The Internet of Things: The Revolution is Happening
Companies are experiencing an unprecedented wealth of information. An enormous amount of data is out there and the majority of us share our information freely. But what happens to this information? And who is processing it?
Understanding and analyzing the scope of the digital transformation in our society – how it impacts global business, sectors and people – came under the spotlight at the 21st ICT & Digital Media Industry Meeting this month.
Up for discussion were a range a topics. From smart and connected objects, to Big Data and the Internet of Things (IoT), one thing seems clear: The digital revolution is happening, and it is changing everything.
"What we are seeing is a transformation driven by ‘digital density’," said IESE Professor Javier Zamora, academic director of the meeting.
Defined as the percentage of connections, interactions and information produced using digital technology, digital density is increasing exponentially as the number of connected devices rises. This, in turn, is generating a huge quantity of data that can now be mass-processed profitably thanks to Big Data technology. The Internet of Things continues to be the key element increasing digital density, said Zamora.
"First we connected organizations, then people, and now we are beginning to connect things too. And this is important, because it will be the generator of new business models that have been impossible until now."
From the Connected Company to the Talking Fridge
The transformation is affecting the broadest diversity of sectors and industries, from the disruptive to the traditional. Retail, for instance is experiencing wave after wave of innovation.
Before the introduction of the barcode, things or retail items were analog. Then came electronic data interchange systems, which connected companies to their suppliers and consumers through websites and e-commerce platforms. Now, thanks to the proliferation of sensors, supermarkets’ products themselves connect with consumers and businesses, said Zamora.
Wal-Mart, for example, has a mobile app that lets you scan products at the supermarket with your smartphone. Amazon Fresh now offers its customers an electronic gadget (Amazon Dash) that can be used at home to add products to the shopping cart by scanning the barcode or using speech-recognition technology. And "LG has smart refrigerators that allow you to have WhatsApp conversations with your refrigerator," said Zamora. "You can be in the office and ask: ‘Do I have any beer?’ And the fridge can answer: ‘You've got three left.’"
But what’s really interesting about the IoT is not so much the gadgets themselves, said Zamora. It’s the opportunity to gain access to a whole universe of data.
"Data can be leveraged in different ways – for individual use by customers," he said. "And we’re already seeing this with wearable technology and the emerging ‘Internet of You’ and ‘My data.’"
Huge amounts of data are, of course, also being processed by business – the so-called ‘Industrial Internet’.
Organizations are using data for a variety of purposes:
Billions of Connected Objects
Cisco estimates that by 2020, there will be 50 billion devices connected to the Internet. Others are more circumspect with their forecasts. Gartner, for instance, sees the figure climbing to just over 20 billion.
Irrespective of who is right, David del Val, CEO and Chairman of Telefónica I+D, believes that the cost and sophistication of smart components and connectivity is leading us toward a world of connected objects and what he calls ‘total tracking’.
"Besides being things, objects will also have a 'digital identity. This means that a connected object is also a sensor (detecting when and how the object is used), an element driving communication with customers, and a portal to access a service."
A skin lotion manufacturer, for instance, could know when and how customers use the product – and when they run out of it.
Likewise, an electric toothbrush can monitor our brushing and the manufacturer can send us recommendations to our mobile devices on how to improve our oral hygiene.
We can even buy a product from home by simply pressing a button on our fridge. A pizza, for example.
Sounds like science fiction? Think again, says del Val. This has already been tested out by Telefónica and Telepizza in Spain.
The two companies have jointly created Click&Pizza, a small, button-like device that sticks to your fridge and allows you to order a pizza with just one click. An invention, says del Val, that "eliminates any resistance that could remain toward e-commerce" and shows that "there is life beyond the smartphone."
Better and More Efficient Cities
The concentration of the world’s population in large cities, one of the great megatrends of this century, will be accompanied by an unprecedented proliferation of connected devices and objects, said IESE Professor Joan Enric Ricart."Smart cities really showcase the opportunities being generated by the IoT."
Technology is primarily deployed in smart cities to meet four objectives: to increase efficiency in service delivery; to promote transparency in governance and in relations with public authorities; to foster innovation and to develop new business models.
Ricart believes these last two have the greatest potential return, since they play the largest role in determining a city's level of global competitiveness – as well as its ability over the longer term to attract and retain investment, talent and employment.
For Patrick Gaonach, President of Schneider Electric for the Iberia area, the three major areas of development for smart-city projects are efficiency, sustainability and habitability.
All cities aspire to become hubs for innovation, capable of attracting talent and investment. The key challenge is to combine high productivity with optimal living standards. You can't have one without the other, said Gaonach.
"The formula for successful cities involves combining a high-value productive environment with a high level of quality of life."
However, as several of the speakers agreed, we are still in "year zero." And no company alone can cope with the enormous challenges that smart cities pose. Applying technologies and networks on a wide scale requires increased cooperation at all levels.
Jordi Alvinyà, director of business strategy of Cellnex Telecom (formerly Abertis Telecom) sees a number of key challenges ahead.
Firstly, we need to "break the vertical silos" that exist in traditional urban management models. Beyond that he sees three areas that must be addressed: