Who gets the Internet of Things?

How much would you pay to LOL? If you were a patron of a pay-per-laugh Teatreneu theater company production in Barcelona, the answer would be €0.30 for each instance. Teatreneu uses facial recognition technology to register each laugh and charges customers accordingly – up to €24 per show, a 25% increase over previous ticket prices.

We seem to be talking a lot about connected objects and locales of late – wearable devices, appliances, vehicles, even fitting rooms.

But maybe, instead of perpetually looking for some killer new feature in the latest LG fridge or Samsung washing machine, it’s time to step back and assess the awesome potential of the underlying technology collective that drives this phenomenon – the Internet of things (IoT).

Broadly, the IoT is about deploying sensors in 'dumb' devices and connecting them into a super-system that senses, transmits, crunches and acts on ‘environmental’, user or system data.

Remember Carnegie Mellon University’s intelligent Coke machine? It reported on its inventory and whether newly loaded drinks were cold enough – back in 1982. So I suppose we can all go home now. The concept of ‘a network of smart devices’ was successfully demoed almost 35 years ago.

But then a network of one isn’t much of a network at all, and ordering cold drinks isn’t all that cool anymore, so I think there’s room to explore how far the concept has evolved, what will be possible in the future, and most importantly, why people aren’t ‘getting’ the massive benefits of the IoT.

It’s easy to see why the IoT will be the single biggest driver of productivity and growth in the next decade. The number of sensors and devices on which it depends has already reached tens of billions. Estimates put the industrial component of the IoT opportunity at $14 trillion by 2030 – with particular benefit for mature economies. Wearables alone will be a $13.6 billion market by 2018.

But full realisation of the IoT’s benefits is by no means guaranteed.

Today, it helps with improving productivity, reducing operating costs and enhancing worker safety. For example, in the petroleum industry wearable devices sense dangerous chemicals, while unmanned aerial vehicles can inspect remote pipelines. The next generation of digital technology will also benefit workforces of the future by augmenting skills and redefining tasks.

But what else can it do other than automation and augmentation; besides efficiency and safety?

IoT’s true potential is as the base technology of a new wave of innovation, but not the sort of innovation that is fixated on the abovementioned incremental gains, because that is not what will drive enduring economic growth (and certainly not job growth).

We must pursue whole new use cases that can exploit the longer-term economic and employment potential of the IoT. It will require new product and service hybrids that disrupt markets, generate fresh revenue streams and create jobs in the form of new or additional manufacturing, sales, logistics and service capabilities.

Many of the new models will be created on the back of IoT data and learnings, obtained from systems in the field (for example retail monitors observing and reporting on floor buying patterns), or even from one’s own products (in-vehicle monitors).

Coupling sensor feedback with machine learning platforms, the IoT can provide the intelligence that allows enterprises to finally enter the ‘outcome economy’, i.e. move beyond selling products and services to delivering measurable outcomes. This can for example take the form of guaranteed crop yields in a specific parcel of farmland, by combining mapping data of farming fields with data on seed yields.

But lest we forget, economic maturity is a prerequisite for taking advantage of the benefits of the IoT – how do we rate? South Africans would certainly like to think that we are in the running to be a mature economy by 2030, operating in lock-step with the NDP: Vision for 2030. What will it take?

• Is government doing enough to create the right investment conditions and putting the necessary physical and digital infrastructures in place to facilitate progress and capture IOT benefits?
• Are companies taking full advantage of such enablement and the IoT’s potential, by creating innovative commercial models to boost economic growth?

Government’s efforts are receiving a lot of airtime, though its failures always seem to attract more attention by comparison. As for companies, 82% agree that the use of intelligent hardware and products will bring about positive outcomes to their businesses, and yet 41% are not involved in the adoption of IoT.

In order to get their house in order, business should focus their efforts in three main areas:

As every inanimate ‘thing’ becomes connected, they must reimagine industry models. For example, how can efforts to improve asset utilisation be used as a platform for new services?

They must also capitalise on the value of data – the power of the IoT is not only in generating insightful data, but also in sharing it between different players, within corporate supply chains or across industry consortia.

Finally, they must prepare for the future of work – the increasing use of smart products and robotics will change the required skills and job mixes in future workforces, forcing changes in the way talent is sourced and collaboration happens.

South Africa will only rise up and become a global economic force if we are serious about using emerging digital platforms that enable rapid innovation and competitiveness. The future belongs to the planners, the innovators and their investors.