The Internet of Things promises to bring a new level of convenience to our lives. Could it bring trillions of dollars worth of convenience? Not likely, but that's not stopping a lot of prognosticators out there.
The level of hype around the financial promise of the Internet of Things is truly gargantuan. A May 2013 report from the McKinsey Institute suggests that connecting billions of ordinary devices to the Internet will add between $2.7 trillion and $6.2 trillion a year to the global economy by 2025.
Cisco, which has a big stake in the hardware infrastructure for a thriving Internet of Things, estimates that what it calls "the Internet of Everything" will boost global output by $14.4 trillion over 9 years, or a comparatively sane $1.6 trillion a year. General Electric, by contrast, goes even bigger than McKinsey, and estimates that the "Industrial Internet" will boost global GDP by $15.3 trillion in 2030.
So where is all this money going to come from? Will all the little robots and sensors that will fill our lives with automated goodness also spit out gold coins?
Not quite. But the Internet of Things is still going to add a lot of economic value. Even if actual gains only amount to a tenth of the hype, the potential boost to the economy—and human wellbeing in general—will be very significant.
As denizens of the Internet, we're used to capturing and managing information on a massive scale, so much so that we often take it for granted.
Take a look at your email inbox, for example. Unless you adhere to Inbox Zero, you might have hundreds of messages. But if each message was printed out, that would be a lot of paper to sort, read and act on. So while we don't think about information overload in our messages, that's partly because it's been a while since we've had to worry about paper storage for what used to be called memoranda and letters.
This kind of obvious-when-you-see-it benefit is a big part of what analysts think will be coming out of the Internet of Things. But instead of automating the flow of information, the Internet of Things promises to automate physical tasks and environmental data sensing.
In theory, this should let, well, things react to their environments. Awnings will sense rain is coming and extend over a sidewalk cafe, freeing the waitstaff. Coffee cups in the same cafe can alert the staff when they're empty. And so forth.
Neither of these scenarios are going to save the world, but by increasing the efficiency of the human staff, the productivity of the restaurant in question should go up, as should customer satisfaction—which should mean returning customers. Thus, the Internet of Things makes a small, but positive contribution to the economy at large.
This is very much the kind of economic gains we can expect to see with a vibrant Internet of Things. Automated systems will reduce the need for human oversight altogether or improve the productivity of humans that are still part of the workflow process. Added up over multiple businesses and employees, then the future with bazillions of dollars added back into the economy doesn't seem terribly far-fetched.
Until, you know, reality sets in.
Check Your Blue Sky At The Door
The common vision for the Internet of Things is that you hook up a bunch of devices to the Internet, work some fiddly magic with the software, and voila! There's your Internet of Things.
But as I've discussed elsewhere, there are serious technical challenges to getting the Internet of Things really up and running. Many of the devices out there are only designed to talk to their corporate "home base," as it were, and not to each other. And even if a common protocol is established, the sheer complexity of getting them to react to what each device is doing is far beyond our near-future capabilities.
Of course, these are surmountable obstacles, and some day the Internet of Things is almost certainly going to work. But another often-unspoken question still remains: will businesses be ready to reap the rewards of the Internet of Things?
Businesses tend to be organized into functional teams. As a company increases in size, teams can become departments, divisions or even outright subsidiaries. Each of these teams has a separate and distinct function: purchasing, logistics, accounts payable, accounts receivable, marketing, sales—useful processes that for the most part don't work together except on a transactional basis.
The influx of data from the Internet of Things (and, really, any big data implementation) can easily disrupt the team-based business model. Information from the Internet of Things will be huge and potentially actionable at an incredibly fast pace. It's just not clear that business is going to be ready to keep up.
The Machines Will Be Efficient; The Human Element, Not So Much
Say folks in marketing at MegaCorp notice a new trend in the way customers are using MegaCorp's totally connected devices. They then have to let engineering know so they can improve the next generation of devices for that use. Or perhaps engineering learns of the trend first; then it has to notify marketing so it can work up a new campaign.
That oversimplifies things a bit, since undoubtedly sales and other relevant teams would need to be part of the loop. The point, though, is that MegaCorp's reaction time for decisions related to the Internet of Things could be way slower than the Internet of Things itself.
To work effectively with the Internet of Things, businesses themselves will have to adapt, enabling cross-team processes that will facilitate better communication and reaction times to what the Internet of Things may be telling them. Human customers don't expect near-instantaneous decisions, most of the time. But devices within the Internet of Things might.
New companies that can build themselves from scratch to accommodate the demands of an Internet of Things and its resultant deluge of data will have a clear advantage over older firms. In fact, the rise of Internet of Things-ready businesses could massively disrupt existing firms, in much the same way online video rentals decimated the neighborhood video store. The result could be significant economic dislocation and major job losses, particularly if successful new businesses are more fully automated than the ones they're replacing. All of that could reduce or even swamp the expected efficiency gains from the Internet of Things.
These technological and business hurdles are not trivial. Businesses will need to learn to adjust to what an Internet of Things really means if they are to have a hope of deriving value from it.
Like most things in life, the real value of the Internet of Things lies somewhere between the hype and where we are now. One thing is certain: this will not be an overnight impact, but a slow evolution as technology and society adapts to the ramifications of a world where devices can talk to each other.
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