As the Internet of Things (IoT) continues to spread across the home and the enterprise, certain industries are leading investments in the revolutionary technologies that are changing how we live and work.
IoT adoption reached some 43 percent of enterprises worldwide by the end of 2016, according to a Gartner report. "The IoT industry is the next wave of internet technologies, and is expected to create hundreds of thousands of well-paying professional jobs," said PK Agarwal, regional dean of Northeastern University-Silicon Valley and former CTO for the state of California. "IoT will fundamentally change how business and manufacturing will be done worldwide."
Northeastern estimates that the total investment between 2015 and 2020 will be $6 trillion among both consumer and industrial IoT markets, with industrial IoT leading the growth.
SEE: How CXOs should plan their approach to IoT (Tech Pro Research)
Manufacturing made the largest IoT investments in 2016, according to a recent IDC report, spending $178 billion total. Transportation followed, at $78 billion, with utilities coming in third, at $69 billion.
"We're just at the start of this journey," said William Webb, an IEEE fellow and CEO of the nonprofit Weightless SIG. "It's a bit like asking who is leading a marathon within 50 yards of the start -- it may not be an indication of who will be in the lead at the end."
Here are the top five industries that, according to experts, are leading IoT investments and adoption, as well as tips for how your enterprise can get started.
IoT is "evolutionary," according to Peter Middleton, a Gartner analyst focusing on IoT. It emerges out of a history of using networked automation systems in industries such as manufacturing and transportation. "Over time, as networking technology improves through phenomena such as Moore's Law, and advances in processing technology and sensors, the idea of monitoring and optimizing use of physical assets extends to all industries," Middleton said.
IoT's manufacturing origins continue, as the largest investments in the technology remain in that space, Middleton said. These investments fall into two categories: Inward facing (those concerned with optimizing systems and saving costs), and outward facing (those that make improvements in customer usage).
In terms of internal investments, manufacturers are using IoT to optimize their processes, monitor equipment, and do preventative and predictive maintenance on that equipment. Manufacturing operations was the IoT use case that saw the largest investment in 2016 across all industries, at $102.5 billion, according to IDC.
In the outward-facing arena, those in this industry use IoT devices to examine how their products are used by customers by maintaining a networked link to those products, and sampling usage data and sensor measurements. This way, manufacturers can analyze results and see broad patterns in terms of how the product is used, which can inform the next generation of the product, or help diagnose problems early.
The transportation industry is also investing heavily in IoT. Freight monitoring drives much of the IoT spending in this sector, at $55.9 billion in 2016, according to IDC, representing the second-largest IoT use case across all industries.
Increasing numbers of freight and public transportation vehicles are equipped with sensors that help schedule maintenance, optimize fuel consumption, and train drivers, Middleton said. These vehicles can also monitor operating or driving behavior for insurance purposes, he added. Some vehicles have digital data recorders that are programmed to take video samples under conditions of heavy acceleration that might be indicative of a serious traffic accident. That video could then be used in an investigation, Middleton said.
In the utilities industry, investments in the Smart Grid for electricity and gas totalled $57.8 billion in 2016, according to IDC. Smart Grid meters are now widely deployed in the US and in several European countries, Webb said. "It's relatively simple: Electricity meters have power, so they don't have to worry about batteries, and are static," Webb said. "And the business case is straightforward -- you don't have to pay someone to read the meter."
The oil and gas industry has also taken advantage of IoT solutions. "These [industries] are spread across large areas and have lots of pipes and valves and pressure gauges to monitor," Webb said. "The loss of revenue from just a few minutes of an oil pump breaking down is huge, so it's worth installing IoT systems."
IoT devices are also used within power generating plants to monitor equipment over time, to do predictive maintenance, and to provide additional safety oversight, Middleton said.
Healthcare is one of the industries that will see the fastest spending growth in IoT in the years to come, according to IDC.
IoT's use in the healthcare field is very broad, Middleton said. It ranges from medical machines that share images with a patient's other caregivers, monitoring and troubleshooting problems with equipment, and real-time location systems that can track equipment, dispensation of medicine, and even staff and patients. Advances in implants, prosthetics, and wearables also take advantage of IoT, streaming data back to medical providers.
Connecting pacemakers and other medical devices to the internet benefits patients by reducing errors and providing more data to doctors to improve diagnosis and quality of care, said Valorie King, IEEE member and program chair of the undergraduate cybersecurity management and policy program at University of Maryland University College. But it also puts these devices at risk for cyber attacks.
"Security should be part of the design requirements of the system," King said. "Software security is the biggest area of vulnerability."
5. Consumer electronics and cars
Consumer IoT purchases represented the fourth-largest market segment in 2016, according to IDC, and are projected to become the third-largest segment in 2020. In the past year we've seen the rise of home and office automation systems, and digital assistants such as the Amazon Alexa and Google Home.
While the digital assistants have gained popularity, it will be awhile before most people invest in fully connected homes and offices, Webb predicts. "The biggest problem is the inertia of needing to buy a new refrigerator or home security system that has these capabilities," Webb said. "We don't tend to think, 'Let me get a new refrigerator that's internet connected,' unless the old one breaks. It's a slow process of introduction in that space."
Connected cars are also an IoT industry leader in the consumer space, said Theresa Bui, head of enterprise product marketing and IoT cloud strategy at Cisco. Cisco Jasper, which operates the company's IoT connectivity management platform, has 8,500 enterprise customers worldwide -- including General Motors -- using the platform to manage connectivity of 43 million IoT devices.
For example, every General Motors car produced today has IoT capabilities that allow drivers to gain diagnostic information and connect to the internet, among other features, Bui said.
Connected vehicles and smart buildings are predicted to rank among the top industry segments for IoT adoption throughout the next five years, according to IDC.
Advice for enterprises
As more industries invest in IoT, it's imperative to ensure that these devices have strong security systems built in, Webb said. "We've seen in the last six months denial-of-service attacks from IoT devices that have been hijacked," Webb said. "It was unexpected, but in hindsight, we should have thought of that. Many more of these kinds of things will happen."
The cost of building a product that connects to a network continues to fall, Middleton said. But someone architecting a low-cost product, such as a smart light bulb, still needs to pay attention to network security, because it would be possible for an attacker to enter a network through that one inexpensive IoT device.
For companies beginning their IoT journey, "we recommend that operations or engineer departments strive to work more closely with IT departments," Middleton said. "It will enable a more cohesive plan in the use of technology across a given enterprise, as opposed to having islands of usage where people don't communicate and leverage best practices."
Middleton also recommends forming a team within your organization that coordinates the selection of technologies, considers possible use cases, shares best practices, and provides security oversight. This group can start with pilot projects, and use lessons learned from those to develop more detailed return on investment calculations and justify scaling up to a full initiative.