Discussions about the future of information technology typically center on two things: the cloud and the Internet of Things (IoT). Both are heavily hyped though neither are often well-defined and therefore not well-understood. Part of the problem is with the terminology. Cloud is a nebulous (pardon the pun) term that does little to describe what it is. Put simply, the cloud is the use (e.g., data storage) or development (e.g., Shadow IT projects) of information technology accessed via the Internet. As a term, IoT sounds confusing because we have been connecting things to the Internet since its inception. Specifically, we have been connecting our computers via telecommunication technology, forming the global network of interconnected computers that gives the Internet its apt name. Initially those computers were mainframes and desktop computers. Later we connected laptop computers, and now smartphones and tablets, to the Internet using mobile or other wireless networks. These things are how we use the Internet, how we access the cloud and its information technology services. So what’s different about the “things” in the Internet of Things?
Gartner defines IoT as “the network of dedicated physical objects (things) that contain embedded technology to sense or interact with their internal state or external environment. The IoT comprises an ecosystem that includes things, communication, applications, and data analysis.” The things in IoT, therefore, are machines enabled by their embedded electronics, software, sensors, and connectivity to collect and exchange data. IoT differentiates this machine-generated data from data generated directly by humans typing text, taking pictures, recording videos, etc. So while both the cloud and IoT involve the use of the Internet, an admittedly oversimplified way to differentiate them would be to say that humans use the cloud and machines use IoT. But why should we care about what machines use, or could soon be using, the Internet for?
A recent McKinsey Global Institute report (direct link to download the PDF) estimates the potential economic impact of IoT by 2025 to exceed trillions of dollars per year across a wide variety of applications including equipment optimization in factories, automated checkout in retail environments, health and fitness wearables, home security, and public transportation.
The McKinsey report also predicts that the IoT ecosystem will soon shift heavily towards platforms and software. This is excellent news for managed service providers (MSPs) that are already providing the infrastructure, platforms, and software supporting the growing number of critical business applications migrating to the cloud. Their proven track record of delivering business value from the cloud is what can make IoT a big thing for MSPs because many analysts, including Joe McKendrick and James Connolly, emphasize it will be those companies that can deliver business value from IoT that will lead this rapidly growing market.