Internet of Things

The high tech world is ever and always on the lookout for "the next big thing" that will take the world by storm, sell countless millions of whatever it is to eager techies, and create a new cohort of high tech billionaires in the process.

Of course one can never know when the next gadget will come along. It could already be in the pipeline for all I know. But I do believe digital technology is reaching a more mature phase and "the next big thing" will come, not to consumers, but to business.

It's already here, big and growing. I refer to the Internet of Things (IoT) which means exactly what it says - "smart" mechanical devices talking to each other, skipping the unreliable human factor in the quest for ever higher quality and productivity.

But it's more than that. As futurologist Daniel Burrus says, it's more than machines. To make machines "smart" requires new generation sensors. A sensor measures, evaluates and gathers data. "The real value that the Internet of Things creates," says Burrus, "is at the intersection of gathering data and leveraging it."

But there is another vital step - an infrastructure that enables the IoT. "Cloud-based applications are the key to using leveraged data," Burrus says. "The Internet of Things doesn't function without cloud-based applications to interpret and transmit the data coming from all these sensors. The cloud is what enables the apps to go to work for you anytime, anywhere."

Cisco Chairman John Chambers says the digital age will bring connectivity from a thousand devices connected to the Internet to 500 billion. "It will transform business," he said. "It will transform our lives, our healthcare system. Business models will rise and fall at a tremendous speed. It will create huge opportunities - probably $19 trillion in economic value over the next decade, incrementally above what we are seeing today. That's the size of the U.S. economy, plus some."

McKinsey sees the same impact, and most of it in business. "Business-to-business applications will account for nearly 70 percent of the value that we estimate will flow from IoT in the next 10 years," McKinsey said. "Nearly $5 trillion would be generated almost exclusively in B2B settings: factories in the extended sense, such as those in manufacturing, agriculture and even health care environments; work sites across mining, oil and gas, and construction; and finally, offices." McKinsey points out that IoT systems can take the guesswork out of product development by gathering data about how products, including capital goods, actually function and how they are used, rather than relying on customer focus groups.

The IoT was discussed at the Microsoft Envision Conference in New Orleans on April 4. A video of my presentation and others is attached. I believe you will find it most interesting.

Jerry Jasinowski, an economist and author, served as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute. You can quote from this with attribution. Let me know if you would like to speak with Jerry. April 2016