6 reasons why the IoT will exceed its already soaring Hype

According to McKinsey, there are six reasons we may be underhyping the Internet of Things. Rather than focusing on verticals and industries (the typical way that potential economic value is computed), McKinsey takes a deeper look at the changes taking place in nine different physical “settings” where the Internet of Things will be deployed — home, retail, office, factories, work sites (mining, oil and gas, construction), vehicles, human (health and wellness), outside (logistics and navigation) and cities. Of that $11 trillion in economic value, four of the nine settings top out at more than $1 trillion in projected economic value — factories ($3.7 trillion), cities ($1.7 trillion), health and fitness ($1.6 trillion) and retail ($1.2 trillion). […] instead of focusing on, say, the automotive industry, McKinsey spreads the benefits of the Internet of Things for automobiles over two settings — “vehicles” and “cities.” If you think the Internet of Things is just about smart homes and fitness devices, think again — McKinsey says the B2B market opportunity could be more than two times the size of the B2C opportunity. According to McKinsey, about 40 percent of the total economic value of the Internet of Things is driven by the ability of all physical devices to talk to each other via computers — what McKinsey refers to as “interoperability.” At same time, isn’t there something bleak about a future in which sensors are hooked up to every object, every setting is predictable and optimized, and pure data guide every decision rather than the human heart?

Sourced through Scoop.it from: www.expressnews.com

According to McKinsey’s latest report there are 6 very good reasons why we are under-hyping the IoT and it’s potential.

1. We’re only using 1% of all data:  What McKinsey found in its analysis of more than 150 Internet of Things use cases was that we’re not taking advantage of all the data that sensors and RFID tags are cranking out 24/7. In some cases, we may be using only 1 percent of all the data out there. And even then, we’re only using the data for simple things such as anomaly detection and control systems — we’re not taking advantage of the other 99% for tasks such as optimization and prediction. A typical offshore oil rig, for example, may have 30,000 sensors hooked up to it, but oil companies are only using a small fraction of this data for future decision-making.

2. We’re not getting the big picture by focusing only on industries:

Rather than focusing on verticals and industries (the typical way that potential economic value is computed), McKinsey takes a deeper look at the changes taking place in nine different physical “settings” where the Internet of Things will be deployed — home, retail, office, factories, work sites (mining, oil and gas, construction), vehicles, human (health and wellness), outside (logistics and navigation) and cities. Of that $11 trillion in economic value, four of the nine settings top out at more than $1 trillion in projected economic value — factories ($3.7 trillion), cities ($1.7 trillion), health and fitness ($1.6 trillion) and retail ($1.2 trillion). Thus, instead of focusing on, say, the automotive industry, McKinsey spreads the benefits of the Internet of Things for automobiles over two settings — “vehicles” and “cities.” In the case of vehicles, sensors are a natural fit for maintenance (e.g., sensors tell you when something’s not working on your car). In cities, these sensors can help with issues such as traffic congestion.

3. We’re forgetting about the B2B opportunity:  If you think the Internet of Things is just about smart homes and fitness devices, think again — McKinsey says the B2B market opportunity could be more than two times the size of the B2C opportunity. Think of an oil work site. You have machinery (oil rigs), mobile equipment (trucks), consumables (barrels of oil), employees, processing plants and transportation networks for taking oil out of the work site. If all those elements are talking to each via the Internet, you can optimize the work site. Oil rigs can let employees know if something’s broken, trucks can arrive on time to pick up the barrels of oil, and all that oil can be processed and shipped on time and on schedule.

4. We’re not seeing that “interoperability” could be the new “synergy”:  According to McKinsey, about 40 percent of the total economic value of the Internet of Things is driven by the ability of all physical devices to talk to each other via computers — what McKinsey refers to as “interoperability.” You can think of “interoperability” as a new form of synergy — a way to increase the whole without increasing the sum of the parts. One example of interoperability is the ability of your fitness wearable to talk with your hospital or health care provider. With interoperability in health, the Internet of Things may be able to cut the cost of treating chronic disease by 50 percent.

5. We’re underestimating the impact on developing economies: 

In terms of economic impact, there will be a 60:40 split between economic gains for developed economies and developing economies. Some of the greatest gains will be in developing nations.In some cases, developing nations will be able to leapfrog the achievements in developed nations because they don’t have to worry about retrofitting equipment or infrastructure with sensors and actuators.

6. We’re forgetting about the new business models that will be created:  It’s not just that the Internet of Things will lead to efficiencies and cost savings — but that it will lead to new ways of doing business. As McKinsey points out, we will likely see the rise of new business models that correspond with the way we are monitoring and evaluating data in real-time. The line will blur between technology companies and non-technology companies.

See on Scoop.itInternet of Things – Technology focus

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