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SPRING S TECHNOLOGIES Research Report 2016

The Internet of Things (IoT)

The evolution of products into intelligent, connected devices

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SPRiNGS Believe in Innovation>>

The Internet of Things (IoT): The evolution of products

into intelligent, connected devices

Training Services Software services Research services

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The Internet of Things (IoT): The evolution of products into intelligent,

connected devices

Executive Summary

Where is your business going? How will you make it thrive? How will you make the most of what you

have, and incorporate today’s and tomorrow’s technology breakthroughs to ensure your business is set

up for the long term? How are you going to help your employees become more efficient? How are you

going to reduce costs yet improve customer service? The answers to these questions—and many more

that keep you up at night—likely already exist in your business with the data and systems you have today.

You may need ideas, inspiration, and technology partners to help you stop running your business and

start making it thrive.

While technology trends and buzz can be exciting to read about, they can also be challenging to assess

from a business perspective and challenging to drive business value from. The Internet of Things, also

known as IoT, is one such trend. The Internet of Things provides vast opportunities, but it can also pose a

challenge to enterprises, since it can seem overwhelming, complicated, and expensive.

A new wave of technological advances in wireless communication is making possible a dynamic

ecosystem of connected devices designed to improve how we live and work. The Internet of Things (IoT)

involves information linked networks comprised of sensors and other technologies embedded in physical

objects, such as refrigerators, electronic meters, electronic tags, home automation systems, etc. IoT is

expected to accelerate the connection of devices, IT systems and networks similar to how the Internet

connects many of the world’s seven billion inhabitants. By the end of this decade, some estimates suggest

the Internet of Things could connect as many as 50 billion devices 1—or approximately six devices per

person on the planet.

While the potential impact of the IoT is considerable, a concerted effort is required to move beyond this

early stage. In order to optimise the development of the market, a common understanding of the distinct

nature of the opportunity is required. To date, mobile operators have identified the following key

distinctive features:

1. The Internet of Things can enable the next wave of life-enhancing services across several

fundamental sectors of the economy.

2. Meeting the needs of customers may require global distribution models and consistent global

services.

3. The Internet of Things presents an opportunity for new commercial models to support mass

global deployments.

4. The majority of revenue will arise from the provision of value-added services and mobile

operators are building new capabilities to enable these new service areas.

5. Device and application behaviour will place new and varying demands on mobile networks.

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Contents

The Internet of Things Defined…………………………………………………………………………….…………… 5

A New Organizational Structure………………………………………………………………………….……………. 6

Lessons from the Software Industry…………………………………………………………………….…………… 8

How Smart, Connected Products Change Services………………………………………………….………. 10

Ten Internet of Things facts and predictions……………………………………………………………….…… 11

Adapting Corporate Structure to Reflect the Connectivity of IoT………………………………….. 12

Conclusion…………………………………………………………………………………………………………….………… 13

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The Internet of Things Defined

The Internet of Things is a growing network of everyday objects – from industrial machines

to consumer goods – that can share information and complete tasks while you are busy

with other activities, like work, sleep or exercise.

IoT is the application domain of Machine to Machine (M2M) communications and it provides the

“plumbing” or connectivity that enables the IoT ecosystem.

The term “Internet of Things” was coined by a founder of MIT’s Auto-ID Center, which specialized in RFID

research. The Internet of Things is the network of people and objects connected via the internet, each

with their own unique identifier and capable of transmitting data over a network without direct human

interaction.

Although technology experts have anticipated the evolution of devices with embedded microchips, the

proliferation of industry devices, and the rise of machine-to-machine communications scenarios for

decades, today the Internet of Things is at an inflection point. Multiple factors are coming together to

create the climate for major, worldwide adoption.

A New Era of Lean

Smart, connected products will help make people, materials, energy, and plant and equipment far more

productive, and the repercussions for business processes will be felt throughout the economy.

The operations and organizational structure of firms are being radically reshaped by products’

evolution into intelligent, connected devices. by Michael E. Porter and James E. Heppelmann

Internet Smart Devices Cloud

Platform

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A New Organizational Structure

Smart, connected products require functions within manufacturing firms to collaborate in new ways. A

new functional unit focused on data management is starting to appear.

Redefining Industry Boundaries

The increasing capabilities of smart, connected products not only reshape competition within industries

but expand industry boundaries. This occurs as the basis of competition shifts from discrete products, to

product systems consisting of closely related products, to systems of systems that link an array of product

system together.

SPOTLIGHT ON MANAGING THE INTERNET OF THINGS

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Smart, connected products will give rise to the next era of IT-driven productivity growth at a time when

the impact of earlier waves of IT has largely palyed itself out.

The New Technology Stack

Smart, connected products require companies to build and support an entirely new technology

infrastructure. This “technology stack” is made up of multiple layers, including new product hardware,

embedded software, connectivity, a product cloud consisting of software running on remote servers, a

suite of security tools, a gateway for external information sources, and integration with enterprise

business systems.

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Lessons from the Software Industry

Many of the organizational shifts that smart, connected products are bringing to manufacturing mirror

changes that have already taken root in the software industry. This is not surprising, since the evolution to

smart, connected products requires a traditional manufacturer to build what is essentially an internal

software company. The software industry, with an entirely digital product, was early to deploy its

products both on premise and in the cloud and to support them remotely. Software companies also were

in the forefront in improving products continuously, including after the sale. The organizational lessons

that other industries can draw from software fall into five categories:

1 SHORTER DEVELOPMENT CYCLES: The software industry has moved away from periodic releases of

major products to smaller, incremental releases of upgrades and enhancements. Because of this,

companies can get new products to market more quickly and respond faster to customer needs. Agile

product-development processes—which emphasize daily collaboration between developers and

marketers, weekly delivery of enhancements, continual course corrections, and ongoing testing of

customer satisfaction— are best practice in software development.

2 PRODUCT-AS-A-SERVICE BUSINESS MODELS: Software is undergoing a sectorwide transition to service-

oriented business models. Customers purchase software on a subscription basis, paying only for what

they need when they need it, instead of buying “shelfware” that sits idle. This turns the product into an

operating, rather than capital, expense, and hugely simplifies deployment (which happens via the cloud).

To support this new model, software companies have learned to carefully track customer usage and

satisfaction.

3 FOCUS ON CUSTOMER SUCCESS: The shift toward software-as-a-service models has led to the rise of

customer success organizations inside software companies. Given the ease with which customers can

change vendors, ensuring that they receive superior ongoing value from products is critical. Many

software companies now have customer engagement teams dedicated to pursuing that goal.

4 PRODUCTS PART OF BROADER SYSTEMS: Most software is deployed as part of a larger “stack” of

business tools, whose value is enhanced by their integration. Successful software companies often

provide application program interfaces and other tools that enable easy integration of their product with

third-party software. In addition, software companies often encourage the formation of developer

communities to create new uses for their products.

5 ANALYTICS AS A COMPETITIVE ADVANTAGE: Software companies, especially those in e-commerce,

have long understood the power of data analytics in generating customer value. Companies with an

advertising revenue model use analytics to serve up ads at the right time—when customers are most

likely to notice and act on them. Increasingly, software companies are also mining data on use to identify

bugs with the highest impact on customers.

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How Smart, Connected Products Change Services

While the effects of smart, connected products begin in manufacturing, they flow to service

industries as well.

Many service industries, including airlines, hospitality, health care, and financial services, rely on products

that will become smart and connected. An airline with smart, connected planes, onboard flight systems,

and baggage compartments can operate with far greater efficiency. Maintenance issues, for example, can

be identified in flight, and the needed parts and expertise can be waiting when the plane lands. A

laundromat at a college dormitory with smart, connected washers and dryers can inform users about

machine availability and when loads are done. The washers and dryers can instantly notify maintenance

personnel of failures, enabling rapid repair.

In health care, the utilization of expensive equipment, space, and clinical staff will be substantially

improved, producing better care and patient experiences. Smart medical devices (like smart, connected

pacemakers) can allow clinicians to track patients remotely and take more-appropriate and timely action.

The opportunities for such monitoring—and for integrating disparate real-time data to gain new insights

and inform lifestyle improvements—are game changing.

Even low-tech services will incorporate smart, connected devices. A cleaning company will place sensors

in washroom doors or meeting rooms in order to focus on just the spaces that need cleaning. A parking

garage will install sensors in individual parking spaces. A smartphone app will guide drivers to open

spaces, reducing congestion and improving space utilization. The app will also enable ticketless, barrier-

free payment while allowing dynamic pricing that reflects minute-by-minute demand patterns.

And entirely new services will be created. Uber has disrupted traditional taxi and livery businesses

through its ability to tap huge unused transportation capacity. It’s bringing many new drivers into the

workforce and then identifying and matching the locations of drivers and passengers. The range of

potential new services enabled by smart, connected products is limited only by the imagination.

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Ten Internet of Things facts and predictions

The total economic value­add from IoT across industries will reach $1.9 trillion

worldwide in 2020, anticipates Gartner.

Fifty billion devices will be connected to the Internet by 2020, predicts Cisco.

The remote patient monitoring market doubled from 2007 to 2011 and is

projected to double again by 2016.

The utility smart grid transformation is expected to almost double the customer

information system market, from $2.5 billion in 2013 to $5.5 billion in 2020,

based on a study from Navigant Research.

Wide deployment of IoT technologies in the auto industry could save $100

billion annually in accident reductions, according to McKinsey.

The industrial Internet could add $10­15 trillion to global GDP, essentially

doubling the US economy, says GE.

Seventy­five percent of global business leaders are exploring the economic

opportunities of IoT, according to a report from The Economist.

The UK government recently approved 45 million pounds (US$76.26 million) in

research funding for Internet of Things technologies.

Cities will spend $41 trillion in the next 20 years on infrastructure upgrades for

IoT, according to Intel.

The number of developers involved in IoT activities will reach 1.7 million

globally by the end of 2014, according to ABI Research estimates.

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Adapting Corporate Structure to Reflect the Connectivity of IoT

As of today, there are approximately 1.6 devices per user connected to the internet. That number will

explode within the next four years: By 2020, the number of users connected to the internet is expected to

increase 33% – to approximately 4 billion. Dwarfing that growth, however, is the number of devices

connected to the Internet: An increase of 400% is expected, from 4.9 billion today to 25 billion in 2020.

That equates to 6.25 devices per user.

USERS

DEVICES

2016 2020

Why Now?

There are three main factors spurring today’s pervasiveness of the Internet of Things:

IPv6: Creating Infinite Growth

Each device on the Internet of Things must utilize a unique IP address as its identifier. 90% of devices

connected to the internet today utilize the communications protocol IPv4. However, IPv4 addresses are

finite in number and exhausted their maximum limit of 4.3 billion in 2011, spurring the official global

launch of its successor protocol, IPv6, the following year. IPv6 can sustain 3.4 x 1038 devices, or 340

trillion trillion trillion – a seemingly infinite number.

Increase in Internet Protocol Address

IPv4

IPv6

Over the next four years, the number of internet -

connected USERS will increased by 33%, while the

number of internet -connected DEVICES will

increased by 400%.

4,300,000,000

340,000,000,000,000,000,000,000,000,000,000,000,000

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The concept of the Internet of Things is a ubiquitous network, and a ubiquitous network will only be

possible if the devices that comprise it are enabled with sensors that are increasingly smaller, lighter

weight, more efficient, lower cost, and powered wirelessly.

Smartphones and Wearable Technology: Internet Portability

Worldwide smartphone usage has increased 45% in the last two years alone, and is anticipated to

increase an additional threefold over the next five years, with 6 billion smartphones in use by 2020.

Likewise, the number of applications available for download has nearly doubled in the last two years, with

10 million apps expected by 2020.

Expected Growth

Smartphones Apps Smartwatches

2016

2020

200%

567%

355%

By 2020, the total amount of data

stored is expected to be

50 times larger than in 2016.

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Conclusion

One clear message: the nature of work is changing. Technologies such as advanced robots and knowledge

work automation tools move companies further to a future of leaner, more productive operations, but

also far more technologically advanced operations. The need for high-level technical skills will only grow,

even on the assembly line. Companies will need to find ways to get the workforce they need, by engaging

with policy makers and their communities to shape secondary and tertiary education and by investing in

talent development and training; the half-life of skills is shrinking, and companies may need to get back

into the training business to keep their corporate skills fresh.

Streaming data, and machine-generated data in particular, requires technology options like event stream

processing to ensure optimum processing and insight. Data coming from the sensors of connected devices

are the key source of streaming data now and in the future. SAS Event Stream Processing helps to acquire,

understand and exploit this data supporting realtime surveillance, analytically sound actions and

probabilistic analysis and alerts.

The Internet of Things ushers in an evolutionary time for business. Organizations will come to know more

about their customers, clients, employees, and third party vendors than ever before. How this data is

collected, secured, analyzed, and utilized to create a competitive advantage will be largely determined by

the relationships of an organization’s executives.

As the Internet of Things expands and stabilizes, every company will have access to vast amounts of data.

The data is not what will empower an organization to be successful. Rather, innovation, communication,

and reciprocity between executives and their teams will be the differentiating factors.

The Internet of Things promises to deliver a step change in individuals’ quality of life and enterprises’

productivity. Through a widely distributed, locally intelligent network of smart devices, the IoT has the

potential to enable extensions and enhancements to fundamental services in transportation, logistics,

security, utilities, education, healthcare and other areas, while providing a new ecosystem for application

development.

Finally in a world of connected devices, the focus should shift from how information is collected and

communicated to how it is protected and shared.

About SPRiNGS

Spring S Technologies is a leading global information technology company. SPRiNGS offers business value

to 100+ global clients by combining operational excellence with deep domain expertise in key industry

verticals Advance Technology and Professional Services. SPRiNGS delivers an entire spectrum of

information technology & consulting services such as technology solutions, software solutions, research

and analytics and technology industry specific project. As of May 01, 2013, SPRiNGS had 10 professionals

across 3 delivery centers worldwide including Bhopal, Faridabad and Hyderabad. For more information,

visit www.springstrategies.in.