In November, in a dive into what is driving enterprise interest in the Internet of Things (IoT) we found that, for the moment at least, enterprises are still wrestling with the problems the IoT poses rather than harvesting the benefits that it offers. There is nothing unusual in this given that the IoT is still a relatively new phenomena and there are considerable — and justified — security fears dominating enterprise strategies around the IoT.

But will security dominate IoT this year. And what about the Industrial IoT — will it move further away from the IoT as some have suggested or will they become closer? At the beginning of 2016 we saw that the really big tech vendors likes Microsoft were dedicating significant resources to building IoT incubators that would focus on enterprise, industry and smart cities. However, now, with security solutions getting "smarter" and enterprises actively looking to harvest consumer data harvested from the IoT, the connection between IoT and Industrial IoT is getting narrower and closer to Cisco’s idea of the Internet of Everything (IoE).

Mark Barrenechea, OpenText CEO and CTO shared that while we might not feel the immediate effects of the IoT, its potential impact is huge. Advances in IoT-connected biotechnology will take healthcare to the next level, with around-the-clock monitoring, targeted treatment, and even automated doses of medication. In smart cities, when everything is connected to the IoT grid, autonomous vehicles will eliminate car crashes caused by human error to save one million lives annually. “In the Intelligent Enterprise, the IoT will connect the global supply chain from end-to-end, enabling pervasive visibility, proactive replenishment, and predictive maintenance. With the IoT, data-driven decision making will become standard in all industries and in our daily lives,” he says. So what will happen with the IoT and the Industrial IoT, and what will enterprises be doing to optimize their investments?

1. Security

“The pace of change has exceeded the rate of human capability to absorb — the cup is already full. In 2018, the real issue is how to increase the ability for people to understand the changes and their implications more clearly, and to take concrete actions to take advantage of the potential upside,” says Erick Dean, Product Director of IoT, at San Francisco-based Splunk. As a result, he has security at the top of his list for IoT trends in 2018, but it’s not all that’s going to happen.

In 2018, security for IoT will be under heavy scrutiny. Cybersecurity risk will increase exponentially as people, processes and businesses continue to connect every part of people’s daily lives, as well as national economies. "We are looking into a future where attacks can be orchestrated not just from public networks, but from private devices such as a smartphones or a smart home,” he says. His other predictions for 2018 go as follows.

Related Story: Industrial IoT: What It is and the Trends Driving It in 2018

2. Major Adopters

Industrial asset management, fleet management in transportation, inventory management and government security will be the hottest areas for IoT growth in 2018. With increasing connectivity between people, data and things, the public sector will begin embracing smart cities, where sensors and automation enhance the reliability of services, especially in the areas of safety and environment. IoT sensor data enables use cases including improved air quality, optimized traffic patterns, reduced safety incidents, traffic fire incident prediction, and improved citizen identity.

3. Digital Transformation

Digital transformation initiatives — especially those centered around customer experience — will drive IoT expansion velocity. Building a technology infrastructure is relatively easy. The challenge is operationalizing data-driven decision-making that impacts the health of the business.

4. Machine Learning

Machine learning and AI represent a tremendous opportunity to IoT. Being able to predict when machinery will need to be repaired, self-optimizing production, and demand response are only a few application examples. With existing network infrastructure likely to be used for "connected things" the investment spend on analytics will be higher as companies find new ways to make sense of the vast amounts of smart device-generated data.

5. IoT Growing Up

Jeff Kavanaugh, VP and Senior Partner in India-based Infosys, told us that while problems persist, the IoT is starting to mature and that enterprises will start trying to monetize the data that is harvested from the IoT. Those that are using the IoT will also start to realize that IoT is difficult "to do."

According to Kavanaugh, connected devices will become smarter and more immersive, and expectations will increase to convert IoT data to insights and financial value. Algorithms and data visualization templates have now evolved so that new use cases can take advantage of earlier ones. The exponential adoption of IoT will drive down sensor and acquisition costs, enabling more and more viable business cases that have previously been too expensive.

6. Executive Expectations

He added that just as enterprise resource planning maturity raised expectations about foundational data consistency, robotic process automation will raise executive expectations about performance levels for repetitive processes. Companies will get better at scaling automation, moving from interesting proofs of concept to systemic enterprise processes that generate efficiency at scale.

Fast-moving technologies will influence colleges and universities to adopt greater computer programming and data analysis courses. However, universities must complement these with a focus on critical thinking and empathetic skills to meet the growing need of enduring skills in the digital world.

7. Revenue Model Challenges

Los Angeles-based Inspire is a company that simplifies consumer adoption of clean energy and smart home technologies. Patrick Maloney, CEO and of the company points out that despite the euphoria around the IoT, there are no guarantees that companies that make a business out of it are going to make money. There has been no shortage of innovation and new product offerings for the smart home this past year, driven largely by advancements in AI, automation, and voice-enabled technology. This is unlikely to change any time soon. However, he said, going to market is hard, retail shelves are crowded, and products aren’t highly differentiated making it difficult to maintain long-term growth. The revenue models for most smart home products and devices are transactional, one-time purchases.

Unless you are Amazon or Google, creating predictable and capital-efficient revenue streams is not likely. Companies that will succeed in the smart home space are those that can make the transition to a recurring revenue business model, and also create more value and efficiency for the consumer. “Smart homes shouldn’t just be smart for the sake of being smart, but instead improve consumers’ everyday lives. By focusing on smart home services, not just the hardware, we’ll see companies achieve both,” he says.

8. Blockchain

Mike Bell, EVP IoT & Devices at London, UK-based Canonical points to the rise of blockchain in IoT as one of the major emerging trends for 2017 and says that this and machine learning will become established elements of the IoT landscape over the course of the next 12 months. “Two of the most interesting IoT developments to emerge in 2017, with the most potential for innovation, were blockchain and machine learning. They likely won't go straight to market in the new year — we'll likely see more proofs of concept (PoC) instead — but, we have seen some fascinating PoCs already,” he said.

Learning Opportunities

Machine learning has also yielded some interesting case studies to date. While it won't move entirely to edge there are some compelling examples so far, like retail shop security cameras with streaming video, where machine learning can be utilized to identify patterns of potential theft, perform facial without digging into customers' personal data, to head off security and privacy concerns.

9. Analytics Literacy

Alluvium is a New York City start-up that uses machine learning and artificial intelligence to turn massive streams of complex industrial data into simple insights enabling factories to reach operational stability. Its founder and CEO, Dean Conway, says that on the industrial IoT, organizations will move from making investments in digital infrastructure to making investments in digital literacy.

Conway predicts that the curve of investment in the industrial IoT will begin to bend toward analytics capabilities. This will likely manifest as a blend of hiring for new roles, such as data scientists and data engineers; a move to multi-cloud to investigate capabilities across incumbent cloud providers, such as Microsoft, Amazon, and Google; and, experimentation in investment with cutting edge analytics tools.

10. Mergers And Acquisitions

There will also be increased merger and acquisition activity for advanced IoT capabilities among large OEMs. This dovetails with the large appetite from industrial OEMs to bring advanced digital and analytics capabilities in-house as a means of accelerating their competitive advantage. Because software engineering and data science are not core competencies of OEMs, it will continue to be more efficient for these organizations to bring these capabilities into their stacks. As digital transparency continues to increase at every level of production the competition among OEMs at the software and services layer will emerge as the deciding differentiator in 2018.

11. Convergence And Employment

Joseph Bradley agrees that blockchain and deeper mining of data will be major trends in 2018, but also believes that the IoT will start driving changes in the jobs market.

As is Global Vice President for Digital and IoT Advanced Services at San Jose, Calif.-based Cisco he points out that the integration of social, business and political will force companies to enter what was previously known as a “no fly zone.” 3As competition for technology talent intensifies, silence won’t be an option for businesses. Millennials and generation Z — both of which will dominate the U.S. workforce by 2020 — will reshape the employment landscape due to their convictions and the expectation that employers demonstrate similar convictions,” he says.

To maintain a workforce and drive success, companies must to listen to their employee base and apply corporate principles to social and political activities. In 2018 and beyond, “taking a stand” will become the norm as companies hire upcoming generations who thrive on a values-driven corporate culture.

12. Next Generation Manufacturing

Chris Steck also works for Cisco as Head of Standardization, IoT & Industries. He says the IoT boom will facilitate the emergence of next generation manufacturing.  Manufacturing is buzzing about Industry 4.0, according to Steck,  the term for a collection of new capabilities for smart factories, that is driving what is literally the next industrial revolution. “IoT technologies are connecting new devices, sensors, machines, and other assets together, while Lean Six Sigma and continuous improvement methodologies are harvesting value from new IoT data. Early adopters are already seeing big reductions in equipment downtime (from 15 to 95%), process waste and energy consumption in factories. 

There are more than 50 billion connected devices in circulation today, generating an excess of eight zetabytes of data between them. And that number is only likely to expand. However, only one percent of Internet of Things (IoT) data is currently analyzed and utilized. But all this is changing. Soon, IoT deployments will include a holistic mobile and cloud platform, consisting of planning and analysis with digital twins, operational autonomy and augmented human and machine interactions using cognitive AI services, predictive analytics, and supporting applications.  This may be for the medium term but the early stages of this change will be seen over the course of 2018.