Business Wakes Up to the IoT

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With a blast on the media trumpets and all the blaring fanfare that goes with it, the dawn of the Internet of Things (IoT) is being heralded as the next big thing in computing.  Visionaries marvel, gamers shrug, and homeowners stare up in wonder, while business people get up, make coffee, and do what they do best: check it out to see if there is any real value here.

A recent Intelligence Unit report from the Economist magazine, sponsored by ARM, titled The Internet of Things Business Index (article, video) indicates that, sure enough, “the IoT is on the agenda at most organizations–even if they disagree about its scope.”  Yes, business is waking up to the Internet of Things, and is starting to investigate the opportunities.

EconomistCover2The report’s survey methodology was based on a two-part question: How much is your organization using the IoT externally (eg. product and service offerings) and internally (eg. energy management and production)?  The main finding is that there is a quiet but growing interest in the IoT.  Among the companies surveyed, about 75% of them are at least exploring the possibility of using it internally, externally, or both.  In fact, a substantial portion of them are already moving into the planning and implementation stages, and a significant fraction are using the IoT extensively.

The more cautious companies are watching the early movers, and learning from their achievements and mistakes (42%).  Others are bringing in consultants and outside experts to help them navigate this new field of possibilities (41%).  Still others are doing market research to see what opportunities are to be had in their respective domains (27%).  A few are even releasing test products with an IoT component or tie-in to gauge the response.

One concrete step being taken by most players is to beef up basic capability.  There is some acknowledgement of a lack of knowledge and skills at both the employee and management level regarding the IoT, and so many companies are either hiring people with the know-how (31%), or getting their staff trained (36%).

In addition to this need for better knowledge and skills, respondents to the survey highlighted other areas that could impact the success of the IoT in their businesses.  Among these: infrastructure investment will be costly, many products and services are not inherently IoT-friendly, and consumers will need to be educated.

There is also some concern about developing standards for intercommunication between devices.  “Beyond storing, securing and analyzing these data,” the report states, “companies should also consider how they manage the commercial sharing of the data as the IoT becomes a platform for trading information.”  There is some agreement that the full value of the IoT will only be realized when there is universal participation across the board.  If not we may end up, they warn, with an “internet of silos.”

From our perspective, interconnectivity of data among the players in the IoT is key to its success.  The report says that Liz Brandt, CEO of Ctrl-Shift “envisages the IoT becoming one big trading system for data. The question, she says, is how those data can be traded across the whole ecosystem.”  How, indeed.  That is the challenge, and the opportunity for those who get it right.

Is Convergence the Future for Industrial Automation?

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In many ways, people today are converging.  Across the globe, farmers and peasants are converging on cities.  Inventions like the telephone, radio, TV, and the Internet are bringing us into a single social village.  Companies merge, associations form, grassroot organizations spring up, and people reach out to long-lost childhood friends and perfect strangers over the social airwaves of Facebook, Linkedin, and Twitter.

The powerful force of convergence is being felt in business and industry, and according to The Convergence eBook: The Future of Industrial Automation, in process control and automation.  This ebook outlines the reasons for convergence, and some of the technologies that will help support it.  From our vantage point, one of these is real-time cloud computing.

The Convergence eBook points out several trends that are facilitating this movement towards convergence:

  • Globalization has pushed companies beyond regional and national boundaries to create satellite offices and plants, building demand for fast and flexible communication between people and machines.  As the assets and resources diverge, the data communication must converge.
  • Corporate mandates for greater efficiency and sustainability mean that the status quo isn’t good enough any more.  Management is beginning to take a greater interest in the data pulsing through the veins of the industrial automation systems in their company, and looking for ways to feed that valuable information to the whole body of the company.
  • Moore’s Law describes how computing resources are continually getting smaller and more powerful, which translates into less and less expensive.  Low-cost sensors and other devices are making more and more data available, and this data converges on SCADA and MES (manufacturing execution system) platforms.
  • Concept, Main gear in mechanism on white isolated background. 3dAutomation technology is converging to the point where it is possible to host a single software development environment and runtime application on one control computer to provide multiple functionality over a single network.

All of these examples of convergence depend on real-time data communication.  In most cases the physical location of the devices, facilities, offices, or factories is spread apart.  What mediates the convergence is the data flow.  The more accessible, reliable, and quick the data flow, the tighter the integration and convergence.

Until recently the opportunity for convergence for real-time data was available mainly within a single factory or SCADA system.  What cloud computing offers is an opportunity to raise the level of convergence among multiple plants, between factory and main office, or even integrating offshore facilities.

Get Ready for the Industrial Internet

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What happens when you add 200 years of the industrial revolution to 20 years of the Internet revolution?  According to GE, the sum of these becomes the “Industrial Internet.”  In a recent white paper, “Industrial Internet: Pushing the Boundaries of Minds and Machines,”  authors Peter C. Evans and Marco Annunziata argue that a new wave of productivity gains is taking shape.  How much of this Industrial Internet will depend on real-time cloud computing?  Potentially quite a lot.

The Industrial Internet is a synergy arising from three increasingly intelligent players: devices, systems, and decision-making.  As instrumentation grows smaller, lighter, and more ubiquitous, sensors and other devices are becoming more intelligent by incorporating microprocessors with digital capabilities.  In this growing Internet of Things, far more sensor data is available than ever before, and this trend can only accelerate.

At the same time, networks that can move the data are getting faster and more robust, as broadband communication expands globally.  The resulting “Big Data” that is starting to pour in from so many sources in industrial systems will provide the basis for “intelligent decisioning.”

Intelligent Decisioning

Intelligent decisioning works by applying advanced analytic methodologies to historical data in near-real-time, and combining it with streaming data inputs in real time.  The results can be provided to strategic analysts and even control-room operators in summary or graphical formats, allowing them to make informed, split-second decisions in circumstances that previously may have depended on gut feelings or sheer guesswork.

“Intelligent Decisioning is the long-term vision of the Industrial Internet,” states the paper.  “It is the culmination of the knowledge gathered as the elements of the Industrial Internet are assembled device-by-device and system-by-system. It is a bold vision that, if realized, can unlock productivity gains and reduce operating costs on a scale comparable to the Industrial and Internet Revolutions.”

Titan blades of jet plane engineWhat kind of productivity gains and reduced costs?

GE works with big machines – locomotives, jet engines, power plants, wind turbines, and so on.  They talk about “big things that spin”, all the engines, motors, turbines and other industrial equipment that has moving, rotating parts, over 3 million in total around the world.  If the Industrial Internet can provide just a 1% improvement of efficiency in, for example, fuel economy for jet engines, that would translate into a savings of 2 billion dollars per year.  Similar savings can be made on maintenance costs.  And that’s just one area.

Combining manufacturing, transportation, healthcare, and other industrial activities in both developing and advanced economies, the combined value is over 30 trillion dollars,  close to half of the current global economy.  The paper demonstrates how the value of increasing the overall efficiency of those assets by a very small percentage can lead to huge gains in national and world economies.  “Our analysis of the Industrial Internet’s potential impact in a number of key sectors suggests that its productivity-boosting potential should be at least comparable to that of the first wave of the Internet Revolution.”

What is needed to make this all work?

Of course, this will not all happen by itself.  The authors point to three essential elements that must be developed:

1. Technological innovation and investment in sensors and user interfaces.
2. Security systems to protect sensitive data and intellectual property.
3. Highly trained and talented people to build and run the systems.

One key to the success of all three of these is the ability to move data quickly and securely from sensors and devices to the Big Data systems that will crunch the numbers, and then provide the results to the right people in the right way.  Here is where we see real-time cloud computing fits in.

To gain a comprehensive view, data will need to be collected from a wide range of devices scattered across potentially large distances.  It will need to be collected and integrated in real time, and then stored in such a way as to be immediately available on demand.  In many cases this historical data will need to be integrated with real-time data coming in from similar or potentially different sources.

As demands flow into the system, it must respond rapidly to move the results of analysis to locations near and remote.  Although real-time responsiveness may not always be required, a cloud based system that can respond to bursts of demand will be better positioned to meet the needs of mission-critical systems that are likely to be well-represented in the Industrial Internet.

Right now the infrastructure of the Industrial Internet is taking shape.  We look forward to active participation in contributing our expertise in real-time cloud computing and industrial systems to help turn the vision into reality.

Cisco Values the Internet of Everything (IoE) in Trillions

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Over 14 trillion dollars, actually.  In a recent white paper, Cisco visionaries Joseph Bradley, Joel Barbler, and Doug Handler say that the Internet of Things (IoT) will sooon evolve into the Internet of Everything (IoE).  In the coming decade, from 2013 to 2022, the Value at Stake is estimated at $14.4 trillion.  And they say now is the time to make your move.

IoE?  What happened to IoT?  According to Cisco, the IoT is merely the connection of things (devices) to the Internet.  The IoE, on the other hand, is the connection of everything to the Internet, where “everything” includes people, process, data, and things, which they say, when combined, will turn “information into actions that create new capabilities, richer experiences, and unprecedented economic opportunity for businesses, individuals, and countries.”

OK, that sounds wonderful enough.  But pretty abstract.  Can we get a little more concrete?  For a start, where do the 14.4 trillion dollars actually come from?  What is this Value at Stake that they claim?

According to the paper, Value at Stake is the value of increased revenues and reduced costs that will accrue to businesses who move quickly to embrace the IoE and its associated technologies.  They calculate that it is an “up for grabs” opportunity to increase profits by a global average of about 21 percent, coming from two sources:

1. New value based on technological innovation.
2. Acquired value through competitive advantage and increased market share.

The Power of Connection
The engine driving this huge increase in value for companies is attributed to the power of connection.  The paper says that the IoE “reflects the reality that business value creation has shifted to the power of connections and, more specifically, to the ability to create intelligence from those connections.” Apparently internal factors like core competency and the knowledge found among one’s own employees is not sufficient any more.  Companies in the age of the IoE will gain advantage through connecting to external sources of knowledge.  We can already see this trend in motion today, and as more things get connected to the Internet, it can only increase.

Security Considerations
As anyone with any experience with the Internet might guess, much of this hinges on the ability to provide solid security.  “Robust security capabilities (both logical and physical) and privacy policies are critical enablers of the Internet of Everything Economy,” the paper states.

The growth projections for the IoE are predicated on the idea that the environment will be secure enough to reassure potential participants to sign on.  Although the authors did not dwell on this point, they pointed out that security technology must be combined with sound policy and effective implementation to ensure the privacy of both companies and customers.

Smart FactoriesFactory Workers
The bulk of the paper looks at the various sectors that will benefit most from the IoE, and one anticipated big winner is manufacturing, by bringing so-called “smart factories” on line.  Close to 2 trillion dollars of value are expected to be generated within this sector alone.

Improved connectivity between machines, combined with better access to the data, are expected to increase efficiency and productivity.  Rapid feedback from users and other machines will help to eliminate production bottlenecks, improve utilization of equipment, and provide hard data for system design.  Even the machines themselves will benefit, as the intelligence gathered can be used to design superior, next-generation tools.

“Value in smart factories is obtained from cost-cutting, revenue growth, and better workforce collaboration,” the paper states.  “With this in mind, manufacturing leaders should accelerate adoption of IoE technologies and consider initiatives that focus on improved collaboration among workers to make employees more efficient.”

Will the Internet of Things evolve into the Internet of Everything?  Will people, data, process and things become well enough connected to produce billions of dollars in value in the next ten years?  Judging from the way things are currently moving, we think so.  It certainly make sense to plan for it.

The Magnitude of the Internet of Things

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For the past few years leaders of thought in major companies and research firms have been creating a number of market forecasts for the Internet of Things.  Pulling together some of the best of this analysis into an Internet of Things Market Forecast is an organization called Postscapes, whose mission is to “aggregate and connect the ideas, people and companies creating the Internet of Things.”

Contributors to the forecast include some of the big players in the game, such as Cisco, Intel, GE, Freescale, ARM, and Ericsson.  In addition are a number of independent analysts and paid researchers like Harbor Research, Arthur D. Little, Smith & Associates, and Forrester Consulting, to name a few.

What strikes me as a common thread running through most of this resarch is the sheer magnitude of the Internet of Things, which seems to be building from a distant ocean swell into a breaking wave, promising to push society forward at a highly accelerated  pace.  The word “magnitude” itself conjures up different meanings, many of which seem applicable.  Here are some examples, based on reports from the forecast:

Greatness of rank or position

  • BigWave“Estimates of the future market size of the Internet of Things cover a broad range, but most pundits agree it will dwarf any other market.” – Freescale/ARM
  • “The ‘Internet of Things’ is among the hottest topics currently being debated, with the projected potential in turnover whetting the appetite of industry experts around the globe.” – Arther D. Little

Greatness in size or extent

  • “Global machine-to-machine connections will rise from two billion at the end of 2011 to 12 billion at the end of 2020.” – Machina Research
  • “… between 2013 and 2022, $14.4 trillion of value (net profit) will be ‘up for grabs’ for enterprises globally — driven by IoE (Internet of Everything).” – Cisco
  • “Consider your own household, and count the number of mobile phones you currently have. Then count the number of windows, doors, electrical outlets, lights, appliances and heating and AC units you have. You’ll quickly see why the IoT market will surpass the mobile phone market, at least in the western world.” – Freescale/ARM

Greatness in significance or influence

  • “The vision of more than 50 billion connected devices will see profound changes in the way people, businesses and society interact.” – Ericsson
  • “We have entered an era where people, businesses and social organizations are beginning to understand the profound impacts awareness, collaboration, and intelligence will bring. In the not too distant future, hundreds of millions, then billions, of individuals and businesses, with billions, then trillions, of smart, communicating devices, will stretch the boundaries of today’s business and social systems and create the potential to change the way we work, learn, entertain and innovate.” – Harbor Research

A measure of energy from an earthquake

  • “The compounding effects of even relatively small changes in efficiency across industries of massive global scale should not be ignored.” – GE
  • “The opportunities this opens up to forward thinking product and service organizations are nearly infinite. Businesses can begin to explore many new possibilities for system solutions unthinkable just a few years ago.” – Harbor Research
  • “Just as the Internet phenomenon happened not so long ago and caught like a wildfire, the Internet of Things will touch every aspect of our lives in less than a decade. Are you ready for it?” – Freescale/ARM

That’s a good question: Are we ready for it?  In a few upcoming blogs we will take a closer look at some of the ideas and opinions of these leaders of thought and see how they relate to real-time cloud computing—and what we can do to ride the growing wave of the Internet of Things.

Investing in the Internet of Things

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As the Internet of Things becomes more and more a reality, and as the world sits up and takes notice, we can expect an increasing amount of capital to flow towards the underlying technologies. A recent report from Technavio, a London-based technology research and advisory company, predicts that the machine-to-machine (M2M) market worldwide will grow at a compound annual rate (CAGR) of over 25% from 2012 to 2016.

There are currently many industries using M2M devices and services, such as RFID readers for product tracking, location-based services for fleet management, and M2M sensors that track inventory in the manufacturing sector. When you add to that the applications now coming online like smart meters, security cameras, vending machines, and even home appliances, there are clearly abundant investment opportunities opening in the near future.

InvestSpreadsheetThe Technavio report points out that one of the main driving forces behind this rapid growth of the Internet of Things and M2M communication is the drop in prices of the devices themselves, as well as the costs involved in connecting them. As chip manufacturers continue to miniaturize their products and reduce costs, the price of the hardware shrinks to insignificance. At the same time, according to the report, the cost of M2M services is also going down.

However, the report states that there is still one aspect of the Internet of Things that presents challenges: data integration. Simply connecting all of these devices presents challenges, as many of them are not capable of sustaining a TCP link to the Internet. Even for those that can connect, there are dozens of communications protocols in use, and no agreement yet on which is best. And finally there is the question of how to manage all the data traffic that results from so many connected devices trying to talk to each other.

Despite these integration challenges, investment in the Internet of Things makes a good deal of sense. Significant growth is expected in the electronics and semiconductor sector, and for those seeking greater opportunities, investing in technology that can provide the core requirements for real-time cloud computing might prove to be a wise decision.