From SCDigest's OnTarget e-Magazine
- Aug. 5, 2015 -
RFID and AIDC News: Large Companies Plan Big Spending on the Internet of Things, but Definitional Issues Raise Some Questions about What is In and Out of IoT Realm
New Study from Tata Consulting Identifies the Seven Attributes of IoT Success Leaders
SCDigest Editorial Staff
The so-called Internet of Things (IoT) or what others call the Internet of Everything (IoE) certainly is not lacking in hype or press coverage these days, including a generous enough helping at times right here from Supply Chain Digest.
Is that hype consistent with what's actually happening out there is business and industry? To a large extent Yes, says Tata Consultancy Services, just out with a major new report on IoT based on a large global survey. And when we say major, we mean major - the report comes in at some 180 pages long. We got through most of it, and will offer some highlights here.
SCDigest Says: |
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The more valuable the product, the more value from better tracking and monitoring, and likely the lower the cost of IoT enablement as a percent of a product's cost, leading to higher ROI.
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What Do You Say?
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Tata does a nice job just kind of summarizing the state of IoT today, noting that IoT encompasses "the digital hardware and software that is being embedded in items ranging from cameras and coffee makers to mattresses and multimillion-dollar aircraft engines. The technology also includes the communications networks (the Internet and wireless) that let such digitally endowed 'things' report their condition to businesses and consumers."
OK, that's pretty good. The report then notes the billions of such things that will be connected in some way, using in the report numbers from Gartner (there are others with similar estimates), which says there will be 4.9 billion 'connected things' by the end of 2015. Gartner expects that number will grow by five times by the end of the decade, to 25 billion connected things, including a quarter billion vehicles
Of course, that's just a guess, but it is pretty safe to expect the actual number to be quite large, in the many billions of things.
The report notes giant GE is committing some $1 billion in investment in IoT, and claims to have generated another $1 billion in new product and service revenue from part of that investment to date. Similar story for Caterpillar, which is marching ahead with plans to have all the some 3 billion machines of all sorts it has in the field connected to the Internet over the next few years, in part to be able to predict failures more effectively.
Tata has identified four different primary types of IoT applications, as listed below.
Premises Monitoring: by putting sensors, digital cameras, and other devices in the places in which companies do business with their customers, be it a bank's branches, a retailer's stores, a lodging operator's hotels, an airline's planes and lounges, and so on.
Product Monitoring: by embedding sensors, software, and other technologies into the offerings that a company brings to market, whether it's a $300 coffee machine, a $2,000 refrigerator, a $5 million haul truck that lugs tons of payload material, or a multimillion-dollar aircraft engine.
Customer Monitoring: tracking digital devices that customers carry (for example, mobile apps on their smartphones) or strap onto themselves (for example, wearable technologies such as digital wristbands).
Supply Chain Monitoring: by putting sensors, digital cameras, and other digital devices in the production and distribution operations that make and deliver their products and services to customers.
OK, this is pretty good, but raises some questions. Product monitoring, as defined above, is clearly the application most people would associate with IoT. For well more than a decade IoT proponents have been talking about refrigerators that would automatically order new products as current ones are being consumed, as just one of many examples, such as what GE and Caterpillar are doing.
The other three categories are a bit less clear. Is video surveillance of a premises really part of IoT? Maybe, maybe not. Ditto with tracking behavior when a customer users a smart phone app - that seems a bit more in the realm of big data and advanced analytics than IoT directly.
There are definitely many IoT opportunities in the supply chain, but where do you draw the line. Is traditional bar code tracking part of IoT? Seems like it could be with this definition.
We ask the question because the survey data found 44.9% of respondents said they were using IoT technologies in production and distribution operations to track product flow to customers. If this refers to newer age technologies such RFID and product sensors, that number seems far, far too high. If it includes bar codes and wireless terminals, then actually it seems far too low.
(RFID and AIDC Story Continued Below)
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Companies with high-priced product offerings will spend much more on the IoT this year than those with low-priced offerings: Firms with the most expensive products will spend the most money on the IoT by a wide margin. In other words, spending on the IoT correlates strongly with the price of a company's products or services. Those firms whose offerings sell for more than $10 million on average (for example, makers of aircraft engines and power turbines) will spend an average $335 million each this year on IoT initiatives. In stark contrast, those with products priced at $100 or less will spend about one-eighth that amount, an average $39 million.