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Smart watches, intelligent climate control, fitness trackers that monitor without passing judgment, refrigerators that know when the milk is low—this is the Internet of Things (IoT) most people are familiar with.

But the IoT is more than novel personal gadgets and handy home appliances. It’s a system of “things” with embedded chips and sensors to collect data, a means to communicate the data, and applications to process and analyze the data. It’s a system that promises not only personal transformation, but a full-on business revolution.

World Economic Forum's Industrial Internet of Things

An artistic interpretation of the World Economic Forum’s IoT workshop discussions. By Visual Facilitators. Source: World Economic Forum, Industrial Internet of Things, January 2015.

Industry experts predict that the data these devices generate and the insight companies can gain from it will have a profound effect on business—it can be used to inform decisions, increase efficiency, and inspire creation of new business models. In an August 2015 report, McKinsey & Company estimates that business-to-business applications will create nearly 70 percent of the value generated by the IoT in the next decade.

Gartner has called it “a revolution waiting to happen,” and they are spot-on. Surveys by IDG and McKinsey & Company estimate that more than 20 billion “things” will be connected to the internet by 2020, and that the IoT will create $1.7 trillion of global economic benefit.

It’s a revolution in the making, for sure, but it will have to wait a bit, at least until after industry leaders clear a few of the IoT’s hurdles.

Like most of the recent shifts in workplace technology (BYOD, mobile, digital transformation), the IoT comes with a culture change caveat. According to the August McKinsey & Company report, as technology spreads across assets, inventories and operations, IT’s role will expand and require increased collaboration with other departments. From top to bottom, the workforce will need to be willing to link systems and work more closely together.

The report also notes that companies will need to become more “analytically rigorous and data-driven,” which means training staff in new skills and connecting data scientists with decision makers.

Another top concern is security. A January 2015 World Economic Forum report notes that security issues could create an estimated $3 trillion in economic loss by 2020. In the first six months of 2014, hackers accessed 195 million identities from records associated with utilities, medical devices, and transportation, the report adds.

Billions of devices generating mountains of data—without interoperability, it’s just a messy data hoard.

The biggest hurdle, however, is getting it all to work together. Billions of devices generating mountains of data—without interoperability, it’s just a messy data hoard. Google, Apple, Microsoft and other companies are making progress toward that end. Google developed the Brillo operating system and Weave communication platform, Apple created HomeKit and Microsoft has the Azure IoT Suite.

As of today, the IoT is still in its youth, “much like the Internet was in the late 1990s,” the World Economic Forum report authors state. Almost 90 percent of respondents to the survey said they do not fully understand the IoT’s business models and long-term implications.

And that’s OK… for now. Although revolutions rarely happen overnight, now is the time for businesses to begin envisioning and working toward an IoT future.

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