This blog is the 1st part of 2, illustrating how the IoT impacts organisations or businesses (this blog), and why Operations Managers, COOs and BPM-professionals should embrace the IoT (next blog).
What is the IoT or Internet of Things?
Simply explained, the IoT means that the internet will not be limited to (only) servers, PC’s, smartphones & tablets and people using those. But any device may – or will – be (directly) connected to the worldwide web: not only devices like cars, gas & electricity meters, fridges, but also pacemakers, your (electrical) toothbrush maybe, the door of your office or of your house, etc.
Thus even things which are not electr(on)ically driven could be provided with a sensor and/or actuator to be connected and to become ‘smart’. Putting a sensor on a simple (non-electric) door, for instance, could enable you to know how frequently the door has been opened and closed, at what times, etc. Or like I already illustrated in this blog, a supplier of construction material may put cheap sensors on pallets, so to follow it, and to be able to know when a pallet with bricks has been consumed. So knowing when it is needed to replenish a construction site.
And yes… even living creatures like animals and human beings, provided with a unique identifier may be part of the IoT. Just like you are already indirectly, through your smartphone that has a unique identifier; it has even many of them: not only the unique hardware ID(s), but also the SIM card in it.
How to make things smart and/or connected?
As explained by Dr John Barrett in this TEDx video, following few steps are needed to make any thing smart or connected:
- Give it a unique identity, say a unique identifier, e.g. an IP-address.
- Provide it the ability to communicate, say to be connected through a network
- Enable the thing to sense by any, or a combination of senses.
The power of Sensors
Mind that sensors, these days, are relatively cheap and exist in many, many types. Here is a (most probably non-exhaustive) list, just to give you an idea of the huge possibilities the IoT will offer you ; sorry… is offering you already today.
Sensors for Environmental and Physical monitoring
These are meant to monitor environmental aspects, like temperature, humidity, air quality, presence of gas (for many kinds of gases), barometer & pressure sensors, dust sensors, light sensors, water sensors, alcohol sensors, electricity sensors, infra red distance sensors, i2c colour sensors, sound sensors, UV sensors, etc.
Sensors for Motion sensing
Some of those are: collision sensors, PIR (Pyroelectric Infra Red) motion sensors, accelerometers, digital gyro’s, digital compasses, heart rate sensors, infra red proximity sensors, rotary angle sensors, etc.
Have also a search on the web for IoT sensors, and you will most probably find even more types and their functional potential.
Connection – Network
An important characteristic and condition of the IoT is that all these things (devices and sensors) are connected. Any existing network type can be used to this purpose: the ones managed by ISP’s – i.e. internet service providers -, mobile networks, Local or Wide Area Networks, etc. And also existing short-distance wireless technology like bluetooth, near-field communication, etc.
A more recent network technology, quite specific and an important enabler for the IoT, is the Long Range, Low Power type; of which LoRa seems to be the standard. It combines the ability to communicate over long distances (hence Long Range), though it is quite efficient in energy (power & battery) consumption.
Do you want to know more about this network technology? Then have a look at the Lo-Ra alliance website.
IoT and the business power of Big Data
Why would you connect things and make them ‘smart’, e.g. by providing these things with sensors? In 2 words: for wisdom. Like explained in above mentioned Dr John Barrett’s TEDx video, and below piramid, all these ‘smart’ things and sensors produce data, so called Big Data, that you may use or need for information and knowledge purposes. And – hopefully – for wisdom purposes at the end.
Connecting things and making them smart should obviously be a means to an end.
Putting a sensor on a door could for example be interesting when you organise events which cause queues. You may then plan events better, based on insights you got about the queues measured; so to keep queues limited in the future.
Are you interested in understanding even more in depth why and how big data – and open data – enable you to innovate and to find out disruptive business models like Uber, AirBnB, etc.? Then I recommend you to watch this (1h38 lasting) video by Stephen Brobst, explaining how you may conceive new business models thanks to Big Data and Open Data. Needless to mention that you, as a manager or businessman, will need to define your business model first, before determining how you may use Big Data to support this new or renewed business model. On the other hand, it is wise to know the capabilities of the IoT and corresponding Big Data for sound ideation on new or renewed business models.
The disruptive potential of IoT
Whether you like it or not, the IoT is not the future; it is already the present. Indeed, there are many applications making use of the IoT already today. Applications you may even not (yet) be aware of. Think of Google – or any mobile network operator – who is able to indicate on digital maps where mobility issues – like traffic jams – do occur in real-time, through detecting a considerable number of smartphones slowing down – or getting stuck – on the road.
I was quite surprised the first time when I got an estimate (from my Android phone) of at what time I would be expected to arrive in the office. It seemed that – based on my regular trips of previous days and weeks – a Google application estimated how much time it would take this day to get in the office. Smartphones include many sensors already, indeed.
Uber is also a striking example of an existing use of the IoT. The first time I experienced Uber, I was surprised that after telling the Uber-app on my smartphone, a Uber driver called me nearly immediately and picked me up less than 2 minutes later. You do not need to analyse Uber’s business logic to understand that Uber drivers’ geographical positions are permanently known in real-time, so Uber’s software can determine very efficiently which driver should pick you up at the lowest cost, depending on your real-time location.
Industry 4.0 or Industrial Internet of Things (IIoT)
It will not surprise you that also the industry will be is being impacted by the IoT. Applying the IoT specifically to the industry results in the IIoT or industrial internet of things, which incorporates machine learning, big data technology, exploiting sensor data, machine-to-machine (M2M) communication and automation technologies, which already exist for many years in the industry.
Interconnection leads to intelligent and self-optimising machines which synchronise themselves with the entire value chain, say from purchase orders towards suppliers to delivery to customers. The so called smart factory.
On the other hand, industry 4.0 will not only impact business processes inside an organisation as you will read in next blog; but rather entire businesses and even entire industries and the overall economy. Interconnection not only offers opportunities in manufacturing plants or local sites, but it also enables new – or it intensifies – organisational concepts like:
Chain integration
Networks and processes will no longer be limited to one plant or factory. Boundaries of individual organisations will most likely no longer exist, and will at least become more permeable to collaborating ones.
The IoT will make it possible to integrate even more intensively supply chains, and to drop intermediary steps – though also intermediary parties -, e.g. wholesalers, publishing companies, etc.
Mass customization
Combining mass production with the possibility of making products more specific for demanding customers will lead to – more – mass customization. Think of increasing 3D-printing opportunities, where the 3D-printers are interconnected.
Smart and efficient Service organisations
IoT is obviously not the privilege of manufacturing. Imagine that your organisation delivers services to keep buildings rats and mice free. How inefficient isn’t it for your organisation to frequently (if not daily) send personnel to visit many sites of your customers to check whether rats were trapped? Most often to meet empty traps. Any idea of what (personnel and transport) costs this may represent? Wouldn’t be a big saving to go only to customer sites when a rat or mouse has been trapped?
Well, putting a sensor that sends a signal when the trap has closed would allow you
to make significant savings, isn’t it? This news post (in Dutch) confirms that this is reality already today. Even not yet mentioning how this data could be combined with geo-location, so to optimise the routes for your personnel who might be informed in real-time of a trap just having closed near-by of where the operator is at that moment.
Sharing economy – the end of capitalism?
This means that the IoT also offers the potential to boost the sharing economy. There is even a high probability that monopolies – and oligopolies – will disappear, thanks to the IoT. Top economist Jeremy Rifkin’s video on “the Fall of Capitalism and the Internet of Things” clearly explains why he thinks so.
Chaordic and self-steering organisations
Also the nature and structure of organisations will change thanks to the growing IoT and further digitization. Highly hierarchical organisations will be forced to leave their (too) strong structure towards more self-steering ones. On the other hand, some structure will still be needed to streamline activities to deliver the right products & services at the right time to increasingly demanding customers. That’s where agile BPM will be of added value: to keep order in the chaos, say to manage and orchestrate activities in chaordic organisations and business systems. 
In next blog, you will read how the IoT and (big data) analytics will impact business processes more in particular, illustrated with concrete examples of how applying BPM with the IoT & big data enables even better value creation.
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