IoT or ‘The Internet of Things. You've probably heard of it but if you're not particularly tech savvy, I suspect that you may not be entirely sure what it is or what it means.
In fact, IoT has been spoken about widely for a couple of years now and it is increasing in its importance on how we behave and operate in both our personal and business lives.
So much so that IoT is being enhanced all around us to the point whereby not knowing its impact could be detrimental.
And not implementing it into your business has the potential to put you on the back foot with your competitors.
If you’ve ‘googled’ IoT, then you’re possibly more confused than you were before. So many articles make this concept unnecessarily complicated, when actually it is rather simple.
IoT means connecting everything in the world to the internet.
Er… that’s it really.
Think about all the things you own. Your laptop, watch, smartphone, wearable tech like fitness trackers, bank account, home appliances, home lighting, alarms and so on. All of these things and more connect to the internet and therefore, are connected to each other.
But the concept incorporates everything.
While the idea may be simple, its execution and what it means goes much deeper.
People get baffled because when we talk about everything, getting your head around it is not easy.
And clearly, not ‘everything’ is connected to the internet (yet). So, at least for now, let’s take the idea of ‘everything’ to mean everything in your personal life/business/company environment.
There are so many ‘things’ that are already or could be connected to the internet. They may be the personal items such as those above, but also in a commercial environment, monitoring systems, vehicles, healthcare systems, agricultural machinery and user apps to name but a few, are all moving towards an IoT structure.
Some benefit the consumer and others benefit the manufacturer of the product. On the whole, however, the benefit of IoT is intended for everyone.
Just as in our personal lives where more people continue to strive to be more connected with each other, IoT aims to aid us in business by recording, monitoring and transferring information so that we can improve our work processes and enhance efficiency.
More information in business means that we can make better informed decisions about actual events, rather than making those decisions which were previously based on assumptions.
An increasing number of companies are incorporating such technology into their hardware, software and systems as well as the tech services they provide.
According to Fortune Business Insights, the IoT market in 2018 amounted to $190bn and is projected to rise to $1.1tn by 2026.
Wow. That’s a huge CAGR (compound annual growth rate) of c.24.7% over this period.
Banking, Financial Services and Insurance (BFSI) industries account for the largest industry end use of IoT, followed by healthcare, manufacturing and IT/ Telecom sectors.
1. Greater insight into your business processes and supply chains.
More and more industries are now using IoT to enhance the connections both internally within their business processes as well as externally through to their suppliers and customers.
Industries such as manufacturing, agriculture, healthcare and aviation, along with several others, are generating stronger analytical information to provide better insights into their operations and how they are used by their customers.
Much of the information is uploaded to data centres in the cloud, run by companies such as AWS, IBM and Google as well as many other third-party providers, but there’s also a move to edge computing for some industries.
Edge computing is where computing takes place near the physical location where data is being collected and analysed (i.e. not necessarily in the cloud). Sensors are often placed in the physical equipment, which collects data. The data is then processed in real time on site, while also connecting to other devices like your smartphone or laptop. This is helpful in some industries as it reduces the delay (latency) of the transfer of data to the cloud.
Greater insight into such processes improve:
The retail industry has shown how the introduction of IoT technology can have an impact on the way companies can move forward, stagnate or fall.
Winners have been those such as Amazon or Ocado, where they have incorporated data catchment, AI and monitoring processes into their strategy. As the consumer demands more convenience and a wider choice with more shopping online and faster delivery too, so the requirement to provide enhanced services increases.
Incorporating IoT is about easing the buying process, empowering the consumer to make better, informed choices, whether that be in a virtual or augmented reality environment. This is the case both for online purchases or in physical stores; smart fitting rooms are already here. The Detego Smart Fitting Room is just one example:
More developments will likely be required for a high street under pressure from further rises in internet-based shopping.
Greater business insights from using IoT can also lead to:
2. Stronger customer/ employee knowledge and interaction
I’ve spoken before about how important it is to really know and understand your customer. After all, the driver of any business is stronger customer satisfaction and service.
With IoT implemented in your business process, the ability to have increased levels of knowledge about your customer’s behaviour will aid you to better serve and maintain your customer base. This may include their shopping preferences, purchasing habits, how they interact with you and your website/ business, language preferences and so much more.
Such data is crucial to provide satisfaction to your customers as it could enable you to offer a more personalised and intuitive product and service to both current and prospective customers.
This is also the case for internal processes. For instance, IoT can provide data on your employees’ growth, attrition, recruitment patterns and wellbeing. Operationally, project turnaround estimation, allocation of resources, timeliness and more.
3. Efficiency and productivity improvements
Implementing IoT into your business has the potential to enhance efficiency and productivity.
Indeed, with a greater awareness of your customer’s needs and desires, the introduction of smart devices can lead to more targeted actions and thus faster turnaround times, shortening the purchasing cycle and improving efficiency across your business.
More done in less time with less errors.
And it is not just static data. With machine learning, devices themselves can evolve to better understand customer trends and patterns, making them smarter, so as to provide a better user experience going forward. This will also help the company boost their efficiency as they generate more detailed and in-depth data.
And much of this can happen in real-time. Getting instant feedback will be invaluable to the business, which can then move faster to adjust if necessary and thus be more competitive.
4. Lower costs
So far, it may appear that IoT is only for big business. But that is simply not the case. All the above is applicable for businesses of all sizes.
By connecting devices, lowering the cost base for a large or small business is very possible. And if small businesses can do this, it will aid them to be more competitive with their larger peers.
The money saved by a small business could materialise in all aspects of the company’s operations. We have covered some already, such a better inventory management, but here are a few others:
And this is all great stuff.
But there is an overhanging issue that I am sure you’ve thought about multiple times when reading the above.
All the data, information, insight and analysis of machines, consumers and customers also means potential problems surrounding security and privacy.
After all, from a consumer standpoint, ‘everything’ you do, from the food you eat and the people you meet, to where you are and what you’re doing could be stored on a data centre somewhere.
And that data may ultimately be sold to someone else.
Privacy issues could become a real and ethical headache for individuals or companies; you should be aware of the data you are providing and the restrictions placed on that data consumption and transfer.
In business, problems could also arise with devices reliant on IoT. For instance, would you be comfortable holding sensitive meetings in rooms filled with smart technology? A badly installed smart speaker could lead to leaks in corporate networks. What if the smart locks in your office building failed to open one morning? What if the smart thermostats failed to work properly on the coldest day of the year?
There are clearly risks associated with implementing IoT in your business environment, but the overriding belief is the rewards and benefits of IoT should outweigh the associated risks.
Sharp Insights is a business, markets and wealth blog. It is dedicated to bringing you insightful and knowledgeable information so that you can make better decisions about your financial well-being and maximise the potential in your personal and business life.