The real value of internet of things

“The IoT is, to a large extent, a solution looking for a problem, rather than the other way round. There’s simply no point in objects talking to each other just for the sake of it and the IoT only provides the communications backbone. “The IoT hype is supported by silicon vendors eager to dream up new applications for chips, but that’s putting the ‘cart before horse’” Steve Taylor, The Internet of Sensors, not the Internet of Things, May ’15

In August 2014, Internet of Things reached its peak in the Gartner’s hype cycle for emerging technology report. Around the same time, The Guardian reported that the (IoT) was the most over-hyped technology in development till date. However, just like happiness, hype is contagious! According to market research firm ‘markets & markets’, the Industrial IoT market size is expected to reach $319.62 Billion at a CAGR of 8.15% from 2014 to 2020. McKinsey has estimated that the installed base for Internet of Things devices will grow by 3 billion new devices per annum from 10 billion connected devices to 30 billion devices by 2020. McKinsey has also predicted that this represents a direct growth opportunity that goes beyond almost all other recent innovations with the exception of smartphones. The giants in the hi-tech industry are already betting heavily in IoT and they are trying their best to deliver this unanimous message to the world. While some of them have gotten down to their drawing boards designing new applications, others have gone the crowd-sourcing path by introducing DIY starter kits for general public. The rest of the article also focuses on the growth prospects of ‘Things’ for the silicon vendors.

But it seems all that glitters is not gold. A study by the analysts of The Technology Partners (TTP) has concluded that the global companies have made an error in judgement by focussing on IoT. He believes the real values lies in the internet of sensors (IoS) and data that the network can provide.

“An Internet of Sensors looks more like the roots of a tree, with sensors of all types at the extremities, capturing and feeding data upwards to the main trunk – the Internet.”

The concept of machines talking to each other is not really a new concept and there are a plethora of industry solutions that do just the same. IoT proponents often refer to the Metcalfe’s law to justify the utility of IoT.

Metcalfe’s law states that the value of a telecommunications network is proportional to the square of the number of connected users of the system (n2).

Metcalfe’s law only gives the ‘potential utility’ of a network by calculating the number of ‘potential communication channels’. However, the real utility of any network depends upon the number of nodes actually communicating! And for nodes to communicate there has to be an end goal or a purpose that defines why they should communicate. Today, the IoT is simply looked as a technology platform rather than an information framework. It addresses the problem of ‘how’ things should communicate before answering ‘why’ they should communicate.

Before ERP, the business activities were considered as mere ‘transactions’ and hence had a lot of gaps and discontinuities. The ERP brought the unifying framework that considered business activities as business processes based on the flow of material, money and information. This framework brought a revolution in the business paradigm and opened channels for supply chain management and other business innovations. The real value of IoT will lie in its power to redefine business processes allowing the companies to gear up for the persistent challenges in their marketing and operations.

One thing that has really made a real big difference is the Big Data analytics that has opened the avenues for data-led intelligence, discovery and innovation. IoT can make a bigger dent by

  1. Defining what information will be required to create cutting edge applications
  2. Where to find this information and how to analyze it

IoT is really an information framework where it provides the real-time information about our world that we never had before. And it is this information that we need to understand and analyze to solve the gaping problems that industries and governments are facing today. The real solution and the real value lies in the information that ‘Things’ can provide. Everything else is just incidental in making this information available. It is high-time the IoT companies start investing in making this information framework a reality rather than simply pushing technology.

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