In a recent Harvard Business Review article, Michael Porter reported on how the ‘Internet of Things’ is changing everything. The aforementioned phrase has arisen to reflect the growing number of smart, connected products and highlight the new opportunities they can represent. With an estimated impact of $140 trillion, this industrial transformation is the third wave of IT-driven competition in the global economy.
In 1987, Porter had written in the same magazine about how computers were bringing about increased operational efficiencies to enterprises. Again in the 1990s, the Internet Wave transformed business, as information technology infused business transformation with business process outsourcing and changed enterprises in fundamental industry vertices. Industrial sectors like retail, financial services, and manufacturing benefited the most because of their intensive IT investment. Furthermore, geographic regions that empowered IT education saw high growth margins.
Now, the ‘Internet of Things’ once again promises to catalyst world economies towards the next paradigm of change. In this particular revolution however, the embedded electronics and software are making products intelligent; they are beginning to communicate with each other without human initiation. The impact is not only felt on how products are programmed and perceived, but also on the fundamental way we do business. However, legitimate concerns have been raised about widespread adoption and full integration of the ‘Internet of Things’. Specifically, concerns related to privacy/security, data ownership, and a spectrum crunch have been raised. Porter counters these concerns with a product cloud, which will consist of the following:
- Smart product application
- Rules and analytics engines
- Application platform
- Product data database
Whether it is technology as accessories, full home automation, or machine-to-machine communications that jump-starts the movement, it will be exciting to watch this phenomenon unfold in 2015.