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The Internet of Things: All About Software

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The Internet of Things: All About Software WINTER 2016 www.bdo.com THE NEWSLETTER OF THE BDO TECHNOLOGY & LIFE SCIENCES PRACTICE DID YOU KNOW... Gartner estimates worldwide IT spending will increase by just .6 percent to $3.54 trillion in 2016, following a year with the largest U.S. dollar drop in IT spending since the research firm began tracking this statistic. The software market, however, is a bright spot, expected to grow by 5.3 percent in 2016. By 2019, the cloud software market will grow to surpass THE INTERNET OF THINGS: $112.8 billion, and the cloud software model will account ALL ABOUT SOFTWARE for $1 of every $4.59 spent on software, according to IDC. By Hank Galligan According to Cisco’s fourth annual Global Cloud Index, the “Smart devices” that capture Major technology players are pushing cloud will account for 83 percent and deliver data to end users software platforms for IoT. In October, of total data center traffic by 2019. are everywhere, sparking the Amazon Web Services launched a new platform for building IoT-intended so‑called “Internet of Things” applications at its annual cloud expo, as its According to Synergy Research (IoT) phenomenon. CTO commented that “everything that used Group, the U.S. accounts for to be hardware is now software.” Earlier in 44 percent of major cloud But while McKinsey & Company puts IoT’s the year, IBM said it would invest $3 billion and Internet data center sites, potential economic impact at $3.9 trillion over the next four years in a new business followed by China at 10 percent. to $11.1 trillion by 2025, organizations must unit—a collection of online software called develop the right systems and processes to IoT Foundation—that will enable customers The global Internet of Things maximize IoT’s real value. The accelerated to gather and analyze the influx of data from market is expected to grow at a collection of “machine data,” as connected IoT technology. Twitter, meanwhile, has been compound annual growth rate devices become increasingly interconnected, piloting IoT for years by enabling sensors to of 31.72 percent, according to is adding to the Big Data deluge. At the record and share data via tweets through its TechNavio. same time, wearable technology, smart open API. With the launch of Twitter’s Fabric home automation devices, machine-to- modular mobile development platform, machine communications and related IoT developers can now create applications for applications promise to unlock new business inanimate objects or things that integrate opportunities. Software plays a key role in with Twitter, or relay information between bringing it all together. existing IoT apps. 2 BDO TECH CONTINUED FROM PAGE 1 THE INTERNET OF THINGS EVERYBODY’S TALKING Software will have a critical role in supporting What is being done with all of the data ABOUT IoT the data analysis needed to turn the being collected by connected devices and massive amounts of IoT-generated data analyzed via software programs? How is it IoT is fueling innovation, with IoT-related into something meaningful that can lead to stored, shared, protected and deleted? Each products stealing the spotlight at the greater efficiencies, improved productivity of these categories is deserving of serious International Consumer Electronics Show and other key benefits. When thinking about consideration. However, up to this point, (CES) in Las Vegas in early January. The the industrial IOT landscape, per a recent data privacy and regulatory compliance have markets for smart home automation devices Wired article, software could boost the largely been afterthoughts. The Economist and wearable devices are expected to surge reliability of major infrastructure through argues that these “missing puzzle pieces” are over the next few years, as new mobile asset performance diagnostics. Consider, blunting the transformative potential of IoT, apps and technologies enable consumers to for example, a piece of manufacturing particularly as it relates to consumer-facing control more through their mobile devices. equipment that can report on its own innovations. The CES show featured an abundance of new operability and health. smart home gadgets, like smart refrigerators, Some of the big corporations are taking that are linked to Apple’s HomeKit, Google’s As companies embrace more connected action—for example, Samsung and Panasonic Brillo and Nest platforms and Amazon’s devices, the urgency grows for better ways are both investing in IoT security efforts, Echo and Alexa voice-recognition platform. to manage and analyze data streams coming and AT&T has pledged to do the same, but Connected cars offer another huge area from many different directions. Data analysis movement across the industry is slow-going. of promise for IoT, with Ford recently software is improving to help enterprises announcing a partnership with Amazon and make sense of the data influx. However, to be In the meantime, regulators are just starting IoT platform Wink to give drivers the ability a true value add, software developers must to poke their heads around. Congress to use voice commands to open a garage have a keen understanding of where data can held several hearings over the last year door or turn on lights in their house. provide actionable insights and intelligence focused on IoT and will continue to monitor to advance the business. developments to ensure there is a proper There is no shortage of innovation on the balance between innovation and consumer enterprise side of IoT either; in fact, there protection. The Federal Trade Commission is some argument that the bigger IoT IoT SOFTWARE CONCERNS (FTC) is taking more active measures, opportunity is in business, manufacturing and Despite all that IoT promises, lack of recently appointing a leading privacy and healthcare. General Electric projects that the interoperability and integration complexities security expert as its new chief technologist, market for connected industrial machinery, pose significant challenges to making this specifically citing growing concerns around which it calls the industrial Internet, will add new collected data useful, due in large part to IoT. The FTC also issued consumer protection $10 to $15 trillion to the global GDP within incompatible or outdated operating systems. recommendations for Internet-connected the next 20 years. Huge bandwidth, cheap Further complicating matters is the lack of devices last year, requiring customer consent processing and cloud technologies seem to a common set of standards. As a result, an for how companies use their data. Further offer endless possibilities for how we interact enormous amount of data being generated developments are certain to follow this year. with machines and how they interact with isn’t analyzed at all and is thus largely each other. But the key to unlocking real useless. McKinsey reports that its $11.1 trillion value lies in what is done with the data that estimate for IoT’s potential economic impact PUTTING IoT ALL TOGETHER is generated and how it’s used to make factors in interoperability at an average of 40 Software developers hold the key to the improvements—that’s where software comes percent, or more in some cases. Information so-called “missing puzzle pieces” of IoT. into play. from sensors in smart devices typically Ultimately, the challenges of data analysis, helps to detect and control anomalies, but interoperability, integration and security THE SOFTWARE OPPORTUNITY McKinsey found that the data often isn’t are potential billion-dollar software being put toward higher value activities like opportunities. Global spending on IoT devices and services optimization or prediction. will grow to $1.7 trillion by 2020, from $656 billion in 2014, according to research firm Hank Galligan is the Software practice In addition, there are an abundance of IDC. It projects nearly one-third of that leader for BDO’s Technology & Life privacy and security concerns that companies Sciences Practice. growth will be tied to devices, which will must address as they gather more data and boost demand of IoT platforms, application embrace new technology platforms. Part software and cloud-based “as a service” of the IoT software conversation needs to solutions. Research and Markets reported be focused on improving data governance that revenue from IoT-related software policies and processes, especially in light totaled $197 billion in 2015, through of the frequency of data breaches and the platforms, APIs, applications, controlling increasing sophistication of cyber attacks. systems, security solutions, management and operations. BDO TECH 3 FIVE STEPS TO A SMARTER SaaS SECURITY PLAN By Shahryar Shaghaghi Cybersecurity and software‑as‑a‑ service (SaaS) companies have a complicated relationship. On one hand, increasing need for cybersecurity is fueling growth for SaaS companies and security solutions. On the other, SaaS companies are targets of would- be hackers, looking to steal sensitive data or use the cloud as a platform to hide behind. When it comes to opportunity for SaaS companies, Research and Markets forecasts that the SaaS security market will grow sound cyber strategy requires sophisticated policies and procedures in place must be by almost 18 percent from 2013 to 2018. risk management and compliance evaluated. Next, core business functions Security SaaS startups have also been a technologies, an incident response team including software delivery, billing and hot investment. In July, Microsoft acquired and cyber insurance to cover any potential customer service should be mapped. Adallom, a SaaS cloud cybersecurity startup business interruption. Once the process flows are analyzed for $320 million. Silicon Angle reports that and categorized in connection with Adallom had previously been responsible for However, the recent BDO Board Survey established policies, proper controls can exposing a breach in Microsoft Office 365. revealed that companies are still playing be implemented to mitigate risks and catch up. Less than half of public company But then consider Dropbox, the most popular minimize their potential impact.
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