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JUNE 2016 www.bdo.com
AN ALERT FROM THE BDO TECHNOLOGY & LIFE SCIENCES PRACTICE
TECHNOLOGY SPOTLIGHT ON THE INTERNET OF THINGS The Internet of Things (IoT) is becoming an increasingly popular topic of conversation for consumers and businesses alike. With McKinsey & Company predicting its potential economic impact to be $3.9 trillion to $11.1 trillion by 2025, IoT has the potential to influence how we live and also how we work. But what exactly is the Internet of Things and what does it mean for the technology industry?
like energy use or traffic networks. So far, consumers have been the primary beneficiary of IoT innovation, but the opportunity for business and the public sector is arguably far greater. Labeled as “the next Industrial Revolution,” IoT will fundamentally change how we work and live.
HOW DO I GET MORE INFORMATION?
WHAT OPPORTUNITIES DOES IOT OFFER FOR TECH?
HANK GALLIGAN 617-422-7521 / [email protected]
WHAT IS IOT?
IoT offers tremendous opportunities for the tech industry, creating demand for new components, products and services. Some of the areas for growth and innovation include:
PAUL HEISELMANN 312-233-1876 / [email protected]
IoT connects “smart” devices to the Internet and to each other. Gartner predicts that 6.4 billion devices will be connected to the Internet by the end of this year, and Cisco forecasts 50 billion devices will be online by 2020. Internet-connected devices can include everything from cellphones and wearables to kitchen appliances and home automation systems. IoT is sometimes called the “Internet of Everything” because we’ve just begun to scratch the surface of adding connectivity and intelligence to products, systems and processes. With IoT, any device can seamlessly collect, share and analyze real-time data. From everyday uses like smart fridges that notify users when they are out of milk to smart thermostats that allow homeowners to turn on heating remotely, there are a slew of smart home and office applications of IoT. On a broader scale, IoT can be applied to larger networks, streamlining supply chains or automating entire manufacturing facilities. IoT can also be used to create smart cities that can improve efficiency for things
u Data analysis – As we discussed in our
Winter 2016 BDO Tech Newsletter, one of the biggest IoT opportunities lies in software—and more specifically, data aggregation and analysis. The global IoT analytics market is expected to reach $16.35 billion by 2020, according to research from Markets and Markets. Helping businesses monetize data from IoT and maximize its value will be a significant—and lucrative—undertaking, requiring better monitoring and diagnostics tools, more storage space and more advanced analytics. Companies that create smarter data collection and management capabilities for the millions of data points that IoT fosters will be at the cutting edge of data analytics across all industries.
For more information, please contact: TIM CLACKETT 310-557-8201 / [email protected] SLADE FESTER 408-352-1951 / [email protected]
AFTAB JAMIL 408-352-1999 / [email protected] ANTHONY REH 404-979-7148 / [email protected] RYAN STARKES 732-734-1011 / [email protected] DAVID YASUKOCHI 714-913-2597 / [email protected]
u Cybersecurity – Arguably the biggest risk
for device manufacturers, vulnerabilities in IoT have opened up a host of new Read more
2
BDO KNOWS TECHNOLOGY
cybersecurity challenges—and a new target for cybersecurity solutions providers. According to the MPI Internet of Things Study, sponsored by BDO, 44 percent of manufacturers do not have or are unaware as to whether or not they have the ability to detect and identify unauthorized Internet-connected devices. In IoT, the data is often transferred autonomously, without additional user input. Without the proper security protocols, IoT can inadvertently offer a window into users’ most personal data. The breadth of potential entry points for attack is much wider, making it harder to track down the site of infection. The demand for cyber solutions leveraging machine learning techniques and predictive modeling will increase as IoT cybersecurity issues come to the fore.
of IoT—and industrial data in particular— creates opportunity for sensor makers to innovate new sensor types and ramp up production. The $85 billion sensor market is expected to grow to more than $115 billion by 2019 with a 7.3 percent compound annual growth rate. u Connectivity – In IoT, all of the devices
in a single household or office—which can number up into the hundreds—are connected to a network. The existing BlueTooth or Wi-Fi solutions may not be able to meet requirements of a smart home or office given their power and network limitations. There will be a need for connectivity solutions with larger data capacity and the ability to manage more IP addresses for many devices. u Data Storage – How data should be
u Sensor technologies – Sensors are a
component embedded in virtually every connected device and are expected to penetrate all categories of products within IoT. Detecting sensory changes is what enables objects to provide intelligence on the surrounding environment. The rise
stored and processed in IoT is a matter of ongoing debate and innovation. Endpoint devices that connect to IoT require chips that allow for greater data storage and processing at the edge of the network—and the trend is for those chips to become smaller with lower power
consumption and even higher bandwidth. In addition, more ingress data flowing into data centers is creating added storage demands—which may drive a sea change in IT management from centralization to distribution, with organizations leveraging several mini-data centers. That doesn’t mean the end of the cloud; for industrial IoT applications where real-time speed may be less critical, cloud computing may be better suited in terms of cost and scalability.
BDO INSIGHTS The implications—and applications—for IoT are vast and span across many different industries—from retail, manufacturing and healthcare to agriculture, automotive and energy. As IoT evolves and consumer and business use becomes more widespread, so will the need for technology-driven solutions that support IoT devices. Tech companies that embrace IoT stand to seize the biggest opportunity since the advent of the smartphone.
BDO TECHNOLOGY & LIFE SCIENCES PRACTICE BDO is a national professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies. Guided by core values including competence, honesty and integrity, professionalism, dedication, responsibility and accountability for 100 years, we have provided quality service and leadership through the active involvement of our most experienced and committed professionals. BDO works with a wide variety of technology clients, ranging from multinational Fortune 500 corporations to more entrepreneurial businesses, on myriad accounting, tax and other financial issues. BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, advisory and consulting services to a wide range of publicly traded and privately held companies. For more than 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. The firm serves clients through 63 offices and more than 450 independent alliance firm locations nationwide. As an independent Member Firm of BDO International Limited, BDO serves multi-national clients through a global network of 1,408 offices in 154 countries. BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. For more information please visit: www.bdo.com. Material discussed is meant to provide general information and should not be acted on without professional advice tailored to your firm’s individual needs. © 2016 BDO USA, LLP. All rights reserved.
AN ALERT FROM THE BDO TECHNOLOGY & LIFE SCIENCES PRACTICE
TECHNOLOGY SPOTLIGHT ON THE INTERNET OF THINGS The Internet of Things (IoT) is becoming an increasingly popular topic of conversation for consumers and businesses alike. With McKinsey & Company predicting its potential economic impact to be $3.9 trillion to $11.1 trillion by 2025, IoT has the potential to influence how we live and also how we work. But what exactly is the Internet of Things and what does it mean for the technology industry?
like energy use or traffic networks. So far, consumers have been the primary beneficiary of IoT innovation, but the opportunity for business and the public sector is arguably far greater. Labeled as “the next Industrial Revolution,” IoT will fundamentally change how we work and live.
HOW DO I GET MORE INFORMATION?
WHAT OPPORTUNITIES DOES IOT OFFER FOR TECH?
HANK GALLIGAN 617-422-7521 / [email protected]
WHAT IS IOT?
IoT offers tremendous opportunities for the tech industry, creating demand for new components, products and services. Some of the areas for growth and innovation include:
PAUL HEISELMANN 312-233-1876 / [email protected]
IoT connects “smart” devices to the Internet and to each other. Gartner predicts that 6.4 billion devices will be connected to the Internet by the end of this year, and Cisco forecasts 50 billion devices will be online by 2020. Internet-connected devices can include everything from cellphones and wearables to kitchen appliances and home automation systems. IoT is sometimes called the “Internet of Everything” because we’ve just begun to scratch the surface of adding connectivity and intelligence to products, systems and processes. With IoT, any device can seamlessly collect, share and analyze real-time data. From everyday uses like smart fridges that notify users when they are out of milk to smart thermostats that allow homeowners to turn on heating remotely, there are a slew of smart home and office applications of IoT. On a broader scale, IoT can be applied to larger networks, streamlining supply chains or automating entire manufacturing facilities. IoT can also be used to create smart cities that can improve efficiency for things
u Data analysis – As we discussed in our
Winter 2016 BDO Tech Newsletter, one of the biggest IoT opportunities lies in software—and more specifically, data aggregation and analysis. The global IoT analytics market is expected to reach $16.35 billion by 2020, according to research from Markets and Markets. Helping businesses monetize data from IoT and maximize its value will be a significant—and lucrative—undertaking, requiring better monitoring and diagnostics tools, more storage space and more advanced analytics. Companies that create smarter data collection and management capabilities for the millions of data points that IoT fosters will be at the cutting edge of data analytics across all industries.
For more information, please contact: TIM CLACKETT 310-557-8201 / [email protected] SLADE FESTER 408-352-1951 / [email protected]
AFTAB JAMIL 408-352-1999 / [email protected] ANTHONY REH 404-979-7148 / [email protected] RYAN STARKES 732-734-1011 / [email protected] DAVID YASUKOCHI 714-913-2597 / [email protected]
u Cybersecurity – Arguably the biggest risk
for device manufacturers, vulnerabilities in IoT have opened up a host of new Read more
2
BDO KNOWS TECHNOLOGY
cybersecurity challenges—and a new target for cybersecurity solutions providers. According to the MPI Internet of Things Study, sponsored by BDO, 44 percent of manufacturers do not have or are unaware as to whether or not they have the ability to detect and identify unauthorized Internet-connected devices. In IoT, the data is often transferred autonomously, without additional user input. Without the proper security protocols, IoT can inadvertently offer a window into users’ most personal data. The breadth of potential entry points for attack is much wider, making it harder to track down the site of infection. The demand for cyber solutions leveraging machine learning techniques and predictive modeling will increase as IoT cybersecurity issues come to the fore.
of IoT—and industrial data in particular— creates opportunity for sensor makers to innovate new sensor types and ramp up production. The $85 billion sensor market is expected to grow to more than $115 billion by 2019 with a 7.3 percent compound annual growth rate. u Connectivity – In IoT, all of the devices
in a single household or office—which can number up into the hundreds—are connected to a network. The existing BlueTooth or Wi-Fi solutions may not be able to meet requirements of a smart home or office given their power and network limitations. There will be a need for connectivity solutions with larger data capacity and the ability to manage more IP addresses for many devices. u Data Storage – How data should be
u Sensor technologies – Sensors are a
component embedded in virtually every connected device and are expected to penetrate all categories of products within IoT. Detecting sensory changes is what enables objects to provide intelligence on the surrounding environment. The rise
stored and processed in IoT is a matter of ongoing debate and innovation. Endpoint devices that connect to IoT require chips that allow for greater data storage and processing at the edge of the network—and the trend is for those chips to become smaller with lower power
consumption and even higher bandwidth. In addition, more ingress data flowing into data centers is creating added storage demands—which may drive a sea change in IT management from centralization to distribution, with organizations leveraging several mini-data centers. That doesn’t mean the end of the cloud; for industrial IoT applications where real-time speed may be less critical, cloud computing may be better suited in terms of cost and scalability.
BDO INSIGHTS The implications—and applications—for IoT are vast and span across many different industries—from retail, manufacturing and healthcare to agriculture, automotive and energy. As IoT evolves and consumer and business use becomes more widespread, so will the need for technology-driven solutions that support IoT devices. Tech companies that embrace IoT stand to seize the biggest opportunity since the advent of the smartphone.
BDO TECHNOLOGY & LIFE SCIENCES PRACTICE BDO is a national professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies. Guided by core values including competence, honesty and integrity, professionalism, dedication, responsibility and accountability for 100 years, we have provided quality service and leadership through the active involvement of our most experienced and committed professionals. BDO works with a wide variety of technology clients, ranging from multinational Fortune 500 corporations to more entrepreneurial businesses, on myriad accounting, tax and other financial issues. BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, advisory and consulting services to a wide range of publicly traded and privately held companies. For more than 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. The firm serves clients through 63 offices and more than 450 independent alliance firm locations nationwide. As an independent Member Firm of BDO International Limited, BDO serves multi-national clients through a global network of 1,408 offices in 154 countries. BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. For more information please visit: www.bdo.com. Material discussed is meant to provide general information and should not be acted on without professional advice tailored to your firm’s individual needs. © 2016 BDO USA, LLP. All rights reserved.
