Recent history is full of examples of supposedly life-changing technologies that in the end, if not quite failures, don’t live up to their hype. So one would be forgiven for maintaining a healthy scepticism towards the much-talked-about internet of things (IoT), that ever-expanding network of objects embedded with digital hardware and software.

But recent research suggests IoT is a trend that is here to stay: there will be an estimated 4.9 billion connected devices by the end of the year – an increase of 30% from last year – and that figure could hit 25 billion by 2020. And while in 2013 the IoT market in manufacturing operations was already worth $42.4 billion, that will grow to $98.9 billion by 2018. As with mobile technology 15 to 20 years ago, the IoT revolution is just beginning, and over the next two decades it will have a profound impact on businesses, the economy and society.

In this new digital world, expectations are increasing. Today, customers demand personalized, reliable and durable products and services, at the time and in the place they want them. And thanks to the large amount of data being made available by the billions of connected devices out there, it’s easier than ever before for businesses to meet these expectations. It’s because of these developments that I believe data is the new currency.

It’s not a new idea. Almost a decade ago, Clive Humby made headlines when he declared that “data was the new oil”. It is a great metaphor – just like oil, in its rawest form, data is almost useless. But when it is refined it can be turned into something much more valuable. With the amount of data we’re all producing today, we could be sitting on a big pile of untapped wealth.

Some companies are already reaping the benefits. In a recent survey we carried out to determine how businesses are adapting to this new digital world, those that have put in place IoT programmes saw their average revenue increase by 16% in 2014. Even more impressive, 9% of those companies had an average revenue increase of more than 30%. When asked to explain how they felt IoT was helping them grow, almost all respondents put it down to their ability to better understand their customers: data on how customers are using their products and services allows them to then tailor those offerings.

data

Source: TCS Global Trend Study 2015

As these early IoT adopters have shown, the potential for businesses really is enormous. But as our survey also revealed, some companies found their IoT programmes generated little – sometimes nothing – in the way of financial returns. This brings to mind a quote from Martin Wolf of the Financial Times: “Technology itself does not dictate the outcomes.” Without other factors in place – the right business models, the tools for collecting, analysing and sharing the relevant type of data, and the correct standards and policies – we stand to gain nothing.

The age of IoT is here and the opportunities are real, and they are big. Our responsibility as business leaders, policy-makers and individuals is to establish how we can turn this raw commodity into something of real value.

Have you read?
How technology will change the way we work
How understanding the ‘shape’ of data could change our world

Author: Natarajan Chandrasekaran is Chief Executive Officer and Managing Director of Tata Consultancy Services; is also chairs the World Economic Forum’s IT Governors Steering Committee

Image: A man holds an electric toothbrush connected to a tablet device at the SIdO, the Connected Business trade show in Lyon April 7, 2015. REUTERS/Robert Pratta