How IoT drives profitability and growth

IoT

As it stands, around ten billion devices are currently connected to the Internet out of a potential 1.5 trillion that could connect. It’s also predicted that by 2020, around 50 billion devices will be connected. Think about that for a second. That’s only three years away, and the number of internet-connected smart devices will have increased by a factor of five.

According to Anthony Smith, general manager of Internet of Things (IoT) specialist Aruba, by 2019 up to 92 per cent of industrial organisations in the world will have adopted IoT technology and 77 per cent believe it will transform industrial and manufacturing.

“The top three sectors globally that indicated they are actively using IoT within the report were; IT, technology and telecoms (72 per cent), Industrial (62 per cent) Healthcare (60 per cent),” said Smith. “However, these sectors also identified that whilst they are are actively using IoT, they are doing so with or without an IoT strategy in place.”

According to the report, 26 per cent of Australian businesses already estimate around 20 to 30 per cent of devices on their networks are IoT enabled. So what are they doing with these devices?

“The top five industry adopters of IoT are enterprise, industrial and manufacturing, healthcare, retail and government. Drilling down into how the industrial and manufacturing sector is using IoT, we find that six in ten businesses have already adopted IoT. They’re primarily using it for monitoring and maintenance of devices such as switches, pumps and other heavy plant and machinery,” said Smith.

“Using IoT, industry and manufacturing can enable pieces of capital equipment to report its own status back to base. Potential faults are flagged before they become a problem, and maintenance can be assigned before a fault becomes a serious issue.”

“Power consumption, uptime and mean time between services can also be monitored, and the data used to analyse past and present performance, and to predict future performance,” Smith said.

One in two businesses in the sector that have implemented IoT are using the data generated for improved business processes and decision-making. Additionally, 83 per cent report improved business efficiency, while a further 80 per cent have found improved visibility across the organisation.

“This means that there’s plenty of headroom for organisations, particularly in the industrial and manufacturing sector, to improve the way they use and analyse IoT data to improve business decision making,’ he noted.

Although the upsides to IoT deployment are significant, caution remains. As many Australian organisations have found to their peril, any device connected to the Internet must be properly protected.

“Many IoT devices by their very nature lack inbuilt complex security  measures,” said Smith. “Conventional IoT security methodologies need to be supported and secured by a robust and reliable network that allows organisations to apply policy management, automated device onboarding, device health checks, and scalable AAA for the strongest possible security,” Smith said.

“Security starts with understanding what’s on the network. What devices are being used, how many, and which operating systems are supported. Utilising a built-in profiling engine that collects real-time data, including device categories, vendors, and OS versions and provides visibility for those not ready for full policy enforcement, is key.”

Getting back to the report, 90 per cent of local businesses using IoT reported a security breach. That statistic is the highest in the world, and is bolstered by the fact only one quarter of businesses felt their cyber security infrastructure and security team are fully prepared to support the IoT.

Among other factors, the report also found among those businesses yet to fully deploy IoT, 43 per cent of IT managers cite security as a key barrier that prevents their organisation from creating new IoT-related business value.

“Organisations need to ensure they have the best security-focussed features that are embedded in their corporate software to help prevent hacking and cyber threats, such as the benefits of two factor authentication and HTML5 for web-based business apps,” Smith said.

When it comes down to it, IoT isn’t really about the devices. For all the switches, pumps and machinery that are connected to the Internet, the real value comes from the data generated by those devices. Put simply, the IoT is all about capturing and analysing data and then turning that data into valuable insights to enable better-informed decision-making.

This feeds into the narrative many organisations are having around big data and digital transformation. At present, business already generates huge amounts of data. Add in millions of connected devices all generating their own data sets, and the amount of data becomes intimidating for even the most accomplished data scientist.

“In fact,” Smith said, “some 53 per cent of IoT-enabled organisations cite managing large volumes of data as their biggest hurdle to fully using IoT.”

“A further 44 per cent stated real-time data ingestion from multiple distributed devices as their main obstacle to maximising the business value of IT,” he noted.

“Creating value from the IoT therefore means that organisations must have big data analytic capabilities, either in house or from a trusted third party, if they’re going to make the most of their IoT-enabled infrastructure.”

“This is underscored by the fact 29 per cent of organisations with an IoT implementation do not yet use the insights to improve their business processes, even though they analysed the data,” Smith pointed out.

“Analysis and implementation of data-driven insights therefore remains the greatest challenge associated with the Internet of things, and it will pay any organisation looking to invest in the IoT to also have parallel investments in big data analytic capabilities,” he said.

IoT is a rapidly growing area, and one that will touch virtually every business. Despite the hurdles, businesses that have invested in IoT are already reporting solid results from their rollouts. Of the businesses surveyed, most reported that their return on investment was ten per cent greater than they had anticipated.

In line with this, Smith said that “Globally, the return on investment from IoT is reported at around 34 per cent.”

“Clearly,” Smith concluded, “there are good business reasons to invest in IoT. Generating data used for insights to improve business processes is but one. These can then be used to drive profits and competitive advantage over those businesses that have yet to fully implement an IoT and accompanying analytics strategy.”