Everyone’s talking about the Internet of Things (IoT) – a concept that is completely transforming the way organisations operate. The IoT is essentially made up of technologies that enable information from devices to flow to people so they can make decisions in real-time to drive better business outcomes.
It’s underpinned by seamless communication between machines that helps organisations improve service and deliver competitive advantage. Over time, more and more simple decision making will be handled by machines without relying on people to take action to complete certain tasks.
IT leaders gathered at a CIO roundtable event in Melbourne recently to discuss how the IoT will revolutionise their organisations, and the role they will play in creating IoT strategies. The event was sponsored by Microsoft and Readify.
All attendees agreed that it’s a huge market. In fact, the IoT will contribute up to US$6.2 trillion annually to the global economy by 2025, according to McKinsey Global Institute.
Around one-third of IT leaders responding to research conducted by CIO, Microsoft and Readify say the IoT will provide better insights to drive operational efficiencies inside their organisations. Similar numbers say it will enhance customer service, cut costs, and improve processes.
Engineering firm, Norman Disney & Young, has a number of projects examining how data collected from many devices in a building can be used to improve its operational efficiency, says IT director, Frank Italia.
This is particularly important as building designs need to be practical in the short term but also allow for future uses and energy efficiency of a building’s life.
“By representing this data in a graphical format – including the overlay of information over building designs – we are able to identify some delivery outcomes for our clients and projects,” he says.
Italia adds that the interconnectivity of devices and central systems to improve the operations of buildings helps the organisation create environments where occupants are healthy, happy, and productive.
Globally, Siemens is involved in numerous IoT projects, says the company’s manager, solutions consulting and PMO, Ian Tribe.
These range from predictive analysis of data on end devices to help optimise maintenance strategies on wind turbines through to smart electricity grids.
These grids react to natural events like hurricanes and re-route power automatically to ensure minimal power disruption during these occurrences.
“In fact, we manufacture a product in Australia called “Fusesaver” that allows intelligent remote reconnection of power lines after a trip event,” he says.
So what are the keys to success for IoT projects and what do organisations need to get right to make these initiatives work?
Mitch Denny, CTO at Readify, says that organisations need to realise that the IoT isn’t something that they should race out and buy. Rather, it’s an emerging property that is created by deploying small integration projects that connect embedded systems to the Internet. Data from these systems can then be used to make business decisions.
Denny suggests that organisations working on IoT projects should start small, always be aware of how these initiatives affect people, focus on business value, measure results and iterate.
Who’s responsible for driving IoT strategy?
Forward-thinking CIOs will have a big role to play in the implementation of IoT solutions across businesses but other CxO roles should provide a focus on what business value is being achieved, says Readify’s Denny.
Microsoft’s internet of things commercial director, Karl Miklis, adds that there is no perfect owner of IoT projects in an organisation. Still, decision makers across various lines of business are emerging as key players for these projects as they look at IoT and related technologies to solve business problems.
“For example, in the manufacturing industry, there has been equal collaboration between the head of IT and the VP of operations or plant manager on common IoT project plans with joint accountabilities for success,” he says.
Attendees agreed that CIOs will need to broaden their understanding of the people and processes these interconnected devices will impact.
Norman Disney & Young’s Italia, says this is absolutely true as the role of the CIO is to support the business drivers.
The construction industry, in particular, is undergoing fundamental changes to its work processes, which means the CIO is now at the point of having a seat at the table, and connecting with CMOs and other customer-facing groups, he says.
Jamie Stewart, group manager, information services at distribution and logistics organisation, BevChain, says CIOs will always need to broaden their understanding of the IoT and its impact on the business.
“The IoT is a new world of thinking and opportunity. I think this is challenge – taking off the blinkers and allowing yourself to realise the opportunity possibly beyond your current understanding and experience,” he says.
Suresh Hungenahally, CISO at the Department of State Development, Business and Innovation, says he is responsible for driving IoT strategy along with the manager, IT strategy and architecture.
He agrees that a broader understanding of people and processes is required.
“IoT technology opens up a new raft of avenues for connectivity and complex business decision making,” he says.
Organisations face a raft of challenges when deploying IoT infrastructure. For instance, difficulty in connecting IoT devices to existing systems was the biggest issue for 45 per cent of respondents to the survey completed by CIO, Microsoft and Readify.
Lack of experience across organisations and choosing an appropriate IoT platform also has the potential to stall projects for many respondents.
Each project will have its own unique problems which may include connectivity, integration of legacy equipment or deployment cost, says Readify’s Denny.
“The key to success is to start small to avoid making large, costly mistakes but also get events flowing back into a more malleable platform as soon as practical.
“In many cases, that means picking a cloud platform to integrate with and pumping event data backwards and forwards between devices. Once you’ve got that working, you can start to add the analytical insights and automated logic incrementally,” he says.
BevChain’s Stewart says IoT infrastructure involves another layer of integration capability that most existing systems have – technically and around data availability.
“Given the ever increasing speed of deployment and customer expectation, operations need to start accepting the need, more than ever, to partner outside for experience and capability,” he says.
But people often feel overwhelmed when they see definitions and hype about IoT, says Microsoft’s Miklis.
When analysts and other companies mention connecting billions of devices or creating trillions of dollars in economic value, it can be difficult to equate that to what it can do for an organisation today, he says.
“But there’s no real reason IoT has to be futuristic, complicated, or overwhelming.
“Microsoft’s view is that instead of being bewildered by the huge universe of things made up of billions of assets, think about it as The Internet of Your Things, where “your things” are what matter most to a business,” he says.
Finally, attendees agreed that standards defining how devices connect in this IoT world, were also very important.
“In an ideal world, I would like to see a single standard whereby all devices communicate, especially if that standard was open for everyone to collaborate,” says Norman Disney & Young’s Italia.
“However, the pace and scope of technological change is actually a barrier to a single source standard, meaning we rely on a bevy of standards which somehow knit together,” he says.
Readify’s Denny believes standards are a double-edged sword.
“Back when the industry was spinning its propellers around web services, we came up with some quite complex solutions to things like message encryption and authentication.
“Ten to fifteen years later, we actually peeled a lot of that away and gone back to simpler protocols and standards because we found it was actually easier to integrate.”
He says many standards are focusing on the format of messages and routing but there’s another interesting challenge in device discovery and resolution.
“I’d like to see faster adoption of base standards such as IPv6 on the public internet as it could have a dramatic impact on device discovery and communication,” he says.
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