The Internet of Things (IoT) was the most hyped technology of 2014 according to Gartner, and it’s easy to see why. Cisco’s recent IoT study suggests that the number of connected devices is expected to grow to 50 billion by 2020, leading to a global economic impact of $10 trillion.

Connected devices are set to change the very fabric of the world we live and work in. However, the buzz around gadgets such as connected fridges and smart kettles being developed by consumer goods manufacturers have been a distraction from the IoT’s true potential. Indeed, recent research from Embarcadero Technologies revealed that just 16% of those developing IoT solutions are targeting consumers.

The real focus should be on connecting consumer gadgets, such as smartphones and wearables with capital-intensive physical infrastructure or assets, such as plants, hospitals, electric grids, field vehicles and pipelines. Until a large part of these assets is connected to the handheld devices, real benefits of IoT such as improved uptime, efficiency and asset utilisation, cannot be achieved.

While many technologies depend on consumer needs and depend on their rate of adoption, IoT will largely be governed by business use cases that will create virtuous adoption cycles across an ecosystem.

For example, in the medical profession, connecting wearable devices with doctors and hospitals could be used to remotely monitor patients’ vital signs, whilst sensors can help clinicians figure out whether elderly or vulnerable patients have taken their pills on time. This would enable doctors to monitor their patients remotely, reducing the need for hospital and GP surgery visits whilst improving care and decreasing the costs of delivering it significantly.

Time to realise the true benefits of IoT

Today we are only seeing the tip of the iceberg when thinking about the vast potential of the IoT. The real innovation is set to take place behind the scenes in the Industrial Internet of Things (IIoT). The real business imperatives arising from adoption of IoT will be operational efficiency and incremental revenue generation opportunities.

Connected devices and network sensors will reinvent and optimise the efficiency of business processes and global supply chains in sectors such as manufacturing, healthcare, energy management, transportation, agriculture, and countless others.

> See also: What the Internet of Things really means for product strategies and the digital economy

The IIoT will give these organisations a greater ability to control the machines, factories and infrastructure that form their physical operating environments. As more devices and sensors begin to come online, there will also be a significant acceleration in the volume, variety and velocity of data being created.

Combining the insights gleaned from analysis of this ‘big data’ with the greater level of control the IIoT enables will allow businesses to automate processes and reduce equipment downtime with predictive maintenance. This will help them to improve product quality, increase throughput and realise potentially enormous cost-savings.

For example, an early pilot of IoT along with big data to help optimise the use of equipment at just one of Intel’s manufacturing facilities generated millions of dollars in forecasted cost savings, highlighting the potential of the IIoT and big data analytics when rolled-out on a larger scale. However, this is just one early example; the IIoT is still in its infancy and there are a number of key challenges that must be overcome before businesses can begin to realise its true and full potential.

Getting the IoT out of the house

First and foremost, there are the obvious concerns over security and privacy. There is barely a day that goes by without a high-profile data breach or large-scale cyberattack in the headlines. As more endpoints are connected to the internet, the organisational attack surface will be increased dramatically, exposing them to an even greater risk from these cybercriminals. As such, current cybersecurity measures will soon become inadequate.

Organisations embracing the IIoT must look to develop new security frameworks that span the entire cyber physical stack, from device-level authentication to application-level security. The other major barrier to overcome is the interoperability between existing IT infrastructure and systems, which has the potential to ramp up the costs and complexity of IIoT deployments significantly.

The industrial internet will rely on an interconnected digital ecosystem that enables machines and core physical infrastructure components to communicate and share data seamlessly.

As such, it isn’t enough to simply layer IoT technologies on top of the existing infrastructure; those looking to embrace the IIoT successfully must lay the groundwork by digitalising their operating environments. This is no small task, and so it is vital to ensure that you are able to walk before you try to run. Legal and political structures will need to collaborate with global enterprises and respond rapidly and perhaps with measured force to such situations.

Organisations big or small, will need to drive the technology test-beds and have to keep room within their IoT budgets to allow for rapid prototyping, use-case testing and data evaluation so that they can quickly turn the ship in case the business case falters.

Drawing a roadmap for the IoT

Once these initial barriers and any early teething troubles of the IIoT have been overcome, we’re likely to see a dramatic shift in the business world. In addition to the huge operational efficiencies set to be introduced, three key trends will begin to emerge:

Industry borders will be redrawn 

The connection of ecosystems that currently operate in isolation will redefine the boundaries that exist between industries. Successful IoT implementation will require new level of partnerships, mergers and acquisitions that we may not consider as 'strategic fit' today.

Technology leaders such as Microsoft, Apple and Google may find themselves partnering with companies that manufacture toothbrushes, hairdryers, meters and fire alarms to name a few. The acquisition of Nest by Google is a case in point where an individual use-case product required support by a larger ecosystem.

The prevalence of data sharing will enable software platforms to draw insights and identify parallel lines between businesses that never realised they were connected. For example, agricultural supply chains will see significant efficiency gains when sensors deployed in a farmer’s field to monitor the soil conditions can forecast crop yields more accurately.

This insight will enable the rest of the supply chain to become more efficient, as manufacturers can automatically adjust the throughput of packaging to ensure shortfall or surplus is limited, whilst logistics firms can plan vehicle routes in advance to ensure the most effective utilisation of their fleets.

Emergence of the ‘Outcome Economy’

As we become increasingly able to directly control and even automate the physical world through technology, we’ll have a stronger grip on the results of business processes and activities than ever before. This will place an ever-growing emphasis on end products and the outcomes of business activities, meaning that traditional models of services and fees will no longer be as important as they once were. 80% of the IoT revenue will be derived from services.

> See also: What does an Internet of Things enterprise really look like?

It’s the end result that will begin to command a fee; which will force businesses to re-assess the ways in which they work. In many cases, this will mean building new business models and software platforms that will help create, distribute and monetise the outcome-based services at an unprecedented speed and scale

Humans and machines will become colleagues 

It may sound like an idea from a sci-fi movie, but as the capability of machines continues to evolve and become more complex, they will increasingly act as collaborative partners for humans. As we grow increasingly used to the helping hand machines can lend, working practices will evolve to include them, leading to a huge upturn in productivity. This will enable people to enjoy more engaging working practices, as mundane and routine tasks are transitioned to machine counterparts.

Of course, there is a long road ahead before these visions become a reality. The opportunity is huge and the canvas is vast. The key to winning lies in picking the right partners and driving change internally. The big winners will be the owners and partners of new platforms and business models, who can harness the network effect inherent in these models to create new kinds of value and revenue streams.

The introduction of smarter ways of working through a seamlessly connected ecosystem is set to yield considerable economic benefits over the coming years. It’s time to put the adolescent dreams of the IoT behind us and set it to work in the industrial internet.