There Is More Value In The IoT Economy Than Big Data Analytics


Rawn Shah, Contributor

August 6, 2015

The Economy of Things report just released by the IBM Institute for Business Value (IBV) gives a glimpse at what is possible when devices are enabled over a network. It focuses on the Internet of Things (IoT) ready devices as data sources for understanding capacity and asset utilization. More precisely they describe it as “liquification” (sic) of the physical world, where “[assets] become as easily indexed, searched and traded as any online commodity.” The concept is to consider what you could do with the data output, and capabilities of IoT devices.

[Note: Unfortunately, the IT industry has popularized the meaning of the word "virtualization" to be associated mostly with creating virtual instances of computer servers. What they really mean by "liquification," or liquefaction more appropriately, is to translate hard assets into their virtual counterparts -- i.e. the virtualization of physical assets. ]

By abstracting IoT device capabilities and output, the report suggests that you “can create liquid marketplaces
of physical assets by enabling real-time discoverability, usability and payment.” You can take the output data into analytical models to do more intricate things like risk mitigation or resource optimization. The marketplace and mechanism introduces the idea of multiple producers of information and consumers that integrate together, and has a value upon the factors of the output.

The IBV report gives a detailed account of how liquification (virtualization) of the airline seat reservation system decades ago with SABRE, originally for American Airlines, helped to improved airline industry load factors from 60 percent up to nearly 90 percent efficiency today. Our view of airlines shifted from how many entire planes fly from place to place, to how many seats are available on flights. Since U.S. airline deregulation in 1978, the average airfare has dropped from around $450 to under $250 (in constant dollars).

This is the one source discovering new value from physical assets, via their virtual models, and the same for the Internet of Things. In the airline models, the idea shifted from flights to more granular units of seats and seating capacity per flight. IoT devices similarly can introduce new factors or shift the granularity of information (e.g., from entire farm fields, to several square meters of specific crops).

There is certainly a lot of value in getting more efficiency out of wasted or idle capacity.  Much of the world’s infrastructure is far enough behind that there are huge profits to be made here.

However, I think it falls short of the promise of IoT. It looks at using such devices as passive data elements. If you think just collecting data from devices is the value of the Internet of Things, you are thinking too small.

Beyond Passive Data To Automation And Control 

IoT devices aren’t just passive data generators relaying information out to Big data analytics engines. Control systems are some of the oldest examples of the Internet of Things. For example, 33 years ago in 1982, CMU students built the first Internet Coke Machine, so students could order sodas while still at their desktops, charge the cost, and then go pick it up. At the 1989 Interop conference, Dan Lynch with others created the first Internet Toaster that was directly connected to the Internet (via TCP/IP) and could be controlled with SNMP. It was a proof of concept that really anything could be on the Internet. The value here is in automation and distributed control. Security still needs much more attention when connecting devices over the network, per the recent Wired story on how a car was hacked while being driven.

But this also points out the other factor: we need to think of IoT devices beyond living in closed networks (e.g. within the limits of a farm), and instead consider their uses on the Internet. The Home Automation market for one is seeing new growth with the affordability of Wi-Fi IoT devices like cameras, lighting, and HVAC.

Lutron home automation systems were once only seen in million dollar mansions. The company now has a more affordable line, Caséta Wireless, to allow you control your home lighting and shades with Siri on your Apple iPhone. What is more interesting is the ability to set your own rules of how all this works automatically as “recipes” on IFTTT cloud service (see Fig 2). Similarly other companies like Honeywell, Philips and Belkin are also getting into the act for the connected home.

IFTTT (If This Than That) is a very simple yet quite powerful glue for things on the Internet, whether software apps or IoT devices, and allow you to perform actions if some rule that you set is triggered. For example, if there is a rain heavy warning on Yahoo weather, you can turn off the sprinkler system, and re-enable later. If your Fedex, UPS, DHL or USPS package on route has a change, it could send a text to you or others.

The value of “glue” systems like IFTTT,Xively or Zapier for IoT is that it enables trigger states and actions for passive systems. It simplifies the computing on the IoT device itself, and instead allows you to set up more complex rules elsewhere that can be on and monitoring all the time.

New Product Use Cases Emerging

This sort of glue also lets us reimagine the use cases for devices. A portable Wi-Fi enabled remote camera can become a drone-mobile perimeter monitoring system for large farms. Live events can integrate feeds from multiple audiences tweeting or posting across the world, or even trigger lighting and environmental mood controls, interactive displays, and more – experiences you might only see at a high end concert or digital art events like VIVID Sydney.

I shared how IMS Health was putting the IoT to work with its IMS HealthWear Life Services platform for sales and customer operations. By integrating an Apple Watch app with the IMS Health data systems, it can guide salespeople with up to date information about customers in the location. It can allow managers to check and support their salespeople out in the field (see Fig 3).

These new use cases also mean more complexity in how companies provide services. Xively, a product line of LogMeIn, aims to help companies manage the experience of these increasingly complex possibilities of connected devices. Its goal is to help companies manage the user experience of such IoT devices. Think of customer services where the product company can remotely diagnose or fix your device for you rather than sending a tech over. The scenario’s described in the IBM IBV paper may be implementable with Xively’s systems.

IoT Ecosystems Create New Aggregated Value

Finding a parking spot in London and major cities in the U.K. in notoriously difficult at any time of the day. According to the Dept. for Transportation, traffic demand is forecast to grow 44% by 2035 increasing congestion by 170%. According to other research from U.K. insurer Swiftcover (part of AXA U.K.), 51% of motorists of motorists are disinclined to visit city centers because of the difficulties posed by parking, which in turn impacts the local economy.

This is emblematic of the increasing urbanization across the globe. Nearly half the world’s population is in an urban area, and this will grow to 75% by mid century. Try finding a good parking spot then.

To help address this problem today, Ethos VO, Ltd is helping several cities in the U.K. (City of London, Brighton, Milton Keynes, Bristol) with this problem in its Future Cities Parking Management Platform based on IoT sensors and parking systems. From the IoT perspective, this is about getting data across devices, but more importantly, the business value created here is due to the ecosystem built around the open data.

[Disclosure: I am a partner with Ethos VO, but not directly involved with this platform.]

This is not a single company building out services in a standardized system but an ecosystem combining many sources and partners together. It involves the collaboration of multiple parking companies in each city; Seme4, a LinkedData platform software developer;, an IoT messaging engine; and EnLight, a lighting hardware vendor. By partnering together in an open data platform, the information is available to motorists (through an app); to city transportation planners (through the management platform in Fig 3); and to retail locations looking to improve foot traffic to stores. Therefore an ecosystem of IoT sensors, parking companies, data companies and city councils create a greater benefit for all.

IoT ecosystems are useful in collective challenges; for example, it could share data about actual water usage across many farms in Southern California, combined with economic and water management data, describe a more holistic view of the value. In the IBV study, this was one of their suggested scenarios, albeit for a single company. Another example would be an IoT ecosystem of air quality, again combined with LinkedData. IoT in open ecosystems and marketplaces can bring us closer to solving larger problems across society than isolated solutions and limited use cases. That is where the real value lays in the future economy supported by the Internet of Things.

Rawn Shah is an independent consultant focused on the future of work, collaboration, and organizational transformation.  You can follow him on LinkedIn or Twitter.

This article was written by Rawn Shah from Forbes and was legally licensed through the NewsCred publisher network.

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  • There Is More Value In The IoT Economy Than Big... - 08/06/2015 19:44
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