We all know the digital revolution has completely transformed the way consumers are interacting with brands, and that a lot of businesses are finding it hard to catch up. One way to closing this brand gap is to understand consumer behaviour and build a brand experience that meets these new needs.
Bland by name and superficially viewed as gee-whiz technology never to be realized, the Internet of things (IoT) has significant potential to transform business. Early forays into Net-enabling physical objects are already pointing the way.
Promising unprecedented connectivity among objects and the gathering of massive amounts of data, IoT is poised to deliver significant business benefits to organizations forward-thinking enough to envision the opportunities and efficiencies IoT can reap.
Resource monitoring, usage pattern tracking, just-in-time delivery of goods and services - some IoT pioneers have launched or are deploying projects, and they're seeing positive results.
But if your organization is looking to explore IoT as a business strategy, be warned that a number of technical and administrative challenges await you. Here's a look at the opportunities, hurdles, and new skills required to make the most of this intersection of Web-enabled physical objects and the deluge of data they will bring.
What exactly is the Internet of things?
At its heart, IoT is a wide-ranging ecosystem of everyday physical objects connected to the Internet, capable of identifying themselves and communicating data to other objects on the network.
The concept initially gained traction via the Auto-ID Center, a nonprofit collaboration of private businesses and academic institutions that created a Web-like infrastructure to track goods through the use of RFID tags that carry EPCs (Electronic Product Codes). The Auto-ID Center shuttered in 2003. EPCGlobal was then launched to commercialize EPC technology, and research continues today at universities around the world.
The basic IoT stack is composed of a tracking technology such as RFID or bar codes, sensors, embedded software, and wireless Internet connectivity. "Transponder nodes" affixed to physical objects -- anything from a truck to a bottle of pills -- uniquely identify themselves to the Internet. By Web-enabling just about any type of product or equipment (vehicles, construction equipment, gas and electric meters, appliances, vending machines, and so on) the IoT will allow information about these objects to be captured, resulting in a network of "smart objects" that can actively participate in a variety of business processes.
Fueling the IoT revolution is a combination of ubiquitous connectivity, low-cost sensors, and microelectronics that allow almost anything to be connected to the Internet. The greatest enabler of IoT applications for business may be the smartphone, with its ability to optically scan bar codes or RFID tags.
"Even simple phones support manual data entry of serialized identifiers such that an individual item can be tracked," says Stephen Miles, research affiliate and consultant at the Auto-ID Labs and Center for Biomedical Innovation at MIT, both of which are working on IoT projects.
The rise of mobile devices and steadily decreasing prices for components, such as Wi-Fi radios, GPS chips, and 8-bit controllers with flash memory, have Gartner predicting that nearly every industry will be affected by the IoT. The research firm cautions, however, that the IoT "will be widely adopted only if the technology is available to all [including consumers] in a way that is inexpensive and easy to use."
For all its whiz-bang futuristic appeal, IoT presents compelling business benefits, especially for organizations prepared to make the most of the stream of real-time data that will come from networked physical systems.
"IoT technologies allow for real-time and accurate data sensing and wireless transmission of that data to Web applications and servers connected to the Internet," says Ronak Sutaria, lead researcher at technology consulting firm Mindtree. "This leads to a more precise and accurate monitoring and control of physical systems."
loT-related technologies are already being tapped in a variety of industries, Sutaria says. For example, agricultural companies are monitoring crops in real time to improve the yield quality of produce and to conserve the resources needed for farming, including pesticides, fertilizers, and water. Utility companies have implemented smart meters to monitor energy, gas, and water consumption, and municipalities are launching "smart city" projects to help ease traffic congestion, improve waste management, monitor energy radiation from cellphone towers, and control street lights.
Some of the more successful and instructive endeavors have come from the health care sector. Great River Medical Center is one health care organization that's connecting many of its medical devices into a network using Microsoft's Windows Embedded, a family of operating systems designed for use in embedded systems.
The deployment "spans our entire operation of medication management, from anesthesia workstations that monitor controlled substances in our operating rooms, to automated and secure cabinets that track and dispense medications at nursing stations, to an inventory management carousel in our pharmacy that records medication levels, automatically reordering when medications are needed," says Darwin Cooley, director of pharmaceutical services at Great River.
The devices are all connected to a central server running Windows Server with a SQL Server database. Each medication is bar-coded in a single-dose package, Cooley says, which the medical center is able to track and control during each step throughout its facility.
"The big driver from our administration and board of directors was to be more cost effective," Cooley says. "Automating the distribution of our medications drives efficiency, keeping down personnel costs, as it's much more efficient than people running all over the hospital to take medications out to the patients each time a prescription is written."
The automated bar-code system is designed for patient safety, tracking medications at each step to assure the correct dose is being administered to the right patient.
"This system is so accurate that pharmacists are required to check only 5 percent of doses leaving the pharmacy, compared to 100 percent before bar-coding," Cooley says.
The technology has allowed Great River to cut medication delivery time to patients by 67 percent, from an average of 90 minutes down to 30 minutes. Getting the correct medication to patients faster has improved patient outcomes and reduced the rate of readmission.
The technology also cut pharmacy costs by US$300,000 annually and provided a one-time inventory savings of $400,000.
Challenges to address
Organizations can't expect to reap the benefits of IoT without addressing a number of hurdles. At the minimum there is the need to inventory, bar-code, and cross-check every physical object to be brought online. For Great River, this process, which involved thousands of medications, took several months to complete, Cooley says.
IoT deployments will introduce a host of technical and procedural challenges that companies will need to overcome to reap the benefits of a connected physical network. IoT also involves multiple technology components across the IT stack, so it will require expertise from various parts of the organization -- or perhaps from outside resources.
"IoT by itself is not a technology; you can't buy a box of IoT off the shelf," says Mike Redding, managing director at Accenture Technology Labs, the technology R&D organization within management consulting and outsourcing firm Accenture.
Each technology component brings with it unique issues. At the transponder and reader-device level, this means questions of reliability, battery life, security, access, and data processing.
Network services and application performance is also a concern for IoT deployments, Miles says. For example, a simple sensing and monitoring application for a site with 100 sensors installed and collecting telemetry data might produce raw data totaling more than 4PB in a year.
From a system design perspective, challenges include ensuring effective, data-driven decision making, dealing with a whole new level of data granularity, and determining who owns the data, Miles says. On this last point, for example, under current U.S. health care law patients have a legal right to access their medical records. "But who owns this data, the doctor, the hospital, the software or hardware/services provider?" Miles asks.
Big data like you've never seen before
The biggest hurdle facing organizations considering IoT deployments will be knowing what to do with the massive amounts of information that will be gathered.
"Social media, sensors, and embedded devices expand the ability to gather data from previously unexplored areas," Redding says. "One challenge is to design for analytics -- creating a strategy that sees data more as a supply chain than a warehouse."
As tools mine countless new unstructured data sources, the problem is no longer the absence of enough data, Redding says -- it's making sure you aren't missing out on the data you really need while spending too much on data you don't need.
"With a supply chain of data, organizations can fill the gaps in whatever way is required," Redding says. They can create new APIs to current applications, ask for data from partners or third parties, or create the data by quantifying the business/physical environment around them, he says.
Acquiring the needed analytics skills to cope with the data deluge is another challenge. Research from Accenture shows that finding top analytics talent to manage massive amounts of data will be difficult in the years ahead. The results of a year-long research project by the firm show that the United States is projected to create nearly 39,000 new jobs for analytics experts through 2015, but will only be able to fill 23 percent of those roles with qualified candidates.
With IoT, basic data analytical skills won't cut it; companies will need people who know analytics and have a solid understanding of what this new data will mean for their specific industry.
"One of the key infrastructures that companies [considering] IoT solutions require is to have a culture of data-driven decision making," Sutaria says. "IoT essentially provides a stream of accurate data from the real world. Converting that data to information, then to knowledge, and finally to wisdom requires traditional analytical skills of the domain where the IoT solution is being deployed."
For example, in the agricultural field a scientist must understand how much irrigation is needed for a crop under various weather conditions. "IoT can provide accurate and automated data collected at very periodic intervals, of the weather, farm, and individual crop conditions," Sutaria says. "But once the data is collected, the actions that need to be taken based on the data is dependent on the domain-specific scientists."
Along with the growing volumes of data and analysis needed, companies must be prepared for "an onslaught of devices that connect consumers and objects anywhere, anytime," Redding says. "Those that adopt the data supply-chain philosophy will surf this wave of information without drowning in the details."
Additional common barriers to adoption of IoT technologies will include the investment needed in sensors and analytics capabilities and support, such as data security, Miles says.
The future of IoT
As IoT becomes mainstream, it will likely play a huge role in areas such as supply chain management. According to Gartner, "the movement of smart goods can transform a logistics operation into a smart supply chain."
OEMs selling new Internet-connected smart goods and devices will see their supply chains evolve, Gartner claims. A physical supply chain that ordinarily stops once goods are shipped will be extended by a digital supply chain in which monitoring services, content, updates, and other services will be provided.
"Businesses have a tremendous opportunity to use IoT to fill in corporate blind spots to provide just-in-time goods and services," Redding says. "When customers' preferences or needs can be tracked in real time, businesses have the opportunity to react accordingly and immediately, with options such as dynamic messaging, pricing, or service delivery."
Tracking usage patterns will allow businesses to plan for spikes or quiet periods in advance, Redding says, reducing the chance of service outages or running out of stock. "Internally, businesses can track their own equipment in order to prevent failures or outages before they occur, increasing operational efficiencies," he says.
Developments with the Internet itself will have a huge impact on IoT. In the coming years, Internet applications built on IPv6 "could conceivably communicate with virtually any man-made object due to IPv6's huge bandwidth," Redding says. "This will undoubtedly open the door to more and more innovative IoT projects."
At a time when organizations are looking to take advantage of big data, IoT offers an opportunity to gather even more information that could prove extremely useful to business.
"Knowledge is power, and businesses that leverage IoT have the potential for an incredible competitive advantage," Redding says.