What IoT Means To Businesses In 2016 And Beyond

by CXOtoday News Desk    Nov 30, 2015

iot

The Internet of Things (IoT) is expected to continue its transformative potential across industries in the foreseeable future. This momentum is expected to continue in 2016, with services expected to lead spending in the IoT space. Frost & Sullivan estimates the IoT market to be valued at US $24.2 billion in 2015 and will reach US $79.3 billion in 2020 with a CAGR of 26.8 percent from 2015 to 2020, with services accounting for nearly three quarters of the market by then. 

“The major IoT opportunities will be in the deployment and management of IoT projects. This will lead to a requirement for new skill sets which are currently scarce in the APAC region,” noted Mr. Andrew Milroy, Senior Vice President, ICT Practice, Asia Pacific. There will also be a shift towards computing decentralization as the IT industry gradually shifts towards using more IoT technology. Examples include P2P networks becoming more widely used, allowing connected devices to communicate directly with each other rather instead of being routed through a centralized data centre.

Milroy also expects IoT to be heavily influenced by ‘Cloudification’ and this will lead to its own set of challenges. These include the large amounts of data involved, realignment of existing processes and security solutions.

IoT To drive cyber security strategies

The increasing use of mobile devices and the gradual spread of the IoT will offer many more attack vectors, and increases the risks of successful attacks enormously. The ongoing convergence of operational technology with information technology will enable the successful attackers to have much greater impacts than before.

Industrial control systems are more vulnerable than ever before and security will be the number one consideration as these systems are modified or developed. In 2016, it is evident that security will be prioritized and built into the architecture of any new systems before they are implemented. 

Big data + IoT vendors to collaborate

Less than 5 percent of the data captured by sensors today are used for optimization analytics and this figure has a potential to increase significantly as more and more devices get connected to the Internet. With the growth of data coming from IoT becoming a reality, Big Data providers are starting to sit up and take note and incorporate solutions that cater to this growth.

As it becomes clear that IoT data will potentially dwarf social media and traditional internet data, Big Data providers have started working closely with IoT vendors to create platforms to support data management, data analytics and enable data collaboration. Enterprises today utilize insights collected to drive efficiency in their internal processes and we are seeing more use cases where big data is used as an extension of an enterprise’s core revenue but this will require a change in their existing business model. This will take time for revenue to grow because their customers will also need to change their procurement processes to cater to this. 

Auto, healthcare and IoT

Digital disruption is set to be the norm across industries as they look to transform to keep their business relevant amidst the ever changing technological landscape. According to the analysis, this trend will lead new business models and is set to stay.

“The Product as a Service model will become the norm in many industries. Over 70 percent of Fortune 500 companies will operate Product as a Service business models, with the Automotive Industry and Electronics Industry expected to lead this revolution at 15 percent and 13 percent respectively,” said Milroy. 

Key examples of Product as a Service include auto makers offering car sharing services on a pay per use system (Automotive), medical device manufacturers offering health monitoring systems (Healthcare) and IT hardware providers offering separation of products and services businesses (IT). 

Opportunities for IoT in APAC

The Internet of Things (IoT) market is one of the fastest growing segments in the Asia Pacific technology industry. The total Asia Pacific spending on IoT spending is forecasted to be $79 billion by 2020. This offers real opportunities, especially in areas of transportation, logistics, manufacturing and consumer technology, which are expected to be fast growing segments over the next three years. 

The Internet of Things market is evolving from one where the focus is on connecting of devices to one of using the information collected to create new services and business models. This is fundamentally changing the way companies market their products and services.

“With IoT, companies are moving from transactional product sales to a longer term relationship and service model, where everything can be offered as a service or ’servicetization of industries’,” said Mark Koh, Senior Industry Analyst, ICT, Frost & Sullivan, Asia Pacific.

“As IoT moves from consumer and enterprise centric applications to vertical/ industrial applications, the potential growth of IoT is expected to exponentially grow over the next 5 years,” he noted.