On a recent Internet radio show I discussed the potential business value of the Internet of Things (IoT) and my views about the accelerators and, the more critical, inhibitors to the evolution of this much advertized concept.
Wisdom of Things
The potential value of the IoT is not in the ability to connect and access remote devices via the Internet. It is in the information gathered and shared by a large number of connected devices in a meaningful fashion that provides a new business value, new business models. To borrow a phrase from social networking, in Wisdom of Crowds, connectedness (in this case among people) enables new value; think of the Internet of Things as facilitating the “Wisdom of Things.”
In his book The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations, James Surowiecki argues that the aggregation of information in groups results in decisions that are often better than could have been achieved by any individual member of the group. Truth be told, I am not a big fan of the Wisdom of Crowds theory when it comes to people. But I do believe that the collective information stemming from multiple information producers: sensors, measurement devices, decision support systems and, yes, to some extent, people, can be aggregated to improve decision making and extract greater business value.
IoT narratives often talks about smart connected devices. Some devices, from factory robots to home thermostats are designed to have localized decision making capabilities, and could be considered smart. But many other devices are not much more than connected sensors, for example the Fitbit personal activity tracker or even the proverbial IoT refrigerator that notifies the homeowner to add milk and eggs to the grocery shopping list.
The true “smarts” of the IoT does not happen at the individual device level. It is a result of aggregating data from multiple heterogeneous devices, both “smart” and “dumb”, and is therefore available and discoverable at the edge of the network.
Conduit vs. Content
The concept of “Wisdom of Things” leads to another observation about the Internet of Things. The potential impact of the IoT is much less a function of how many things are connected and how, but rather it is in exploiting the information they share. In other words, new business models need to focus not on the IoT “pipes”, or the conduits, but rather on the content that flows through them.
Therefore, I do not consider remotely accessible devices in a manner that until recently we used to refer to as machine to machine (M2M) communication as being synonymous with the IoT. M2M applications have been shown to provide tangible and meaningful value, but they tend to focus on individual devices and narrow domains and not on the aggregation of heterogeneous information to gain deeper insight into more complex decision-making domains.
If we accept the notion that IoT business models are predicated on information aggregation, then we begin to better understand and address the barriers to maturing from M2M to IoT, to realize the business impact of the IoT.
