Would you like to understand what the Internet of Things (IoT) is and what it means for business owners? Or maybe you’re already familiar and just need a refresher. How does the internet of things relate to smart devices?
In this post, we’ll look at the definition of IoT, along with an explanation and an example of what it is. Then, we’ll move on to the differences between connected, smart and IoT devices and how they all relate to each other. To wrap things up, we’ll take a quick look at what this means for business owners.
What is IoT?
Daniel Burrus, one of the world’s leading technology forecasters and innovation experts, defines the Internet of Things as:
“…a combination of networked sensors and machines that enable machine-to-machine communications. Enabling technologies to include the Internet, advanced cloud services, wired and wireless networks, and data-gathering sensors, making the system instantaneous anywhere, anytime.”
In other words, the Internet of Things is simply an extension of the current Internet, expanding into our physical world, and more specifically, physical objects.
For example, let’s pretend you own a factory and it’s your job to oversee a building full of machines and equipment that create products or perform services. If one machine goes down, your supply chain and business will suffer. Maintenance and regular checks are key for making sure that your operation goes on seamlessly.
But it takes time and money to look at every machine individually. Even if you’re performing regular, daily checks on all your equipment, you’re working from old and possibly outdated data. Unlike manual maintenance and checks, IoT capability gives you access to real-time information on the status of your operation and can predict and alert you to potential issues. Instead of working from a day-old or week-old report, you know exactly what is happening in real-time, giving you the opportunity to stop interruptions before they start.
IoT is the process of giving a physical device or object the ability to connect to the digital world in a real way. In this example, your machines now report as devices, and these devices connect to a centralized hub. Your machines now share information like battery level, operating efficiency and even give reports on any jams or specific operating issues that you may need to know about, and would have previously missed with manual checks.
As you can imagine, this will significantly reduce the response time needed on business-critical actions. In addition, you can now schedule maintenance repairs when you know you need them. This example uses a factory, but it doesn’t stop there. Eventually, IoT will be the solution to monitoring and maintaining distributed machines everywhere from assembly lines, airports, drone deployments, buses, within your home and so on.
How are IoT devices different than connected or smart devices?
Back in 2014, Michael E. Porter and James E. Heppelmann assessed the difference between smart and connected technology in the Harvard Business Review this way:
Smart things are products that incorporate sensors, microprocessors, data storage, controls, software, an embedded operating system with enhanced user interface, and the capability of running autonomously (e.g., following a programmed schedule). Smart devices are often connected to a network of some kind, but it’s not required.
Connected things are products with sensors, microprocessors, and controls that communicate with networks in order to serve two purposes. On one hand, it exchanges data over the network to allow monitoring and data collection. On the other, it’s designed to allow some of its functions to be controlled remotely by one of those smart things over a communications network.
In other words, smart devices provide some level of automation, gather data and can be programmed for specific uses, while connected devices are limited to being remotely controlled and monitored.
For example, a connected clothes dryer can tell you when your cycle has finished. A smart clothes dryer, on the other hand, may have sensors to detect if the clothes are dry before the full cycle is complete, and can be programmed to shut off and conserve energy instead of continuing to dry already dry clothes.
IoT devices are a step up from connected and smart devices and create more value because they are more scalable, upgradeable, automated and future-ready. In the example used above, an IoT clothes dryer goes beyond sensing when the clothes are dry and can determine the most cost-effective way to dry the clothes. For example, the device can collect data such as the humidity level of the geographic area of the device, the most efficient fan speed, heater temperature, local electricity rates and so on to predict when the load will be ready and how much it will cost to dry the clothes.
What does this mean for businesses?
Eventually, all companies will have IoT solutions and systems in place. By using IoT products, businesses will have access to better business insights and consumer experiences, can further reduce costs and equipment downtime and easily identify more ways to boost efficiency and productivity. Changes will also be seen when it comes to asset tracking, eliminating waste and reducing inefficiencies.
But, we’re not quite there yet. Implementing IoT solutions is still costly and convoluted. In the meantime, business owners have access to a wide range of other information sources to help streamline operations, drive business decisions and help increase their bottom line, such as advanced real-time reporting and business intelligence (BI). Like IoT, business intelligence can help business owners improve efficiency and increase productivity.
To learn more about what BI encompasses, and how it adds value when incorporated into an ERP system, read our blog "How to Implement Business Intelligence Tools for your Business."