How To Get Ready For The Internet Of Things

When we talk about the Internet of Things (IoT), we usually talk market size, because it's enormous -- billions of units are generating more than $1 trillion in revenue today. And analysts forecast that revenue will double by 2015.

Those are exciting numbers, but what benefit does the IoT deliver? For businesses, it is twofold. First, it unlocks the value of assets, such as medical devices or industrial printers, to generate new services and revenue streams. Second, it helps turn data into information for better decision making.

[Sensor-equipped objects and their networks will reshape your life. Read CES 2014: Cisco's Internet of Everything Vision.]

However, you must overcome looming challenges before the IoT can be fully realized. A lack of unified standards is preventing widespread adoption, and scaling is difficult, because vertical industry applications like medical devices and industrial controls have little or no overlap.

Complexity is also an issue. The technologies involved in creating intelligent connected systems are broad, and it can be difficult to know where to start or what technology is best for specific needs. Most IoT products do not provide a seamless experience between the business backbone and the embedded device or system out of the gate. Some complex customization is required. For example, a legacy device that is not connected to the Internet may use proprietary protocols to communicate with an internal network over a wired connection. The company would need to customize the IoT setup to support that proprietary protocol and provide wireless connectivity to the Internet.

Businesses are also coming to terms with the fact that, to create an end-to-end IoT experience, they typically need assistance from partners that may not be a part of their current ecosystem.

With all that in mind, where do you even begin? Here are three tips for approaching and implementing the IoT.

Get to the heart of the business problem
Different companies and industries have different perspectives on the opportunities created by the IoT, but all are looking to scale efficiently, increase average revenue per device, and set themselves apart from the competition while responding to the needs of the business. So where does your company fit in, and what's the first step?

Smart forklifts use Internet-connected sensors to collect usage and location data.

If you're starting from scratch, it's important to ask, "What's the No. 1 business problem you want to solve?" Once that's answered, it's time to look at the systems you need to connect and the capabilities you must put in place.

The IoT is shaking up traditional business models, but the technology itself is just the enabler. It's the new business models that will be transformational. For example, the Internet is now reaching beyond IT departments and traditional Internet-enabled devices. Though technology is spurring these new connections, business models across industries will also change as they adjust to the new realities of what can be delivered in everything from city-wide transit systems to smart homes. The business models themselves are changing, and IoT products will help with that shift.

Companies that already have a stake in the IoT will need to address a series of questions. What are my top operating expenses and my customers' top operating expenses? What is the best way to connect new applications, systems, and devices to complex and often fragile networks? How can information be exchanged among siloed institutions, systems, and applications for better decision making? How can the operational efficiencies of IoT-enabled systems be scaled to create higher profit potential?

The answers to these questions will provide a clearer picture of the information needed to increase productivity and profits.

Business maintenance vs. business transformation
We see a lot of interested customers asking about what they can do with the business they have right now. For example, how do they take advantage of streamlining logistics and predictive maintenance on the assets they already have in place?

But it's also critical for companies to consider the other side of the coin: the new services made possible by the IoT, or what we call business transformation. IoT technology is flexible enough that, once you can collect data and know how to use analytics that help turn data into value, you'll open yourself up to new business opportunities. Using the manufacturing industry as an example, the IoT will address the following scenario.

A manufacturer equips all its forklifts with sensors and connects them to the IoT via a wireless gateway. The manufacturer can now get a productivity boost by updating the forklift's software remotely, rather than taking the forklift to a repair shop and losing time and productivity. The manufacturer can also use forklifts more efficiently by tracking their location and use (how much is being lifted and how often) to design products better and offer customers a mix of products based on their needs -- such as a few small forklifts versus one big and expensive forklift.

And the company can open up revenue streams and business models by selling lift capacity, rather than selling forklifts outright. In this case, the manufacturer acts as a service provider and lends the customer a forklift. The customer pays for the amount of lifting done -- by the ton per month, for instance -- or maybe subscribes for a certain capacity per month, whether it is used or not (similar to a cellphone plan).

Look to intelligent gateways
In the private and public sector, organizations looking to use IoT technologies face two potential scenarios: connecting their assets or building a new generation of Internet-connected devices. For most organizations, it's much cheaper to find ways to connect assets than to deploy new devices.

Software and hardware can be modified to connect to the Internet, but this approach is expensive and not very realistic. Many devices, such as sensors, do not have enough memory to hold modified firmware or enough compute power to support the needed communication stacks. And even with devices that have enough capability, it may be too costly to modify software and hardware, or security and regulatory concerns may not allow it.

The best option is to build a bridge between these devices and the Internet with what is referred to as a gateway or a hub. A gateway can connect to unmodified devices, read their data using current protocols or interfaces such as USB port or serial cable, and forward that data to the Internet using modern technologies such as 3G cellular or WiFi.

Even for the new Internet-connected devices, connecting via gateways will be the most practical way to achieve scalability and keep costs down.

Ido Sarig is vice president and general manager of the IoT Solutions Group at Wind River, where he is responsible for driving the company's Internet of Things product strategy. He has been leading product and marketing organizations in high-technology companies for more than 20 years.

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