The IoT means improved automation, monitoring, measurement, insight, as well as new business opportunities and better product and service value.

For example:

• Devices communicating with each other can automate mundane processes. Using a service like IFTTT (IF This, Then That), we can trigger actions such as automatically saving Gmail attachments to OneDrive, or backing up photos to a Dropbox.
• Embedding sensors monitoring wear and tear in machinery means we can not only prevent downtime for machinery; we can predict it.
• A device’s data anonymously sent back to the manufacturer can help to improve product innovation (or reveal new product opportunities).
• New business models using ‘X as a Service’, where X is a product - potentially given away or leased for no upfront cost - with the user charged only for reported use (for example, a fridge that tracks door opens; a tennis racket that reports swings; a walking stick that tracks distance).

Someone you know is using a Fitbit. Or a Jawbone. Or an Apple Watch. These so-called ‘wearables’ are automatically tracking steps, activity, calories, and more. And then storing that information for review later. It’s not the user who’s entering the data; it’s the machine.

But there’s more to IoT than the usual devices we hear about.

The real value of IoT comes from the networking of multiple devices across various platforms. This comes about when vendors think about the outcome a user wants to achieve.

For example, you have a shoe store as a client. Their desired outcome may be to always have the necessary stock required to make sales, but not too much stock. How that’s achieved isn’t necessarily important; more that it’s achieved at a good price and in a timely and effective manner.

IoT comes into play by:

• Monitoring physical stock levels – through POS software recording sales
• Monitoring shoe popularity - sensors on the boxes or storage shelves that track how often a box is removed for a customer to try the shoes. Similarly, shoes on display with sensors that record how often they’re handled.
• Tracking store traffic – not just counting the number of customers through the door, but where those customers spend the most time in-store
• Analysing store and sales data from local and overseas locations
• Leveraging low-cost logistics – booking freight options that report discount rates for half-full runs

At this relatively early stage of the Internet of Things, there will be many failed projects. The idea might be clever, but the value not immediately apparent. As IoT evangelist Bruce Sinclair says: “If an IoT product does not create enough incremental value, then no one is going to pay more for the product.”

In other words, if a consumer cannot see the value in paying 10x the price of a normal toaster for the ability to track the progress of your toast on your phone, chances are that IoT toaster will fail to sell.

This is the nature of technology, though – many, many failed experiments before the cream rises.

John Rossman, formerly of Amazon (arguably the world’s leading IoT business), lists four levels of IoT technology in his ‘IoT Extensibility Framework’.

The number one concern right now is the amount of data gathered about consumers and sent back to businesses. More than likely, this concern will slowly recede or fail to slow IoT advancement. The widespread acceptance and adoption of social media applications such as Facebook – which exist primarily to gather consumer data – show that humans are, in general, ok with sharing data so long as they feel they’re getting value from the relationship.

Security concerns are a prime concern, with relatively simple data encryption a potential vulnerability for businesses. Video surveillance systems are potential entry points for attackers.

Gartner predicts a black market selling fake data to enable criminal activity.

While not so much a risk, information overload may become an issue. Misunderstanding data or simply being unable to make sense of it could impact business owners unable to analyse data correctly or easily.

For the past 100 years or more, firms have focussed on optimising processes to maximise returns and efficiency. The introduction of cloud computing was the last great opportunity to find new efficiencies.

Soon, with sensors attached to every aspect of a firm’s workflow, a new age of efficiency will be upon us.

As an example, the efficiency gains from IoT-enabled calendars could have a huge impact on time management:

• You have a client meeting at midday. Your client’s calendar has been receiving information from their phone’s GPS, stating that traffic is busier than usual. In fact, the GPS has communicated with the road itself, which has reported an incident ahead - slowing the journey even further.
• Your client’s calendar has communicated with your calendar, suggesting moving your meeting to the precise time that the client is expected to arrive – bringing forward your scheduled lunch time.
• Meanwhile, your calendar has communicated with the coffee machine and microwave to start preparing your lunch.
• Instead of wasting time waiting for your client’s arrival, or starting a new project only to be interrupted by your client’s late arrival, you’ve optimised your schedule and lost no time at all.

Essentially, IoT brings better business planning and resource allocation, and will also help to optimize operational processes, minimize expenditures, and mitigate issues quicker.

The constant flow of real-time data will have a dramatic impact on transaction processing and advisory work. Not only will transaction data flow in real time - information gathered from non-sales-related IoT devices and sensors will provide the advisor with the ability to move from reactive advice based on historical data, to proactive and even prescriptive advice.

In other words, the advisor can use live data analysis to predict future outcomes and make smart business recommendations. This is the connected practice in action.

The client, then, has peace of mind knowing that any financial discrepancies and opportunities are monitored and acted upon by their trusted advisor.

Just as the blockchain may have immense effects on audit procedures, so too will the IoT. Real time data from multiple locations will provide deeper and more timely audit insights.

The live flow of information means much of the audit process can be automated and continuous, with accountants monitoring for unexpected variances.

Today, there’s a lot of data on the Internet. By 2020 there’ll be a lot more – perhaps 275 times as much data as exists today.

With so much information available, there’s a need to be able to analyse it – to put it to good use. This is possibly the biggest opportunity for accountants and bookkeepers to consider going forward. There will come a time when the zettabytes of existing Internet data - and right now it’s barely monitored, let alone used - will be reined in, controlled, processed, and put to productive and valuable use. Accountants and bookkeepers stand as the professionals closest to businesses that could make sense and add value from this literal wealth of information.

Accounting and bookkeeping practices will need to consider bringing in data analysts to help provide these data insights to their clients. Or risk losing the opportunity to a new service model outside of the industry.

Unlike some of the technology discussed in the Radar Report, the Internet of Things is here now and fast becoming mainstream. The ability to record, collect and act on data from previously ‘silent’ devices and objects is a momentous forward shift in technological progress.

With retail and the cognification of just about everything, the customer relationship no longer ends at the cash register – it’s where it begins. For many products, value will continue to be provided – and even improved – long after the product has left the store. That’s a seismic shift in customer lifetime value.

Similar benefits will come for commercial, industrial and infrastructure IoT. It’s to expand the accounting practice into data and information technology and analytics. Your clients need it.