7 essential lessons about the Internet of Things

The Internet of Things (IoT) promises to reduce energy consumption, transform the way our businesses operate and in general improve the quality of life for billions of people. But it’s also not going to be easy.

Experiments will be launched and abandoned to connect everyday objects to a network. New security and management issues will emerge. Executives and IT departments will struggle over whether it’s more important to focus on the potential savings and long-term return on investment or worry more about the upfront costs.

The good news is that IoT is also not as new as you might think. Utilities, manufacturers and even large real estate partnerships have been using machine data to monitor and optimize their processes for years. Really, IoT is about taking that data and using it in other parts of the company.

There are seven main ideas to keep in mind when thinking of the design and impact of IoT.

1. You will generate far more data than you think

Machines put the “big” in Big Data. A smart mining site can generate up to two petabytes per day. Vibration analysis systems can soak up 200,000 or more signals per second. Some utilities monitor more than 27 million end-points. Harvesting and exploiting this data is the key to becoming more efficient, reducing energy and moving toward true sustainability. The volume, variety and volume of data will be unprecedented.

Some will argue that a substantial portion of the data doesn’t need to be analyzed or even kept. This is not true. The more data you have, the greater resolution and accuracy you will have about whatever you’re tracking. Besides, not saving the data opens up potential regulatory problems.

2. Variety (in standards) is the spice of life

Standards proliferate in operational technology (OT). A wind farm, for instance, might actively capture data from over 300,000 “tags” or data sources on a continual basis served up in 140 formats. Different markets have their preferences: OPC and OPC UA are popular with manufacturers. BACnet, meanwhile, is popular in the building management market.

Why such variety? Many of these devices are placed in extremely challenging environments and must last for years without human intervention. In the U.S., for instance, the average age of an electrical transformer is over 40 years. Performance trumps convenience.

3. The cloud isn’t the answer to everything

Today’s cloud systems are magnificent. You can spin up hundreds of thousands of servers in an instant to analyze a genome. Clouds, however, are often located miles from your devices or your data. The volume of data means bandwidth costs quickly can escalate out of control. David Floyer of Wikibon has an interesting analysis of the problem. Clouds also introduce latency and the risk communications failures. Take it from your engineers in operations: A substantial portion of your data will be stored and analyzed right where it was born.

4.  It has to be as easy to use as a faucet

Think of the power grid or the water system. They are incredibly complex networks that are at the same time incredibly easy to use. You can attach a wide variety of devices — light bulbs, household appliances, fire hydrants and faucets — that are all supposed to work perfectly at any time at a moment’s notice. Water and power networks are so reliable, in fact, that when they break down it is headline news.

This same infrastructure approach — ease of use, reliability, seamless scalability and broad compatibility — will be essential in IoT. Customers, service providers the original manufacturer and others will be accessing smart devices with very little training. Different types of hardware will be plugged into networks and removed without edicts being handed down by IT. Your employees and customers will want to run analytics on data without waiting for a data scientist to scrub it. The data just has to be there.

5. Take it one step at a time

Don’t boil the ocean all at once. A lot of companies tend to start with using IoT for predictive maintenance. Dong Energy, for instance, uses IoT to cut down the number of times technicians have to boat out to inspect offshore turbines. The company anticipates saving 20 million euros a year by 2020. Once you can show the ROI, everyone from the CEO on down gets more comfortable with the idea.

6. It can generate revenue

When people think of IoT, they often think of cost savings: It can reduce energy, cut emissions and more. But it also will serve as a basis for selling new services, such as predictive maintenance. Every product will have an attached service.  

7. The benefits will be bigger than you think

After the struggle and pain, there is a reward. Irish Distillers Pernod-Richard has launched a plan to cut energy consumption by 50 percent while doubling production at some of its distilleries by using data better. Xcel Energy said it has saved $46 million by increasing wind power production through better forecasts. The San Diego Padres, meanwhile, are on track to cut resources by more than 25 percent over the next five years.

As they say, to know the future, study the past.