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Digital + Physical

There are high expectations for IoT. How can business leaders take a more analytical view around it?

Earlier this year, Klaus Schwab, the founder and chairman of the World Economic Forum, introduced his view for contextualizing Digital Transformation and its impact on both industry and society. He suggested that the transformation we are seeing in industry today are distinct from earlier advances in IT and digital technology. Schwab believes that the velocity, scope and systems impact of industrial technology has marked a 4th industrial revolution, characterized by cyber-physical systems such as autonomous vehicles, 3-D printing, nanotechnology and the Internet of Things (to name a few). 

One of these enabling digital/physical technologies that represents a major share of the conversation around Digital Transformation is IoT. This is in part due to the wide-ranging applications of IoT across industries. This can be seen in the fact that IoT was placed at the peak of Gartner’s Hype Cycle for emerging technologies in 2015. So, assuming that IoT is at the peak of inflated expectations, what should business leaders understand about this technology and how can we take on a more analytical view?  


The trend of Digital Transformation can be distinguished from earlier digital trends in part because of its focus on the intersection between digital and physical systems. One example of this cyber-physical intersection is the Internet of Things, which according to Gartner, is at the peak of the emerging technologies Hype Cycle. Anticipating that managers will likely take on more sceptical outlooks around IoT, we should be looking for ways to develop more structured thinking around it.

Looking at past research into the Internet of Things shows that there are three general ways that experts use to explain it; the Things-oriented view, the Internet-oriented view, and the Semantic-oriented view. Each of these views sheds light on the opportunities and challenges associated with implementing IoT.

Things-oriented view

The things-oriented view sees IoT as a network of identifiable objects – and generally leans on the decades of research around RFID technology. This tends to be the way that most are introduced to the Internet of Things – where devices give greater visibility into processes and business environments. The benefits in this view are related to a company’s capabilities in data and analytics, and modeling information captured by devices is used to inform strategic decisions.

Internet-oriented view

The internet-oriented view is one where physical objects are integrated into information networks and become active participants in business processes. These smart objects are accessed by services that let people query them and change their states. This view also sees this integration happening over a public infrastructure, making security and privacy key issues – not to mention the challenges of establishing the public infrastructure itself.

Semantic-oriented view

The semantic-oriented view assumes that an extremely large number of connected devices will require machine learning tools to ensure efficiency and productivity. It implies that intelligent devices will reason and take action autonomously in the network in ways that aren’t pre-programed. This view compensates for the need for human intervention that the Internet-oriented view assumes, but also presents a wide range of challenges and concerns.


In general, the application of the Internet of Things in its early stages focuses on the ability for sensors to capture and inform decision making. As IoT matures, improved infrastructure and opportunities to automate enable more dynamic network-oriented strategies, and eventually, autonomous devices that promote efficiency and productivity.

Based on the challenges that are associated with the internet-oriented and semantic-oriented views of IoT, most business will find quick wins in the things-oriented approach. That said, it’s important not to lose sight of how IoT is expected to progress, and start to plan for the challenges around it early. It’s clear that if the challenges around infrastructure, privacy, and security can be resolved, the value of the IoT opportunity increases exponentially. These challenges, however, are a major obstacles that should be at the center of the conversation. 


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