The market for sensors is booming, the price of data storage is falling and M2M data volumes are on the increase. The Internet of Things is clearly forging ahead at full speed. But what happens to all the data that sensors collect and supply around the world? Big Data is still something many people find hard to grasp. In the Port of Hamburg Deutsche Telekom is demonstrating how much untapped potential IoT data already has.
On the Internet of Things (IoT) everything and everybody generate data. Cars relay geodata to help manage traffic flows, production facilities relay status reports and coordinate their optimal capacity utilization and physicians monitor patients around the clock by means of wearables. The resulting data volumes are enormous – and are increasing continuously. The strategy consultants at Machina Research forecast global annual growth of the flow of M2M information to around 3.2 exabytes until 2024 in the mobile networks alone. Compared with todays volume that is a 16-fold increase because today’s annual data throughput is still 0.2 exabytes.
Low-cost hardware makes IoT entry level less challenging
Figures provided by Germany’s AMA Association for Sensor and Measurement underscore the revolutionary nature of the changes that are under way. The Association represents the interests of 480 companies that are involved in sensor and measurement technology for all manner of uses. It regularly polls its members on economic development and its surveys have revealed that over the past decade sales of sensor and measurement technology in Germany have increased on average by 6.3 percent per annum.
What can be said for sure is that all industries – from mechanical and electrical engineering to medical technology – are increasing the intelligence of their products. They are able to do so more easily than ever. Sensors for the Internet of Things are available at ever lower prices. McKinsey management consultants provide the current figures for mobile communications market:
“Low-cost, low-power sensors are essential, and the price of MEMS (micro-electromechanical systems) sensors, which are used in smartphones, has dropped by 30 to 70 percent in the past five years.”
Developments in the market for storage solutions are also taking the Internet of Things forward. Storing information electronically has never been less expensive. Storing what the omnipresent sensors record is thus as easy as pie, and this data is no less inexpensive to relay via mobile networks. The cost of mobile data connections has in recent years developed positively for the customer.
Data is captured, but not used fully
McKinsey does, however, place a damper on expectations. The management consultants present a simple calculation. Today’s offshore drilling rig incorporates 30,000 sensors, but the operators use only one percent of all sensor data. According to McKinsey that is typical of the current situation: “Most of the IoT data collected today is not used at all, and data that is used is not fully exploited.”
This view is shared by German Big Data specialist ParStream. A study that it commissioned from Dimensional Research concludes that data is captured, but not used fully. Data capture and storage was found to play a role in the majority of IoT projects, whereas information gained is fully analyzed in very few cases:
“While the vast majority, 83%, are collecting data, only a very small number (8%) report that they are making the most of their data by fully capturing and analyzing data in a timely fashion.”
However, a little over a half of the respondents (58 percent) said they were coming to grips with analyzing IoT data, albeit somewhat hesitantly – and they know they can do better.
IoT data as the basis for new business models
So what is to be done? According to McKinsey the use of IoT data is currently limited to real-time machine control. Yet this data presents much greater opportunities that await exploitation. It can contribute to value creation and to the creation of new business models:
“The Internet of Things will enable, and in some cases force, new business models. For example, with the ability to monitor machines that are in use at customer sites, makers of industrial equipment can shift from selling capital goods to selling their products as services.”
This ‚as-a-service‘ approach could give the supplier a more intimate tie with customers that competitors would find difficult to disrupt, the McKinsey experts state. The sensors that are incorporated everywhere now open up new angles of entrepreneurial vision. They can do more than just monitor machines in a factory or container vessels on the high seas, such as identifying ways to optimize processes and procedures. IoT data can be used to extend the service life of production facilities by means of optimally coordinated maintenance. It can also be a valuable raw material for redesigning future generations of equipment, while Big Data Analytics opens up many other opportunities. Those who succeed in collecting and making use of enormous quantities of structured and unstructured data from different sources will advance into new dimensions of value creation.
A practical example in the Port of Hamburg: More cargo handled in the same amount of space
The Port of Hamburg provides an indication of what the intelligent connection and evaluation of IoT data can already accomplish. T-Systems and the Hamburg Port Authority (HPA) operate in the port the smartPORT logistics system. This solution enables truck and container movements to be better controlled at all times and at the same time facilitates more efficient use of the port’s limited space for additional traffic infrastructure. That reduces bottlenecks and waiting times and speeds up cargo transshipment.
The smartPORT logistics system merges all relevant traffic and infrastructure data in the 72 square kilometers of the port area and it does so in real-time. This data includes the position of trucks and relateded containers, terminal and depot information, construction sites, bridge opening times, and free parking spaces. In this way the Port management, forwarders and parking providers receive a comprehensive picture of the situation around the clock and can respond swiftly to infrastructural incidents, e.g. traffic congestion. As a result, traffic flows around the shipping berths can be predicted more accurately. If a bottleneck occurs, the Port Authority knows about it immediately and can take suitable counter-measures. These decisions are based on IoT data gleaned from different sources.
smartPORT logistics is a private cloud application based on the T-Systems Connected Car platform and on SAP’s Connected Logistics software. The application connects freight data and information from telematics systems of different providers with the Hamburg Port Authority’s traffic and infrastructure data. Furthermore, Telekom provides an Android app that serves as a telematics unit in trucks. Finally, the SAP Connected Logistics software connects all of this real-time data and makes it available to users on an online portal.
Analysis of IoT data pays dividends
Examples such as this from northern Germany will set a precedent. Here too, the findings of the Dimensional Research market researchers speak for themselves. Ninety-four percent of IoT stakeholders still feel that collecting and analyzing IoT constitutes a major challenge. At the same time, however, 86 percent of them assume that an improvement in this state of affairs will pay immediate dividends for the company. Michael Hummel, ParStream co-founder and CTO, notes in the company’s blog that “due to increased competitive pressures, organizations are forced to optimize processes and products – the key to identifying optimization opportunities and track improvements is in the IoT data.”