The Internet of Things Is a Revolution Waiting to Happen

The challenge of the IoT is less in making products “smart” and more in understanding the opportunities enabled by smart products and new ecosystems

The Internet of Things (IoT) has rapidly become one of the most familiar (and perhaps, most hyped) expressions across business and technology, but will 2015 be the year the IoT will take hold? We asked Jim Tully, vice president and distinguished analyst at Gartner, to discuss what the IoT is all about, and what’s next for business and society.

Q: There is a lot of hype around IoT right now. Is the hype justified?

A: The hype is absolutely justified, and it’s backed up by the numbers. The world will see 25 billion Internet “connected things by 2020 – just a short five years away. We estimate that the IoT will produce close to $2 trillion of economic benefit globally. IoT will have a great impact on the economy by transforming many enterprises into digital businesses and facilitating new business models, improving efficiency and new forms of revenue.

Q: What are the verticals that are furthest along with IoT?

A: Right now, the top two verticals using IoT are manufacturing and utilities. In terms of numbers of things, manufacturing has a slight lead with almost 307 million installed units in 2015 compared to 299 million units for utilities. This makes intuitive sense; control systems using sensors have always been an integral part of manufacturing and automation processes, and we certainly see a lot of smart meter deployments by utilities leading to energy efficiency improvements and operations like automatic billing, energy management and monitoring. One of the fastest growing verticals is retail. I find this to be a particularly interesting sector with a lot of IoT activity in operations and in customer-facing situations – often involving very innovative technology.

Q: What are the biggest challenges to IoT adoption?

A: Hands down, the biggest barrier is that most enterprises don’t know what to do with IoT. We did a survey a few months ago that explored this question, and what we discovered is that most enterprises aren’t using IoT and have no plans to do so. This is largely because they don’t see a business justification for IoT – they can’t prove that it’s a benefit to the organization. This will gradually change as more use cases across a range of industries become visible to these enterprises.

More traditional barriers like capital and implementation costs are fading away as prices fall throughout the IoT stack. Companies can source IoT platforms as-a-service from cloud-based providers, and most types of sensors have gotten really cheap. Among enterprises that have started to seriously consider IoT, other issues like a lack of necessary skills and questions around security and privacy remain substantial barriers.

Q: How do you think the IoT will change our world?

A: I think most people will be surprised at how invisible the technology is, even when it is so pervasive. But the implications of IoT on every aspect of life will be profound. Certainly, there will be great benefits including more efficiency and less waste, but it may also lead to some gray areas. For example, in some cases, machines will start to replace human decision-making. We can already see some potential issues today with both simple machines like meters and complex machines like cars and jet engines becoming intelligent and connected.

Let’s take a relatable example: vending machines. Today, a person typically goes around from machine to machine to inventory stock and maintain it. Increasingly, connected vending machines can remotely detect and report inventory and maintenance needs to a control center, and one day, these machines can very well reach out to suppliers and negotiate terms. This certainly results in cost savings and efficiencies, but it can lead to job losses. Similarly, wearables gather the location and biometrics of humans wearing them. This brings up issues around privacy, data ownership, governance and security. All of these issues are just the tip of the iceberg, but it will be interesting to watch how everything plays out.

Mr. Tully examines how enterprises can exploit the increasing proliferation of IoT in the Gartner report, “Mass Adoption of the Internet of Things Will Create New Opportunities and Challenges for Enterprises”.