagement while addressing their IoT-related issues. They need to consider everything from operating models and technology platforms to organizational change, talent resources and appropriate use cases to respond to new consumer behaviors and extract value from IoT.
Businesses must get organized to drive digital strategies for their business with IoT at the core. Since IoT spans the business, functions, and hierarchies of an enterprise, it’s hard to say who owns it. If an organization does not clearly assign ownership of IoT, it is unlikely to achieve good results. To prevent fragmented decision-making, duplication of effort and investment, and the risk of vulnerability to disruption, it is essential to identify those in the organization responsible for promoting, managing, and managing IoT usage.
This means that the organization must have the right people to do the job. In addition to recruiting data scientists and other IoT tech talent, companies need to assemble business, cybersecurity and risk management teams to translate consumer expectations into a seamless, secure experience. Beyond HR, IoT readiness may require some changes to the organization, just like any business transformation program. For example, it may require redesigning a company’s operating model, workflow or key processes to work in IoT.
Odd deployments are not enough to extend IoT value. Instead, businesses should use technology as a strategic tool to enhance various business capabilities. These range from using sensors and connected devices to optimize service operations, to designing and delivering new products and services, to increasing visibility into manufacturing and supply chain operations, to inspiring new business models.
IoT has affected specific areas
Manufacturing is no stranger to automation; however, IoT can enhance the performance of even the most advanced production systems. By deploying sensors throughout their operations, manufacturers can make their production systems work together, respond faster, and even repair themselves if they fail. Businesses can even give authorized external entities, such as suppliers, access to their manufacturing systems to improve inventory operations, or equipment suppliers to enable remote monitoring and maintenance. Manufacturing has brownfields with existing assets and investments. Maximizing these investments while driving transformation should be one of the key areas of focus.
A pervasive and equally underutilized opportunity for IoT is data monetization. As billions of devices join the IoT every year, they bring a wealth of information. Businesses need to think hard about unlocking this value. The most obvious approach is to build a marketplace, form an ecosystem of partners, and leverage data streams to enrich business propositions. Data can be shared with internal and external stakeholders using a trusted blockchain.
Amazon, unsurprisingly, is a standout example: The company gets data from Alexa to sell products to customers; it also charges third-party providers and developers to use it on its platform privileges on building and starting services. Another example is the digital marketplace for electric vehicles, which monetizes data by making it available to relevant businesses. For example, it provides customer and market data to charging station operators, who use these insights in their pricing strategies. Businesses can offer an “as-a-service” model based on insights into the usage of their products.
Scalable and secure technology
Dealing with IoT connectivity and data may require some changes to a business’s operating model. Hardware must be able to generate and process data, which along with data from external devices must be turned into insights and integrated into business processes and workflows. The challenge with IoT can be the amount of data, some of which is irrelevant. Therefore, while embracing IoT, a hybrid edge and cloud architecture is required.
Since IoT is not a homogeneous entity, businesses will encounter fragmented ecosystems that affect their ability to deploy and scale IoT initiatives. Therefore, they should make interoperability a standard when procuring IoT solutions. Companies that can integrate these disparate ecosystems and innovate with emerging technologies such as blockchain, AR/VR, etc., will be able to derive value from IoT.
Eventually, enterprise networks will have millions of IoT endpoints, making it very challenging to protect organizations and their customers and partners from cybercrime threats. Customers know this and are concerned. Unfortunately, research shows that while businesses acknowledge the importance of cybersecurity, they are not prioritizing it. That has to change. Businesses should focus on overall security covering privacy, data sovereignty, regulatory compliance and traceability.
Leaders must think about security strategically, considering their business model, industry specifics, and even monetization opportunities. Product manufacturers should incorporate security into their production lifecycle. Even as they set out to make security “everyone’s business,” businesses need to assign clear responsibilities and obligations for IoT security both within the organization and within extended networks such as supply chains. Especially in manufacturing, where IT-OT integration is opening up production networks to the internet, zero trust security design is critical.
The potential value of IoT is unfathomable, but by 2030 it is estimated that it could add between $5.5 trillion and $12.5 trillion. Consumers are rapidly adopting IoT and changing along the way. Businesses that have not yet been fully successful in capturing value from IoT should ensure that IoT consumer behaviors and expectations are factored into their plans. This may require initiatives at organizational, business and technical levels.
Gopikrishnan “Gopi” Konnanath is Senior Vice President and Global Head of Engineering Services and Blockchain at Infosys
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