There are more connected devices in the world today than humans. These devices, commonly known as the Internet of Things (IoT), come in infinite forms, from smart building technologies, which monitor and manage energy usage, to connected vehicles, which help anticipate and avoid potential collisions. By 2020, the number of IoT devices is projected to exceed 20 billion, fueled by continued technological advances and the plummeting costs of computing, storage and connectivity.
Forecasts by the International Data Corporation (IDC) predict that IoT spending will increase by a compound annual growth rate (CAGR) of 13.6% from 2017 to 2022, reaching $1.2 trillion within the next four years. Whereas current IoT spending is dominated by the manufacturing sector with an estimated $189 billion in spending projected for 2018, spending in transportation, utilities and cross-industry applications continues to edge up.
The growing investment in IoT technologies has the potential to generate new cost-savings and efficiencies while also driving significant improvements to quality of life. An analysis by the World Economic Forum, in partnership with IoT-Analytics GmbH, found that an estimated 84% of IoT deployments are currently addressing, or have the potential to advance, the United Nations Sustainable Development Goals. This analysis supports the intuition that many share: IoT has clear societal benefits that could be maximized without compromising commercial or economic viability.
Despite a growing number of companies, organizations and governments experimenting with IoT, success stories are not always easy to come by. According to a 2017 analysis by Cisco, three-quarters of IoT projects fail due to limited understanding of how to effectively design and integrate these solutions into day-to-day corporate or government operations. Moreover, challenges related to security, interoperability and the sustainability of IoT solutions are widespread.
To overcome these challenges and help realize the full potential of IoT, the World Economic Forum’s Centre for the Fourth Industrial Revolution has assembled and helped to unite technology leaders from across the globe around a new approach to reinforce best practices, streamline procurement, and enable more consistent, positive outcomes. During the first half of 2018, more than 200 individual case studies, based on IoT technologies that were successfully tested and deployed, were consolidated into 71 IoT solution sets. These solution sets ─ clusters of analogous IoT technologies grouped according to the problem they address ─ were, in turn, analysed by a community of experts representing more than two dozen public and private sector entities. These experts include engineers, scientists, researchers and executives who are currently developing, investing in, and helping deploy IoT solutions across a myriad of sectors from energy and manufacturing to city operations. Experts evaluated the IoT solution sets along four variables: economic impact, societal benefit, technological difficulty and financial barriers to implementation. Preliminary findings of this analysis are included below.
>> Among the analysed solution sets, six key thematic areas rose to the top. These solution areas ─ which were all deemed highly impactful and scalable ─ include solutions that: better manage crops and livestock; advance the safety, well-being and efficacy of workers; optimize the movement of goods and people; help with early warning and prevention of disasters; assist doctors in monitoring and treating patients; and help governments and/or public utilities better manage finite natural resources like energy and water.
>> The bulk of highly impactful and scalable IoT solutions address pressing needs in China and the broader Asia region ─ notably a growing elderly population and rapid urbanization. According to data from the United Nations, East Asia is ageing faster than any other region of the world. From 1990 to 2017, the proportion of the population over 40 grew in East Asia from 28% to 48%. In parallel, Asia is witnessing an unprecedented move of population from rural to urban communities. In China, for example, the urban population has increased by 500 million people in the past three decades. These trends are placing increasing pressure on healthcare systems and urban infrastructure — areas where IoT has proven incredibly valuable. Not surprisingly given this finding, the Asia region currently leads the world in IoT spending.
>> Whereas the manufacturing sector is currently the largest area of IoT spending, experts did not feel that all industrial IoT solutions are equally impactful and scalable. Rather, IoT technologies which improve worker well-being stood out above solutions that focus exclusively on enhancing system operations. These worker-centric solutions include using IoT technologies to optimize workplace conditions such as temperature, lighting and air quality, and the use of wearable technologies to monitor the health conditions of workers, reducing the risk of accidents and helping to optimize the performance of employees.
>> Experts are divided on the potential impact and scalability of many smart city solutions. Smart city solutions are regularly cited as the key area where the societal impact of IoT can be seen best, yet many experts express concern about the challenges that these solutions face – particularly as it relates to personal privacy protections, security and the economic sustainability of these solutions. Smart city solutions which focus on system-wide efficiencies – for example, monitoring real-time changes in electricity consumption to balance supply and demand within a power grid or enabling public utilities to quickly detect water leaks before significant damage is caused – appear to hold the greatest promise in the short term.
>> Just as ride-sharing services like Uber and Lyft have disrupted the taxi ecosystem and car ownership, similar models are transforming the way people and goods are transported in a commercial context. Fleet management systems, which leverage IoT technologies to monitor and optimize the use of corporate vehicles and equipment, and route optimization tools which use real-time data to improve movement of goods across the supply chain, were cited as two of the most impactful and scalable solutions in this area.
>> Contrary to growing concerns about the potential of automation to displace labour, the IoT solutions highlighted by experts focus on enhancing worker productivity, not replacing humans. In the healthcare space, where a shortage of doctors has prompted concern from India to the United States, IoT solutions that enhance preventive care and the early detection of health conditions rated among the most impactful and scalable. These solutions include, for example, the use of IoT technologies to continuously monitor heart rates, blood pressure, blood sugar level and other health conditions. In the agriculture field, where food security remains an ever-present global challenge, experts similarly underscored the opportunity for IoT technologies to help workers do their job more efficiently. Precision agriculture solutions that enable farmers to better monitor and manage crops, for example optimizing the use of water and fertilizers, or manage livestock, were consistently cited among the most impactful and scalable.
The path forward
These initial findings provide the beginning of a new roadmap and strategic framework for accelerating the impact of IoT technologies. By focusing attention and coalescing support around tried-and-tested IoT solutions with clear societal and financial returns, the World Economic Forum’s Centre for the Fourth Industrial Revolution and its partners are committed to maximizing the value and impact of IoT investments. In the months ahead, this effort will bring traditional industry competitors together to co-design, and align behind, a set of trusted implementation models – which incorporate well-defined business models, established technical frameworks and clear metrics on the costs and benefits of implementation – for these highly impactful and scalable solutions. These tools will provide an essential tool to ease and speed up the process for procuring and deploying new IoT systems, reducing missteps and embedding best practices.
Companies, governments or organizations who are interested in joining or supporting this work, please contact the World Economic Forum’s Centre for the Fourth Industrial Revolution at firstname.lastname@example.org.