This is a small question with a big answer. It is as difficult to estimate how big the Internet of Things (IoT) will become as it is to estimate how big its impact on CFOs will be; and not just because of variations across business sectors, finance chiefs, finance teams and their roles and responsibilities. Attempting to predict the future with any degree of certainty is a mug’s game, doomed to failure: the twisted prism of history makes it look as if Nostradamus was occasionally prescient, but the odds aren’t good for amateur soothsayers.
In a recent article for the FSN website I’ve taken a stab at it, by asking some software developers how they see the IoT playing out for systems such as analytics and enterprise resource planning, and they’ve taken a stab at answering – without being too partisan about their own products. There are also words of wisdom from an executive at a mining company, where zillions of sensors are collecting data on business activities, consumables and machines, then using analytics to pre-empt emerging problem areas and improve productivity.
This highlights how, in a very large organisation, even a slight improvement to operational performance can yield big financial results. But what can the IoT do for finance professionals in scenarios without such economies of scale? Before you can meaningfully consider this (on a personal or generic level), you need to get your head around what the IoT is. This can be challenging; particularly for those of us (and by this is I mean myself) whose hands-on personal experience is limited to a ‘smart’ fitness band that refused to sync with their Android smartphone.
In the context of the IoT, ‘thing’ becomes a technical term of reference describing any device that can: sense something about its surroundings (such as altitude, location or temperature); automatically transfer the data to a central location or application (in response to a condition, time or threshold); and integrated into business processes to improve decision-making. But this seemingly simple definition is necessarily superficial and (as tends to be the case in the world of technology) there is a metaphorical devil lurking in the details.
We are accustomed to being ‘connected’ to the internet by ‘clever’ devices; but this is not made possible by magic. It relies on an infrastructure of service providers and technical standards for the exchange of data and the interaction between devices and software. Today, fragmentation and a lack of standards make the IoT a ‘Wild West’ where various groups (of technology companies and telcos) are fighting to become part of the IoT ecosystem or platform of choice. It will be some time before the winners emerge – or the implications for CFOs.