In our work at Sensorsolve (www.connectedsensorsolutions.com), our company that is building a portfolio of connected-sensor-solutions, we see substantial growth in enterprise adoption of connected devices.  From oil wells, to agricultural equipment.  From HVAC equipment to gen sets.  Companies are realizing the benefits of better visibility into their assets.

It is still absolutely true that too many vendors are “technology-first” rather than “benefit-back”.  However, businesses large and small can see the productivity improvements that come from better tracking, monitoring, and understanding of their supply chains and assets.

In the vast majority of cases, however, these are “point solutions” that solve a specific operational problem.  As I wrote in my last post, this is one of the ways in which companies will create value from connected sensors.  These are solutions, in most cases, led by line functions to solve an operational pain point.  And in most successful cases it is driven locally by leaders who benefit tangibly from the improved information available.  These point solutions also avoid many of the security concerns of the “internet of things” by riding over a private network rather than over the public internet.

The productivity and value creation of these solutions cannot be ignored.  As an example, from past work done in commercial equipment repair environments, we know that the cost of maintenance and repair can be reduced by over 30-40% by leveraging temperature, vibration, and other performance data on a regular basis.

What is emerging, therefore, is a fragmented collection of “intranets of things” rather than an “internet of things.”  The internet implies that “things” are communicating with one another autonomously across a public communication infrastructure (with security protocols, of course).  An intranet implies that they are communicating over an internal, private network.  And, in most cases they are not directly communicating with one another, but instead just acting as an aggregation of the data for a centralized resource to manage.  Individual operational departments build what they need to solve a specific problem.  Therefore, IT departments are left with a patchwork of individual solutions.

We see this as a natural first step in the evolution for established enterprises for several reasons.

• Point solution intranets can add substantial operational value quickly with less security risk (both real and perceived)
• Just delivering a point solution is time consuming and requires significant behavior change in established organizations.  Larger change could delay or risk impact altogether.
• The additional benefits from the “internet” – that is open data accessed over the web – is not yet clear.  If I am an upstream oil producer, I can see the immediate benefits of gathering information on whether my well is operating or not, what the pressures are, whether the tanks are nearing capacity, etc.  However, how connecting to data outside my firewall helps my operation is less clear.

Over the next several (maybe twenty) years, we see an evolution from where enterprises are today:

1. Increase the number of point solutions
2. Integrate the “intranets” at least at the data layer to capture the insights available from seeing data across the enterprise
3. “One way/pull” information from the internet into the enterprise’s analytics stream to improve the insights by capturing available public data…e.g., weather data, crop production data, etc.
4. Enable the “things” to communicate directly with each other within the intranet to automate decision making and problem solving with prescriptive analytics
5. Publish data to the internet because there are new revenue streams available from allowing others to access your data.

Obviously not every company will go through each step in order nor at the same pace.  But the “internet of things” where millions of industrial machines are talking with one another autonomously across the public internet will likely take some time.

This evolution creates opportunities for multiple players.  First, to the vendors who can focus on solutions that can deliver rapid pay back.  Second, to the nimble competitors who can find value in the internet more quickly to deliver greater customer benefits or lower cost.  Third, to the “industrial media companies” who develop valuable information that can generate new revenue from publishing it for others to access.