The Internet of Things—digitizing the physical world—has received enormous attention. In this research, the McKinsey Global Institute set out to look beyond the hype to understand exactly how IoT technology can create real economic value. Our central finding is that the hype may actually understate the full potential of the Internet of Things—but that capturing the maximum benefits will require an understanding of where real value can be created and successfully addressing a set of systems issues, including interoperability. Viewing IoT applications through the lens of the physical settings in which these systems will be deployed creates a broader view…
Author: Harrison
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In reviewing nearly 300 IoT applications, we discovered that using only a conventional approach to categorizing the potential impact by vertical industry markets—such as automotive or consumer electronics—made it more difficult to analyze all the ways in which value could be created. If we look at how IoT technology is creating value from the perspective of the automaker, for instance, we would see how it improves manufacturing efficiencies and reduces costs. However, by viewing IoT applications through the lens of settings, we capture a broader set of effects, particularly those that require the interaction of IoT systems and often produce…
We define “the Internet of Things” as sensors and actuators connected by networks to computing systems. These systems can monitor or manage the health and actions of connected objects and machines. Connected sensors can also monitor the natural world, people, and animals. For the purposes of this research, we exclude systems in which all of the sensors’ primary purpose is to receive intentional human input, such as smartphone apps where the data input comes primarily through a touchscreen, or other networked computer software where the sensors consist of the standard keyboard and mouse. McKinsey Global Institute 1. Introduction What we…
The potential value that we describe in Chapter 3 from IoT applications arises from how the data are analyzed and applied to decision making, improving operations, and enabling new lines of business. However, in most of the applications we evaluated, the data being generated are used in very limited ways. In one oil platform application we studied, less than 1 percent of the data being gathered were used, largely because most of the data were never transferred from the rig (Exhibit 3). IoT should be a key source of big data that can be analyzed to capture value, and open data, which…
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