The IoT industry is an exciting space to be in right now. The Internet of Things is being hailed as the solution to everything from traffic and congestion, to managing domestic energy usage, to farming productivity. As a new, growing market, there is plenty of opportunities both to become an emerging vendor and to capitalize on these new technologies before your competitors do. Some new IoT trends offer to make organizations – whether public or private sector – more productive and efficient, ultimately leading to higher profits.
In addition to this, the IoT signals a move away from siloed and inefficient working towards a world of greater connectivity and collaboration. Although a nascent space, key trends are already starting to emerge in IoT, as we will explore in this article.
IoT trends: Dashboard-centric solutions vs. Insight service providers
Dashboard-centric vs. insight service providers expresses the opposition between different types of vendors of IoT solutions. The former offer solutions that show aggregated data in a dashboard (interface), whereas the latter offer products that help users to act on this data. Sometimes, people look at the dashboard-centric/insight-centric binary as an IoT platform provider/IoT application/solution provider opposition.
To clarify: dashboards can show, for example, real-time traffic; the location of police officers; traffic lights; and other city infrastructure. However, dashboard-centric solutions often fail to convert the data shown into actionable insights. Insight service-providers, like business application providers, go beyond simply visualizing, and offer insights, recommended actions and expected outcomes. The latter is usually seen as more useful for businesses and other organizations. Simply seeing that things are happening (across a city’s streets for instance) on a dashboard is not enough: the true value of an IoT solution lies in its ability to offer analytical and decision-making guidance, giving predictive models of what might happen if any number of decisions are made, and assessing which decision will best meet the user’s goals.
It is important to note that dashboard-centric solutions can work alongside insight-specific solutions. For example, some service-providers offer subsystems, such as business applications, and dashboard agnostics, meaning that clients can integrate existing systems and dashboards. As such, although there is a growing trend to think of the two as different things, in some cases they can actually be used alongside each other.
IoT trends: Outcome-based contracts to mitigate risks
Gartner estimates that by 2020, 20% of all new IoT projects will include outcome-based contracts, up from less than 5% today. An outcome-based contract is essentially one where the buyer only pays once the product starts generating beneficial results. The provider, therefore, offers to do everything for free – for example installing 200 sensors, which will increase revenues lost due to parking fraud, which only takes (complete or partial) payment once the first results come in.
This kind of contract is increasingly popular, along with proof of concept, because spending on IoT solutions can be difficult if there are no proven outcomes – especially in not-for-profit or public-sector organizations. Proof of Concept (PoC) is another trend which goes hand in hand with outcome-based contracts, and describes what they do. It is a stage during IoT implementation where businesses “test out” an IoT solution as a pilot project in a limited area of their operations – or, in the case of the city, in a limited physical area. Only once the solution has proved its worth can it be scaled across the business/city, and this is also usually the point where they will be charged. Although the two are not inextricable, so that a PoC can sometimes happen without an outcome-based contract, the latter rarely happens without the former so they are frequently found together.
The financial barriers to adopting new technologies can thus be eradicated, or at least partially negated, by the use of PoC and outcome-based contacts.
IoT trends: The Digital Twin Concept
A digital twin is essentially a digital replica of physical assets, processes and systems, for example of a city or a mine, which provides a representation of both the core elements and the dynamics of IoT devices used within the space and system depicted. Digital twins use AI (artificial intelligence), machine-learning (a subset of AI) and software analytics with data to render real-time (otherwise known as “living”) digital simulation models that can update and change as their real, physical counterparts, or “twins” change.
To make it simpler, it basically means that a real-time “video game” version of a city, mine, or warehouse is created, digitizing this space in a way that produces interaction between the real and the virtual. These systems can be used to optimize the operation and maintenance of physical assets, systems, and processes in real-time.
Operational Intelligence (OI) can pave the way towards building digital twins. OI can be defined as a form of real-time business analytics that delivers visibility and insight into business operations.
The insights produced by real-time intelligence enable operators to understand the performance of distributed infrastructure, make predictions, improve efficiency and even prevent disasters. This gives them greater capacity to make the right operational decisions. Importantly, OI offers the possibility of partially digitizing operations or only digitizing sub-operations, like parking management, rather than digitizing the whole city at once. As such, OI allows city authorities to take a step-by-step approach to digitization: instead of suddenly installing a digital twin, they can decide which areas need digitizing first, and gradually build up a digital version of the city over time. This is often more aligned with internal budgets and innovation processes.
Operational Intelligence is thus one catalyst for the digital twins concept because it allows us to digitize infrastructure, monitor operations in real time, predict events, take actions based on intelligence, and engage with important stakeholders – for example, the city’s citizens. Cities are currently far away from this concept – it will probably come into being in around 5 – 10 years time – but mines are already ahead of the game and are using digital twins as part of their operations.
Although the IoT market is a relatively new space, it is an incredibly dynamic one. As such innovative partnerships between smaller and larger vendors are prevalent, and new start-ups are constantly appearing with disruptive products that offer more bespoke solutions for their clients. It is unsurprising then that forward-thinking trends – such as digital twins and outcome-based contracts – have already started to appear in this industry.
These IoT trends indicate where the market is heading, signaling a shift towards insight-centric, highly-adapted IoT services that aim to not only to give clients data visualization capabilities but also offer them AI-enabled recommendations and future predictions, as demonstrated by digital twins. There is also a shift towards transparency and accountability, particularly for vendors targeting public-sector organizations, as is shown by the increasing popularity of PoC and outcome-based contracts. IoT innovation is, therefore, happening on two fronts: digital technology and business models. In the future, we should see an increase in innovation in these areas, with more sophisticated products – such as digital twins, and beyond – and new, creative ways of doing business that enable more companies to reap the benefits that IoT brings.