Case Study:
The Internet of Things
The Internet of things refers to a set of capabilities emerging because of physical things being connected to the Internet or networked via sensors. Networks link data from products or operations, which can generate better information and analysis. These networks capture huge volumes of data that flow to computers for analysis.
Application of the Internet of things:
Embedded sensors
When devices or products are embedded with sensors, companies can track their movements or monitor interactions with them. Business models can be fine-tuned to take advantage of this behavioral data. How a company generates revenue from its assets is determined by its business model. A business model describes how a company actually operates—how work is done, the degree of automation, the pricing and design of products or services, and how the company generates sales revenue and profit to sustain itself. The Internet of Things For example, an insurance company offers to install locationsensors in customers’ cars. By doing so, the company develops the ability to price the drivers’ policies on how a car is driven and where it travels. Pricing is customized to match the actual risks of operating a vehicle rather than based on general proxies—driver’s age, gender, or place of residence. Objects are becoming embedded with sensors and gaining the ability to communicate. The resulting information networks promise to create new business models, improve business processes, and reduce costs and risks. For example, sensors and network connections can be embedded in rental cars. Zipcar has pioneered this business model, which includes renting cars by the hour. See Figure 1.9. Cars are leased for short time spans to registered members making rental centers unnecessary. Traditional car rental agencies are starting to experiment with sensors so that each car’s use can be optimized for higher revenues.
Opportunities for improvement Other applications of embedded physical things are:
• In the oil and gas industry, exploration and development can rely on extensive sensor networks placed in the earth’s crust to produce more accurate readings of the location, structure, and dimensions of potential fields. The payoff would be lower development costs and improved oil flows.
• In health care, sensors and data links can monitor patient’s behavior and symptoms in real time and at low cost, allowing physicians to better diagnose disease and prescribe tailored treatment regimens. Sensors have been embedded in patients with heart or chronic illnesses so that their conditions can be monitored continuously as they go about their daily activities. Sensors placed on congestive heart patients can now monitormany of these signs remotely and continuously, giving practitioners early warning of conditions that could lead to expensive emergency care. Better management of congestive heart failure alone could reduce hospitalization and treatment costs by $1 billion per year in the U.S.
• In retail, sensors can capture shoppers’ profile data stored in their membership cards to help close purchases by providing additional information or offering discounts at the point of sale.
• Farm equipment with ground sensors can take into account crop and field conditions, and adjust the amount of fertilizer that is spread on areas that need more nutrients.
• Billboards in Japan scan passersby, assessing how they fit consumer profiles, and instantly change the displayed messages based on those assessments.
• The automobile industry is developing systems that can detect imminent collisions and take evasive action. Certain basic applications, such as automatic braking systems, are available in high-end autos. The potential accident reduction savings resulting from wider deployment of these sensor systems could exceed $100 billion annually.
Q1. Research Zipcar. How does this company’s business model differ from traditional car rental companies, such as Hertz or Avis?
Q2. Think of two physical things in your home or office that, if they were embedded with sensors and linked to a network, would improve the quality of your work or personal life. Describe these two scenarios.
Q3. What demands does the Internet of things place on IT budgets or data centers?
Q4. What are some privacy concerns?
Your answer must be typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.