The idea that the Internet of Things (IoT) will ultimately give rise to a worldwide fourth economic revolution has been steadily gaining traction over the past couple of years.
In a series of articles exploring the potential of the IoT to bring about a “dramatic landscape shift”, Microsoft recently cited “greater sustainability and less waste, less climate impact, more mobile and personalised services, and greater inclusion” as just some of the immediate benefits we’re all about to start reaping from this “convergence of the physical and digital worlds”.
As if that didn’t sound epoch-defining enough, they even included a Winston Churchill quote for good measure. The IoT, it seems, no longer cares that our first reaction to WiFi-enabled hairbrushes was a confused collective chuckle: in the business world, things are already getting far more serious.
Previous economic revolutions have brought about huge sea changes in the way global markets are powered. Following the Agricultural and Industrial Revolutions, our most recent third iteration – the Digital Revolution – has evolved over a period spanning the 1960s to the present day, founded on new digital technologies making it easier and quicker for people to communicate with each other.
Current market analysts appear increasingly convinced that the fourth industrial age will be defined by machines communicating between themselves, on a continuous and largely autonomous data loop. This mass product connectivity – which, in very basic terms, is what we mean when we talk about the IoT – gives companies the first genuine opportunity in history to operate on a worldwide ‘real-time enterprise’ basis.
In other words, it offers businesses the ability to respond instantly to customer needs and product feedback across a very broad range of goods and services.
The fact that connected products can now communicate all kinds of information directly and independently to internet servers means they can be monitored remotely in real time: subsequently, businesses can continually tweak and update their offerings according to automated feedback telling them how, when, where and by whom a product is being used, exactly why it’s succeeding or failing, and precisely what to do in response.
By returning colossal amounts of instantaneous data that can be used to pre-empt the provision, function, maintenance and upgrading of their own products, the IoT effectively gives enterprises the power to stay ahead of supply and demand curves.
In real terms, that’s the difference between merely selling a product, and providing a truly on-demand managed service in support of it.
The rise of the industrial IoT has quickened dramatically since 2015, thanks mainly to the progressively lower cost of sensors combined with the increasing reliability of long-range wireless technology. In an attempt to chart its ongoing exponential growth into the near future, The Boston Consulting Group (BCG) ran an in-depth study into the B2B market for the IoT, and published their findings earlier this year: their research concluded that, by 2020, companies will be spending around $250bn on IoT development over and above their existing technology budgets.
Among the areas that will see the heaviest investment over the next three years, say BCG, three of the biggest drivers for IoT adoption are expected to be self-optimising production, automated inventory management, and predictive maintenance.
Self-optimising production will centre around connected factories and plants using sensor-based monitoring technologies to analyse their manufacturing and roll-out processes, making automated adjustments to improve efficiency and product quality along the full line from factory floor to shipping container.
Automated inventory management will enable that same level of fine-tuning control to extend beyond local production into the wider supply chain: companies will be able to track precise location and condition of goods in transit, as well as respond proactively to incoming stock level fluctuations and reduce costly downtime between production and sale.
Predictive maintenance, meanwhile, will allow IoT technologies to significantly reduce cost impact for businesses of unexpected product malfunction or breakdown, as well as minimising expenses incurred through regularly scheduled maintenance that isn’t always necessary. A piece earlier this year in the Financial Times even looked at how, by placing 900 sensors on each of its US Amtrak locomotives, Siemens could use the IoT to help improve safety and prevent delays: “Siemens’ work for Amtrak is at the vanguard of a revolution that promises radical change for industries including manufacturing and energy as well as transport”, the article notes.
Morgan Stanley research has cautioned that it’s still too early to be comfortable with the degree and timing of adoption, noting that the prohibitive cost of retro-fitting extensive sensor and data-transmission technology to existing robots is still a major barrier to many businesses.
The same Morgan Stanley/Automation World survey also found that cybersecurity was respondents’ most pressing concern. It’s a valid one, certainly: data security issues will be even more critical in a future industrial landscape powered by the IoT, requiring a suite of custom solutions that go far beyond mere firewall protection. We’ll also need to develop a far sturdier legal framework for addressing the ethics of harvesting data, and for figuring out the appropriate response to breaches.
Despite these significant concerns, the vice president of Gartner tech research company, Jim Tully, stated as far back as 2015 that the biggest barrier to B2B IoT uptake in the early stages of this ‘revolution’ would simply be that most enterprises “don’t know what to do with it”. Until they can prove that it’s a benefit to the organisation, he said, many industrial leaders won’t see a business justification for heavy investment.
In many ways, that’s roughly where we’ve been hovering for much of this past year – and, in all likelihood, where we’ll continue to hover through the early stages of 2018. However, all that will quickly change, Tully predicts, as “cases across a range of industries become visible to these enterprises [and] traditional barriers like capital and implementation costs fade away as prices fall throughout the IoT stack”.
And that, in a nutshell, is precisely what’s beginning to happen right now.