IoT Adoption is Delivering Significant ROIPosted in Blog
The Internet of Things (IoT) has come a long way since presenters at the 1990 Interop Networking Conference wowed the crowd by controlling a Sunbeam Deluxe Toaster via the Internet. In fact, jumping forward to the present day, IoT has burgeoned into a rapidly expanding, multi-billion dollar industry, with predictions that over 200 billion IoT-connected devices will exist by 2020. By 2025, according to projections by McKinsey Global Institute, the global economic value generated by the IoT could reach $11.1 trillion.
Countries and businesses worldwide have been waking up to the IoT’s revolutionary potential, with the speed of adoption rapidly picking up pace across industries. In a recent report by HPE which surveyed 3,100 business and IT decision makers across 20 countries to evaluate the scope of IoT uptake, 57% of companies reported having already adopted IoT technologies, while 89% stated their intention to do so by 2019.
Globally, China is leading the way in Industrial IoT (IIoT) adoption and Machine to Machine connectivity (M2M). China currently has more connected devices than any other nation. According to a report by the GMSA, these connections represent almost a third of the global base, and rapid growth of the IIoT has been fueled by the country’s massive economies of scale, industrial partnerships, and government support.
Kevin Ashton, inventor of the term “Internet of Things”, points out how China’s investment in the IoT to date has put the country far ahead of the global curve.
“China is so far ahead in the IoT world, and is three or four times more productive in terms of high-tech exports than its nearest competitor,” says Ashton, which is Germany, followed by the United States. “So far ahead for the same reason the U.S. was so far ahead for the PC and the internet, because of intelligent government infrastructure.”
“When you have a Chinese premier, for example, talking about the Internet of Things in public, it’s a pretty clear sign that his government is aware of what’s going on in technology and is planning and investing in the future of technology.”
As with most emergent technologies and processes though, initial implementation of the IoT can be cost and time-intensive. Recent research by Accenture points out the possible challenges and risks to Chinese manufacturers posed by the IoT, which includes a lack of integration and operability between data communications systems and potential security breaches of sensitive data through unsecured servers. What factors, then, might be propelling China and other early adopters to embrace IoT technologies? What’s the driving impetus for manufacturers to connect their businesses to the internet?
An investment of time and resources into the IoT, it appears, has the potential to yield enormous results for these forward-thinkers .What do these benefits look like for manufacturers? According to James Heppelmann, CEO of PTC, in an interview with McKinsey Global Institute, there are three important and impressive applications of the IoT that could revolutionize the value chain.
“The first is that you can service things better if you can communicate with these things and have feedback loops. You can be proactive. You can be efficient. You can maintain higher degrees of uptime. Better output with lesser input,” says Heppelmann.
“The second thing you can do is you can operate these things better—operate them remotely for reasons of safety, efficiency, accessibility, you name it. And the third thing is that you can make them better,” Heppelmann asserts, by implementing feedback loops into the engineering and design processes to understand how the product performs in the customer’s hands. As a result, a company’s efficiency, differentiation, and value can skyrocket.
Maciej Kranz, author of Building the Internet of Things, notes a compelling illustration of these benefits in a recent interview with The Street.
“Harley [Davidson] is a great example,” says Kranz. “Before implementing IoT, it took them roughly 18 months from the time they took an order for a custom bicycle from the time they actually shipped it.”
“By implementing IoT in their operations, connecting basically everything throughout the common process, they reduced this time from 18 months to two weeks.”
These extraordinary advancements in manufacturing are highly pertinent to China’s key sector—by harnessing the IoT to optimize the production process, improve efficiency and safety, and open up new possibilities for innovation, the IIoT can contribute to massive economic growth for the country. Accenture’s research reveals that manufacturing is poised to account for the IoT’s largest economic gains (40%) over any other industry. This could lead to a cumulative potential impact of US$736 billion by 2030 if the country drives smart investment and resources into boosting its impact.
It’s clear that, even while still in a relatively early stage of its potential, the IoT is poised to accelerate exponentially throughout manufacturing and other major industries. Internet of Things Inc. (TSX-V:ITT) understand this significant opportunity and believes the Industrial IoT market in China will reap tremendous benefits for those who get on board – and perhaps leave far behind those who don’t.