From leaders of Fortune 500 companies to innovative start-ups all around the world, the term “Internet of Things” (IoT) has been a popular conversation topic. There have been discussions on how this will or have changed the way businesses operate and speculation is rampant over what companies are able to do with a massive influx of data about their products, supply chains and processes.

According to Morgan Stanley, there could be as many at 75 billion connected devices by 2020. However, the term “Internet of Things” gets used in so many ways that to many, it seems like an abstract concept with no universally accepted definition. If businesses do not have a firm grasp of what IoT is, their operations will miss out on the bottom line benefits.

I would like to invite you to take a step back with me, where we will break down this concept and shed some light on an idea that is real and widely implemented across industries and how it will continue to change the world we live in.

What Is IoT & What Does It Really Mean?

The term “Internet of Things” was coined by Kevin Ashton, a British technology pioneer who co-founded the Auto-ID Center at MIT, in his efforts to develop a new global standard in managing company supply chains.

IoT stands for the Internet of Things, which is another way to describe a network of interconnected devices, people or equipment. Once connected, the devices can send data to each other or a person, who can analyse the data and choose to remotely manipulate the devices. IoT devices can also interact directly with each other without the need for human intervention.

Why Are People Talking About IoT?

As another popular saying goes, “Knowledge is power.” The sensors that are placed on items that bring them into the Internet of Things become goldmines of data that can then be collected, analysed and mined for valuable business insights. The wealth of available data on a company’s processes can help them cut costs or grow their operations by being more efficient.

According to a study from Forrester Research, 53 percent of global enterprises are planning to implement IoT solutions within the next 24 months. Across the globe, CIOs and leading business leaders are beginning to see how an ecosystem of connected devices can translate into more business information, operational efficiencies and revenue-generating opportunities.

How Is IoT Made Possible?

IoT is made possible through tiny sensors embedded on items that collect data and then that information is stored in a single location, like the cloud. After all the data is collected, businesses can filter through information and turn it into useful readouts or dashboards. Executives have access the real-time information, which allows them to get deeper insights on their current operations and processes and have the ability to make faster, smarter business decisions.

What Does IoT Mean For Businesses?

For businesses, IoT applications can take many forms. New and existing IoT technologies can inspire enterprises to create unique customer experiences as well as disrupt industries and reshuffle competition. A few common applications might include tagging assets to better track and monitor them through the company supply chain, gathering consumer data and activity for better and smarter customer service, or real-time monitoring of company property to prevent costly depreciation of business assets.

For example, healthcare providers can use machine-to-machine devices to monitor patient vitals in real-time or to dispense medication on a set schedule. Retailers can tag individual store items so they can let shoppers know exactly what they have in stock and where its exact location is for better shopping experiences.

How Widespread Is The Adoption Of IoT?

Research firms are now predicting that the number of connected devices will grow anywhere from 50 billion to 200 billion by 2020. Manufacturing, transportation, retail and energy are proving to be the industries with the most potential, showing solid ROI and generating new forms of business value with existing assets. On the consumer side, what many refer to as investing in creating a “smart home” is what is driving most of the IoT adoption.

New research shows that global smart appliance revenue could grow to be US$35 billion by 2020. A smart appliance is anything that can monitor, control and protect its electrical usage in response to customer needs. While consumer applications continue to roll into the market, the potential of IoT for businesses has remained relatively untapped.

What Are The Costs Associated With IoT?

One of the many appealing things about the newest IoT applications is their scalability. By leveraging the cloud and utilising user-friendly interfaces that be accessed through desktop computers, tablets and smartphones, the barrier to entry for businesses is coming down. SMBs can connect as few devices as needed, and large corporations can implement enterprise-wide global solutions. And even as the number of connected devices increases, the solution is still just as simple to use.

Clearly, with any new technology, there are benefits and challenges that need to be considered and addressed before any type of IoT implementation can take place. Machine-to-machine technology is growing at a rapid pace in the global economy.

According to the TechRepublic and ZDNet’s survey “M2M: Hype or Transformative Tech Survey,” 32 percent of respondents believe that machine-to-machine technology is integral to their business and about 29 percent stated they are already using M2M technology or have a project underway. These statistics prove that the Internet of Things is not a futuristic, lofty concept but rather a real-world technology that will continue to bring objects to life in a growing ecosystem of knowledge and business value.