August 03, 2015
Digitization and networking were the first steps taken. Now we are about to take the next big step: the Internet of Things.
August 03, 2015
Digitization and networking were the first steps taken. Now we are about to take the next big step: the Internet of Things.
At this point, when devices communicate with each other and act autonomously, new business opportunities open up for companies. However, before that happens, other obstacles have to be overcome.
Machines that request their own maintenance. Sensors that monitor a patient’s vital signs and sound an alarm if something goes wrong. The autonomous car going from point A to point B! That’s the Internet of Things (IoT), the networking of more and more machines, services and people – and, according to recent studies, it holds great growth potential. Accenture says that IoT could account for 14.5 trillion dollars of the global economic output by the year 2030 and ICD predicts a volume of 1.7 trillion dollars for the global IoT market. While Gartner expects around 25 billion connected devices by 2020, CISCO projects up to 50 billion.
At the moment, the market is in a state of transition. The much discussed digital transformation is just arriving at companies and the IoT is only a part of it. Really successful business models in this field are still in the making and the decision-makers in the various industries are slowly approaching these new opportunities. How can companies develop smart services to participate in this growing market?
The technology is ready – at least in its well-defined and compartmentalized Walled Garden systems – but nonetheless: The Internet of Things is ready for take-off. Reasonably priced radio modules and sensors, affordable telephone service rates and the new IPv6 standard to accommodate the Internet addresses of all those connected devices. The first tentative steps have been made. Devices, machines and people can now be connected to the Internet and networked easily. Cloud technology makes the storage of data and extensive processing on external servers possible without the need for local storage.
However, the IoT is supposed to be more than that. It is supposed to establish an intelligent connection between individual components that is automated and offers added value for the users. We are talking about the second level of networking, that is, a network that really creates smart services.
At the moment, the economy is still in the limbo phase of the digital transformation but headed for a genuine IoT. This "Inter-net" is still made up of individual and proprietary networks that are cumbersome to connect to each other. True, they give us "things online" but still not a comprehensive all-encompassing network. If you want to connect several objects and devices in these networks in any meaningful way – that can still only be done within one ecosystem at the moment, but not beyond the system's boundaries. So the pioneers of this technology still have a lot of integration work to do.
To have a better and more precise understanding of the term Internet of Things, we have to define some terms more clearly. A "thing" in the Internet of Things typically possesses the following properties:
This opens up completely new opportunities for companies, provided the basic principles are understood:
Many industries are already searching for new business fields where they can employ the Internet of Things. Even small businesses and mid-sized companies are embracing digitalization more and more; e.g. the following business models can be identified:
For making a real breakthrough in the market, there are still some obstacles that have to be overcome, not only with Wearable Devices or Smart Home but also in the consumer market. The same goes for Industry 4.0! To ensure stable services and the machine-to-machine communication in real-time that goes with it, certain conditions have to be ensured:
Companies now have the chance of positioning themselves in such a way that they can greatly benefit from these new opportunities. However, this requires them to review their own business models – and if necessary, adapt them. If they fail to do so and stay in their comfort zone, they will run the risk of being overtaken in their own core competencies by inventive companies that may even hail from other industries. For this reason, companies should open up to partnerships, but also obtain outside expertise. However, the technical and regulatory conditions have to continue to be developed further for the Internet of Things to become a success.