Businesses need to get on board with the Internet of Things or be left behind, according to a new study from Verizon, and the same goes for players in the business-to-business market. The State of the Market: The Internet of Things (IoT) 2015 report estimates the number of B2B IoT connections will balloon by 350 percent to 5.4 billon by 2020.
What does IoT really mean?
The Internet of Things may be the hottest technology of the moment, but its nuts-and-bolts have existed for decades. At its most basic, IoT combines machine-to-machine (M2M) communication, network connectivity and cloud infrastructure to transform raw data into actionable intelligence with little-to-no human interaction. Without being automatic and actionable, it’s not the IoT.
The falling cost of sensors and data processing, combined with the proliferation of cloud computing, is driving the rapid adoption to IoT. Improving economic conditions in the United States and abroad mean more businesses are willing to invest in exploring new opportunities. Another spur to integrated connectivity may be the number of M2M connections themselves – Verizon reports they now manage 15 million connections, and that number is only expected to grow.
Room to grow
The number of businesses using IoT to is growing, but implementation still isn’t widespread. Some reports have IoT adoption as high as 80 percent for some use cases, but Verizon research puts the amount of business that have implemented IoT extensively closer to 10 percent. Those sitting on the sidelines will want to act fast. By 2025, enterprises using IoT exclusively will be 10 percent more profitable than ones that don’t, according to the report.
Manufacturing, finance and insurance, and media and entertainment are the sectors leading the IoT push. Manufacturers, research shows, were early adopters of M2M communication and IoT using RFID chips to track products throughout manufacturing process.
For businesses looking to differentiate themselves in a more competitive landscape, choosing IoT can help fast-track growth and performance. John Hagel III, a director at Deloitte Consulting, sees investment in IoT to lessen the need for incremental asset investment as low-hanging fruit. Imagine the cost savings for a truck fleet owner if engines could automatically notify the parts maker of a soon-to-be-needed repair, order the part and notify management on it’s own. Or the time and money saved by removing the need for physical inventory check. Items in low supply could seamlessly reorder themselves.
To get the greatest benefit from IoT, there is a need for a B2B platform that further integrates the automated and actionable data created by the IoT ecosystem. This support tool could generate the needed paperwork—purchase orders, sales slips invoices—all of which tracked automatically.
Added points of connectivity mean amplified risk for security concerns. More work needs to be done to prevent hackers from gaining access to not only the scores of data generated by IoT, but the physical items as well. Device management also becomes a primary concern, an advantage of IoT is the ability to monitor and interact on the go. Having or planning for strong security protocols is a must for any organization planning to incorporate mobile into IoT. The authors of the Verizon report recommend a platform to ensure any device with access to the network is properly configured, is able to be updated wirelessly and communicate with diagnostics.
Devices and people are becoming more connected, businesses willing to invest in harnessing data and analytics to power business decisions will be in a stronger position to reap the benefits of productivity and revenue. There is also a lot of room for innovation. The most successful businesses of the future will use the tools available to find new ways of doing business.