In a report titled, “The Internet of Things”, McKinsey Quarterly outlines the benefits of technological advances allowing sensors to communicate over the Internet. The report discusses the trend that “objects are becoming embedded with sensors and gaining the ability to communicate. The resulting information networks promise to create new business models, improve business processes, and reduce costs and risks.”
The report points out two main processes that will see immediate gains from adding web-enabled sensors to objects. First, information and analysis is greatly aided since data that was previously unobtainable, can now be made available. Second, automation and control can be optimized due to the additional data.
As standard Internet protocols can eliminate the need for proprietary hardware and software, both information and automation are much more accessible. We see this as a way to level the playing field. Now, even small business can invest in a network of relatively inexpensive sensors and gather data without paying for complex and highly customized systems.
In our experiments with web-enabled sensors, namely the LOE (level-over-Ethernet) sensors, we have seen great opportunity for both information and automation. For example, several oil-recycling companies have installed our LOE sensors on remote tanks and connected, via Ethernet cable, to local Internet services. This gives them a means to collect remote tank level data, allowing them to optimize their pick-up routes and increase profitability. Other customer applications have included the RST-5001 module, which can take any 4-20 mA output and translate it for the Internet. These products have shown us the massive gains that can be obtained by communicating over the Internet with our sensors.
The report concludes that this new integration of technologies is growing, and that new ideas are still under development. However, it’s time to start adopting proven applications. The authors wisely state:
“Companies can begin taking steps now to position themselves for these changes by using the new technologies to optimize business processes in which traditional approaches have not brought satisfactory returns. Energy consumption efficiency and process optimization are good early targets.”
To read McKinsey Quarterly’s full report, visit the article on their website and create an account.
Michael Chui, Markus Löffler, and Roger Roberts, “The Internet of Things,”
McKinsey Quarterly, www.mckinseyquarterly.com, March 2010.