3 minute read 20 Feb 2019
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How the IoT and data monetization are changing business models

3 minute read 20 Feb 2019

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More decision-makers are realizing the disruptive potential of IoT and are more likely to use and monetize the data collected.

The internet of things (IoT) industry has grown considerably in recent years; however, it remains an area that varies greatly in technologies, systems and disparate standards of operation.

1. IoT monetization: a transition from “value islands” to “value ecosystems”

Business and operational models based on IoT capabilities are still very traditional and the anticipated benefits have primarily focused around how to achieve incremental value (which created value islands) through increased productivity, process automation, and maintenance cost reduction for example.

However, more and more decision-makers are realizing the disruptive potential of IoT and are likely to increase its current value stream (toward value ecosystems) and more effectively use and monetize the data collected.

As executives realize the value creation potential of IoT systems, they are likely to seek new areas of application within their organizations. Our analysis projects that we will see multiple proofs-of-concept of such solutions in 2018, as well as acquisitions of start-ups that have IoT solutions in their portfolio. However, this shall bring its own challenges, as it could demand a redesign of business and operating models that require interoperability of current solutions throughout the entire IoT technology stack and the need to embed new IoT sensors in existing products.

2. A new dawn of network edge processing

Moving of IoT data processing to the network edge was expected to happen in the early years of the IoT development. However, this trend slowed due to decreasing connectivity costs and rising communication networks throughput, which resulted in a shift toward centralized processing. However, falling prices and the increasing processing power of edge devices have revived this trend back towards network edge.

The changing requirements of connected devices such as throughput and power consumption, have resulted in the need to redesign communication networks from a ’one-size-fits-all‘ concept into networks with flexible characteristics. New privacy concerns, especially in Europe, where recent regulations relating to personal data protection rights may result in companies avoiding the transfer of raw data into the public cloud. We therefore expect organizations to increasingly adopt edge of network processing systems.

Disruptive technologies converge as businesses fully integrate IT systems.

3. Disruptive technologies are converging

Technologies like IoT, blockchain, artificial intelligence (AI) and robotic process automation (RPA) are increasingly converging under a single digital disruption umbrella. The EY IoT Competence Center anticipates that in the first half of 2018, suppliers will begin to move toward full integration of IT systems supporting business processes and automation solutions in order to build fully integrated “Intelligent Automation” solutions.

From a business perspective, digital disruption technologies are complementary and perform unique functions within various parts of the organization. We expect that, after a period of initial fascination with pilot implementations of individual disruptive technologies, industry leaders will expect a much more integrated approach to the adoption of digital technologies, and with measurable return on investment.

4. A battle for standards – IoT connectivity wars

So far, IoT interconnectivity has been difficult as players adopt their unique approaches and solutions for different applications. Each promotes their own proprietary standards and protocols, which has led to a multiplicity of closed systems that do not communicate with other devices.

IoT cannot thrive without effective and affordable wireless connectivity, interoperability and common standards. We believe 5G has the potential to make a ground-breaking impact on the way in which future IoT ecosystems are designed, especially in the areas of scalability, latency, reliability, security and the level of individual control on connectivity parameters.

5. From cybersecurity to resilience by design

EY IoT Competence Center analysis reveals that security and privacy concerns are the top factors preventing decision-makers from committing to IoT development and implementation. Increasingly, companies are recognizing that the solutions required to secure centralized IT systems are not sufficient to secure distributed IoT systems, especially in applications requiring high levels of reliability.

Security and privacy are top issues preventing internet of things (IoT) adoption.

IoT solutions require simultaneous fulfillment of security, privacy, safety, reliability and resilience that cannot be achieved through securing individual elements of a multipurpose environment. Therefore, current approaches must consider changing direction from simply seeking to achieve security, toward a resilience-by-design approach that incorporates redundancy into architectural and organizational design and separates data processing.


Monetization of data collected from networked IoT devices, convergence of multiple disruptive technologies and standards, and network edge processing are among the key trends for 2018 according to the EY IoT Competence Center, a global team of IoT professionals.

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