IoT and its Role in Digital Transformation
Some may think of smart home appliances or wearables like fitness trackers when they hear "Internet of Things" or IoT. But now, IoT is something much wider-reaching and more transformative than that. At its most basic, it's a network of physical devices — sensors and other instruments embedded with electronics, software and sensors — that wirelessly connect to the internet. That's everything from industrial machines and shipping containers, to agricultural sensors, and connected medical devices.
The raw data that these devices generate on its own don't pass along the full story. What matters is what businesses do with that data — not in a generic sense, but what they actually do to derive insights that help them make smarter decisions, boost efficiency and create new products or services. This embedding of IoT data into business processes is one of the pillars on which digital transformation sits, and it changes forever how organisations run their back end systems.
Digital transformation is not about digitizing, but instead transcending traditional thinking on business models from the new realm of technological possibilities. IoT provides real-time visibility into processes and environments, enabling businesses to maximise resources and monitor conditions in real time, often predicting future events. This capability opens up other revenue streams and competitive differentiators, be it in manufacturing, healthcare, logistics, retail or any number of sectors.
And for businesses just embarking on their IoT journey, it's important to remember that success comes not from merely connecting a few things, but through a disciplined approach to gathering and analyzing data—and then taking action. This will lay the groundwork for all of the trends and obstacles that we will discuss in subsequent chapters.
Trends Accelerating IoT's Impact
What is powering IoT's increasing impact? As we peer into the factors behind that growth, several trends emerge. First is edge computing. Rather than transmitting all data to central, power-hungry cloud servers, edge computing does it where the action is. That decreases latency and the amount of bandwidth you need, so that applications just run faster — which is especially important in situations where microseconds count, such as warehouse automation or autonomous vehicles.
Absolutely. And edge computing is closely tied to one of the telecom industry's hottest buzzwords — 5G technology. 5G networks claim to be able to manage a lot more devices all at once and transfer data at light speeds. That means companies, without having to worry about delays in connecting or bottlenecks in bandwidth, can hook up everything from thousands of sensors across a smart farm to entire fleets of drones.
Meanwhile, artificial intelligence and machine learning are back in the spotlight. They allow organizations to make sense of huge volumes of data produced by IoT devices through pattern detection, prediction of equipment failure, automated decision-making and even adaptive systems that "learn" from experience.
Granted, as the IoT universe expanded, security becomes increasingly important." New security paradigms that includes device identity, zero trust concept, advanced encryption is being developed and implemented to keep pace with the ever-growing complex threats landscape.
In total, these are not just moving the needle — they're rewriting the playbook in terms of what businesses can do with IoT.
Key IoT Applications Transforming Industries
If you want to witness what impact IoT is making in the real world, there's an incredibly wide variety of use cases. Let's begin with manufacturing, as IoT keeps the smart sensors watching machines in real-time. This allows companies to anticipate when a piece of equipment is likely to fail and arrange for maintenance before costly downtime ensues. The gains are tremendous — more productivity, less disruption and enhanced safety.
Exactly. Then there is retail, and retailers that have installed smart shelves and Siemens inventory management thanks to IoT. Picture shelves that can sense precisely when stocks are dwindling, or cameras that track the movement of customers to optimize store layouts and tailor marketing. It all adds up to better sales and happier customers.
Smart buildings Another fast-expanding area is that of smart buildings. From lighting and temperature to security and occupancy, IoT sensors record data on just about everything. The result is not only energy savings and lower costs, but also healthier, safer indoor environments.
The promise of IoT is nothing new to healthcare, either. Scrutinizing patients through connected devices remotely, doctors can receive more continuous data and intervene much earlier, reducing visits to hospitals and improving patient outcomes. These types of remote monitoring technologies were fast-tracked due to the COVID-19 pandemic and low-and-behold, they're essential.
Clearly, in every industry, IoT is not just a technology but the very lifeblood of operational excellence and innovation.
Challenges and Obstacles in IoT Implementation
Although the potential is significant, a lot of organizations experience hiccups on their way to implementing IoT systems.
A big concern is data privacy. The collection of specific information, and occasionally personal or sensitive data, leads to questions about user consent and the right to ownership and protection of that data.
Sure—and unfortunately, it tends to get more complicated due to changing rules in different countries or industries. "Doing business globally can be a challenge because you wake up and there are 200 new laws that came into effect," said Jonathan Bennett, an associate general counsel at American Express whose portfolio covers data privacy. For example, companies doing business in Europe have to deal with GDPR; in health care, they face HIPAA standards; and so on — "It feels unwieldy."
Integration with existing systems is another setback. Many organizations have legacy infrastructure that was not developed with the expectation of interfacing smoothly with modern IoT devices. Bringing together old and new technology is a complex technical problem.
And let's not forget interoperability. The proliferation of vendors in the IoT market with various standards and protocols results in ongoing challenges for device and system interoperability.
Finally, lack of talent also prevents many companies from being able to properly build, deploy and maintain IoT infrastructure. What it requires are experts in networking, security, data analysis and operations.
Addressing these obstacles depends on a strong strategy that manages risks, invests in training and aligns with partners to bring in external expertise.