Alongside buzzwords like big data, machine learning and artificial intelligence, the Internet of Things – or IoT – has emerged as one of the ‘must-watch’ technological developments of recent years.

Yet, as with many of these tech trends, their rise to prominence is often accompanied by confusion and misunderstanding; while the terminologies may enter our everyday lexicon, there are still vast numbers of individuals who do not understand what they mean.

Of course, this is not typically an issue for consumers, who can benefit from these advances without needing to comprehend the specifics of how they work.

But for businesses, and in particular entrepreneurs at the very start of a new venture, it is vital they have a strong grasp on not just what these terms mean, but also how these new areas of technology can enhance their products, services or operations.

What do we mean by IoT?

People have been talking about the Internet of Things for well over a decade. Quite simply, IoT refers to the way in which devices – everything from smartphones and wearable technologies through to household appliances and vehicles – use sensors, software and connectivity to communicate or exchange data.

A common example would be using a voice-controlled Amazon Echo device to turn off a lamp in your kitchen – the two pieces of hardware, when embedded with sensors and software, can interact with one another.

Thanks to the huge upturn in mobile connectivity, Bluetooth and Wi-Fi, not to mention the affordability and sophistication of the requisite microchip within the devices, this is now happening on a huge scale.

To put the growth of this market into perspective, a report from BI Intelligence this year projected that there will be more than 55 billion IoT devices by 2025, up from approximately 9 billion in 2017.

Furthermore, it forecasts that there is going to be nearly $15 trillion worth of investment into IoT technologies between 2017 and 2025.

Entrepreneurs must consider the benefits of IoT

There is virtually no sector that is not being disrupted by the seemingly all-consuming nature of IoT.

Consequently, technology and innovation teams in large companies around the world are seeking ways to harness this new interconnectedness to improve their offering – they are attempting to find out how the data being transmitted by all manner of devices can be turned into insights that can enhance the products or services they are offering.

But it is essential that startups or, looking even earlier in the process, entrepreneurs still in the ideation phase of developing a new business consider what IoT could mean for them.

The falling costs of data storage, analytics, software platforms and sensors mean that IoT is no longer the realm of blue chip tech companies.

Whether a new business is operating in the agriculture, manufacturing, engineering or healthcare space, there is a huge competitive advantage on offer to early stage companies of all shapes and sizes. And the ones who adopt IoT-based technologies earlier in their development stand to benefit significantly.

First and foremost, IoT can deliver cost savings – for instance, by using smartphone apps a startup can monitor the office’s energy usage, enabling them to control lighting and heating remotely at any time, and in turn make the business more efficient.

As another example, by using software and tagging systems, ecommerce businesses can keep a real-time record of their stock levels, which means they are able to more accurately track what they need to re-order and simultaneously save time on performing manual stock checks.

But IoT provides far greater benefits than this. It also improves an entrepreneur’s product – either in the manufacturing phase or while it is actually being used by customers, if a business leader can record performance data from its product then they can ensure it is behaving in the way it should.

What’s more, being able to collect and analyse real-time data from sensors within the product means that a startup can better understand how they should adapt and evolve their offering over time.

The perfect storm

The opportunities of IoT are vast – and that is because IoT is a massive, growing area of technology. IoT is the result of a perfect storm of digital trends; it brings together hardware and software, with the two sides communicating via different methods of connectivity.

On top of this, advances in data storage, analytics and visualisation mean the information being emitted from a multitude of devices can be turned into actionable insights.

Entrepreneurs who have either just launched, or are preparing to launch, their own business must realise the potential IoT has to play in driving disruption.

By enabling businesses to make smarter and faster decisions, connected devices are leading a new wave of innovation – as such, the more intelligent ways an entrepreneur can embed IoT into their business model, the better their chance of long-term success.

For a decade, Ritam worked as a consultant for the likes of Accenture and Bank of America Merrill Lynch before, in 2014, going on to found Studio Graphene – a firm that specialises in developing amazing blank canvas tech products.

Working with many startups alongside innovation teams in more established companies, the London-based agency plans, designs and builds astounding tech products for its clients. What’s more, Ritam and the team also use their experience and expertise to help leaders grow their business from ideation, to launch and beyond.

Ritam Gandhi, director and founder, Studio Graphene.