A Macro View of IoT Impact, and the Adoption Journey

First Published in the Business World magazine, April 2016

The Internet of Things is set to be one of the next big waves of technology hitting Indian shores soon. It will have tremendous impact across our social and business eco-system: enabling Smart Cities, transforming manufacturing in ways which one can barely imagine at the moment and ensuring that connected and smart products, such as cars, become a reality.

To put it in context, back in 2007, IDC predicted the emergence of the Third Platform of computing. The Third Platform was built on Four Pillars: Social, Mobile, Analytics and Cloud. A decade later, it is clear that the prediction was prescient. SMAC related IT spending today constitutes more than a third of all IT spending by corporates globally, and is growing by 14% YoY. Meanwhile, traditional IT is in recession, shrinking at 5% YoY.

The maturing of the Third Platform has led to the emergence of entirely new technologies. IDC calls these the Innovation Accelerators. These technologies promise to transform the business world even faster, and more profoundly, than Third Platform technologies have done. The six Innovation Accelerators are: The Internet of Things (IoT), Robotics, 3D Printing, Cognitive Computing, Virtual Reality and Next Generation Security.

Amongst these, IoT has seen the fastest adoption so far, though others are not far behind. This concept refers to a network of uniquely identifiable “things” that communicate without human interaction using standard (Internet Protocol) connectivity. These “things” can be machines, packages, cars, flower vases, bricks, lights, fans, even clothes and devices we wear. Literally, it can be anything.

At a fundamental level, sensors (or tags) on things capture relevant data and transmit them to data collection containers over the network. Depending upon what value the organisation wishes to derive, this data can trigger specific business processes, alert notifications, escalations and actions. Further, analytics can be run in real time, or post facto, to determine trends and patterns and enable informed decision-making.

Which opens up a limitless realm of possibilities for companies, governments and us consumers to exploit. One prominent example is GE’s headlong plunge into the IoT world. Realising what is possible, their CEO has invested over $6b over the last five years in building out these capabilities, which he wishes to translate into the Industrial Internet. Already, GE is able to capture vast quantities of data from jet engines as soon as the aeroplane takes off: from temperature readings to fuel consumption to the size of dust particles being sucked in. The immediate efficiency impact: even before the airplane lands, the crew get the maintenance manifest in their hands, including what spares might be needed and exactly where the engine needs cleaning and refreshing. A new paradigm of maintenance is emerging from this data deluge: prescriptive maintenance.

Longer term, the engineers and designers have deep insights available into which parts tend to fail more, which part of the design can be made more efficient and many other technical dimensions to feed into future generations of aircraft engines.

Closer to home, interest in IoT technologies is gathering momentum. In IDC’s Internet of Things Survey, 2015, almost half of the respondents said that they’d be looking to deploy IoT led systems within the next 12 months: these ranged from security applications to shopfloor systems to logistics related platforms. As an example, UFlex, a packaging company, recently deployed and IoT system to track the movement of parts and materials, real-time, through the assembly line. Not only does this ensure very specific reductions in inventory cost but also ensures that the thorny problem of stock mismatches between the systems and physical stock disappears.

Schools are also starting to deploy IoT technologies in a very critical area. Students are being given tags which are “read” by readers across the school campuses, and in school buses. These readers, using standard mobile phone networks, then transmit the information to a central repository thereby ensuring that both the school as well as parents can always be assured of their wards’ safety and security.

Consider the ongoing push for Smart Cities: where the IoT and related technology eco-systems will enable safer living, lower pollution, better sanitation and superior traffic management, just to name a few potential benefits. However, it is an imperative that the government allows industry to develop the IoT eco-system in a sustainable way, integrated into the very fabric of the cities.

Examples are manifold, and the use cases stretch across industries. However, it is crucial for any organisation to understand the complexity of an evolving IoT eco-system and adopt what is relevant to them.

Ultimately, IoT adoption is a journey. Strategic thinking is required, and careful analysis is necessary, to be able to understand the benefits that IoT can deliver in a particular organisation’s context. IDC’s Internet of Things MaturityScape is a useful roadmap to consider when IoT adoption is on the agenda. This tool enables you to understand and assess where you are currently, create a roadmap for the way forward and measure success as you traverse the IoT highway.

 Our research has revealed:

1. Understanding and leveraging the complex ecosystem of the Internet of Things is a journey which takes time: upto 24-36 months to achieve high levels of adoption maturity.
2. One must always see the program through a business rather than technology lens. Given that it’s still reasonably exotic as a technology eco-system, it’s easy to get swayed. An immovable business value lens should always be deployed.
3. There are various stages of maturity that one crosses. At each stage, from experimenter to disruptor, the characteristics of the business, and associated outcomes, change. Measure these carefully to chart your journey and understand the returns that are being generated.
4. There simply aren’t enough experts available for you to be able to create internal teams, though select established companies and startups do have a certain depth of capabilities. Choose your partner carefully though: you’ll need them through the long haul.
5. Finally, not all companies need to be Level 5 companies. While it is a good aspiration, the fact is that it demands huge investments. Further, the context of your industry, customers and competitors should be applied to understand whether you even need to go that far. For many companies, an equilibrium at an IoT Strategist level well be sufficient to generate substantial competitive advantage.
6.  Ultimately, like all new technologies, the IoT eco-system will eventually mature and become “business as usual”. It does however present a powerful opportunity to build new capabilities, digitise products and processes and transform customer experiences.