Impact of IoT on Business and Society
Abstract | IoT [Internet of Things]
The literature review highlights how IoT has transformed how organizations do business today. How society functions, along with discussing the potential of IoT in transforming the world we live in today.
The literature review discusses the potential of IoT use and the risks and challenges faced. It touches on how society and organizations as a whole benefit from IoT implementation and what challenges and risks can be waiting around the corner if proper IoT implementation and related rules and regulations are not followed.
The literature review discusses IoT’s benefits, challenges, and risks.
to organizations and society, along with the possible actions that should be taken to derive maximum benefits from IoT while eliminating involved risks and challenges to all possible extents.
Extensive analysis of the literature reveals that while almost all researchers agree on the importance and beneficial nature of IoT, almost all present some concerns over its adoption strategies and the need to develop a use infrastructure system with the right rules and regulations, that will overcome challenges and risks and offer the maximized benefit of the technolog
Introduction | IoT [Internet of Things]
Internet of Things (IoT) is a network of connected objects that are able to link and communicate with each other, along with other devices that are internet enabled (Ramos, Augusto & Sharipo, 2008). Ramos, et.al., (2008) evaluate IoT as offering the capability of controlling and monitoring the physical world in a remote manner.
Hashem, et.al., (2015) further adds that the adoption of IoT will enable businesses to yield immense benefits, in addition of the Big Data that will be gained as a result offering valuable insights and the potential to obtain value from them. This however does not mean that scholars and researchers are not concerned about the risks involved as Scarfo (2014) points out that there may be factors and risks associated with IoT use that may have unintended effects on its use by organizations.
IoT is clearly generating great interest. The number of related devices is predicted to reach 55 billion by 2025, and companies recognize that a connected workplace would offer several opportunities. Realizing that IoT can have a major impact on a company, its mode of operation, its personnel and its flexibility is fundamental for its adoption (Challal, 2012). Soon all the devices owned and virtually all of the things that exist – will be connected to the Internet. Whether it is via a mobile phone, “clothing” devices or ordinary household appliances, everything will be linked to the Internet of Things (IoT) by means that cannot be imagined yet.
Emergence of IoT
Attaran (2017) defines the evolution of technology as being in its third wave currently. The first wave included the worldwide web connecting computers with various networks and connecting people with people in the second wave. IoT is the third and current wave that has connected everything with everything else. May it be people, devices, types of machinery, environments or virtual objects, everything today is interconnected.
The thermostat, alarm system, smoke detector, doorbell and refrigerator in your home may already be connected, but changes are also beginning to be seen across cities. Thanks to better management of energy, water, transport and security, residents are closer to their environment, which brings us to realize a fully integrated, intelligent and sustainable city. In addition to this, an incredible bubbling of activity and innovation at the level of production plants is also witnessed, where the potential of cyber-physical systems to improve productivity and efficiency in the production process is immense (Vermesan et al., 2011).
Paradigm Shift in Technology and Its Effect On Business
According to consulting firm Gartner, Inc., (2013), 6.4 billion connected devices will be used worldwide this year, up 30% from last year. This figure is expected to triple to almost 21 billion by the end of 2020 (Gartner Inc, 2013).
The impact of IoT is ever-expansive as technology rapidly gains acceptance and adds to the functionality. There are three major economic sectors that will experience a phenomenal boom in terms of IoT solutions, e.g., businesses, governments and consumers. Businesses by far will adopt IoT solutions owed mostly to the potential it offers with respect to enhancing productivity, lowering costs of production and exploring and expanding to newer markets, besides aiding in the development of new products or adding value to existing ones (Shim, et.al., 2019)
On an international level, major developments are taking place in the conventional manufacturing industry, marking the dawn of intelligent manufacturing, also known as Industry 4.0. (Sen, 2010). IoT provides manufacturers the ability to track objects, to find out how consumers use certain products, and to determine which features are paramount. They can thus better understand the adjustments to be made to increase the adoption and purchase rates. Businesses want to know what users are doing with the products to take advantage of them, and IoT gives them the opportunity.
Potential Benefits Organizations Can Derive From IoT Use
The biggest benefit IoT offers organizations by far is the Big Data abundancy. Fleisch (2010) identified 7 drivers of value related to IoT’s use by businesses, also partially discussed in further literature on the topic. These include
1. Enhancement of job satisfaction, consumer empowerment, reduced labor cost and improved quality of data received (Bi, Da Xu, & Wang, 2014; Fleisch, 2010).
2. Reduction in costs of process failure, fraud and labor cost, along with offering high granularity information that enables achieving of efficiency through enabling improvement of process (Fleisch, 2010)
3. Improvement of quality of service by means of prompt control of service and identification of potential areas that require improvement of the process (Brous & Janssen, 2015, Fleisch, 2010)
4. Reduction in cost of process security and process failure, enhancing trust in consumers (Fleisch, 2010)
5. Direct feedback enhances the effectiveness and efficiency of service through flexible, robust and accurate processes (Fleisch, 2010)
6. Widely ranging feedback from users offering opportunities of advertising to new consumer segments and seeking new revenue streams (Fleisch, 2010)
7. Identification of trends through customer feedback, ideas on new product features and enhancements and selection of new segments that attract consumers (Fleisch, 2010).
Chui, et.al. (2010) further add on that the IoT applications of Automation and Control and Information and Analysis have contributed tremendously to enhancing the efficiency of organizations and enforcing compliance through the amount of processed data IoT has offered and respectively the base for analyzing that data. Further on Information and Analysis ability IoT has offered organizations has enabled them to experience effective decision-making based on quality data received from various networked physical objects and analytics driven by sensor-based tracking devices.
Harrison (2011) also stresses on the benefits IoT offers for eCommerce and Commerce entities as the granular data collected automatically and in real-time, with the ability to share instantly has transformed the business scenario completely.
IoT offers a vast variety of benefits offering analysis and real-time data measurement offering tactical, political, strategic and operational benefits that have completely transformed how businesses operate today (Brous & Janssen, 2015).
Potential Risks Of IoT Use
Although there is no denying the tremendous benefits IoT has offered organizations, yet there are risks, challenges and barriers to its complete adoption. Organizations are turning towards IoT to observe new data sources; however, as Scarfo (2014) put it, one great challenge faced is the security, information sharing and privacy of this data. Security and privacy have been a major concern. Moreover, they are the main obstacle to the complete adoption of IoT (Skarmeta, et.al., 2014).
There are concerns related to the disclosure of user information as there is a possibility of revealing sensitive information in the process, related to personal or financial data, etc. Unauthorized access can put many users at risk of being exploited and will impact the privacy of users severely (Fan, et.al., 2014; Kranenburg, et.al., 2014).
Misuraca (2009) explains that there is no second opinion that IoT has brought a wealth of opportunities for businesses. However, there is a need to develop regulations and policies related to IoT. Also, organizations need to place themselves very carefully among these regulations (Stephan, et.al., 2013).
Another challenge organizations face in the implementation of IoT is the high implementation and development costs. Though overall cost reduction is a benefit of IoT initial implementation and development is a costly affair, coming as a challenge to organizations (Yazici, 2014). According to estimation, Walmart’s vendors had to spend around $1 million to $3 million on RFID implementation, signaling that a fully functional system of IoT can be substantial for organizations. (Yazici, 2014).
Like any new technology, IoT can be confusing and a little scary, especially when the debates revolve around standardization. Currently, the biggest problem in the field is the lack of consistent standards.
There are no standards for certain layers of IoT technology, but others are the subject of many competing standards, none of which is clearly decisive. Without a “common communication method”, devices will only be able to communicate with their own brands, which will seriously reduce the interest in connected machines. It is enough to consider connectivity issues to understand how difficult the lack of stable standards can complicate product development and industry growth. For example, if an organization that develops smart clothing technologies differs from a company that develops technology for smart buildings, the chances of communicating their products are minimal (Khan, Khan and Khan, 2012).
Future Actions To Support IoT Implementation
Create Global Value in B2B
To make the IoT more understandable for the general public, society is enthusiastic about the release of various “wearables” (activity trackers, connected watches, etc.) and equipment for the connected home. It is true that these areas carry considerable value where the global wearable market is “more than double” in 2015. However, the fact is the essentials: in the next ten years 70% of the value will come from applications in B2B. Experts estimate that around $ 11.1 billion in value will be created every year. US$ 5 billion of which will come from B2B alone, such as production in the broadest sense, that is, manufacturing, agriculture and even health structures, extraction of raw materials (mines, gas, oil), construction and finally, in offices (Chen, et.al., 2014).
The potential of IoT is therefore global. Emerging markets with their intensive manufacturing production will be the first to adopt it. 38% of the global estimated value is likely to be generated in developing economies. These countries having less legacy technologies, their economies will skip stages. Quantitatively, the deployment of IoT (factories, extraction, oil and gas, construction) could exceed that in post-industrial economies (Stankovic, 2014).
Optimizing Operations
Investing in IoT hardware is just a starting point in the value creation chain. Most of the competitiveness gains will be realized elsewhere. The IoT will provide a constant flow of essential data in decision-making and which will optimize operations, work organization and staff allocation.
According to (Chen et al., 2014), IoT systems will centralize all data concerning the operation and actual use of the equipment. This data will then be more precise than the information collected from consumers or during studies. Manufacturers will be able to understand which functions of their products are more or less frequently used, in order to modify the design to make them more functional. In addition, improving the iterative loop (e.g. updating online connected products) will make the whole more robust and more relevant. So, instead of depreciating, the object will continue to increase in value (Chen et al., 2014).
Currently, most of the data generated by the IoT sensors is not in use. Usually on an oil drilling site, a traditionally “early adopter” area, 30,000 detectors are installed. Only 1% of the data is in practice, yet this data is an important source of additional value.
Create Innovative Economic Models
IoT can lead to the creation of new business models that would be game-changing in various industry sectors. For example, the use of IoT connectivity and data can transform the sale of industrial capital goods into a service. There are many ways to create new economic models. First, knowing when and how the equipment is used allows manufacturers to optimize and monetize a new use-consumption. Second, the data set obtained from all these objects helps the supplier to gain performance in the management and use of its equipment. For example, analyzing IoT data would help improve maintenance forecasts, reduce downtime and anticipate peak usage (Hui et al, 2012).
This change in the economic model will encourage companies to strengthen their service offer. Product development turns into service development, where value is co-created with the customer. It will not be enough to focus on the product features for which customers will pay the most. Understanding customers’ expected results will be vital to formulate the most effective offer.
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