# Small businesses can gain a significant edge using IoT technologies

As the cost of instrumenting things with sensors and wireless transmitters drops, every "thing" will be a candidate for measurement and optimization.

October 10, 2016
Pathways. (source: Pixabay)

According to a June 2015 report from McKinsey Global Institute, the Internet of Things (IoT) could generate more than $11 trillion per year by 2025. How do they get to that number? A big part of it involves a direct impact from factories, but the impact from small businesses might be greater than you think. While the economic and environmental effects of any one small business are marginal, taken in aggregate, they are anything but small. Darren Beck notes in “Smart Business,” that “according to the Small Business Administration, ventures with fewer than 500 employees make up more than 99% of U.S. employers and generate about half of private-sector output. This level of economic impact comes hand-in-hand with environmental impact. And as Beck points out, environmental impact bears a cost: you pay for the energy you waste; not only is energy expensive, but poor resource usage is intimately connected to operational inefficiencies. In his report, Beck maps out how small businesses can combat inefficiencies and gain a significant edge by building sustainable systems using IoT technologies. ## Learn faster. Dig deeper. See farther. Join the O'Reilly online learning platform. Get a free trial today and find answers on the fly, or master something new and useful. Learn more IoT solutions don’t build themselves, however. If you’re a programmer or developer working on an IoT-based sustainability solution, you’re going to need resources—and you’ll encounter a lot of costs before you see the financial rewards. ## Building that sustainable future First on your mind will no doubt be the cost of the sensor modules you adopt (or fabricate yourself). You’ve also got to consider the cost of the processor that makes sense of the information coming from your sensors—it decides what and when to push up to the cloud; it’s what makes decisions for you in the field. Of course, the cloud itself has its costs. But perhaps most expensive will be the software development, which is where a lot of the costs hide, or are, at best, poorly understood. You will need to make (and periodically re-evaluate) decisions about what embedded software to use. There also may be licensing fees associated with that software, and there certainly will be training costs involved. The cost of integrating software between modules and controller boards from different vendors, as well as the need for rapid response (and field upgrades) for security, add up to significant costs, both at the outset and throughout the product’s life. It’s during that product life cycle where things can really get costly, which means the effect of optimization is greatest in that stage. Ultimately, any IoT solution will require you to assemble a number of layers. First, you will need robust hardware and scalable infrastructure to connect devices to each other and the cloud. You’ll also need an embedded software platform as well as tools and support to go with it. Ultimately, those will feed into a cloud platform that connects all these devices and makes sense of their data—and everything is tied together with APIs at all layers of this stack. ## We all benefit Improved management of resources through real-time sensor-powered monitoring and analysis, coupled with anomaly detection, are but two of the drivers that will help small businesses become smart and take the lead. To get to$11 trillion, though, businesses will need to look at all their products and processes. As the cost of instrumenting things with sensors and wireless transmitters drops, every “thing” will be a candidate for measurement and optimization.

The benefits that can accrue from “IoT-izing” everything are potentially greater than the financial benefit that comes from simply spending less money on fewer resources. A product manufacturer or service provider wins by building sustainable operations—not just in the “green” sense of the word “sustainable,” but in the sense of building a long-lived, enduring company. And by building devices that have an awareness of how they are used, you gain awareness of what your customers want, and ultimately, you create more refined products. All this helps build long-term brand leadership, and yes, optimized and increased revenues.

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