By 2020, it is estimated that there will be 50 billion connected devices in the world. A slew of connected homes, smart kitchen appliances, universal smart controllers, fitness bands, driverless cars, self-learning traffic systems, remote controlled production lines, remote/real-time health care diagnostics will join the list. This combination of the physical and digital worlds is a powerful one. McKinsey estimates that the economic impact of IoT applications could be from USD 4 trillion to upto USD 11 trillion per year by 2025. To put things in perspective, China’s GDP in 2015 is estimated to be around USD 11 trillion.
Gartner’s survey of organizations that have already implemented IoT shows that it has been largely internal operations reaping benefits—improved efficiencies, cost savings and enhanced asset utilization—versus the external IoT benefits of enhancing customer experience or increasing revenue. This is mainly led by the ease of implementation of connected things in an internal controlled environment against an external application of IoT across multiple network systems with higher cyber-security and integration risks.
However, enterprises are increasingly asking vendors and partners to help them use IoT to generate revenue, drive competitive differentiation and build new business models. IoT enables data-driven, informed decision making and can result in product-as-a-service models. For example, auto insurers could offer usage-based insurance based on the way individual customers drive rather than charging a monthly/yearly premium.
Given the economic situation and the rapid disruption taking place across industries, enterprises have to embrace IoT or risk losing out on the major market opportunity.Four industries that understand IoT, have critical business use cases and lend themselves to significant disruptions are:
- Manufacturing–The future of manufacturing—the fourth industrial revolution or Industry 4.0—will be enabled by a combination of cyber and physical systems that will build a complex, closed-loop system. By applying IoT in factories, machines will operate in tandem with each other and humans in real-time. Manufacturing processes will become visible and controllable in a virtual space. Real-time decision making will enable products to communicate with machines as to how to process, based on contextual information. And supply chains will flexibly align based on changes in demand or production capacity. This smart manufacturing setup will far exceed traditional efficiencies by incorporating machine learning, communications and networking (intelligent, automated, network controlled decision-making); optimized processes (rapid prototyping, enhanced supply chain visibility); proactive asset management (preventive diagnostics, maintenance); and enhanced infrastructure integration. Harley-Davidson, for example, operates a new manufacturing facility where every machine is a connected device, and every variable is continuously measured and analyzed. The equipment provides performance data that the manufacturing system uses to anticipate maintenance issues before machines break, which minimizes workflow interruptions. With the help of IoT, Harley’s manufacturing plants can now complete a new motorcycle every 86 seconds.
- Personal Health–A new patient-centric model is emerging in healthcare enabled by connected wearables, advanced body sensors that provide real-time health monitoring and remote diagnostics to enhance medical attention. As one pioneering example, Google and the Swiss healthcare group Novartis jointly developed a specialized contact lens that can measure blood sugar levels through tear liquid and transfer it to a glucose monitor or a smart device. Novartis has already developed a prototype and hopes to achieve significant market penetration in the next five years.
- Retail–The consumer products and retail industries are undergoing a profound transformation. Traditional competitive advantages are being challenged as customers use smart, connected devices to access information while shopping and demand more convenient and personalized shopping experiences. In the future, an IoT-enabled retail environment will use smart customer relationship management systems to interpret customer feedback, automate transactions and offer personalized products/services. For instance, online retailing giant Amazon has introduced the Dash Button, a WiFi-enabled device for use in the home that is mapped to specific consumer packaged goods products such as laundry detergent. It allows for customers to order replacement products by the touch of a button.
- Public/government–According to a Cisco analysis, IoT is poised to generate US USD 4.6 trillion in value at stake for the public sector over the next decade due to employee productivity, connected militarized defense, cost reduction, citizen experience and increased revenue. IoT-led innovations in public services can be realized when the near real-time data on citizen behaviors, movement of goods and services, infrastructure usage, weather conditions, etc. are all collectively analyzed to address population needs. With this information, governments can become hyper-aware, predictive and agile in their responses. Government-specific use cases for IoT include smarter management of city infrastructure (with big data analytics), cloud-based collaboration across multiple public agencies, improved public safety and law enforcement, cognitive traffic systems, efficient emergency response, networked utilities with smart metering and grid management.
Can you think of other upcoming uses for IoT? Feel free to share.
To know more on how Indian IT-BPM companies need to reinvent themselves in the age of disruption, stay tuned for the upcoming NASSCOM study – Reinventing to Disrupt: Shaping a New Identity for the Indian IT Industry.