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The Internet of Things - A Huge Opportunity, Wrapped in Risk

The emerging Internet of Things (IoT) represents a huge opportunity for today’s enterprises but also poses risks. Many organizations are challenged to open up their systems to ever-growing networks of devices, sensors, and systems that are relentlessly spewing data that may or may not be of value. But questions about security and systems performance swirl around as well. Today, organizations are only getting started with IoT, and the business benefits are still being explored. For example, a recent survey of 200 IT and business leaders released by TEKsystems, an IT staffing company, finds only about 22% of organizations are currently seeing value from their IoT projects. However, a majority, 55%, expect to see a significant impact on their businesses within the next 5 years.

According to another survey of early IoT adopters by Verizon and The Harvard Business Review, many IoT initiatives are being driven by the need to improve customer service (51%), increase revenue from services and/or products (44%), improve use of field assets (38%), and boost analytics (35%). The survey also finds success so far in these efforts: 62% say IoT has increased customer responsiveness; 58% say it has increased internal employee collaboration; and 54% have seen better market insights.

While proponents point to the potential of IoT to drive business growth, most current projects are intended for cost-cutting, but little else. “To date, most IoT implementations have been relatively modest in that they have attacked expenses and enabled risk management without addressing other aspects of the business,” according to a recent report written by Eric Openshaw and a team of fellow analysts with Deloitte LLP. Few IoT implementations have been launched to spur innovation, he noted, adding that simply implementing IoT as a cost strategy is a short-term plan. “While cost-reduction and efficiency efforts can be valuable to a firm, the returns diminish over time, and the value is often competed away as competitors implement similar efficiency improvements.”

Plus, there is no one form of IoT—the nature of deployments varies greatly, depending on the industry where it is being adopted. To date, some industry verticals are well ahead of others, said Nishant Patel, founder and CTO of “Government, especially municipalities and cities are kicking off IoT initiatives, sometimes called connected city or smart city initiatives,” he explained, noting that in these cases, cities employ “sensors embedded in parking spots and smart cameras installed at junctions to manage and optimize traffic flow,” or install “smart meters for electricity and water and providing citizens real-time information about their consumption.”

The nature of IoT deployments varies greatly, depending on the industry where it is being adopted, with some industry verticals well ahead of others.

Manufacturing, logistics, and transportation companies are also taking the lead with IoT, Patel added. Use cases here involve “incorporating connected devices, real-time fleet management, supply chain management, and field service. Industrial IoT is becoming so big, it’s getting its own acronym—IIOT.”

There also has been some movement with the consumer products sector, which has been “somewhat slow to deploy the full promise of the IoT,” said Brian Gilmore, senior manager of the Internet of Things and Industrial Data at Splunk. Some leading consumer companies are starting to adopt IoT “for remote diagnostics and customer behavior analytics,” he added. The energy sector is also seeing more IoT activity, as well. “The adoption, or more accurately, advancement, of machine-to-machine, machine-to-application, and machine-to-cloud technologies in industries such as oil and gas, manufacturing, and utilities is both powerful and transformative, with new insights generated around performance, availability, and security,” Gilmore said. Other areas seeing adoption include “wearables, connected home devices, and telematics in the car,” said Sudip Singh, senior vice president and global business unit head of engineering services at Infosys.

One thing is certain—IoT is going to make big data even bigger. “Each new device added to the network is going to generate enormous amounts of data,” said’s Patel. “Uploaded data needs to be interpreted in real time and decisions have to be made quickly. It’s hard to quantify how much data, but it’s going to explode exponentially.”

IoT will create “a wave of sensor, diagnostic, and transactional machine generated data never seen before,” Gilmore agreed. “Petabytes of machine data will be routinely generated by device networks.” He stressed that it isn’t just the volumes that enterprises need to get their arms around but also “the variety of real-time sources required to put this device data in context.”

It is generally estimated that IoT will bring at least 20 billion devices together within the next few years. The examples of where and how those devices will be employed are countless. “An aircraft engine or a turbine used in power generation generates terabytes of data every hour, or even less,” said Singh. “There will be telemetry devices used in automated metering and agriculture that generate kilobytes of data in a day or even less. Security and surveillance cameras will be deployed in homes, industries, or even smart cities that generate huge data. IoT will certainly generate enormous amounts of data resulting in large data processing, storage, handling, security and privacy requirements. This will also drive the bandwidth requirements on the connectivity.”

What are the advantages that enterprises should look for in IoT implementations in the coming years? Here are some primary benefits that can be realized early on:

Cost Reduction and Efficiency

It is this benefit, sought the most at this time, which can be seen at least initially as projects roll out of the gate. For starters, IoT helps mitigate “delays in response time; lost, stolen, or misdeployed assets; process inefficiencies; and human error,” Openshaw and his co-authors state. This is often a good place to start, said Patel.

“Start with a smaller project that has clear ROI to get your feet wet in IoT and then move onto bigger projects that have larger ROI,” he advised. “The reason for this is to ensure everyone in the organization has time to get used to and understand the implications of the new systems and processes that are needed for a successful IoT implementation. It also mitigates the risk should something go wrong with the protection of data.”

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