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Will the Internet of Things Be the Next Economic Revolution?
It’s a weighty question, but increasing numbers of commentators have emerged over the past couple of years – including top tech researcher institutes such as Gartner – who certainly seem to think so.
Indeed, after the agricultural revolution, the industrial revolution and the digital revolution, there’s now widespread support amongst market analysts for the idea that our rapidly expanding Internet of Things (IoT) is about to issue in a fourth industrial age of its own.
It’s easy to see why so many business and technology experts see the IoT having a truly seismic impact on global industries of the near future. As the once-prohibitive price of sensors continues to drop, and the reliability and capacity of long-range wireless connections continue to increase, we’re moving rapidly towards a digital future defined almost entirely by the gathering and transmission of data.
If the digital revolution of the past 40 years was driven by lightning-fast developments in human-to-human communications tech, then the next phase will be all about machines communicating with each other – in other words, it’ll be about the Internet of Things.
And, as widespread as its impact is going to be, experts clearly feel that global industry is where it’s set to punch hardest.
Analysts including the Boston Consulting Group have already predicted that business enterprises will collectively invest around $250bn (on top of current IT outlay) in developing IoT connectivity by 2020. That vast fund will go towards supporting technologies such as self-optimising production lines, whereby highly connected plants and factories use sensor technology and data feedback to automatically tweak manufacturing processes for optimised quality and efficiency.
Once connected goods make it off the production line, automated inventory management will kick in, allowing companies to track their precise real-time whereabouts, condition, order patterns and stock levels all the way from the loading bay to your front door. Warehouse shortages or surpluses could quickly become a headache of the past, with the budget impact of downtime between manufacture and sale shaved to near zero.
Even after sale and delivery is complete, ongoing connectivity will allow for other ground-breaking capabilities such as predictive maintenance. Rather than waiting until a product or service breaks down, or waste money sending out regularly scheduled upgrades and repair crews to check for problems that don’t yet exist, companies can wait for specific devices or systems to detect an issue and respond to it instantaneously.
One intriguing example cited by the Financial Times earlier this year looked at a fleet of Amtrak trains built by Siemens, each of which was fitted over the past year with around 900 of those all-important sensors. The investment effectively gave Siemens locomotives the ability to self-monitor across dozens of live metrics, patching diagnostics through to HQ on a continual loop to help predict and prevent failures, breakdowns or safety issues.
The result? A 33 per cent drop in delays during the first year the tech was running.
It’s the sort of impact many are predicting we’ll soon see extending across an enormous range of industries and sectors. The fact that such ‘smart’ products can now communicate vast quantities of data via the internet without the need for active human intervention means, in theory, that businesses should always be able to stay ahead of their own supply and demand curve. Rather than merely selling goods, an enterprise can now offer a fully managed service along with them, almost regardless of what the product is.
Moreover, as the industrial IoT becomes more widely adopted over the coming years, consumer expectations are quickly going to make doing so a standard requirement.
However, there are still several key barriers to be overcome before we can claim to have fully entered into this much-touted new industrial epoch. They’re not necessarily just financial ones, either: back in 2015, Gartner vice president Jim Tully predicted that the single biggest initial barrier to adoption would be that most companies simply “don’t know what to do with it”; many won’t see a clear “business justification for [investing in] IoT” until it becomes much more visible and widespread, he argued.
Even then, the aforementioned cost barrier will remain a significant one, too. Although a key benefit of the industrial IoT will be to drive down overheads in the long run, it’s going to take some pretty heavy investment to get us there: retro-fitting even relatively cheap sensor and data transmission tech to existing robots can quickly lead to a very hefty bill across an entire fleet or production line.
On top of that, there’ll be the need to fund and develop all the necessary staff skills and training programmes; a considerable time and budget drain that immediately follows any ‘revolution’ involving a workforce. With such a major sea change in prospect, a lot of people are going to have to get up to speed quickly – especially given the added importance of cybersecurity in an industrial landscape shaped entirely by the collection and transmission of potentially sensitive data.
In fact, Morgan Stanley research found that security was the top concern among most respondents to a survey exploring the challenges of IoT adoption in business. Even if we could somehow come up with a largely bulletproof firewall alternative tomorrow, we’d still be left with the thorny and enormously complex problem of building a coherent and consistent legal framework around the rights, risks and ethics of data harvesting on a totally unprecedented new scale.
None of these concerns, though, seem to be deterring analysts from seeing the industrial IoT as the next major era in the history of global market development.
Microsoft even peppered its series of exploratory articles on the IoT with stirring Churchill quotes, presumably the better to impart the full gravity of precisely what’s stirring out there in our increasingly connected backyards.
And, as Tully and Gartner correctly predicted they would two years ago, prices are continuing to fall rapidly throughout the IoT stack, removing many of the traditional barriers to adoption as we edge towards the end of what may yet prove a genuinely revolutionary decade. Once the high-profile early adopters make an industrial IoT visible to a greater number of second-wave enterprises, we can expect the take-up process to start gathering speed exponentially.
When that happens, we’ll have come an awful long way from laughing at WiFi-connected hairbrushes in a very few short months: welcome, then, to the fourth industrial age.