THE INTERNET OF THINGS:
THE SHAPE OF THINGS TO COME

A new McKinsey report studies how more objects are becoming embedded with sensors that communicate data and its implications for business.

A new McKinsey report looks at how the predictable pathways of information are changing, as the physical world itself is becoming a type of information system. In what’s called the Internet of Things, sensors and actuators embedded in physical objects—from roadways to pacemakers—are linked through wired and wireless networks, often using the same IP that connects the Internet. The resulting volumes of data that flow to computers for analysis, and the complexity and speed which the data can be understood and responded to--often without human intervention--marks another information system revolution that will change competitive advantage.

On a technology basis, the Internet of Things will likely be a "non deterministic" and open network in which auto-organized or intelligent entities (Web services, SOA components), virtual objects (avatars) will be interoperable and able to act independently depending on the context, circumstances or environments.  

Examples of applications are pill-sized micro cameras that traverse the human digestive track and pass back thousands of images to pinpoint sources of illness. Farming equipment, with wireless links to data collected from remote satellites and ground sensors, can use that data to adjust crop conditions.

Business models based on today’s largely static information architectures face challenges as new ways of creating value arise. Companies that take advantage of these capabilities stand to gain against competitors that don’t.

Though the widespread adoption of the Internet of Things will take time, the timeline is advancing due to improvements in underlying technologies--such as wireless networking, greater standardization of communications protocols, ever-smaller silicon chips, massive increases in storage and computing power making large scale number crunching possible (some via cloud computing)—and falling costs.

As these technologies mature, the range of corporate deployments will increase. This is the time for executives, managers and technologists to structure their thoughts about potential impact and opportunities that are likely to emerge from the Internet of Things.

McKinsey identifies six distinct types of emerging applications, which fall in two broad categories:

Information and analysis			Automation and control
1	2	3	1	2	3
Tracking behavior	Enhanced situational awareness	Sensor-driven decision analysis	Process optimization	Optimized resource consumption	Complex autonomous systems
Monitoring the behavior of persons, things, or data through space and time.	Achieving real-time awareness of physical environment	Assessing human decision-making through deep analysis and data virtualization	Automated control of closed (self-contained) systems	Control of consumption to optimize resource use across network	Automated control in open environments with great uncertainty
Examples: presence-based advertising and payments based on locations of consumers	Example: Sniper detection using direction of sound to locate shooters	Example: Continuous monitoring of chronic diseases to help doctors determine best treatments.	Examples: Modernization of lime kiln through-put via wireless sensors	Examples: Smart meters and energy grids that match loads and generate capacity in order to lower costs	Examples: Collision avoidance systems to sense objects and automatically apply brakes
Inventory and supply chain monitoring and management			Continuous precise adjustments in manufacturing lines	Data-center management to optimize energy, storage, and processor utilization	Clean up of hazardous materials through the use of swarms of robots

 

Within companies, large changes in information patterns will have implications for organizational structure, as well for the way decisions are made, operations are managed and processes are conceived. Companies can begin taking steps now to explore and position themselves for these changes by using new technologies to optimize business processes in which traditional approaches have not brought satisfactory returns.

In the May edition, we will take a closer look at some examples of these emerging technologies.

 

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