Getting ready for the Internet of Things

The Internet of Things (IoT) is becoming a hot-button issue for the C-suite. Many senior leaders are concerned whether implementing IoT-based technology and processes is worth the time, money, and effort involved. Others worry they risk being left behind and losing their customers to competitors if they avoid it altogether. Read all about it here.

Getting ready for the Internet of Things

By

Abhijit Majumdar – Executive Director, PricewaterhouseCoopers India

• What is IoT ?

The next wave in the era of computing is here. And it is outside the realm of the traditional desktop. In the Internet of Things (IoT) paradigm, many of the objects that surround us will be on the network in one form or another.

The term Internet of Things refers to the worldwide network of interconnected objects uniquely addressable based on standard communication protocols. In the past decade, the current Internet (Web 2.0) has evolved into a Network of interconnected objects that harvests information from the environment (through sensing) and interacts with the physical world (through actuation, command and control), and uses existing Internet standards to provide services for information transfer, analytics, applications, and communications.

The Internet of Things (IoT) has been called the next industrial revolution that will change the way all businesses, governments, and consumers interact with the physical world. In total, we project there will be 34 billion devices connected to the Internet by 2020, up from 10 billion in 2015.

IoT devices will account for 24 billion, while traditional computing devices (e.g. smartphones, tablets, smartwatches, etc.) will comprise 10 billion.

Businesses will be the top adopter of IoT solutions. They see three ways the IoT can improve their bottom line by 1) lowering operating costs 2) increasing productivity, and 3) expanding to new markets or developing new product offerings.

Governments are focused on increasing productivity, decreasing costs, and improving their citizens' quality of life. We believe they will be the second-largest adopters of IoT ecosystems.

Consumers will lag behind businesses and governments in IoT adoption. Still, they will purchase a massive number of devices and invest a lot of money in IoT ecosystems.

Nearly $1.6 trillion will be invested to install IoT solutions in 2020, up from $450 million in 2015. The majority of the investment will be in software and application development, followed by hardware and middleware.

Fueled by the prevalence of devices enabled by open wireless technology such as Bluetooth, radio frequency identification (RFID), Wi-Fi, and telephonic data services as well as embedded sensor and actuator nodes, IoT has stepped out of its infancy and is on the verge of transforming the current Internet Web2.0 into a fully integrated Future Internet. In 2011 the number of interconnected devices on the planet overtook the number of people. Currently there are 9 billion interconnected devices and it is expected to reach 24 billion devices by 2020. According to the GSMA, this amounts to $1.3 trillion revenue opportunities for mobile network operators alone spanning vertical segments such as health, automotive, utilities and consumer electronics. A schematic of the interconnection of objects is depicted in Fig. 1, where the application domains are chosen based on the scale of the impact of the data generated.

Fig 1: IoT schematic depicting end users and application 

A McKinsey Global Institute study has estimated that the IoT has a total potential economic impact of $3.9 trillion to $11.1 trillion a year by 2025. At the top end, that level of value —including the consumer surplus—would be equivalent to about 11 percent of the world economy (Fig 2).  

 Fig 2: Potential economic impact of IoT till 2025 

Achieving this kind of impact would require certain conditions to be in place, notably overcoming the technical, organizational, and regulatory hurdles. In particular, companies that use IoT technology will play a critical role in developing the right systems and processes to maximize its value. Let us understand the key components and technologies that make up the IoT.

• The three key components of IoT

 Three key components make up the IoT ecosystem. 

1. Hardware—made up of sensors, actuators and embedded communication hardware
2. Middleware—on demand storage and computing tools for data analytics and
3. Presentation (software and applications) — novel easy to understand visualization and interpretation tools which can be widely accessed on different platforms and which can be designed for different applications.

• IoT enabling technologies:

5 key enabling technologies make up these three components.

1. Radio Frequency Identification (RFID): RFID technology enables design of microchips for wireless data communication. They help in the automatic identification of anything they are attached to acting as an electronic barcode. The passive RFID tags are not battery powered and they use the power of the reader’s interrogation signal to communicate the ID to the RFID reader.
2. Wireless Sensor Networks (WSN): Recent technological advances in low power integrated circuits and wireless communications have made available efficient, low cost, low power miniature devices for use in remote sensing applications. The combination of these factors has improved the viability of utilizing a sensor network consisting of a large number of intelligent sensors, enabling the collection, processing, analysis and dissemination of valuable information, gathered in a variety of environments.
3. Addressing schemes: The ability to uniquely identify ‘Things’ is critical for the success of IoT. This will not only allow us to uniquely identify billions of devices but also to control remote devices through the Internet. Every element that is already connected and those that are going to be connected, must be identified by their unique identification, location and functionalities. Herein, the Uniform Resource Name (URN) system is considered fundamental for the development of IoT. URN creates replicas of the resources that can be accessed through the URL. The entire network now forms a web of connectivity from users (high-level) to sensors (low-level) that is addressable (through URN), accessible (through URL) and controllable (through URC).
4. Data storage and analytics: IoT entails harvesting of an unprecedented amount of data through sensors and connected things. Storage, ownership and expiry of the data are critical issues. The data have to be stored and used intelligently for smart monitoring and actuation. It is important to develop artificial intelligence algorithms which could be centralized or distributed based on the need. Novel fusion algorithms need to be developed to make sense of the data collected. State-of-the-art non-linear, temporal machine learning methods based on evolutionary algorithms, genetic algorithms, neural networks, and other artificial intelligence techniques are necessary to achieve automated decision making. A centralized infrastructure is required to support storage and analytics which forms the IoT middleware layer.
5. Visualization: For a consumer or end user to fully benefit from the IoT revolution, attractive and easy to understand visualization has to be created. Extraction of meaningful information from raw data encompasses both event detection and visualization of the associated raw and modeled data, with information represented according to the needs of the end-user. This will enable policy makers to convert data into knowledge, which is critical in fast decision making. Cloud based storage solutions are becoming increasingly popular and in the years ahead, Cloud based analytics and visualization platforms could become de-facto standard.

• Applications for IoT

There are several application domains which will be impacted by the emerging Internet of Things. These applications can be classified based on the type of network availability, coverage, scale, heterogeneity, repeatability, user involvement and impact. We categorize the applications into four application domains:

1. Smart Enterprise: Environmental monitoring, security, automation, climate control, health and well-being issues; transport in light of its impact on mobility, productivity, pollution; and government services in terms of critical community services managed and provided by local government to city inhabitants. This is estimated to be $1.2 – 3.7 Tn in market size.
2. Personal and Home : Control of home equipment such as air conditioners, refrigerators, washing machines etc., will allow better home and energy management. This will see consumers become involved in the IoT revolution in the same manner as the Internet revolution itself. Social networking is set to undergo another transformation with billions of interconnected objects. An interesting development will be using a Twitter like concept where individual ‘Things’ in the house can periodically tweet the readings which can be easily followed from anywhere.
3. Utilities: The information from the networks in this application domain is usually for service optimization rather than consumer consumption. Smart grid and smart metering, Water network monitoring and quality assurance of drinking water, informed decision making concerning agriculture will be key applications in this space.
4. Mobile: Smart transportation, smart logistics, smart homes

Fig 3: Roadmap of technological developments for IoT

• How does it all work together?

Interoperability between IoT systems is critical. Of the total potential economic value the IoT enables, interoperability is required for 40% on average and for nearly 60% in some settings. The vision of IoT can be seen from two perspectives—‘Internet’ centric and ‘Thing’ centric. The Internet centric architecture will involve internet services being the main focus while data is contributed by the objects. In the object centric architecture, the smart objects take the center stage. In our work, we develop an Internet centric approach. A conceptual framework integrating the ubiquitous sensing devices and the applications is shown in Fig. 4 below. In order to realize the full potential of ubiquitous sensing, a combined framework of Internet and Things with a cloud at the center seems to be most viable. This not only gives the flexibility of dividing associated costs in the most logical manner but is also highly scalable.

Fig 4: IoT reference architecture

• Future Trends
• The IoT has a large potential in developing economies. Still, it may have a higher overall value impact in advanced economies because of the higher value per use. However, developing economies could generate nearly 40% - 50% of the IoT’s value.
• While Smart Factories, Smart Cities and Smart Transportation & Logistics will form the top 3 areas of IoT application (Refer Fig 2), it is estimated that IoT users (businesses, other organizations, and consumers) could capture upto 90% of the value that these IoT applications generate. For example, in 2025 remote monitoring could create as much as $1.1 trillion a year in value by improving the health of chronic-disease patients.
• Security issues would pose safety and privacy risks. Security of IoT devices will, thus, be the foundational enabler for IoT. A prevalent, and unrealistic, expectation is that it is somehow possible to compress 25 years of security evolution into novel IoT devices.

A dynamic industrial revolution 2.0 is evolving around IoT technology. As in other technology waves, both incumbents and new players will have opportunities. 

About the Author:

Abhijit Majumdar is an Executive Director with PwC India and heads the IT Strategy consulting business in the country. He has 16 years of experience in management consulting, IT strategy and is regularly consulted by senior leadership of clients in shaping and deploying their IT strategies and transformation agendas. He has authored thought leadership articles on innovation, mobility and digital economy areas. 

He is based in Mumbai, India