The Internet of Things (IoT) market has seen rapid growth in recent years, thanks to the proliferation of wireless networks that allow more machines to communicate with split-second accuracy. According to a new report by Framingham, Massachusetts-based IDC, IoT adoption is up across many major verticals, including retail, healthcare, government and manufacturing. SearchManufacturingERP site editor Brenda Cole spoke with Scott Tiazkun, senior research analyst at IDC and author of the report, about how the IoT market is shifting and how companies are utilizing this technology.
What was the catalyst behind this IoT research? What did you hope to learn?
Scott Tiazkun: IoT is a large derivative IT market, one of many being tossed around by analysts and vendors as having trillions of dollars of IT opportunity. That may be true, but the idea here was to take it a step further and find out really which industries are going to have those opportunities, and then see what the IoT use cases could be within those industries.
When we say IoT 'use cases,' we mean specific applications used to accomplish needed business processes. For example, within healthcare, we looked at things like clinical care and location monitoring. In retail, we looked at digital signage and store operations. In utilities, we looked at smart water and status systems. And in manufacturing we looked at areas like production, asset management, operations and traceability.
How does IoT translate into a manufacturing environment?
Tiazkun: It's part of the production value chain. In asset management, for example, IoT can track, monitor and maintain assets such as industrial machines. The end goal of IoT technology is to improve process efficiency for these manufacturers. Traceability, particularly food traceability, is another IoT use case for manufacturing. The technology is used to track the production process and delivery of food across the entire supply chain, from point of harvest to point of sale.
What were some of the key findings of your report?
Tiazkun: We found that some of these IoT markets today are showing hundreds of millions, if not billions, of potential revenue across a five-year period. For example, the IoT market for remote health monitoring will grow from $8.2 billion in 2014 to over $12.4 billion in 2018. In all of our manufacturing markets, all of the growth rates are 6.5% or higher.
Again, this is a derivative market. For IoT, we're talking about hardware, software, sensors and telecomm connectivity components. This technology already exists in the field. Sensors are out in the field transmitting data back to a central collection point, valves and pumps are stopping and starting based on preprogrammed data. Now, IoT is just getting more market traction, with new types of sensors being developed for different business processes. Plus, the telecomm costs have come down, which makes IoT more viable for more industries.
Did you discover anything surprising about the IoT market?
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Tiazkun: I think what we're seeing is that some of the larger enterprise application companies, like SAP and Oracle, realized within the last year that they already had a lot of the components needed to cobble together and market IoT solutions. Oracle obviously has Java, which is a good tool to make a lot of those components talk to each other. SAP has already been involved with the manufacturing space and they too have an IoT story to tell based on their software.
They've realized that IoT is something that they can also be selling and marketing to their client base, much like 'big data' and analytics. So in coming years, I think big companies will be driving IoT adoption alongside smaller, startup companies. IoT software can be very specialized and niche for specific manufacturing environments, as well as very widespread and general for a variety of manufacturing industries.
Do you have any advice for manufacturers that are new to the IoT market?
Tiazkun: IoT is much like any information technology purchase: You have to define what you're trying to address with the technology first. The nice thing about IoT is that it promises to address many types of processes that manufacturers hope to automate. Due diligence in IoT is important for purchases, especially with more options not only around software, but telecomm and connectivity providers. It's important to keep in mind that there are a lot of components to consider and you may need to go to more than one vendor to actually get all that you need.
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