Analysts at Gartner say the rapidly evolving Internet of Things (IoT) will create a new economy along with fresh markets. According to Peter Sondergaard, senior vice president at Gartner and global head of Research, the incremental revenue generated by the IoT’s suppliers is estimated to reach $309 billion per year by 2020.
“Half of this activity will be new start-ups and 80 percent will be in services rather than in products,” he confirmed. “[Clearly], the Internet of Things is a strategically important market. It will accelerate fast and drive both revenue and cost efficiencies.”
In 2009, there were 2.5 billion connected devices; most of these were mobile phones, PCs and tablets. In 2020, there will be over 30 billion devices connected, of far greater variety. Simply put, the IoT is projected to create greater economic value for all organizations and the global economy at large.
Indeed, Gartner predicts the total economic value add for the Internet of Things will hit $1.9 trillion dollars in 2020. Verticals leading IoT adoption include manufacturing (15 percent), healthcare (15 percent) and insurance (11 percent).
More specifically, the manufacturing sector will benefit from producing billions of devices and from more efficient tracking of materials and components. In terms of healthcare, smart slippers and other wearable devices for elderly people are expected to contain a growing number of sensors capable of detecting falls and various medical conditions. Another example includes installing sensors in cars to facilitate a “pay as you drive” insurance model – effectively linking a premium to the individual’s risk profile in real-time.
“The Internet of Things enables solutions that are optimized for the customer and enables new innovative business models. This will allow companies to move away from blanket pricing to more tailored solutions which benefit both company and customers,” Sondergaard explained. “The Internet of Everything and the Nexus of Forces, which combine the physical world and the virtual, will drive organizations and their CIOs toward an all-embracing digital future. No matter what business or service organizations deliver today, digitalization is changing it and becoming pervasive inside organizations.”
Nick Jones, research vice president and distinguished analyst at Gartner, expressed similar sentiments, noting that the IoT will create tens of millions of new objects and sensors, all generating real-time data.
“Data is money. Businesses will need big data and storage technologies to collect, analyze and store the sheer volume of information. Furthermore, to turn data into money business and IT leaders will need decisions,” he explained. “As they won’t have the time or the capacity to make all the decisions themselves they will need processing power. Computers can make sophisticated decisions based on data and knowledge, and they can communicate those decisions in our native language. To succeed at the pace of a digital world, you’ll have to allow them to do so.”
Meanwhile, Dave Aron, research vice president and Gartner Fellow, noted that every business will require its own flavor of digital strategy as digital is embedded in everything we do.
“Vanilla is off the menu. Digital is not an option, not an add-on, and not an afterthought; it is the new reality that requires a comprehensive digital leadership,” he said.
To be sure, business requires digital leadership capable of recognizing the huge opportunities in shifting business models; leadership that can create the freedom and agility to capture business moments, and leadership that extends itself beyond company boundaries to guide and shape the ecosystem.
“Just like with the strategy, the flavor of digital leadership is not vanilla. CIOs must explore, adapt and embrace the new digital realities. They must be fearless digital leaders,” Aron added.