What is the Internet of Things and what does it mean for your business?

You’ve probably heard the phrase the Internet of Things (IoT) bandied about lately, but what on earth is this latest buzzword that is suddenly making the rounds?

Wikipedia describes IoT as “the network of physical objects or ‘things’ embedded with electronics, software, sensors and connectivity to enable it to achieve greater value and service by exchanging data with the manufacturer, operator and/or other connected devices. Each thing is uniquely identifiable through its embedded computing system but is able to inter operate within the existing Internet infrastructure.”

Cisco calls the concept IoE – Internet of Everything – and similarly they refer to RFID tagging, wireless communication, instant data and the ability to influence customers instantly via technology.

Microsoft, which commissioned Australian telco and tech consultancy Telsyte to carry out research into IoT in Australia, takes the definition one step further by considering the data gathering and measurement aspect of IoT; in that IoT collects and collates data from those connected devices —data that can be used to improve customer service, increase revenue or reduce costs.

IoT further ties in with the emergence of big data and business analytics as well as the ability to manipulate and crunch this data to enable business to make better decisions and pivot them into action. According to the Telsyte-Microsoft report, in Australia there are more than 1.5 million machine-to-machine (M2M) devices deployed and this is expected to double to 3 million by 2017.

There are more than 1.5 million machine-to-machine (M2M) devices deployed.

(Machine-to-machine refers to technologies that allow wireless and wired systems to communicate with other devices of the same type and is an integral part of the IoT conversation).

The topic of big data was also quite prevalent in presentations given by various speakers at the recent Ecommerce Conference and Expo that was held in Melbourne in March 2015.

One in five companies in Australia are unaware of the concept of IoT and 48% are either unaware of or have no plans to deploy the technology, yet those that have deployed it on average have shown a 33% increase in revenues. Interestingly 12% of surveyed respondents were in the retail industry. The Telsyte-Microsoft report found one third of Australian retail enterprises are already using big data to analyse sales and customer trends. The more intelligence retailers have about their customers, the more opportunities they have to increase revenue or customer satisfaction.

Retailers that have successfully integrated data from a point-of-sale system with data from proprietary location sensors will have access to business insights of an order of magnitude more valuable and timely than laggard rivals, according to the report.

This data could be the relationship between foot traffic within a store, consumer behaviour and real time sales, holistically providing three-dimensional real time modelling of customer location and behaviour, volume and type of product sold and when. This opens up the opportunity to analyse and test better ways to engage customers with goods and services. This in many ways similarly translates online whereby a customer may follow a link from an email or search for a product on their mobile device, purchase the product and then elect to have it shipped or choose the option of click and collect.

In the background, the order is automatically transferred from the website to an ERP order management system, and the transaction is passed to an accounting system. The order is transmitted to a wireless handheld device, which is then used by an operator to pick, scan, pack then dispatch the goods via a third party carrier or to the collection location for click and collect. The data for goods that need to be shipped is then transmitted as an electronic manifest to the freight company. On dispatch of the goods an email and/or SMS is sent to the customer to collect the goods. All along this journey, the customer’s behaviour can be tracked, i.e. their behaviour on the website, how they elect to receive their order, how quickly they open their tracking email or how long it takes to collect their parcel.

This is just the beginning of the relationship with the customer and the journey for IoT. It is a concept that has come about due to the improvements in connectivity, cloud infrastructure and the ease of integration between disparate systems thanks to standard based protocols and will become a term you see and hear more frequently. If your business hasn’t already incorporated aspects of IoT tech then it might be a good time to start thinking about the how and why of doing so.


To further help understand the application of IoT, have a look at a product called Droplet, which allows you to configure how to water your garden and save money and water by not over-watering your garden. Droplet is linked to a cloud-based system and analyses local weather in real time, soil conditions in your area etc. So if a storm front is coming, Droplet will not dumbly water the lawn five minutes before a cloud burst.

Mark Freidin is an experienced chief operating officer, e-commerce pioneer and consultant to fast-growing firms with his company internetretailing.com.au.


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