A Strategist’s Guide to the Internet of Things

The digital interconnection of billions of devices is today’s most dynamic business opportunity.

Post by Frank Burkitt

Humanity has arrived at a critical threshold in the evolution of computing. By 2020, an estimated 50 billion devices around the globe will be connected to the Internet. Perhaps a third of them will be computers, smartphones, tablets, and TVs. The remaining two-thirds will be other kinds of “things”: sensors, actuators, and newly invented intelligent devices that monitor, control, analyze, and optimize our world.

This seemingly sudden trend has been decades in the making, but is just now hitting a tipping point. The arrival of the “Internet of Things” (IoT) represents a transformative shift for the economy, similar to the introduction of the PC itself. It incorporates other major technology industry trends such as cloud computing, data analytics, and mobile communications, but goes beyond them. Unlike earlier efforts to track and control large systems, such as radio-frequency identification (RFID), the Internet connection gives this shift almost limitless versatility. The IoT also opens a range of new business opportunities for a variety of players. These opportunities tend to fall into three broad strategic categories, each reflecting a different type of enterprise:

“Enablers” that develop and implement the underlying technology

“Engagers” that design, create, integrate, and deliver IoT services to customers

“Enhancers” that devise their own value-added services, on top of the services provided by Engagers, that are unique to the Internet of Things

How will your company build value in this new world? That will depend on the type of business you have today, the capabilities you can develop for tomorrow, and, most of all, your ability to understand the meaning of this new technology.

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Connecting everything: A conversation with Cisco’s Padmasree Warrior

Cisco’s chief technology and strategy officer describes how the exponential growth of connectivity between people and devices, both mobile and network, will change commerce, business systems, and individual behavior.

Despite two decades of increasing connectivity between people and devices over high-tech networks, only 1 percent of what could be connected in the world actually is, argues Padmasree Warrior, Cisco Systems’ chief technology and strategy officer. As the level of connection swells over mobile and other platforms during the next decade, she expects sweeping changes in how consumers shop, businesses handle data, and individuals grapple with the data available about themselves. This interview was conducted by McKinsey’s Rik Kirkland in Davos, Switzerland. What follows is an edited version of Warrior’s remarks.

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