How does the internet of things work? IoT explained

Today's internet-enabled devices can be tiny — but their impact is enormous, transforming the world in profound ways. So, what will this mean for your life, your company, and your future? Let's take a look at what we know already, current internet of things trends, and what might the internet of things do in the future.

What is IoT Technology?

What is the Internet of Things? Explained very simply, it’s the increasingly large number and type of devices that are now able to connect to the internet and share data amongst themselves. The rapidly proliferating “smart” devices that provide greater levels of functionality through their connections to each other. Today, billions of devices are connected to the Internet worldwide, all collecting and sharing data. 

It could be something as simple as your entertainment or heating at home being controlled by a digital assistant or your smartphone, right up to a driverless vehicle or smart cities filled with sensors and cameras, reporting on traffic or pollution.  

But you may never come across many IoT devices knowingly. "Most IoT smart devices aren’t in your home or phone — they are in factories, businesses, and healthcare. Why? Because smart objects give these major industries the vital data, they need to track inventory, manage machines, increase efficiency, save costs, and even save lives," according to Intel. 

The tech giant says the number of IoT devices is projected to hit 200 billion in 2020. That's 26 smart objects for every human walking the Earth today. By 2025, IoT technology could be worth USD 6.2 trillion in terms of its global worth, reports Intel.

IoT Technology - Pros and Cons

Possibilities Vs Capabilities

Most of us love to be dazzled by new toys and with the Internet of Things — the possibilities are virtually endless. Google and Levi's Internet-connected jacket for urban commuters is a great example. It allows wearers to interact with their smartphone using gestures.  

But this only scratches the surface of the question “what is IOT used for?”

The most common examples of IOT devices in use today are sports watches and other activity wearables. The global fitness tracker market size is expected to reach USD 91.98 billion by 2027, reports Fortune Business Insights, as users look for healthier lifestyles.  

Gartner predicted that the enterprise and automotive sectors would grow to 5.8 billion IoT endpoints in 2020, up almost a quarter on 2019. Utilities will be the highest user of IoT, thanks to the continuing rollout of smart meters. Security devices, in the form of intruder detection and web cameras, will be the second most significant use of the Internet of Things devices. Building automation – like connected lighting – will be the fastest-growing sector, followed by automotive (connected cars) and healthcare (monitoring chronic conditions).   

Liberation from work Vs The end of work

The World Economic Forum predicted that automation and robotization would eliminate five million jobs by 2020. The impact goes beyond blue-collar workers, affecting a significant portion of the employed population. The healthcare industry faces the most considerable losses.   

The breadth and scale of change have been explored by PwC, which analyzed over 200,000 jobs in 29 countries to explore the economic benefits and potential challenges. It believes that AI, robotics, and other forms of smart automation have the potential to deliver vast benefits.  

But significant change is ahead with how IoT works with automation and related tech, and this shift will likely dominate IoT’s future trends. "By the mid-2030s, up to 30% of jobs could be automatable, with slightly more men being affected in the long run as autonomous vehicles and other machines replace many manual tasks where their share of employment is higher. During the first and second waves, however, women could be at greater risk of automation due to their higher representation in clerical and other administrative functions​," says PwC.  

However, there will be fresh opportunities. While some jobs are at risk of extinction, many jobs will undergo a considerable evolution. New jobs will also emerge, believes Dr. Kristina Dervojeda, Senior Manager Innovation & Development at PwC, writing for the EU's website. Jobs that relate to human creativity, intuitiveness, and empathy are less likely to be replaced.  

Limited resources Vs Human wellbeing

But beyond automation and optimisation, what is the purpose of IoT? The Earth has limited resources and an ever-growing human population. The BBC predicts growth of up to 9.7 billion people by 2050 with an accompanying strain on resources.  

Happy and healthy human well-being depends on changing resource consumption through renewable energy sources, better food production methods, and reducing emissions. So, what can the Internet of Things do to help? 

Already, tech is yielding results in agriculture. Witness the emergence of "smart farming" where sensors can check on animal welfare, monitor and control water usage in the fields, and cultivate plants in the most efficient way to boost food production. 

The Internet of Things can also play a key role in food safety, security, and traceability. Safe storage conditions can be monitored remotely, and food can be tracked to prove it's safe and ethical.    

Converging markets Vs Fragmenting structures

The substantial increase in computing power also revolutionizes ownership. Digitalization already impacts many areas of life today, from how people consume music to server resource allocations in a business network. The Internet of Things continues this trend by changing the boundaries separating industries.  

This begs the question: Will businesses in one sector or another end up becoming "Internet of Things companies" that are essentially tech operations that deliver a product or service? This could enable some businesses to move almost effortlessly from one sector to another.  

Increasingly, the data gleaned through IoT is being valued and used more effectively — because it enables companies to serve customers with what they want and perform more efficiently. But this could squeeze out smaller players who struggle to figure out how IoT works for them — and don't have the actionable insights to compete.   

Liberties Vs Security

Globalization continues to bring people closer together through the Internet, with social media and online communities fostering communication across cultural boundaries.  

But what will be the effects on societies if jobs disappear in large numbers — will people have the money and freedom to do other things they find meaningful?  

And what if less tech-savvy demographics struggle with some of the complexities of modern life — and just can't access some of the services and experiences enjoyed by their neighbors? Will this mean that society starts to fragment and become restless? 

What it's like to "feel human" in this new world could become a contentious issue. The explosion of the Internet of Things devices generates vast quantities of personal data that can be used to make people's lives easier. But concerns over a "surveillance society" where everything about you is monitored and owned by a corporation could be voiced increasingly. There could also be a perception that enterprises have a disproportionate impact on governments and democracy. 

The threat of cyberattacks is another matter that will loom large. Business Insider has flagged the security and privacy issues that come with the Internet of Things. "The increase in connected devices gives hackers and cybercriminals more entry points," it notes. 

Businesses and individuals need to prepare for the hyper-connected future to make the most of these technological advances. No-one can predict the full societal impact but understanding the possibilities now will help to ease the transition later. 

Unit4 sits at the heart of a growing partner ecosystem that's exploring opportunities and finding positive solutions using the Internet of Things and other related technologies. We consider how IoT works most effectively and consider the benefits for our clients.  

This ecosystem is tackling the productivity paradox by offering a people-centric alternative to the process-focused systems that have dominated the enterprise software market.