In 2025, an estimated 30 billion of interconnected devices will be circulating. The Internet of Things, the technology-driven trend, offers a range of opportunities for CIOs to open new IT-based business portfolios.

The construction of a fully interconnected system with globally distributed computing systems, sensors and numerous devices, all communicating with each other over the Internet, is underway. This transition will change our lives through unleashing the full potential of the digital enterprise.

The Internet of Things is a part of the digital enterprise

The Internet of Things (IoT) represents the interconnection of physical objects. Not only human beings but also sensors, household items, cars, industrial facilitates etc. belong to this disruptive shift. The IoT bridges the digital and the analog worlds by targeting a maximum interconnection and the largest possible exchange of information.

The large-scale dissemination, adoption and adaptation of the IoT will still take some time, but will contribute to a similarly large shift as the one already observed in cloud computing over the recent years. Crisp Research forecasts that in 2025 about 30 billion of interconnected devices will be on the market. By 2016, a market volume of €366 million for IoT equipment (sensors and networks) is expected in Germany (€5 billion worldwide). This trend is quickly becoming a key factor for the future competitiveness of enterprises, with the need to step into the ring with the necessary technologies.

There are some companies that already use real-time analytics to identify data trends and respond to them. For example, this functionality allows for a better understanding of customers in real time and improved customer relationships. Timely and tailored offerings are delivered directly to the customers’ smartphones or wearable devices, matching precisely the current context of the customers’ activities. Other IoT applications are found in the areas of transportation and logistics – for example, the optimization of the CO2 balance based on use of data patterns in the supply management process.

A good example of an innovative IoT company is digitalSTROM. The provider of smart home technologies from Switzerland has developed intelligent home networking that makes possible the communication over the electrical wiring with the respective devices in the house using smartphone apps. The basis for this consists of Lego-like building blocks, via which each of the connected consumers can be addressed. The intelligence of each terminal is plugged into a block. digitalSTROM uses the Azure cloud infrastructure from Microsoft as an underlying technology platform.

The applications of the Internet of Things are unlimited

The principal areas of applications and the potential of the Internet of Things are almost unlimited. For the next three years, Crisp Research has identified four key areas where the IoT will have considerable influence:

• An improvement in marketing through intensive monitoring of the behavior of people, things and data based on the analysis of time and place where the objects reside. These include, inter alia, location-based advertising and the evaluation of purchasing behavior across different stores.
• The improvement of reaction time to certain situations in real time. This, for example, includes the control of transport routes based on different variables such as the weather and fuel consumption, but also softer factors such as potential hazards.
• Support to decision making by sensor-based analyses based on more profound analysis, for example for the continuous monitoring of patients for better treatment.
• A higher level of automation and better control for the optimization of processes and resource consumption (e.g. smart metering), as well as for risk management systems.

CIOs should not underestimate the Internet of Things by any means

The Internet of Things solves existing data silos, provides access to new data sources and opens up new business opportunities. New digital enterprises suddenly appear out of nowhere and interefere with the existing provider landscape by opening up new markets with new offers and services.

For quite some time, today’s industries are not as strictly vertically organized as was the case several decades ago. Today, online retailers also sell IT resources; computer manufacturers have revolutionized the music industry. These are just a couple of examples of the constantly evolving competitive landscape.

Thanks to cloud computing, wireless connectivity, mobile solutions as well as big data analytics and caching, the cost of IT solutions has fallen considerably. One must also factor in the increasingly cheaper sensors and devices and the rising positive wave to gather data from devices at any time and at any place.

If CIOs do not perceive these direct attacks on their businesses as a clear and present threat, they will sooner or later be faced with the consequences. CIOs must develop awareness of, evaluate and embrace existing and future opportunities and carry out strategies that enable their companies to reap the benefits offered by the IoT.

What CIOs should look for during the introduction of the Internet of Things in their company

CEOs and CMOs are increasingly moving towards CIOs, asking for help in collecting, analyzing and reporting data. These requests range from the simple storage of data to the use of data for business process optimization, development of new business models or evaluation of new business opportunities. With the ever increasing amount of data variation and arrival speed, traditional infrastructure quickly reaches the maximum point of its potential scalability. The same destiny overtakes all applications whose evolutionary behavior is rigidly encapsulated. Thus, these cannot keep up dynamically with the increasing demands of the business side.

To meet the evolving demand for IoT workloads and the growing sensor- and metadata, new agile platforms and massively scalable infrastructure are necessary. Standardized toolkits and interfaces will help in the quick introduction of powerful IoT applications and ensure a stable communication between the applications, services, sensors, platforms, and dashboards, and the collection, analysis, interpretation and preparation of the obtained data.