People say we live in a connected world. The ubiquity of smartphones and tablets has meant that people are constantly attached to technology, and able to carry out actions and services at a click of their mobile device.

But if you believe the hype of the Internet of Things (IoT), a truly connected world is nowhere near. Smart devices are just the beginning of a phenomenon that will see objects of any description – cars, shoes, kettles, books, teeth…anything – equipped with tiny internet-connected sensors that generate actionable data.

The sheer breadth of big data, therefore, knows no bounds. Just look at some of the forecasts: Gartner says that by 2020 the IoT will have grown to over 26 billion units; IDC puts it close to 30 billion, with an industry value of around $8.9 trillion; and Cisco reckons 50 billion by 2050, with a value of $14.4 trillion by 2023.

Some of technology’s biggest players have already sought a lead in this potential goldmine – the latest example being Google’s £2 billion acquisition of Nest Labs, which produces a thermostat capable of learning user behaviour by analysing things like temperature, humidity, activity and light levels.

Elsewhere, Apple is rolling out wearable technology and iBeacons, which can notify nearby devices of their presence, while Intel has revealed an SD card-sized PC called Edison, and Cisco has announced IOX, allowing IoT sensors to autonomously process information without connecting to the cloud.

‘Add to this the countless smaller disruptive innovation companies, and we can expect to see a real shift in actual devices and their deployment, as well as in the adoption of an IoT mindset,’ says Tunde Cockshott, creative consultant at Amaze.

The result could transform the way we live our lives, at a proliferated rate of what the internet and smartphones have already achieved. Objects will no longer just be objects; they will effectively have brains. They will know about you: about your habits and your needs. And they will customise themselves to know exactly when and how you want to use them.

However, the capabilities and scale of IoT has largely been hypothesised to date, and mostly in the consumer space, with little analysis given to exactly how enterprises can formulate it into their IT strategy. After all, if the immensity of this technology is to be believed, those organisations that get there first are sure to reap huge rewards.

>See also: 4 things that will happen in the Internet of Things space in 2014

A first step is gaining an understanding of the major subdivisions of IoT, such as smart glasses, home automation and beacons.

‘Consider how each of these IoT elements could map to your customers, or your customer’s customers, and invest in some internal education to make sure there is a robust internal discussion about what the technology can do and where it is going,’ suggests Karen Tegan Padir, CTO at Progress Software.

Even if you do not find an immediate opportunity to implement IoT, it is critical to begin the process of internal realignment.

Vertically aligned

IoT offers significant opportunity for businesses, both in terms of improving customer satisfaction by developing products and services, and improving profitability.

‘One practical example is demonstrated within the healthcare sector,’ says Adam Diggins, technology evangelist and content development manager at Toshiba. ‘Patients could wear devices that monitor their vital signs, such as heart rate or blood pressure, and communicate this data to medical practitioners.

‘Another practical application could be the addition of sensors in manufacturing processes. When faults occur, sensors can send signals to central systems, which can save money for the manufacturers, who do not mistakenly sell faulty goods, and improve satisfaction for buyers, who are confident that they are purchasing a quality product.’

Manufacturing and healthcare are indeed two verticals that immediately stand out when you think about the opportunities presented by IoT, along with retail.

This is because these sectors require a logistics and supplier network for the services they supply. If the materials involved in those networks were IoT-enabled, they could create more intelligent and efficient processes. 

‘The financial sector and government will not draw as much return, as these sectors do not have as many “physically moving parts”,’ says Hans Zandbelt, senior technical architect at Ping Identity. ‘But IoT will nevertheless be beneficial in supporting functions such as IT and office automation.’

The utilities industry, however, is well ahead of the curve, having already deployed items such as electronic smart metres and sensors that can detect power outages.

These smart meters provide utilities firms with greater insight into power usage levels, allowing them to refine their models and use analytics to predict usage patterns, which can help them to plan power generation more efficiently.

Companies that operate a fleet of vehicles can also reap significant rewards from IoT, says Stephen Keenan, VP, UK and Ireland at Verizon.

‘Telematics systems give fleet operators the data they need to rein in operational expenses while protecting their vehicles, drivers and bottom line,’ he says. ‘City councils can also turn to IoT in order to save time, money and manpower through the ability to control and monitor street lights remotely.’

>See also: Rapid growth of Internet of Things will add economic value – Gartner

Weighing up the costs

While IoT may be unique in many ways, senior management will still expect CIOs to make a business case that measures the investment.

The main investment is not in the hardware, which has come down so much that it’s now economically feasible to attach a sensor to almost any item, or connect a device to the Wi-Fi network. Such progression makes IoT financially possible for the first time.

On the software side, open-source data management tools, like Apache
Cassandra and Hadoop, also help drive down costs.

‘When it comes to budget, the CIO should keep in mind that this is a new offering,’ says Matt Pfeil, co-founder and chief customer officer at DataStax. ‘There is always more upfront cost with anything new, but the key is to look at the opportunity benefit down the road when the solution is fully implemented.

‘And the CIO should always remember that there is opportunity cost to not pursuing an IoT strategy. What’s the lost cost if you skip this trend but your competition doesn’t?’

There are three core components of deploying IoT – the infrastructure, the analytical capabilities and the application – all of which require investment to realise proper return.

As mentioned, the infrastructure is relatively inexpensive, as it’s mostly hardware and technology and not a lot of human capital.

The analytical capabilities are more expensive, as they’re a combination of hardware and technology to enable analysis and humans to actually do the analysis. 

‘The application of the data is the most expensive, as it’s very thought intensive, and requires a lot of human capital,’ says Cory von Wallenstein, chief technologist at Dyn. ‘But it’s here that the true value will be realised, and true ROI will be recognised.’

>See also: The Internet of Things: Expecting the unexpected

According to Jonas Jacobi, president and co-founder of web communications infrastructure company Kaazing, IT has reached a stage where these investments are necessary anyway. 

The legacy systems that IT is currently using and deploying to, he says, were never designed for the performance and scalability demands required by the new-generation applications that are accessed anytime and anywhere, from any device. 

‘It’s a simple matter of physics and computer science: the traditional web and internet technologies of the past 18 years won’t take us through the next ten years,’ he says. ‘The demands are different, the scales are different, the expectations are different, the depth and range of what users expect are profoundly different, and the stakes are certainly different.

‘Rather than relying on the ‘you-can’t-get-fired-for-buying-Blue’ methodology and continuing down the traditional technology path, enterprises should select new IoT technologies that are designed from the ground up to support this new world, and that offer greater ROI, TCO and user experiences.’

Bridging the gap

However, one cost that hasn’t been considered is the skills gap. A recent Gartner survey revealed that many CIOs do not feel prepared for the rapidly emerging digital torrent, and lack the talent to take it on. 

In an emerging area such as IoT, the talent pool simply doesn’t exist, even if the organisation had the will and resources to hire it.

Many organisations had similar issues in addressing social media, and made the mistake of hiring people who were great self-publicists but extremely limited in delivering business value.

‘The people who are best equipped to respond to the opportunities presented by IoT are the people they already have and who understand the existing capabilities,’ says Neil Kinson, VP for EMEA at Redwood Software. ‘The key is freeing up the bandwidth they need to do this by eliminating the manual tasks they do today so that they can spend their time on adding value.’

Raj Samani, CTO for EMEA at McAfee, adds, ‘It is a huge concern. Sadly, this will come down to supply and demand, and moreover emphasises the pressure for stronger academic institutions to provide more talent.

‘We need to address this gap in the market and we need to address it now, in order to keep pace with modern technology and the accompanying security issues that IoT affords.’

>See also: Onto a good Thing

On the subject of security problems, this is something that will only exacerbate as IoT gets bigger and matures in the enterprise.

With that in mind, the prevailing concern is that many are racing into IoT deployment without proper consideration of security implications. If cyber criminals are already having a field day hacking into smartphones and PCs, what are they going to do when every other object in the world is connected?

‘With IoT, there will be millions of new dumb devices to be taken over and so many new ways for hackers to get on the network,’ says Chris Drake, CEO at FireHost. ‘This is how hackers will win with IoT. If devices aren’t properly protected, it’s entirely possible for our fridges and kettles to form part of a botnet.

‘They won’t be able to do anything too sophisticated, but by just sending a simple request they could contribute to a successful DDoS attack – it’s just another resource for hackers to utilise.’

Rage against the machine

With IoT enabling technology to accumulate even more human intelligence and capabilities, CIOs must prepare for the possible challenge of user resistance.

Yes, the idea of IoT is to make the lives of humans easier, but if computers are able to match, or better, their abilities, it also makes their capabilities less important.

‘New technology and delivery models have already caused concern to workforces, such as the introduction of outsourcing, offshore services and automation solutions,’ says Mike Smith, CTO at Atos.

‘However, the CIO should recognise and highlight the new opportunities that IoT will bring for their business, and for the users of any IoT-based services.’

Consequently, individuals must decide whether revealing information about their behaviours when using services is a price worth paying for the advantages they will gain by using them.

This notion of letting customers subscribe to what they want – where, when and how they want it – with powerful search and fulfilment capabilities, is one that will permeate all enterprises. 

‘We used to speak of intelligent buildings and digital markets; these are fast becoming reality,’ says JP Rangaswami, chief scientist at salesforce.com. ‘As with IoT, a city that aspires to be smart in itself has no meaning. 

‘People make the cities, and it is people who will make the cities smart – aided and abetted by enabling technologies.’

Ultimately, the challenges will have to be overcome, as this is not looking like something that CIOs can ignore.

Even if the vertical isn’t the most suited to the capabilities of IoT, it will at least have a profound impact on office environments.

‘Imagine a workspace that’s aware of you as an individual – whether you’re an employee, partner, customer or supplier,’ says Garry Veale, president of Avaya in Europe. ‘Imagine an office that knows your preferences for light, heat and room type; one that will alert you when someone who might be useful to a project you’re working on enters the building, and even sets up a meeting with that person without you having to look at your calendar.’

This is a world empowered by communications-enabled networks and the Internet of Things.

>See also: Major Internet of Things cyberattack uncovered

What the experts say

“Most of the popular press will be talking about wearables, predominantly connected to a network via Bluetooth and WiFi. We see 2014 as the year the first major steps will be taken towards widespread wide area networking. Connecting devices over a wider network than Bluetooth or WiFi will lay the groundwork for a true Internet of Things, taking it beyond close range industrial and consumer use,” says Ben Peters, vice president for marketing at Neul.

“While the Internet of Things (IoT) will initially be an area of cyber experimentation, cloud services – particularly high value targets such as payment gateways or services which process personal data – will increasingly be targeted. Hackers are likely to take control of devices which are equipped with chips and are connected to the Internet. If organisations hold back from taking advantage of IoT, they might hamper their own competiveness,” says Alan Calder, founder and executive chairman at IT Governance.

“Rapid adoption and scale of deployment of IP devices will continue to generate pressure on IT to deliver the right service at the right time, with the right level of quality and security. This will inevitably be a significant on going concern for CIOs that can be overcome by automation at both the network and security level. This will be key for IT, if it is to support the business needs for IoT,” says David Williamson, CEO at EfficientIP.

“It has already begun in all forms of business. I think what CIOs need to prepare for are the transformation that will happen at the home. Every employee of the company from executive staff down to the standard employee will see their cars, homes, and personal items all become Internet capable. This is the BYOD problem but at 100-times the scale. All of their consumers will likely see this same transformation,” says Tim Keanini, CTO at Lancope.