Big Data. Predictive analytics. Smart devices. The Internet of Things...

These are some of the buzzwords you’ve undoubtedly heard that begin to describe a truly connected world. As has been promised for some time, we are moving from a world of standalone appliances into a world of devices that incorporate network-connected sensors. Imagine your alarm clock “talking” to the appliances and devices you use in your home every morning when you wake up. While this interconnected world is not yet a mainstream reality, tremendous movement is underway, and The Internet of Things (IoT) is probably not as far off as you might think. In the words of Joe Tucci, CEO of EMC Corporation, “The Internet of Things is coming, and you better disrupt or prepare to be disrupted.”

In a July 3, 2013 article by Ben Rooney in The Wall Street Journal, Simon Cook, CEO of a London-based venture capital firm, used a mousetrap as an example of IoT. “The one thing about a mousetrap is that you have to empty it once it has caught a mouse,” Cook said. “Now imagine an Internet-of-Things mousetrap. That is no longer a product; that is a service. Instead of someone going to look to see if a mouse has been caught, they will know once it fires. Then you take that data and you start to track where the mice are and you can solve the mouse problem. That is how you go from a product, via Big Data, to an entirely new service.”

Growing the Internet of Things
There is no doubt the world is becoming more and more connected every day—and with that comes a remarkable opportunity to increase efficiency and generate new ideas based on the information being collected. According to a December 2013 Gartner report, the Internet of Things (which excludes PCs, tablets and smartphones) will grow to 26 billion units installed in 2020—a whopping thirty-fold increase from just under the one billion units installed in 2009. By contrast, Peter Middleton, research director at Gartner, estimates the number of smartphones, tablets and PCs in use in 2020 will reach about 7.3 billion—just a four-fold increase from the estimated 1.75 billion in use in 2009.

What does that mean in terms of economic impact? The same Gartner report indicates IoT product and service suppliers will generate estimated incremental revenues of $300 billion in 2020—though most of that revenue will be in services. The truly staggering figure is that within the same timeframe, IoT will result in $1.9 trillion in global economic value added through sales into diverse markets. It’s difficult to imagine an industry that will not see an impact from IoT, as benefits will range from utilizing advanced medical devices to sensor motes for increased agricultural yield to monitoring systems for the distribution of resources like water and electricity.

Envisioning Impact
Much of the impact IoT will have on industries is hard to imagine. That’s because, as Middleton notes, “many categories of connected things in 2020 don’t yet exist. As product designers dream up ways to exploit the inherent connectivity that will be offered in intelligent products, we expect the variety of devices offered to explode.” Further, as Cisco Systems CEO John Chambers said last May, “The Internet of Things, I think, will be the biggest leverage point of IT in the next 10 years—$14 trillion in profits from that one concept alone.”

What types of disruptions can be expected from IoT? One example comes from something as simple as LED lighting, which Heather Clancy, a contributing author on Forbes.com, called the “Trojan horse” of the Internet of Things. She notes that as LED prices fall, the adoption rates of LED lamps are increasing. Because the semiconductor nature of LEDs makes them inherently controllable, many are being sold with built-in controllability, meaning that each new LED fixture could become the node on an intelligent controls network—harvesting useful data about temperature, occupancy and the surroundings that could lead to a host of other applications. Clancy adds that in a commercial building, LED lighting networks could help with a myriad of activities ranging from security applications—letting people know when someone has entered a room—to administrative functions—managing conference room attendance or keeping track of which department uses certain areas or resources.

Opportunities Ahead
There is no doubt we will continue to see the rapid growth of connected things. The challenge that lies ahead is to create value from these connections for end users. It will be about taking the available data and providing customers with the best tools possible to make decisions with information that has never before been captured. It will be about having the ability to move beyond the evolutionary changes we have seen from business intelligence and analytics into transformational changes. I believe that move from evolutionary to revolutionary will be a result of the same principle that has driven success and transformational changes for years—the ability to utilize very talented people to apply technology in a meaningful way.

I look forward to the challenges and opportunities that lie ahead through connected devices. It will be exciting to see things like “smart” buildings get even smarter as devices and systems are increasingly integrated—gleaning information that can be applied in truly revolutionary ways. And while some individuals have been critical of the IoT hype, I tend to agree with Joe Bradford of Cambridge University who said IoT is probably another example of Amara’s law: we tend to overestimate the effects of a technology in the short run and underestimate the effects in the long run. iBi

Kip McCoy is director of product development at ENTEC Services, Inc.