Dilan Rajasingham, Head of Emerging Technology, CommBank
Imagine if the billions of devices connected to the Internet of Things could do business with each other. Rather than just transmitting information, they could buy services from other devices as well as sell to them.
For example, a ‘smart machine’ such as an autonomous truck could manage itself by buying maintenance services from an autonomous maintenance machine.
Machines could also rent themselves to other companies instead of sitting idle when owners aren’t using them. They could even run an organization’s day-to-day operations; making complex decisions and conducting transactions.
This isn’t a picture of the distant future. As more machines do business with each other, they will create a machine-to-machine (M2M) economy.
Why the M2M Economy Matters
This is a critical moment for organizations and their IT departments, because businesses that prepare their systems to support M2M now could reap significant benefits in the future.
Companies might be able to save time and lower their costs if machines automate operations. They could also save resources, because they won’t need to own as many machines if they can rent them. These savings could allow companies to sell products and services to their customers at a cheaper price, giving them a price advantage and competitive edge.
Organizations could also take advantage of new revenue streams. For example, we might see the ‘Uberization’ of businesses as they earn additional income by renting equipment to other organizations, or even machines.
Entrepreneurs could benefit by establishing businesses that supply smart machines with energy, payment or computing services. The barriers to entering the market will also be lower because entrepreneurs will be able to rent machines instead of buying them.
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Preparing for the M2M Economy
To gain these benefits, IT decision makers need to look at whether their systems will enable M2M business or stand in its way
IT decision makers will also need to consider security challenges posed by the transfer of data and currency in the M2M economy
There are three key trends they'll need to consider. The first is the rise in artificial intelligence and machine learning, which will automate more complex decision-making processes than previously possible.
The second is the growth of the sharing economy. Until now, this has mostly involved individuals or businesses renting equipment such as accommodation or vehicles to other individuals or businesses, but in the future, machines could rent equipment to other machines. IT departments will need to put in place systems to support this.
The third is the emergence of digital marketplaces such as Airtasker and ServiceSeeking. Today, these allow people to do business with each other, but smart machines could use the same model to buy and sell insurance, or rent themselves by the time or distance required.
IT decision makers should also look to pioneering work that is already turning the M2M economy into a reality. For example, IBM demonstrated a proof-of-concept semi autonomous Samsung washing machine as far back as 2015. The washing machine was capable of re-ordering detergent and parts, and negotiating power usage with energy providers. This project linked blockchain technology to the Internet of Things to solve security and payment challenges.
The payment technologies that will underpin the M2M economy are also advancing. Fledgling distributed autonomous organizations exist today that use smart contracts to govern their transactions. One example is Dash, a digital currency organization.
IT decision makers will also need to consider security challenges posed by the transfer of data and currency in the M2M economy. They will also need to make sure smart machines act safely and ethically.
The Next Big Shift in IT
For IT decision makers, the M2M economy is shaping up to be as significant as cloud computing.
The number of devices that could potentially become part of the M2M economy is increasing as the cost of processors falls and more devices connect to each other. By 2020, it is estimated that the Internet of Things will incorporate up to 50 billion devices.
Forward thinking organizations are currently testing use cases and experimenting with the M2M economy. These use cases apply to a broad range of sectors, from manufacturing to logistics, resources, agriculture, and energy.
Plenty of IT departments have spent years replacing systems so that their companies can do business quickly in the digital economy. Now, organizations such as the Commonwealth Bank are assessing M2M opportunities to know whether their systems are ready.
Organizations that prepare their IT to support the M2M economy now, will be in a much better position to benefit from it in the future.