Is the Internet of Things Really Happening?

Over the last few years there has been much speculation about the inevitable growth of the Internet of Things (or Internet of Everything). Forecasts have suggested anywhere from 30 to 50 billion devices will be connected by 2020. Cisco has estimated that the global IoT ecosystem will have a value of $14.4 trillion by 2022, and IDC has projected yearly IoT market revenue to increase to $1.7 trillion by 2020. 

Here we are now in 2016, a few years into the future they were talking about back then, and it may be a good time to take a look the current state of the IoT and see how it measures up to all of these lofty expectations. Are people really embracing IoT technology at this rate? Is this money really being invested? 



Connected Devices
First, let’s take a look at the number of connected devices. If we flash back to 2013, we find that Gartner released a report entitled “Forecast: The Internet of Things, Worldwide, 2013”. In this report, they predicted that the IoT will include 26 billion connected devices by 2020. Two years later, Gartner reported a total of 4.9 billion connected devices at the end of 2015, up from 3.8 billion in 2014. Gartner also revised their 2020 estimate, anticipating 20.7 billion connected devices by 2020, a decrease of 5.3 billion (20.4%) from their 2013 estimate. (It should be noted here that Cisco continues to anticipate as many as 50 billion by 2020).

So, according to Gartner, IoT adoption has not proceeded at the rate they had anticipated at the end of 2013.

One reason for the slower-than-expected growth is the difficulty faced when trying to implement IoT technology. In fact, Gartner anticipates that through 2018, 75% of IoT projects will take up to twice as long as planned. 


Value of the IoT
Now, let’s consider the monetary value of the IoT and how that number has progressed. Cisco initially projected a value of $14.4 trillion by 2022. Within two years Cisco had increased this number to $19 trillion.

This highlights an interesting fact. Even though fewer connected devices are expected by this date, the total value of these devices and the underlying network is expected to be greater than it was when more devices were expected. Based on this, I think it’s safe to suggest that implementing IoT technology is turning out to be more expensive than originally thought. 

This may be due in part to the fact that some enterprises are rushing headlong into IoT projects without the proper foresight and planning. Often it is a reaction to competitive pressure, based on a perception that a competitor is already moving forward with their IoT strategy, or simply in an effort to be the first and gain a competitive edge.

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“I think it’s safe to suggest that implementing IoT technology is turning out to be more expensive than originally thought.”

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Another answer may come from Gartner’s 2015 report: “Predicts 2015: The Internet of Things”, in which Gartner predicts that through 2018, there will be “no dominant IoT ecosystem platform”. They cite a lack of IoT standards and anticipate that IT leaders will be forced to compose solutions from multiple providers.

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Even when faced with these realities, however, enterprises are still moving forward with their IoT projects. The extra expense – though unanticipated – is not nearly enough to outweigh the potential benefits. The IoT is most certainly transforming the way businesses operate, and no one wants to be the last one to this dance.


IoT Investment
This is an important category as it will largely determine how quickly the industry moves to develop standards, and how motivated IoT solution providers will be to develop more powerful and more cost-effective solutions.

Recall IDC’s projection of annual market revenue reaching $1.7 trillion by 2020. It would stand to reason that if we are learning that IoT projects are coming in over budget and late, there is probably some distaste in the marketplace, and maybe IDC’s projection was a bit ambitious.

At the same time, though, if people are spending more on IoT initiatives than they had originally planned, perhaps IDC’s projection was a bit conservative. Let’s examine how things are taking shape.

In 2015, IDC reported that worldwide IoT spending reached $655.8 billion in 2014 and calculated a 16.9% CAGR (Compound Annual Growth Rate).

Well, 2015 is now in the books and we can see how IDC’s projections seem to be holding up. Their latest report indicates that spending in 2015 reached $698.6 billion, a CAGR over 2014 of only 6.53%. Had IDC’s anticipated CAGR proven accurate, 2015 revenue should have been closer to $766 billion.

Notwithstanding this fact, however, IDC continues to project a CAGR of 17% and an increase in spending to $1.3 billion by 2019, which would equal approximately $1.5 billion in 2020. It looks like IDC sees the IoT market cooling off a bit, though not much.

So, while the earlier projection has proven to be overly optimistic, it is clear that investments in IoT initiatives are continuing to increase with no end in sight.

If there is any kind of meaningful takeaway from all of this, I think it’s safe to surmise that IoT projects may be coming in late and over budget, but that doesn’t seem to have had much of an impact on continued investments. It is clear that business owners and executives see the value and have no interest in letting their competitor’s gain an edge. 
So, was the IoT hyped a bit excessively over the last couple of years? Maybe a bit. But, it is also very real and happening right now.

Oh, The Possibilities … When the IoT Grows Up

The Internet of Things is something like a gangly, acne-covered adolescent with knobby knees and a clumsy gait. We can see the bright eyes, the long legs and strong hands, and we know it is chock full of “potential”, but it sure is awkward right now.

Notwithstanding all of this awkwardness, however, this clumsy youngster has already made a tremendous difference in the world. The very thought of its possibilities has sent a tremor to the core of our civilization, touching every aspect of our material and intellectual lives. Just consider the fact that the sentence you just read – as blustery and over-the-top as it may seem – is not even inaccurate. Sure, a person can still live a simple life without all of the trappings of modern technology or communication media (I assume?), living only from sustenance won by his or her bare hands directly from the natural world, never interacting with another living soul. I suppose this is possible, and maybe this person could make a strong case that his/her life remains untouched in any way by the Internet of Things. This person, however, will not be reading this and need not be a part of the conversation.

So, to reiterate: the Internet of Things – or at least the thought of it – is influencing every component of our world today. This is because it is not simply an evolution of technology; it the sort of technological/philosophical movement that transforms civilizations. On the order of agriculture, kingship, or industrialization.

Yes, it is that significant.

That is to say, the technological/ philosophical movement started by the Internet itself is that significant. After all, the words, images, videos, and applications that inhabit the regular old Internet are themselves ‘things’. The concept behind what we call the Internet of Things is simply the dawning of the realization that the Internet is not just about people communicating with people; it’s about everything communicating with everything.

Consider what we already see happening to:

Cities

In Oskarshamm, Sweden smart building technology has helped reduce the city’s power consumption by 350 MWh, reducing their carbon footprint by 80 tons of CO2. Houston, Texas has used new sensing technology to retrofit 40 municipal buildings for energy efficiency, delivering $3 million in yearly energy and water savings.

Entire cities are changing the way they govern their populations, the way they distribute resources, the way they police themselves. Cities are changing the way they transport goods and people, the way they measure and control their impact on their environments. Everything that defines what a city is and does is being transformed by not just new technologies, but the new ideas inspired the Internet of Things.

Agriculture

One of the foundational elements of civilization, a technological/philosophical movement that predates history itself, is being profoundly influenced by the Internet of Things. Farmers large and small are using networked data to maximize the already-known benefits of established practices (knowing what types of crops to plant when, knowing when and how much to water, etc.). Farmers have also had success safely and naturally controlling pests through the intelligent release of pheromones. Decreased resource consumption and increased yield are very tangible benefits that have the potential to solve some very serious problems related to food shortages and ever-increasing populations, while simultaneously reducing the environmental impact of farming and bringing the family-owned farm back into the global marketplace.

Industry

This is the realm of autonomous factories and self-healing machines. Through the convergent development of advanced computing power, sophisticated network technology, sensors, robotics, and analytic techniques, we are seeing the integration of industrial systems both vertically and horizontally. Machines to Machine communication, predictive maintenance, and continuous improvement programs are completely reinventing manufacturing.

Companies like Honda and ABB are using IoT technology to consolidate and organize their manufacturing and maintenance operations through systems of real-time communication and process automation. Companies are using advanced analytics to discover unknown opportunities for improved efficiency. Consider how Kennametal reduced their production cycle time by as much as %40 by simple modifications to their processes like changing the angle of a cut in a particular machining operation.

Real-time consumer data is helping companies be more responsive to the needs and expectations of their customers, and eliminating gaps between supply and demand. Predictive analysis is helping to reduce maintenance costs and incrementally improve production processes through systems of continual improvement. A unique quality of the impact the Internet of Things is having on Industry is its benefits extend beyond the marketplace. Whereas previously profit increases were sought by increasing the scale or speed of production, the new paradigm focuses on increasing efficiency, reducing resource consumption and eliminating waste. The new industrial landscape of smart, connected devices will incidentally lead to a cleaner, safer, more sustainable planet, which leads to the next item…

Environment

It is certainly possible to see new technologies as a double-edged sword in this arena. Historically, what humankind has deemed to be good for itself has quite often seemed to be detrimental to our environment. As the Internet of Things makes it easier for us feed and accommodate larger populations, and populations continue to grow, it is not difficult to see how this could negatively impact the environment. An interesting quality of the philosophical thrust behind most Internet of Things initiatives, though, is the tendency toward reduction and conservation.  Use fewer resources. Create less waste. Do as much as possible with what is available to us. In a way that may be unprecedented, this worldwide technological evolution may actually improve our relationship with the natural world.

Yes, the Internet of Things is a gangly, awkward, stumbling bunch of possibilities right now, but it is already changing our world. And while we may not have reached that tipping point yet – the point where what is possible becomes what is necessary, and a movement truly transforms our civilization – I think most of us can feel the axis tilting.

There will inevitably come a time when what is happening becomes what has happened, and we will only recognize the revolutionary quality of it when we look back at it in retrospect. In the case of the Internet of Things, I think we have reason to be optimistic.  

(Originally published on the B-Scada, Inc. blog.)

Industry 4.0 - The Industrial Revolution Continues

"In times of change, learners inherit the earth; while the learned find themselves beautifully equipped to deal with a world that no longer exists." - Eric Hoffer (1902-1983)

It is becoming a matter of common knowledge that we are in the midst of a fourth industrial revolution, alternatively referred to as the Industrial Internet or Industry 4.0. This circumstance resulted from the usual combination of capability and need, and as usual, participation will not be optional. In each previous period of revolution, companies that wished to remain competitive in the marketplace had little choice but to embrace the march of technology and leverage the same revolutionary tools employed by their competitors. In the late 18th or early 19th Century, when Jim's Widget Factory down the street bought a steam engine to power his production processes, how could you hope to keep your widget factory afloat? No clever re-organization of your business processes or motivated personnel could ever hope to compete with a steam engine. The reality is you had to get one too. The same holds true when you move into the next period of revolution (Industry 2.0), marked by the introduction of the moving assembly line and electrically-powered production. Obviously, it didn't happen overnight, but when your toughest competitors began to employ this new technology, there was no way to pretend your comparatively slow manual assembly line could ever hope to compete. The inevitably ubiquitous nature of these technological advances is exactly what made them "revolutionary". Flash forward to the advent of the microchip and personal computers - Industry 3.0 - and an obvious pattern emerges. Industrial revolutions don't just affect the few companies that have the resources to leverage the new technologies; they affect the entire industry. Whether you and your organization choose to embrace the revolution or ignore it, there is no way to stop it and there is no way to shield yourself from its influence on the marketplace. So, What is Industry 4.0? The latest industrial revolution centers around the new world of smart, connected objects. This is the realm of autonomous factories and self-healing machines. This is the world depicted in the science fiction of the mid-twentieth century. Through the convergent development of advanced computing power, sophisticated network technology, sensors, robotics, and analytic techniques, we are seeing the integration of systems both vertically and horizontally. We are seeing machines communicating with other machines and making decisions based on real-time data. We are entering a time when new rules are emerging and business processes are being evaluated anew. Much in the same way that previous revolutionary advances forced themselves into the awareness of business owners and managers, the time has come to face reality of the industrial internet. Of course, a unique thing about this fourth industrial revolution is that its benefits extend beyond the marketplace. Whereas previously advances were made by increasing the scale or speed of production, the new paradigm focuses on increasing efficiency, reducing resource consumption and eliminating waste to find opportunities for greater profit. The new industrial landscape of smart, connected devices will incidentally lead to a cleaner, safer, more sustainable planet. Industrial enterprises that have embraced the new paradigm have seen measurable results. Real-time consumer data is helping companies be more responsive to the needs and expectations of their customers, and helping to eliminate gaps between supply and demand. Predictive analysis is helping to reduce maintenance costs and incrementally improve production processes through systems of continual improvement. A plant floor machine can now be aware of its current condition and environment and make decisions about its operation - or even the operation of other machines. The fourth industrial revolution is every bit as revolutionary as the previous three, and the evidence surrounds us. We are living in a smarter, connected world full of "smart" cities full of "smart" buildings, and this is only the beginning. By 2020, what we now call Industry 4.0 will be known simply as 'industry'. Where will you and your business be?