If the Internet of Things (IoT) achieves the scale many experts are predicting, the changes will be far reaching. From how energy is used, to simply going to the fridge for a snack, the widespread adoption of sensors to connect machines so they can, in effect, ‘talk’ to one another has the potential to transform the delivery and capability of products and services.

It’s certainly not an exaggeration to say the IoT is already happening and is only set to get bigger. In 2013, approximately 10 billion sensors were shipped worldwide, and this year that figure will be just over 24 billion. By 2017, it’s estimated that nearly half of all IP traffic will be from non-PC devices (2013: 33 per cent).

“It will have a transformational effect over the next five years,” says Matthew Smith, Global Head of Market Development for the Internet of Things at Cisco Systems. “What we’ll see in the first phase will be a lot of process improvements – it’ll be processes that already exist that can be combined.

“So if you have a supply chain, you’ll be able to combine that with your e-commerce strategy and your fleet delivery and transport to make sure everything is ‘talking’ to each other at the same time. You’ll receive real-time updates and that really allows you to conduct the scenario planning that is required.”

It will lead to increased volumes of data. Geraint Anderson, Non-executive Director at component supplier Volex, says: “The competitive advantage will lie in how to make sense of all this information and use it to inform decision making. It’s about understanding key trends and issues by sifting through the volume of information that is available.”

Paul Brennan, Chairman of cloud storage provider OnApp, says: “The Internet of Things is a huge opportunity for data mining. If you’re running a company that is, for example, going to be looking after and maintaining office complexes, student accommodation or hospitals, this will provide the ability to analyse the data within different systems.

“So if you’re looking at the optimal way to heat apartments in cold countries for instance, you can start to do things very intelligently in order to manage the flow of energy, as opposed to a monolithic approach which is to turn the temperature up for the entire building.”

As a result, significant growth can be expected in device manufacturing. “There will be software companies which are writing the applications and the programmatics to help manage and optimise the Internet of Things,” says Paul. “It will then be people looking at the way in which they can integrate [the various elements] across the IoT platform.”

Get connected

There is a lot of excitement and speculation about the impact the IoT can have on healthcare. Matthew says: “In the longer term, there will be things happening we haven’t thought of yet. So, if you have a [fitness tracker wristband like] Fitbit, it could be connected to your refrigerator, which could be connected to your supermarket [order] and your scales, so you know what you’re eating and [why] you weigh [what you do].

“From there, you can gauge how much exercise you’re taking and [this information] can be [seen by your] doctor, who can then provide real-time healthcare advice rather than sick-care. All of this can be connected to the insurance company you use, which can start to provide dynamic pricing.”

This new eco-system, or the ‘sharing economy’ as it has been described, will lead to the creation of different business models. However, as every part of our lives becomes tracked and open to scrutiny, there are understandably concerns about privacy and how secure this information actually is.

Steve Muylle, Criticaleye Thought Leader and Professor & Partner at Vlerick Business School, says: “There are quite a few risks, such as security. If you look at health, what if somebody hacked your medical records and changed your drug prescription?

“It goes beyond that. If you are in a hospital and the Internet of Things is used to treat you, what if that treatment was changed automatically by hackers?”

Transparency over data policies will be increasingly important for organisations and, ultimately, they will have to invest more in protecting customer information. Heather Savory, Independent Chair of the Open Data User Group, which provides advice to the UK Government’s Data Strategy Board, comments that “cyber security is going to be absolutely paramount because since you’ve got automatic control of things, you need to be sure somebody can’t tamper with automated processes”.

That said, the positives brought about by greater interconnectivity should be kept in mind. “There are real issues around how people fear personalisation,” says Heather. “But the Internet of Things isn’t about Big Brother, it’s just about using data more effectively for the benefit of the economy.”

Fact or science fiction?

As ever, there is a lot of PR and marketing about the IoT and some of the expectations around what can be achieved may prove to be outlandish or downright silly.

Ultimately, the growth of the IoT will depend on customer demand, reliability and the price points being right, as was seen with Web 2.0 and mobile.

Matthew of Cisco doesn’t doubt for a second that once critical mass is gained, the impact of the IoT will be game-changing. “We’re looking at this over the next ten years being a $19 trillion opportunity… In fact, it will be five times as a big as the internet.”

While difficulties can be expected, from technical issues around the compatibility of devices to regulatory scrutiny, there is a strong sense that the IoT is something that businesses need to be paying close attention to.

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