Deloitte predicts that in 2015, one billion wireless Internet of Things (IoT) devices will be shipped, a 60% increase on 2014. These will add to an installed base of approximately 3 billion devices. The IoT-specific hardware is likely to be worth around £6.4 billion, and the associated services enabled by the devices worth about £45 billion.

While the press may focus on consumer applications, such as remote control thermostats, lights and appliances, Deloitte predicts that 60% of all wireless IoT devices will be bought, paid for and used by enterprises and industries. And over 90% of the revenue generated from the services will be enterprise, not consumer.

Despite all the media excitement around consumer uses for the Internet of Things, most products – mostly connected devices, sensors or controllers – are selling in their hundreds of thousands rather than in their millions. Enterprises, however, are buying and using tens or even hundreds of millions of IoT devices. Smart meters, smart grids, smart homes, smart cities and smart highways are just some examples.

Enterprises are leading the way in their use of IoT because of the benefits that it can bring for them. For example, deploying smart meters in the UK has been estimated to generate annual savings of only £26 per household, equivalent to £1.3 billion for all households in the country. For electric utility companies, combined savings from automated meter reading, short-circuit detection, and better real-time diagnosis/location of power outages are about a billion pounds annually.

But the most significant benefit comes from the analytics about consumer demand for power around peak power periods. This could save billions of pounds annually by avoiding the need for between one and three new power plants, each of which could cost up to £24 billion. The total saving for the utilities could be five or even ten times as large as the savings for consumers.

Similar benefits can be demonstrated in other industries such as telematics, but also with any other manufacturers of machines. IoT brings the ability to relay information about reliability and advance warning of failures, but also real-time information on which features are actually being used and how.

Implications for enterprises

While many things are possible, enterprises may want to find the single biggest pain point or revenue opportunity, and roll out an inexpensive solution, such as a sensor network, which will simplify the return on investment justification.

IoT vendors may want to extend cost-reduction and risk management deployments to explore revenue and innovation potential. Often, IoT is seen as a technology that is driven by the CIO. Since CIOs are not typically focused on revenue growth and innovation, providers who sell only to the CIO will usually revert to talking about lowering transaction and maintenance costs. Cost reduction is useful, but this alone may be insufficient to encourage organisations to invest fully. The potential for adoption and business value may be broadened by reaching out to CMOs, CFOs, major line managers, and CEOs.