Internet of Things – 2017 trends

Joseph Reger, Fujitsu EMEA CTO

2017 predictions for the Internet of Things (IoT) market by Dr Joseph Reger, CTO at Fujitsu, EMEA.

1. Realisation that IoT is no longer the future, it is here

IoT is a technical term and describes technologies and technology scenarios. IoT is used most of the time for a business transformation, commonly called now: digital transformation. The latter is a business term. 2017 will be the year organisations truly start to become hyperconnected businesses as they begin to embed Internet of Things (IoT) technologies into the every-day running of their business.

Currently, when we talk about the Internet of Things (IoT), we talk about it as something that will be happening in the future. The reality is that IoT is here and looks to disrupt businesses across many industries. Much of the technology has already been proven, so in 2017 the focus will be on moving their digital transformation efforts from operational efficiency to gaining real insights from the huge data being collated that will drive real action. An example of this is in general asset management where manufacturers track and monitor stock levels saving both time and potentially 30% reduction in stock write off, or where aeroplane manufacturers are using RFID technologies to help streamline the full lifecycle management of components.

2017 will see IoT technologies talked about increasingly as an assumed presence as it is a key enabler to Digital Transformation, not an add-on or a ‘nice to have’. ; IoT will become a mission critical technology that will be fundamental in all business operations in an increasingly digital era.

2. Shift from product optimisation to connected products brings new challenges

In 2017, we will see an increase in manufacturers who, in the past, have focussed on building a product, shift to ‘connecting’ that product; turning it into a service. This will see new challenges come to the fore as organisations that move from a factory approach to business to selling a connected product with a business model based around consumption. This has already happened in the airline business where engines are now sold on a usage basis. IoT technologies are the enabler for this digital transformation. But this shift means a huge change for the manufacturer as the value of the product being consumed is based on effectively software – with ongoing product lifecycle management placing a completely new set of requirements on the organisation. They need to be effectively a software company – as well as a service organisation.

The challenge for manufacturing businesses to move to this strategy is completely underestimated. Product-based teams are used to building a product, shipping it and relying on third-party dealer networks. Most of the maintenance and support is mechanical. For example, there isn’t the same ongoing lifecycle management of a car as there is of a software (or connected) product. This is where companies will get it wrong, launching something they are unable to accompany with the necessary wrap around services or security.

This is a position born from trying to apply services strategies to a product business. Just because you can build, sell and support a product, doesn’t mean you can do the same with a service. They are very different strategies requiring different skillsets. However IoT technologies will enable the ‘fabric’ to allow manufacturers to shift to service based models, for example the motor manufacturer connected to smart city connected to insurer connected to consumer’s devices and services.

3. Being hyperconnected opens new opportunities around customer relationships

As a direct consequence of the move to a connected product, manufacturers are finding new opportunities to establish ongoing customer relationships and deliver a new customer experiences through offering a service. This drives an ongoing revenue model as well as potential to directly influence their customer loyalty. In the past they were one step removed as they typically worked through distribution / resell / retail channels. At present our current connected world is still largely a morass of ‘point solutions’ which have some minor level of connectivity and integration through associate or syndicated relationships. IoT technologies may actually provide ‘integrated by default’ relationships as organizations drive their digital transformations.

This does however place new challenges on companies to manage these new customer relationships effectively – as those who are able to leverage these relationships will have the greatest competitive advantage. This is why IoT technologies and analytics go hand-in-hand; the ability to drive actionable insights is key to success in transforming digitally.

4. A drought of IoT skills

Moving into 2017, the lack of talent and skills in the building and deploying of IoT technologies will become even more prevalent. Recent research from Fujitsu found 38% of European businesses wish they could improve the level of digital skills within their business. Because of this, we often see companies put digitalisation projects and the implementation of IoT technologies on hold – or be more conservative about what they try to do.

Next year, as organisations become more aware of the necessity to adapt and implement IoT technologies into their business IT infrastructure, the lack of skills needed to carry out such campaigns will become obvious. No doubt in 2017 there will be a huge industry push to identify, source, secure and retain such talent – whether that be by finding new or re-training and cross-training existing staff.

5. A leap towards Managed Services

As technology rapidly evolves along with the opportunities it offers businesses, organisations are finding themselves building mission critical systems and networks of which they don’t have the skills in-house to manage. In addition, the environment in which they will be deploying their offerings into will be dynamic and nebulous, with many aspects not under their direct control.

We are seeing plenty of development of innovative technologies, but not as much time and effort dedicated to understanding how they will be managed and operated once deployed.

From rapidly progressing startups to large organisations, we are seeing businesses dipping their toes into Research and Development with 92% believing that their organisation must evolve to thrive in a digital world. But there is too much focus on the development but not enough on the operations.

Highlighted in IDC’s Worldwide IT Industry 2017 Predictions this is where next year we will see 75% of IoT adopters looking to Managed Service Providers (MSPs) to support and run new technology infrastructures in an efficient, secure and sustainable way.

6. Holistic responsibility for IoT security

Security around IoT solutions poses new and different threats from traditional IT deployments when you factoring in edge computing, battery lifetime issues etc.

Potentially due to the rapid growth the adoption of IoT technologies, who owns the responsibility for securing these devices has not been entirely clear. Due to some believing that this should begin with the manufacturing of IoT products, security is often overlooked and ends up more of an afterthought or bolt-on solution.

But IoT solutions will require security built in as ‘bolted on’ will not actually be possible for lots of use case. It is safe to assume that many components of an IoT solution will be “unsecure” and that while judicious use of encryption will help, an ‘encrypt all’ strategy will not work. Security needs to be embedded in the end to end security concept, but it has its own challenges and technologies.

Next year we will see the wider industry, particularly Systems Integrators and Network Providers start taking the software security of IoT technologies more seriously. In 2017, the industry will find methods that provide more holistic security approaches to IoT solutions that won’t expect every part of the network to have been competently built or managed with security at the heart of strategy. This will ensure security in IoT solutions no longer falls through the cracks.

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