There is a lot of confusion surrounding the term, “IoT.” It sounds like something from a Sci-Fi movie. However, the world has been consumed by the Internet of Things for quite some time. People carry it around in their pockets, wear it on their wrists, or use it each day to get work done. At its most basic level, the Internet of Things (or IOT) is simply a network of internet-connected objects capable of sending and receiving data. The Amazon Echo, FitBit, smart thermostats like NEST, smartphones, and laptops are a few easily recognizable examples.
The International Data Corporation estimates the IoT currently has 13 billion connected objects, and that number is projected to surpass 30 billion objects by 2020. This substantial growth suggests the IoT will drive major changes in every industry. Executives must understand why and how to use the IoT in order to maintain a competitive advantage.
Why use the Internet of Things
It is difficult to imagine a time when a person might require an internet-enabled toaster. Yet in 1990, a toaster became the “first” IoT device. This toaster was merely an experiment, but it highlights an important concept. Just because something can be connected to the internet does not mean it should be connected to the internet. Companies considering IoT opportunities should think first about the advantages connectivity provides.
There are two main reasons to invest in IoT:
- Monitor remotely
- Collect data in real-time
Smart sensors, the nucleus of IoT, allow users to monitor people, processes, and systems from anywhere in the world. For manufacturers seeking a better understanding of their supply chain, using the IoT makes a lot of sense. Sensors provide more accurate delivery estimates and real-time changes in inventory. This added visibility detects if shipments have been tampered with and mitigates damage risk. End-to-end data can be used to assess weaknesses, identify opportunities, and establish a more efficient supply chain.
How to use the Internet of Things
Data-driven devices give companies insight to processes and operations like never before. IoT allows users to extract enormous data sets and summarize them into actionable analytics. There are four distinct types of data analytics:
- Descriptive Analytics – What happened
- Diagnostic Analytics – Why it happened
- Predictive Analytics – What might happen in the future
- Prescriptive Analytics – What to do about what is happening
Companies use IoT data to lower maintenance costs, predict equipment failures, and improve business operations. B2C companies can better understand their target market by analyzing data collected from IoT devices used by their customers.
The Industrial Internet of Things (IIoT) allows manufacturing and energy companies to leverage big data to drive future action and business strategy. The IIoT is essentially the point where traditional information technology (IT) and operational technology (OT) come together. IIoT applications use smart sensors to track inventory (as supply chain managers do) and gather data on condition-based predictive maintenance. IIoT will have a significant effect on how Operational Excellence is defined and achieved in the next decade.
Implementing the Internet of Things
The Internet of Things will continue to revolutionize the way of doing business across every industry, but the transition will not be easy. Companies who choose to implement the IoT will face many challenges. They will encounter resistance to change from their own organization, their vendors and their clients. There will be obstacles to overcome from a security standpoint, including physical security and cyber-threat. The companies will need to be flexible as best practices, standards, and regulations evolve. Organization structures will change, processes will be re-designed, and budgets will be re-allocated to support the IoT. While there are advantages to adoption, companies should look to outside resources for assistance in change and implementation management.