An increasing number of devices are being empowered with online connectivity as part of a widespread shift towards the Internet of Things (IoT). This process brings sensors, actuators, machines, appliances, consumer products, and more onto computer networks, which allows data to be sent to and from these newly intelligent devices. IoT and Industrial Internet of Things (IIoT) provides businesses with the means to better communicate with the various hardware, equipment, and vehicles involved in their operations, and it equips consumers with connected devices that businesses can tap for data analytics and sales messaging.
IoT tremendous value is estimated to be potentially worth between $4 and $11 trillion a year by 2025. Research also suggests that the IoT will provide more economic impact in some areas than in others — the leaders being factories, cities, human sensing, and retail. A recent IoT in Operations survey displays disparities in operational IoT implementation across industries showed that manufacturing has implemented by far the most full-scale solutions, and retail sits in second place, ahead of consumer products, telecommunications, utilities and energy, and automotive.
Outdated technological infrastructure and cybersecurity concerns are potential blockages to a more complete IoT implementation. Solutions to these roadblocks tend to be in capital expenditures that some companies may not prioritize or presently be able to afford. Although ROI-related decisions regarding operational implementation of IoT technologies show in specific details on a case-by-case basis, a perceived lack of use-cases or a failure of leadership in IoT implementation might act as barriers as well.
With that said, implementing IoT automation, real-time feedback, and other data-driven insights into business operations is an investment that can lower costs and thus provide positive returns. A GE Capital study did find that 80% of senior IT executives believe the IoT will help improve operating efficiency and uptime.
In addition to potential supply-side operational benefits, the IoT impacts businesses from the demand side as well. As more products gain the ability to connect to the internet, companies can gain increased insight into consumer behavior, and can also benefit from new mediums on which to display information to them.
Industrial Internet of Things (IIoT)
As of 2018, industrial products have seen the highest adoption of IoT practices, and this sector is expected to derive the highest potential value from continued digitalization of physical assets well into 2020. IoT technologies offer advantages in production and inventory management when integrated into factories and warehouses. From remote operation and monitoring of machines to automated climate control and contextualized actions of moving parts and doors, the Industrial IoT helps improve processes.
IIoT setups save manufacturers money by streamlining operations, which leads to time-savings and more efficient allocation of resources. The technology also offers precise monitoring of machines, allowing for predictive maintenance that leads to more pro-active repairs and less downtime.
In each of these cases, internet-connected sensors can provide data to computer systems and the planning software running on them. This data transfer drives the actions of connected hardware and also helps professionals derive insights that lead to making better decisions regarding the allocation of resources and operating processes.
With IoT dataflow, machine learning can also run analyses to find new business models and optimization methods for manufacturing operations. Microsoft CEO Satya Nadella says the technology creates a “digital feedback loop” that enables the same “analytical power and predictive power in industrial equipment that you had in software products for the mobile web.”
Continued developments towards higher degrees of “lights out” manufacturing may erode some of the need for human labor, along with the errors that sometimes come with it. Since labor costs have disproportionately increased relative to robot prices since 1990, this is compellingly lucrative for manufacturers.
On the other hand, pawning off manual tasks to machines, and some monitoring tasks to computer systems can free up human resources for other areas or completely new jobs. New human-machine interactions may emerge from this shift. A worker that once logged information might now analyze it, and someone who manually built something on an assembly line may instead program or repair the machines now handling the job. This would improve operating efficiencies and drive down costs, while also creating new jobs. However, it might also generate skill gaps for workers along the way.
The IIoT also plays a big part in improving conditional settings and responses required for more optimal inventory management. Businesses now employ RFID tags and camera systems with object analysis that communicate with cloud resource planning software to track inventory locations in real-time. This allows for preemptive responses to prevent supply shortages or backups and also educates automated building systems on actions related to things like climate control.
The IoT also offers businesses opportunities to track inventory and customer journeys in the retail sector. RFID sensors on goods and Wifi movement tracking can allow stores to monitor inventory and customer traffic to better track buying journeys and sales breakdowns. Sensors allow retailers to maintain equipment in a predictive fashion. IoT also provides retailers with chances to improve customer experiences. Developments in mobile point-of-sale, automated checkout, and smart shelves help accommodate the demand for seamless purchasing experiences where goods are searchable and shelves are more likely to be stocked.
Retail IoT technology provides chances to engage consumers through their personal connected devices as well. A user looking for food or clothes may see targeted digital messages from restaurants and retailers as they walk through a mall or down the streets of a city. Users might also easily receive information about the products they find in stores. Wearable technology offers consumers new methods of receiving information and offers businesses new mediums for sales opportunities. Brick and mortar businesses are feeling the pain of online retail competition, so in-store experiences are in need of alluring modern features. Implementing IoT can help retailers cater to the digitally connected consumer, and can serve as an avenue to augment the experience while also arming retailers with more data.
The connected consumer
More connected devices grant businesses more user data for market analysis that can, in turn, help provide better products, services, and experiences. Oracle CEO Mark Hurd affirms the idea that an “unprecedented explosion of Big Data is being triggered by the Internet of Things” and states “Home appliances, food, industrial equipment, pets, pharmaceutical products, pallets, cars, luggage, packaged goods, athletic equipment, even clothing will be streaming data.” The thought leader also offers balance by highlighting the importance of questioning “how a CEO copes with this unimaginable volume and velocity of data, much less harness it to excite and delight customers” because “much of it will be extraneous” after all.
Extracting portions of data to micro-target consumers with personalized experiences may present a solid answer to his question. In theory, a coffee maker privy to one’s favorite capsule and timestamped usage data may notify that user when they run low on coffee pods and where to go to restock. The consumer IoT also provides additional digital mediums for promotional media or advertisements. For example, the coffee maker’s screen may display information about associated products. Wearable devices further aid companies’ efforts to develop personalized data profiles and can also provide extra avenues for digital sales messaging when acting on that data. Wearables shine as a major catalyst for the consumer Internet of Things.
Most sales in the wearables market still come from smartwatches and smart bands. According to the International Data Corporation, global wearables shipment volumes grew 5.5% in the second quarter of 2018 over the same period in 2017, and wearable revenues posted an 8.3% gain. However, the wearables business in established markets actually generated 6.3% less revenue than the year-ago period. Some believe this shows declining demand for smart bands, which was not mitigated by smartwatch demand. Emerging markets, on the other hand, saw a year-over-year wearables dollar value growth of 14%. Perhaps demand for more basic wearable band is driving this increase, with some help from smartwatches.
Further investment in and implementation of the IoT should be expected in the near future. Augmented reality has seen increasing adoption over the last year, and AR technology might soon extend beyond the enterprise domain with smart glasses that complement other consumer IoT devices. The same expectations hold for the booming Industrial IoT. Smart cities and self-driving cars are also the focus of some significant via projects and investments. Lastly, blockchain integration with IoT initiatives and continued advancement of A.I. and machine learning can be the cherries on top of a movement that will greatly impact business into the future.
Guest post from Maddie Davis at Enlightened Digital