Does your workplace have smart lighting that only comes on when it detects motion? Does your heating and air conditioning work in a similar way? Or maybe you have a refrigerator in the kitchen that orders food direct from the supermarket when supplies run low.
If you use any of this technology then you’re already part of the Internet of Things (IoT) – a network of business or consumer devices with embedded sensors, communications and analytics enabling them to respond to the external environment.
Industry watchers estimate that by 2020, between 20 billion and 30 billion devices will be interconnected all over the globe. Steve Perkins, Grant Thornton’s global leader for technology, media and telecommunications says that the IoT is destined to prove more revolutionary for businesses than the Internet itself ever was.
“Companies that aren’t proactive risk being seriously disrupted and rendered irrelevant,” says Perkins, who also leads Grant Thornton’s technology industry practice in the US. “On the positive side, it’s a first-mover opportunity for companies to consider what new products and services they can introduce into existing business models . Analytics to make sense of the huge new mass of data that the IoT will generate, represents the brightest opportunity This doesn’t only apply to high-tech companies. It applies to every industry in every sector.
Alex Bazin, vice president and head of IoT at technology giant Fujitsu, says that both big and small companies are transforming themselves with the new technology.
“A lot of companies, particularly in manufacturing, are starting to move up the value chain to take on a much stronger service role,” he says. “For instance, companies that supply life jackets to airliners will get a big order every few years and the airline will store the equipment until it’s needed. Storing the life jackets is inconvenient and expensive for the airline, and the manufacturer faces months or even years without a new order.
“But with IoT-based sensor technology built into the life jackets, the supplier can know where they are, what condition they’re in, whether they’ve been damaged or tampered with. They can take on the management task from the airline and supply just-in-time delivery, which means the airline doesn’t have to worry about maintaining large stocks and the manufacturer can rely on a regular revenue stream. Everybody wins.”
Damian Gleeson, a partner in audit and assurance at Grant Thornton Ireland, says every business involved in transportation can benefit from the IoT too. “Traditionally, getting a vehicle’s tyres checked and changed meant taking it off the road and booking it into the garage. That cost time and money. Now, sensors can be built into the tyre to report directly on its condition, meaning it only comes off the road when absolutely necessary. The same principle can be applied to every single component on the vehicle that is susceptible to wear and tear.”
“The beauty of smart technology like this is that it doesn’t demand big upfront investment,” says Bazin. “It’s easy for a company to identify three or four ways in which their operations could be made more efficient, and then decide on small scale technological implementations to solve them. They can see the first benefits and then upscale as fast or as slowly as they like.”
Crucially, adds Gleeson, mid-market business owners don’t need technological skills to develop an IoT strategy. “There are plenty of university research and development departments that would be delighted to listen to their problems and challenges and then find ways of implementing solutions that would work,” he says. “The students get hands-on applied research experience and the company gets advice about how additional connectivity and the Internet of Things can help their business.”
Data privacy and security pose an important potential problem. The interconnection of billions of devices will produce complex networks with vast amounts of information and make the protection of data even more difficult and more crucial than it is now. “There could be a serious business risk if your data gets into the wrong hands,” says Gleeson. “Ultimately, it’s hard to control where your data ends up if it’s passed down a chain from one device to another but it’s a risk that can be mitigated by caution and discipline in data handling and tracking.”
Risky as it has the potential to be, the Internet of Things is here. Billy Bosworth, CEO of California-based software giant DataStax recently summed up the change that it’s bringing: “Ten years from now, when we look back at how this era evolved, we will be stunned at how uninformed we used to be when we made decisions.”
All mid-market company leaders who want to improve their operational efficiency and take more informed decisions would do well to consider how they can start implementing IoT technology into their business in small ways.
The costs of IoT technology are falling all the time, making it affordable to businesses of all sizes. But according to research firm Gartner, only 7% of companies are ready to embrace the Internet of Things – which means that 93% are missing out on the opportunities for enhanced products and extra service offerings.
At the moment regulators are struggling to keep up with the changes these complex networks are bringing, but they will create new regulations and businesses should be aware of that too. But for those dynamic organisations that seize the moment, whatever their size, there are real business advantages to be gained.
Have you considered where the Internet of Things could support your business growth and create new opportunities? If you would like to speak to Steven about how you can connect your business to the Internet of Things, visit our Grant Thornton US websites.