CIOs: seize the multitrillion-dollar Internet of Things opportunity

TSpider in webGiven the ubiquity of social media channels such as Facebook, it’s easy to think of the internet as the preserve of humans. But smart machines are coming to the fore.

We are talking, of course, about the Internet of Things (IoT). This is where sensors, RFID tags and tiny computers allow components, everyday objects and machines to communicate with one another.

Today, only 1% of all objects are connected. But the number of connected items is predicted to rise to 55 billion by 2020 – representing a market potential of a stunning US$19t (1).

Why the IoT really matters: growth through innovation

The IoT offers exciting potential for innovation:

  • Patients can be monitored remotely.
  • Smart home thermostats can maximize energy efficiency.
  • Aircraft engines can alert their maintenance teams when repairs are needed.
  • Sensors in food cartons can issue alerts for potential spoilage.

However, the real opportunity of the IoT lies in business model innovation. With the IoT, companies are moving from selling products to selling outcomes.

Take the example of John Deere, which no longer just sells agricultural machinery. With its PowerSight solution, it offers recommendations on preventive maintenance and helps to identify potential problems before they cause downtime.

CIOs are essential to unlocking sustained value from connected devices

Seizing this new opportunity poses a significant tech challenge for the CIO. Companies will need to develop integrated platforms that embrace a whole host of technologies, from embedded devices to mobile technology.

This will be an extremely complex undertaking. The CIO will need to frame the objective as a business outcome, help define the supporting processes and deliver a smart tech solution.

When tackling the IoT, CIOs should focus on these three key tasks:

  • Make sure your technologies are as usable and intuitive as the tools we use every day, such as iPads and smartphones. The IoT is about machines talking to each other, but it’s humans who will be the end users.
  • With all the data swirling around the IoT, you need to build watertight cybersecurity.
  • Prepare for the data deluge. You need to know what types of data will emerge from your IoT initiatives. And you need to work out how to store, retrieve and analyze these large volumes of data in a way that will add value.

The possibilities of a hyperconnected world seem endless. The time is ripe for CIOs and their companies to profit from the age of the machine.

(1) “Internet of Things: Like the Air We Breathe”, CeBIT, 2015.

The IoT is the lead topic at this year’s CeBIT global conference, kicking off on 16 March in Hanover, Germany. EY is attending the CeBIT and sponsoring the CODE_n program, which includes an international start-up contest. If you want to learn more, visit us in Hall 16.

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