The Internet of Things Revolution

The growing network of connected devices known as the Internet of Things (IoT) is sparking digital transformation across many industries. By linking physical objects to the online world through sensors and internet connectivity, IoT enables unprecedented data collection, automated analytics, and process enhancements via remote monitoring and control.

IoT’s core value is its ability to embed intelligence and access into infrastructure like manufacturing equipment, vehicles, appliances, and more that comprise the operational backbone of modern civilization. Web-enabled sensors across locations generate massive datasets reflecting system states in granular detail and real time. Sophisticated AI algorithms tap countless data points to discern efficiency opportunities within complex processes previously opaque to analytical scrutiny. 

For example, shipping companies implement IoT tracking to gain end-to-end visibility across global supply chains. Radiofrequency identification tags on containers and pallets relay location data to logistics managers. This allows dynamic routing adjustments en route to circumvent bottlenecks caused by weather, traffic, or other disruptions — ensuring on-time delivery despite uncertainties. Sensors also track container light, humidity, and temperature levels to prevent spoilage of perishable goods. 

Smart factories invest heavily in sensors and connectivity to monitor production line status, equipment performance, inventory levels, and other metrics 24/7. Data flows into cloud analytics platforms, generating insightful reports on overall equipment effectiveness, preventive maintenance needs, and areas for improvement. Managers access operational analytics via dashboards that translate signals from factory floor noise into actionable business intelligence. Sensor data combined with AI supports predictive maintenance — allowing parts replacement before failure causes costly outages.

Beyond Supply Chain and Manufacturing

While industrial contexts receive much IoT limelight, the technology pervades customer-centric sectors, too. In healthcare, remote patient monitoring facilitated by wearables allows earlier disease intervention without hospital visits. Patients get diagnosed faster while doctors gauge treatment efficacy more closely through streams of biometric data from sensors versus periodic in-person appointments. Machine learning models trained on such physiological datasets get refined further over time, improving diagnostic accuracy.

IoT also enables usage-based insurance models leveraging driving telematics. Insurers install internet-enabled devices tracking policyholder vehicle location, mileage, speed, and acceleration patterns. This allows conversion from traditional premium models to personalized pay-per-mile insurance rates aligned with actual driving risk profiles. For most motorists adopting a less risky driving style, insurance costs decrease. This paradigm shift powered by IoT sensors benefits both insurance providers and policyholders via fairer premiums.  

Across domains, IoT unlocks value in two key ways:

1. Internally to drive operational excellence within organizations 
2. Externally, through monetization of IoT data and services for supplemental revenue 

Let’s explore examples of both models.

Internal Productivity Gains

Before IoT, gaining transparency into operations required tedious manual inspections, guesswork based on outdated documentation, and institutional knowledge retention issues when experts left organizations. IoT alleviates these problems through automated, real-time data gathering across assets.

Consider renewable energy producers managing large-scale wind farms and solar grids spanning vast geological areas. Hundreds of sensors immersed within turbines and photovoltaic systems identify emerging mechanical defects through minute vibrational signal changes. Technicians fix or replace worn parts before outright failure occurs, minimizing power generation downtime. Detailed wind flow pattern analysis enables optimally orienting turbines to maximize energy output. IoT-enabled remote inspection and control slash the costs of dispatching staff physically to such distributed infrastructure.

In retail, sensors track customer movement patterns within brick-and-mortar store locations. Hot zones with high traversals get identified, along with underperforming areas receiving lesser foot traffic. Store layouts get reconfigured accordingly to place premium products where most eyeballs glance while removing lesser popular items. Sensor data reveals the best times and days for stocking shelves without disrupting patrons. It also helps right-size inventory to prevent wastage from excess supply or lost sales owing to stock-outs. Shopping apps integrate with in-store beacons so consumers receive coupons matching items near their location, driving transaction lift.  

IoT is even modernizing farming through ‘precision agriculture’ — data-driven management of crop cultivation and livestock monitoring. Drones flying over farmland use infrared cameras to detect soils lacking adequate hydration and moisture. This allows targeted watering only where needed instead of broad irrigation, which wastes water and causes fertilizer pollution from excessive runoff. Further sensors track microclimate conditions 24/7, enabling protective actions during periods of extreme heat, cold, or pest infestations threatening yield. GPS-tagged livestock roams safely without human oversight while being monitored remotely for vital statistics indicating health status and illnesses requiring early treatment. 

External Monetization Opportunities

While internal productivity constitutes the primary business case locus for IoT currently, an emergent arena holds exciting potential — external monetization of IoT sensor data and services to third parties. With cutting-edge use cases still evolving, however, firms are experimenting with building new data-sharing revenue streams.

Sharing anonymous IoT data externally helps other companies refine their products, services and supply chain processes to consumer benefit. For instance, automakers receive drivetrain performance, mileage, and related telemetry from connected vehicles. Analytics over aggregated data from vehicles experiencing failures exposes manufacturing defects requiring recalls to prevent accidents. Even competitor brands proactively share data to uphold industry safety standards. This data gets anonymized and distributed into various commercial datasets that vendors monetize for application development. Motivated developers buy access and derive mobility insights for improving smart city infrastructure, like optimizing traffic light sequences to reduce congestion. 

As the software-as-a-service revolution allowed companies to shift from selling licenses to subscriptions, IoT facilitates transitioning equipment businesses from initial unit sales to leasing assets with usage-based billing. Manufacturers install sensors emitting runtime operational statistics, including speeds, feeds, wear-tear rates, and supply replenishment needs. Industrial customers lease such transparent equipment via flexible “machine time” consumption pricing adjusted to actual utilization levels monthly rather than fixed contracts. This brings new affordability while manufacturers gain predictable recurring revenue and rich data for boosting uptime and equipment lifespan. Early examples include printing presses charging per page printed or music speaker use billed by hours active.

Commercial buildings are also cashing in on IoT data externally. Hundreds of building automation sensors governing HVAC equipment, lighting systems, security apparatus, and more generate granular observational data reflecting asset efficiency and occupancy patterns. Anonymizing and selling this rich operational telemetry on commercial data exchanges creates new revenue streams for real estate owners. AI firms monetize the external data further into machine learning model training datasets sold to developers, improving smart gateway applications and indoor space optimization algorithms.

Growth Forecasts Buoyant

As per leading research firms, global IoT spending will sustain brisk over 20% annualized growth rates, catapulting from around $700 billion in 2019 to nearly $1.3 trillion by 2024. An expanding array of IoT hardware fuels uptake — from inexpensive wireless tags and sensors costing a few dollars to advanced gateways, robots, and drones running thousands of dollars for heavy industrial settings. Annual consumer IoT device shipments are projected to zoom from 7 billion units in 2019 to 25 billion by 2025 as market saturation extends beyond early adopters.

Gartner estimates that 14.4 billion connected things will be in use by 2024 across consumer and enterprise contexts combined – up from 8.9 billion in 2020. The industrial sector will outpace the consumer side with a larger share of activated units. Machinery, production equipment and goods vital to global GDP enjoy immense hardware modernization demand built up over years as organizations deferred digital investments until recently. IoT hits an inflection point now as the maturation of underlying technologies like ubiquitous connectivity, cheaper and smaller sensors, edge analytics, and cloud data lakes coincide with pressures to address risk resilience and labor shortages.

In particular, 5G and Wi-Fi 6 wireless networks promise faster speeds and lower latency ideal for projects requiring immense data ingestion beyond 4G capacities across far-flung locales. Multi-access edge computing also brings backend data processing physically closer to industrial assets to enable lightning fast automated response times not possible when data traverses distances through external data centers. Sleek low-power wide-area networks allow linking rural infrastructure running years on batteries, replacing manual visits. Overall data storage and compute costs drop significantly as cloud resources scale, making a return on investment more compelling across sectors.

Overcoming Adoption Barriers

Despite bullish outlooks, meaningful IoT adoption lags with barriers slowing traction. Many CIOs grapple with building sound business cases given deployment complexity and substantial upfront costs. Disparate connectivity standards across proprietary equipment exacerbate matters. Then fragmented data flows into infrastructure silos requiring costly integration. Many IoT analytics pilots stall at proof-of-concept purgatory, unable to scale laterally across units or replace aging legacy systems entirely. Operationalizing experimental initiatives into sustainable IoT programs with demonstrable ROI remains challenging.

But the biggest roadblock today is cybersecurity — with massive attack surfaces vulnerable to crippling exploits, ransomware and theft. Myriad devices using insecure legacy software connected openly to the wild internet could prove devastating if hijacked to swamp systems via DDoS attacks. As digital and physical infrastructure converge, targeted hacking brings catastrophic risks. Yet most devices lag sorely in encryption, access controls, and the ability to patch vulnerabilities. Though no major disasters have occurred yet, experts warn chronic gaps remain in IoT domain skills and safety standards.  

Without question, IoT introduces new attack vectors that require thoughtful risk management. However, most CXOs concede that the benefits still outweigh the threats currently from embracing IoT programs.