Israel del Rio
Israel del Rio

Your Business and the Internet of Things:

The emergence of IoT, potential pitfalls and why you should care


There’s been a lot written about the Internet of Things (IoT), but many people don’t have a firm grasp of its current state today and how it will affect their business. In this article, we will explore the booming growth of IoT, what it means for companies now, and how your business can leverage it to drive business goals.

What is IoT?

In short, the IoT is a network. Just like the Internet connects people, the IoT connects devices. This way, a wide range of physical objects can exchange and transmit data. What this means in practice is that things like refrigerators, cars, manufacturing equipment, and HVAC can be controlled, monitored, and analyzed in much the same way that computer systems can. This can provide incredible benefits to consumers and business, allowing for increased efficiency, marketing opportunities, reduced costs, and innovative new products.

IoT today

The IoT is evolving rapidly from a mere novelty to an integral part of the modern economy. Its first iteration was a prototype soda machine that could tell researchers at Carnegie Mellon University its current stock levels and whether drinks were cold. Today it encompasses a wide range of devices, technologies, and functions and is only expected to continue evolving for the foreseeable future.

Rapid growth

The Internet of Things is truly emerging. Gartner predicts that by 2020 there will be 26 billion units and IoT related products and services will generate revenues in excess of $300B.[1] There is little doubt that the IoT is already significant and that by in the next decade an enormous number of devices will have network connected functionality. This trend is driving substantial growth for businesses and allowing them to improve operations and develop new products, providing an estimated economic value add of $1.9 trillion across sectors by 2020.[1]

The “basket of remote controls” problem

Unfortunately, rapid growth also poses potential problems. Businesses must be aware that the IoT is developing in a disorganized fashion. New technologies are being added device by device, vendor-by-vendor, with little to no coordination. This means that devices from different manufacturers may not be able to communicate or users may have to coordinate across several different interfaces to track all their devices.
For example, someone may have a Fitbit device, an Apple iWatch, and an Internet enabled home security camera. These devices, and others, connect according to vendor-specific protocols and technologies such as WiFi or Bluetooth which prevent their linkage under common access and management frameworks. This problem is made even worse by the fact that each vendor requires ad-hoc device configuration according to their own IP, DNS address, password, and naming standard requirements.

IoT may be exploding, but it will be several years before a standard emerges that make it easier to leverage. This situation is akin to having a basket of remotes, with each one operating a different device in the entertainment center. This state of affairs is still very fluid, even as new technology leaders are joining forces to create standards for communication between devices.

Why is this happening?

The scenario we see developing in IoT is not unique. Practically every major technology started with an abundance of incompatible vendor offerings. Early day computers operated according to vendor-specific platforms until de-facto or government standards were introduced. Before TCP/IP became the standard protocol, there were a wide range of networking options including NetBIOS/NetBEUI, UUCP, and AppleTalk. In all cases, the trend has been the same. As these technologies matured, a standard emerged to which most companies adhered. IoT is, in all likelihood, following a similar pattern of progression.

What is the future of IoT?

In order to leverage the power of IoT most effectively, companies need to understand how the new technology will likely progress. IoT will follow a trajectory similar to past technologies. This includes five distinct stages that companies should closely monitor to determine their strategy.

Hype – This is the peak of expectations for a new technology. In IoT terms, this can be thought of as the point when network functionality was added to devices primarily for a novelty factor, but the technology was not in widespread use.

Vendor driven zoo – In this transition period, vendors are beginning to realize the potential of a new technology and each racing to develop the standard. This leads to a number of competing technologies, making it difficult for consumers and other businesses to choose and use products effectively. This is the stage we are currently in.

Consolidation – This is an intermediate stage between the vendor driven zoo and standardization. There will be a decrease in the number of competing technologies, but still no uncontested standard.

Standardization – In this stage, a standard emerges and other technologies fade into the past. Companies should pay careful attention to signs of this stage to stay ahead of the curve and not get stuck with legacy technology.

Commoditization – This is the final stage of an emerging technology, when the standard is so ubiquitous that it becomes a commodity. This is the current stage of technologies like TCP/IP.

What will drive IoT adoption?

The keys to enabling IoT across a greater number of devices are pervasive networking, sensors, and actuators. These technologies will make IoT more cost effective and more powerful, expanding the scope of its viability.

Pervasive networking – In order for devices to stay connected, there must be more widespread access to WiFi, Bluetooth, and 4G/5G data. Another roadblock is the limited number of IPV4 addresses available. The protocol provides only 4.3 billion address, with many available only for special uses. As of September 2015, four out of five North American internet registries exhausted allocation of all blocks not reserved for IPv6 transition. IPv6 provides for 3.4 x 1038 unique addresses, more than enough for the foreseeable future, but the new protocol is not ubiquitous. If billions more devices are going to be connected to the Internet, there must be a broader deployment of IPV6 address protocols capable of uniquely identifying every possible device in the universe.

Sensors – The availability of low cost sensors such as RFID readers or machine recognition devices will further expand the area of applicability for IoT. As costs and ubiquity of these technologies increases, IoT will become more powerful and cost effective.

Actuators – Actuators allow network connected devices to actually do control things. Many of the most exciting IoT applications will require the addition of actuation devices that can be remotely controlled to perform specific functions.

What can companies do today?

The last thing any company wants is to end up with the Betamax equivalent of IoT. But that doesn’t mean that you should wait to act until things become clearer. An even worse scenario than picking an unpopular technology is getting left behind by not adopting any IoT technology at all. Being reactive, rather than proactive, will only lead to missed opportunities. It is unwise to wait until a competitor or disruptive new entrant takes your business.

The time to frame IoT strategy is now

Leveraging IoT in a future forward way means aggressive adoption while still having an awareness of current limitations and potential pitfalls. Start by gathering your team and envisioning how your products will fit into an IoT enabled world. What enhanced functions would it provide? How can IoT best be implemented?

Choose a participation model

There is a wide range of ways IoT can be implemented in your company. Before moving forward, it is important to think about how your company’s products and solutions fit into a network connected framework. You will need to reach an internal consensus on what participation models you will pursue and in what timeframe. The below models capture various levels of IoT implementation, with each progressively more involved than the last.

Model 1 – Focus only on leveraging the IoT reach capabilities for promotional and advertisement purposes. This primarily means tracking user activity, delivering location aware ads, and developing promotions such as automatically reminding users when their device needs to be replaced or upgraded.

Model 2 – This model involves a more proactive stance to IoT. Companies will envision and prototype current product extensions by adding IoT functionality. An example of this might include adding basic network controls to an existing line of thermostats.

Model 3 – IoT will offer many opportunities for companies to innovate and develop new products to take advantage of emerging functionality. In model 3, companies will offer unique additional functionality and products that use IoT.

Model 4 – In this model, companies are actual IoT players, rather than simply users. This means that they develop and introduce components or services to augment actual IoT capabilities. This role involves more innovation in the IoT sphere and represents the first level in which companies may actually influence the future of the technology.

Model 5 – In this stage, IoT becomes a significant part of company strategy. This involves implementation of IoT core technologies across many areas and a role in developing standards and the direction of technologies according to your business needs.

What are the best strategies for models 1 and 2?

For companies targeting the lower levels of IoT implementation, there may not be significant will or resources available to track emerging standards and develop new technologies. However, in order to stay ahead of the curve, it is important to begin investing now. Some key strategies for success at these levels include:

Stay vendor neutral – Do not lock up to a particular IoT vendor’s vision yet. It is too early to know which technologies will still be around in the next five years. Companies should instead focus on identifying potential partnerships that might provide an early adopter advantage. In particular shop around for potential IoT development houses that can help you implement IoT more effectively.

Identify component gaps – Look for areas that your company needs to work on to bridge the gap between product ideas and current technology. For example, your idea may require a new type of sensor or actuator dongle that you can develop and patent with the help of external manufacturers. This will help form the foundation for a future IoT strategy.

Begin R&D – After identifying gaps between your current technology and IoT vision, initiate an R&D effort to begin bridging that gap and prototyping possible extended functions and products.

Hire talent – Without the right people, your company cannot develop innovative, effective IoT products. To stay ahead of the competition, start hiring and developing skills now, rather than later. Keep in mind that this talent does not have to be internal. Many companies can benefit from third party consultants and outside companies to help track standards closely and to keep a pulse on the rapidly changing IoT field. It is also important to have people to consider the potential security threats that the new technology can pose and ensure that your products are safe.

Evaluate core architecture – Many companies believe that strong mobility services are all about having beautiful, modern apps. Although a nice UI helps, it is important to remember that most functionality occurs on the backend. Re-evaluate your core architecture to ensure that the central systems can provide the required business processes and data access necessary to support IoT in your business.

What is the best strategy for model 3?

Most of the recommendations for models 1 and 2 also apply to model 3, except your investment on R&D, involvement with standards, and identification of partners’ efforts will more closely mirror the recommendations for models 4 and 5 below.

What are the best strategies for models 4 and 5?

Companies targeting levels 4 and 5 likely already have a much clearer understanding of the most effective strategies and need less guidance. They should keep the advice for models 2 and 3 in mind, but take it further by getting more involved and staying proactive.

Get involved with standards – Don’t allow other companies to decide on the future of IoT. Form coalitions with other leaders and get involved today to steer standards towards technologies that will be beneficial to your company

Invest in R&D – At this stage, model 4 and 5 companies should be making significant investments in R&D and hiring staff with the skills necessary to make their goals a reality.

Identify partnerships – By developing technologies with other companies, you can help create more robust and innovative IoT offerings. Emerging technologies demand cooperation.

Closing thoughts

Although IoT is rapidly shifting and there is no clear standard, your company cannot afford to ignore it. Network connected devices will become ubiquitous with or without you, and it is important to stay proactive to monitor emerging trends and form partnerships to remain competitive. In order to benefit from the new technologies, companies must be aware of the potential for certain technologies to rapidly fall out of favor and dark horses to emerge victorious. At this stage, it is important to remain vendor neutral, but begin planning for a future in which a standard emerges. IoT is coming, by planning for the future standardization and commoditization of the technology, your company can gain a competitive advantage and drive business goals.

To learn more about Wavestone US’ services, click here.


Israel del Rio

Israel is a leading IT executive and technologist with more than 30 years’ experience. He has held CIO and CTO roles, led global IT teams, and delivered innovative solutions that have reduced costs by the millions. His specialties include IT strategy, IT management, and SOA.

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