In a report they co-authored for Deloitte’s Center for the Edge, co-founders John Hagel III and John Seely Brown share their insights concerning of the most promising and yet least understood shifts in disruptive technology: the “Internet of Things.” To read the complete report, check out other resources, and learn more about Deloitte’s Center for the Edge, please click here.

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What is the Internet of Things (IoT) and why is it important to businesses? To start, it is about the collection, analysis and use of unprecedented amounts of real-time data that likely will disrupt the way many organizations do business today. The Internet of Things (IoT) concept involves connecting machines, facilities, fleets, networks and even people to sensors and controls and then feeding the sensor data into advanced analytics applications and predictive algorithms as a way of enhancing automation and improving the maintenance and operation of machines and entire systems—and in some cases even enhancing human health.

As connected devices proliferate and networks penetrate into remote regions, the potential for IoT solutions and growth in the IoT ecosystem has increased. If IoT solutions can improve enterprise adopters’ fundamental business values—not just savings and risk management, but also revenue growth and innovation—demand and new uses for connected devices will grow. At a higher level, IoT has a role to play in helping companies create more sustained value through moving from a one-time transaction focus to a continuous, relationship focus with customers, suppliers, workers and assets.

The Internet of Things has the potential to offer business value that goes beyond operational cost savings. Providers in the IoT ecosystem have a largely unexplored opportunity to develop compelling IoT solutions that examine how the ability to collect and analyze disparate data, in real-time and across time, might transform the business. These developments will play out within and across enterprises, offering opportunities for sustained value creation and even disruption for those who can imagine possibilities beyond the incremental.

Organizations are still early in the adoption of the IoT. Yet, belief is widespread—among analysts, investors, IoT technology providers and enterprises large and small—that businesses are on the cusp of an explosion in the potential and adoption of IoT. Economic and technological barriers are receding, and with the proliferation of connected devices and evolving analytics capabilities, the possibilities for IoT seem boundless. Each industry will have its own use cases, some focused on businesses, some on consumers. Already, agriculture is experimenting with more efficient irrigation and soil monitoring, while manufacturing and process industries increasingly instrument and connect machinery and wearable applications developed in the wellness industry are migrating into health care.

But significant obstacles remain. Executives worried about security and interoperability are unsure of the economic rewards relative to the risks of implementing IoT solutions. Consumer-facing use cases, in particular, raise additional privacy and security concerns. IoT providers (of hardware infrastructure, software, communications and devices) have yet to articulate compelling propositions for how IoT solutions can drive lasting economic value for the enterprise.

Instead, many vendors focus on selling technology to the CIO—without a comprehensive vision of how it will translate into returns for the business. There is a largely unexplored opportunity for IoT providers who can broaden the sales horizon to encompass the CEO, CMO, CFO, compliance and risk officers and even major line managers. As machines and objects become more intelligent, armed with enhanced analytics, context awareness and predictive decision-making, they will be able to act in ways that benefit individuals and the larger system.

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Here is a direct link to the complete report.

John Hagel III (co-chairman, Deloitte Center for the Edge), of Deloitte Consulting LLP, has nearly 30 years of experience as a management consultant, author, speaker, and entrepreneur, and has helped companies improve performance by applying technology to reshape business strategies. In addition to holding significant positions at leading consulting firms and companies throughout his career, Hagel is the author of bestselling business books such as Net Gain, Net Worth, Out of the Box, The Only Sustainable Edge, and The Power of Pull.

John Seely Brown (independent co-chairman, Deloitte Center for the Edge) is a prolific writer, speaker, and educator. In addition to his work with the Center for the Edge, JSB is adviser to the provost and a visiting scholar at the University of Southern California. This position followed a lengthy tenure at Xerox Corporation, where JSB was chief scientist and director of the Xerox Palo Alto Research Center. JSB has published more than 100 papers in scientific journals and authored or co-authored seven books, including The Social Life of Information, The Only Sustainable Edge, The Power of Pull, and A New Culture of Learning.