The Internet of Things for private companies


Internet of Things (IoT) in 2016

Private company issues and opportunities

The IoT is fundamentally changing how private companies operate, transforming conventional processes into competitive advantages. Private company leaders should stay on top of emerging IoT trends but avoid getting caught up in the hype. Instead, they should focus on how their companies can use these technologies to create value. At the same time, they need to carefully protect the data they’re collecting.

Trend to watch: The Internet of Things

The Internet of Things (IoT) comprises a rapidly evolving suite of technologies to monitor, compare and act on insights across and within systems that previously operated in digital isolation. Devices now have growing capabilities to communicate with one another, fundamentally changing the way companies run their manufacturing plants, how energy utilities manage demand, and even how families keep their homes safe.

For private companies, the IoT can transform conventional processes, such as supply chain management, into a true competitive advantage. By arming a company’s sourcing, manufacturing and logistics teams with more sophisticated data from IoT-enabled equipment, companies can prevent errors, correct missteps more quickly, identify and alleviate bottlenecks, and ensure they’re not leaving valuable scraps on the factory floor.1

For B2B firms in particular, three trends within the universe of IoT appear most relevant:

  1. There is incremental opportunity to improve existing systems, such as embedding sensors in baggage and cargo carts at the world’s busiest airports.
  2. There is optimization, which can help seaports handle more cargo in a particular location, for instance.
  3. There are entirely new business models, such as the case of a major logistics provider that is looking at ways to confirm whether packaged medications already hold certification assurance, which would provide valuable intelligence to both regulators and drug manufacturers.

It’s very easy to get caught up in the hype of the Internet of Things—to chase new gadgets. Instead, we should think about how we actually create value—where should we play and how can we win?

- Ruben Gavieres, chief of staff, Deloitte Center for Integrated Research, Deloitte Services LP

The IoT is revolutionizing the way companies think about information. The increasing arsenal of data on physical objects, employees, customers and other stakeholders can now travel across devices, influence the way people act, and enable a growing range of autonomous actions. While the value of these insights is clear to marketers and product developers, there are concerns regarding stewardship and transparency of the information. Says the University of Chicago economist Richard Thaler, “If a business collects data on consumers electronically, it should provide them with a version of that data that is easy to download and export to another website.”2

Private companies looking at potential avenues for innovation within the IoT also need to stay abreast of privacy rules, as there are times when data cannot be shared at all. For example, the US Health Insurance Portability and Accountability Act (HIPAA) offers protection of medical information collected by health professionals and insurers.3

More broadly, there are challenges in adapting certain ecosystems for an IoT-powered future.4 For technology, media and telecommunications companies, the formerly standalone device is now a potential target for hackers.5 Likewise, dropping sensors into existing systems such as utility meters may expose weak links within older systems with less robust security features. Instead of retrofitting, companies should consider how new technologies specifically equipped for IoT can avoid security lapses.

In addition, there still are no uniform standards governing security and enforcement within the IoT.6 Therefore, it is largely up to business and technology leaders to develop rules to combat security risks in this emergent field.

Despite these concerns, IoT technologies can empower private companies to potentially change lives. The battle against chronic disease is one example. Consider that about half of American adults have one or more chronic health conditions, according to the Centers for Disease Control and Prevention.7 Wearables, monitors and implantable devices can truly maximize their potential when patients and health care providers are able to interpret and use the information they extract from the technology. Potential benefits increase as this ecosystem expands to include payors, but with the trade-off of higher regulatory hurdles, potential risk, and barriers to adoption.

The IoT is helping people modify their own behaviors across a range of activities through social proof, where people feel more confident making decisions that mirror their peers. For instance, one Software-as-a-Service (SaaS) provider is partnering with utility companies to provide graphical- and emoticon-filled alerts on energy usage. Users can see how their consumption compares to that of their neighbors, and even get suggestions on how to cut back on energy costs.8

The IoT is also helping change behaviors in automotive-related industries. The typical car today has 70 computing systems and up to 100 million lines of code.9 To use that data for the collective benefit of motorists, some insurance companies are capturing information and providing peer-to-peer driving comparisons that can ultimately affect premiums.10

Yet another area for opportunity within the IoT is emerging through improvements in supply chain management.11 For example, a large household appliances manufacturer switched to radio frequency identification (RFID) tags to help managers track parts in one of its factories, improving an earlier process that required workers to read paper tags. The company reported that the new system exceeded expectations for ROI through the reduction in cost of the paper tags alone. In another example, shipping companies, for instance, are arming their customers with real-time updates on orders. The tools monitor potential roadblocks such as postal strikes, route closures, natural disasters, and other incidents. Some of the tools can adjust the timing or mode of shipments to minimize the disruption from such events.12

According to a global survey of business leaders, 74 percent of those who implemented initiatives such as sensor-based logistics saw increases in revenue, demonstrating how the IoT can improve efficiency and increase differentiation within supply chains. Some companies are using the sensor-based systems to get around delays, further evidence of the impact of the IoT.13

You can create value in IoT by enhancing the flow of information. You can capture value by controlling the flow of information.

In spite of apparent and often compelling benefits, understanding of the IoT remains uneven. For example, more than one in 10 adult Americans now owns a fitness tracker, demonstrating consumer eagerness to put the power of connected devices to use in their daily lives. However, more than half of US consumers who have owned an activity tracker no longer use it.14

By itself, the IoT is no silver bullet. Private companies can play an important role in exploring how IoT-related technologies can transform the way we work, manage our communities, and play.

According to a global survey of business leaders, 74 percent of those who implemented initiatives such as sensor-based logistics saw increases in revenue.

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1 Martyn Warwick, “Deloitte’s ‘Value loop’ concept for IoT explained,” TelecomTV video blog, June 1, 2015,
2 James Guszcza, Harvey Lewis, and John Lucker,”IoT’s about us: Emerging forms of innovation in the Internet of Things,” Deloitte Review, Issue 17, July 27, 2015,
3 Jonathan Holdowsky, Monika Mahto, Michael E. Raynor, and Mark J. Cotteleer, “Inside the Internet of Things (IoT): A primer on the technologies building the IoT,” August 21, 2015,
4 Irfan Saif, Sean Peasley, and Arun Perinkolam, “Safeguarding the Internet of Things: Being secure, vigilant, and resilient in the connected age,” Deloitte Review, Issue 17, July 27, 2015,
5 Irfan Saif, “Flashpoint: Cyber risk in an Internet of Things world,” article,
6 Saif, “Flashpoint: Cyber risk in an Internet of Things world.”
7 “Chronic Diseases: The Leading Causes of Death and Disability in the United States, Center for Disease Control website,
8 “Get More Out of Your DSM Spend with Agile EE,” Opower video, February 2016,
9 Joe Kwederis and Greg Boehmer, “Automotive cybersecurity: Growing technology needs a broader safety net,” article in “Examining the evolving mobility ecosystem,” Deloitte and Automotive News,
10 Michael E. Raynor & Brenna Sniderman, “Power struggle: Customers, companies, and the Internet of Things,” Deloitte Review, Issue 17, July 27, 2015,
11 Joe Mariani, Evan Quasney, and Michael E. Raynor, “Forging links into loops: The Internet of Things’ potential to recast supply chain management,” Deloitte Review, Issue 17, July 27, 2015,
12 Matthew Lacey, Helena Lisachuk, Andreas Giannopoulos, and Alberto Ogura, “Shipping smarter: IoT opportunities in transport and logistics,” Deloitte University Press, Sept. 15, 2015,
13 “The Ninth Annual Global Survey of Supply Chain Progress,” Computer Sciences Corporation, TCU Neely School of Business and Supply Chain Management Review, 2012,
14 Maria LaMagna, “Have we reached peak FitBit,” MarketWatch, January 28, 2016, and Dan Ledger, Daniel McCaffrey, “Inside Wearables: How the Science of Human Behavior Change Offers the Secret to Long-Term Engagement,” Endeavor Partners, January 2014,

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