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This will be the year that internet of things (IoT) technology really moves into the mainstream. Or so says analyst firm Gartner.
An IoT survey that the researcher conducted at the end of 2015 revealed that 29% of large companies were already using IoT-based products and another 14% planned to implement them over the next 12 months, bringing the total of new adopters to nearly half the potential market.
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An additional two out of five said they intended to go down this route after 2016, although a significant 38% have no plans for the technology at all. The researchers interviewed 465 IT and business professionals around the world belonging to Gartner’s Research Circle club.
The keenest adopters were companies in asset-rich heavy industries such as utilities, oil and gas, and manufacturing. The researcher estimated that around 56% of players in these industries would have bitten the IoT bullet by the end of this year compared with just over a third in the service sector.
Shift in progress
But while the emphasis to date has been on making internal operational improvements and saving money rather than improving the customer experience or boosting revenues, a “marked shift” is now apparently taking place.
Jim Tully, vice president and distinguished analyst at the firm, expects the number of customer-focused initiatives to double from 18% to 34% over the next 12 months. “In effect, IoT programmes and processes will become competitive marketplace weapons starting in 2016,” he says.
As a result, the wide range of use cases across nearly all industries will mean that “2016 will be a very big year for IoT adoption”. The most significant challenge will be how to demonstrate return on investment in order to justify large roll-outs.
Reality on the ground
So are Gartner’s findings being borne out in reality so far this year? According to Martin Garner, senior vice president of market research firm CCS Insight, it is hard to generalise because growth is so sector-specific.
But he adds: “We are at the start of a very big thing here.” He believes IoT is something similar in stature and importance to the development of the electricity market in the early 1900s. Interestingly, though, he adds that many organisations, particularly in the consumer space, are not buying into the term ‘IoT’ but rather into the idea of digitising the business.
Robin Duke-Woolley, chief executive of Beecham Research, agrees. He too believes that different applications are taking off at different rates because of the very different requirements and awareness of the opportunities in different markets. In his view, it is the transport sector, which includes logistic supply, fleet management and telematics, that is the most enthusiastic because it has found the deployment of new technology easy to cost-justify.
Utilities and healthcare
Adoption in the utilities market has slowed lately because of the high level of investment required in infrastructure such as smart meters and smart grids. Healthcare, on the other hand, is a mixed bag, with the remote monitoring of assets in hospitals being the most popular choice.
“Growth rates have been fairly consistent over the last 10 years or so and I do expect them to rise, but not astronomically,” Duke-Woolley says. “So when people talk about 50 billion connected devices by 2020, I don’t think it’ll happen – it’s more likely to be five to 10 billion.”
This is not least because organisations have to work out what they want to use the technology for, to justify it, trial it and then roll out it out more widely, which all takes time, he adds.
Interestingly, however, the UK did start seeing a “groundswell” of interest in IoT among venture capitalists (VCs) during 2015. Caroline Gorski, head of IoT at Digital Catapult, which is focused on driving growth in the UK digital economy, says VCs began thinking of IOT as a separate category to “technology” for the first time last year.
Barriers to adoption
The Catapult centres are a network of about 15 organisations established by Innovate UK, a government agency set up to promote innovation. Each specialises in a different technological area and their role is to act as a bridge to help academic researchers turn their ideas into commercial reality before replicating their insights elsewhere.
As for IoT specifically, last year’s Tech City report indicated that the technology accounts for less than 1% of the activity and workers employed in the tech sector overall. But the “enormous amount of hype” is whetting the appetite of VCs on the look-out for “disruptive players” and “game-changers”, Gorski says.
At the research level, some 135 projects have gained about £120m in funding over the last year, with focus areas including healthcare, security and privacy, and energy in the field of smart utilities management.
Risky, expensive and confusing
But the market is still facing some major barriers that will need to be overcome before it can really take off. Garner believes that for many organisations, IoT is simply too high-risk, too expensive and too confusing, and they plan to wait until things settle down and become clearer.
Confusion is being caused by a lack of standards despite the proliferation of technology, and a widespread shortage of data scientists is also not helping matters much either.
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“Not enough people get what it’s about, its potential and how to tackle it, and the suppliers don’t make it any easier with their focus on technology rather than business issues,” says Garner. “So there are still significant barriers to adoption in many industries and the effect will be to slow things down.”
Gorski has reservations too, although she believes momentum is gathering. “A lot of it is about unlocking partnerships and bringing stakeholders together to address challenges, and find ways forward in important areas such as how to share data securely,” she says. “But there are also unanswered questions about who owns the data and how you use it to deliver services, so privacy matters will have to be addressed before we see any huge transformation.”
Case study: British Gas Connected Homes
“Why we decided to move into the IoT space was to differentiate our products and create added value in a very competitive commodity market,” says James Beltcher, head of product for British Gas Connected Homes. “The issue is that energy is energy, so it was about doing more to ensure a great customer experience.”
As a result, one trap that the Connected Homes team has been careful not to fall into, he says, is pitching its Hive Active heating system, which can be controlled via a remote mobile device, as an IoT-enabled product. The same applies to the rest of its IoT-based offerings, which include Hive Active plugs, window and door sensors as well as BoilerIQ.
James Beltcher, British Gas Connected Homes
An add-on to British Gas’s Homecare boiler insurance policy, BoilerIQ was launched at the end of March. Its goal is to detect problems with domestic boilers as they happen so that engineers are aware of what the fault is and can be sent out to remedy the situation as soon as possible.
But, says Beltcher: “We don’t pitch BoilerIQ as an IoT product, although it’s IoT-enabled and uses IoT at its heart. It’s the early adopter space that trawl the internet for new technical products like that, but the wider UK public just care about the benefits, irrespective of how they’re delivered.”
Nonetheless, he believes the IT industry “has yet to work that one out” as the market still tends to be dominated by software engineers “who focus on product features rather than consumer benefits”.
Another key learning gleaned from three years of experience with Hive, meanwhile, is that in an IoT-enabled world it is vital to tap customer insights quickly to keep on top of their requirements and remain competitive.
This insight has led Connected Homes to move away from undertaking “long-scale qualitative research” using mechanisms such as focus groups. Instead, it prefers to talk to customers directly and even “bring people in off the streets” to access feedback more swiftly.
But the organisation has also learned that “information in the boiler service manual may not necessarily provide the most effective resolution to an issue”. This is because the huge amount of data generated from boilers enabled with IoT sensors – each one transmits data four times a second – makes it possible to spot previously unseen patterns that could indicate future breakdowns.
Boilers that never break down
Beltcher says: “We’ve got insufficient numbers at the moment to build an engine sensitive enough to identify symptoms of potential failures. These are very small symptoms that customers wouldn’t even notice yet, but they’d give us a degree of certainty that part x would fail in three to six months.”
Such certainty would mean the organisation had a “three-month window to make an intervention and ensure that customers never experience a breakdown”. It’s a move that would make a huge difference in customer service terms.
Getting it right, though, Beltcher says, will be both an internal IT “architecture challenge” (due to the sheer amount of data to be dealt with) as well as a process issue. “Making internal change to respond to situations proactively would not be insignificant as we’re a very large organisation. But we will if we can see the benefits both to our customers and ourselves.”
Case study: MHS Homes
IoT technology could revolutionise how housing associations manage their buildings, freeing staff up from time-consuming manual tasks to undertake more proactive maintenance, says Gary Clark, operations director at MHS Homes.
MHS is the largest independent landlord in Kent and, along with a small number of other housing providers, joined the Connected Homes Consortium last year to trial potentially useful new technology.
“The housing sector has in the past sometimes taken a relatively traditional approach to technology, but working with the consortium has really opened our eyes to its potential,” Clark says.
MHS has been involved in three pilot projects this year. The first used drones to conduct surveys of tower blocks where roof access is tricky and it would be expensive to erect scaffolding.
The second involved introducing Blue Maestro sensors into buildings to establish whether any damp and mould issues were the result of structural issues or customer behaviour.
The third entailed trialling Cloudview’s cloud-based IoT-based CCTV system at its Saxon Shore site in Gillingham to see what potential benefits the technology could offer over traditional fixed cameras.
Connecting the existing CCTV system to the internet meant retrofitting a network adapter. This adapter uses a broadband or Wi-Fi connection to record whether movement takes place and to store footage in the cloud. This footage can then be viewed in real-time from smartphones, tablets and PCs, and downloaded to provide evidence to the police, if required.
According to Clark, the IoT-enabled cameras demonstrated a number of immediate advantages over traditional ones. For example, most CCTV systems today record data on an onsite digital video recorder, making a site visit necessary to view and download footage or check that cameras are working properly.
Providing a live feed that can be accessed anywhere not only saves time, it also means that housing officers can respond to incidents as and when they happen.
Gary Clark, MHS Homes
A further benefit is that the cameras can be used to zoom in on potential problems, such as specialist light fittings that have broken. A still can then be taken and sent to the supplier so repairs can take place as soon as possible, thus saving time in the process.
Another time saver is that the system issues an automatic alert if something goes wrong with one of the cameras, ensuring not only quick fixes, but also saving wasted journeys to retrieve non-existent footage.
“As with most housing associations, there’s a heavy focus on value for money and efficiency as traditional models of property management are quite HR-intensive, which is by nature costly – although essential,” Clark says. “So there’s a place for technology like this to help us become more proactive and allocate resources more efficiently.”
This, in turn, means that IoT-based systems could have “quite a dramatic impact on how we manage buildings”, he adds. Because such technology is relatively inexpensive and can help solve obvious problems, he does not expect it to take long to move into the mainstream.
“As a fundamental idea, it works, so I’ve got high hopes for products like this,” he says.
Read about IoT fleet management at Karcher