In reviewing nearly 300 IoT applications, we discovered that using only a conventional approach to categorizing the potential impact by vertical industry markets—such as automotive or consumer electronics—made it more difficult to analyze all the ways in which value could be created. If we look at how IoT technology is creating value from the perspective of the automaker, for instance, we would see how it improves manufacturing efficiencies and reduces costs.
However, by viewing IoT applications through the lens of settings, we capture a broader set of effects, particularly those that require the interaction of IoT systems and often produce the greatest impact. For example, by examining the cities setting, we discover that not only can sensors in individual vehicles be used to save 2 Based on World Bank projection of $99.5 trillion per year in global GDP in 2025 3 The productivity paradox was observed by economists Robert Solow and Stephen Roach, who in 1987 noted that despite the widespread adoption of computers to automate office functions, there was no evidence of their impact on productivity.
Subsequent research found problems in how government statistics measured the impact of computers and a lag between investment in technology and the organizational adjustments required to realize significant productivity gains. See Erik Brynjolfsson and Lorin M. Hitt, “Beyond the productivity paradox,” Communications of the ACM, volume 41, issue 8, August 1998. See also US Productivity Growth 1995-2000, McKinsey Global Institute, and October 2001.
Maintenance costs by predicting when maintenance is needed but we also see that sensors can be linked to broader systems that help to manage traffic congestion across the city. We have identified nine settings, capturing IoT use in environments such as homes, offices, factories, worksites (mining, oil and gas, and construction), retail environments, cities, vehicles, and the outdoors.
We have also included a “human” setting for for systems that attach to the human body and enable such health and wellness applications as monitoring chronic disease or exercise, and productivity-enhancing applications such as use of augmented-reality technology to guide workers in performing complex physical tasks (Exhibit E1).