According to the latest forecasts for growth from research analysts Gartner, the predicted connections for 2015 is a rise of 30% on connections this year and the huge increase expected over the next five years reflects the fact that the IoT has become a powerful force for business transformation.
Gartner vice president and distinguished analyst Jim Tully says the IoT and its disruptive impact will be felt across all industries and all areas of society.
“The digital shift instigated by the Nexus of Forces (cloud, mobile, social and information), and boosted by IoT, threatens many existing businesses. They have no choice but to pursue IoT, like they’ve done with the consumerisation of IT.”
Gartner estimates that IoT will support total services spending of $69.5 billion in 2015 and $263 billion by 2020.
Tully says consumer applications will drive the number of connected things, while enterprise will account for most of the revenue, and Gartner estimates that 2.9 billion connected things will be in use in the consumer sector next year and will reach over 13 billion in 2020. The analyst firm expects the automotive sector will show the highest growth rate at 96% in 2015.
And, according to Gartner, manufacturing, utilities and transportation will be the top three verticals using IoT in 2015, and together they will have 736 million connected things in use. But, Foley says that by 2020 the ranking will change with utilities in the No.1 spot, manufacturing second and government third - totaling 1.7 billion IoT units installed.
“Government will take the No.3 spot as it invests in smart street and area lighting for energy saving reasons. Utilities will move to the No. 1 position because of investment in smart meters.”
Foley says that while connected things such as automated teller machines and airline check-in machines have previously existed, “new and novel devices, and many ordinary objects, are also being reinvented with digital sensing, computing and communications capabilities.”
“This functionality provides both new and previously passive objects with a ‘digital voice’, and the ability to create and deliver an information stream reflecting their status and that of their surrounding environment. Such developments radically change the value proposition, creating new services and usage scenarios and driving new business models.”
Vice president and Gartner Fellow Steve Prentice says it is likely that within the next few years, some level of built-in intelligence and connectivity will be regarded as standard, and this will rapidly filter down to mainstream products and services.
“However, CIOs must understand that the most disruptive impact and competitive threats — and, equally, the greatest competitive opportunities — arise not from simply digitalising a product or service, but from creating a new business model and value proposition.
“Organisations must straddle the tension of all the information available from smart things by balancing their desire to collect and analyse it with the risk of its loss or misuse.”
Prentice says the IoT highlights the tight linkages between information security, information technology security, operational technology security and physical security “like never before”, and that executives now face a decision regarding the future of security in their enterprise and who governs, manages and operates it.
“IT leaders will have to accommodate the differences in technologies across those areas and develop a multifaceted technology approach to IoT risk and security.”
According to Prentice, the number of connected intelligent devices will continue to grow exponentially, “giving ’smart things’ the ability to sense, interpret, communicate and negotiate, and effectively have a digital ‘voice’"
“CIOs must look for opportunities to create new services, usage scenarios and business models based on this growth.”
Analysts will explore the impact of IoT on business at the Gartner Symposium/ITxpo 2014 to be held on the Gold Coast from 17 to 20 November. Click here to register for the symposium.