HOTREPORT

Paul Bevan – Research Director, IT Infrastructure

5g, IoT and Edge Computing

8 9
What is it? 7
5th Generation Networks (5g), the Internet of Things (IoT) and Edge
Computing are essential infrastructure enablers for a range of new
2017 2018 2019
business and technology developments, often termed Industry 4.0, that
cover areas like autonomous vehicles, smart city grids, e-health, automated
factories, mobile content streaming and data analytics. This marks a
significant step on the journey to genuine digital transformation.

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In 2014 th per
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Eur ated th
ealth estim
o n M -H avings of In 2014 the European Green Paper on
roduce s
it could p , a saving M-Health estimated that it could produce
on a year
€99 milli health savings of €99 million a year, a saving of
7% on EU
of around g based on around 7% on EU health spending based on
spendin
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es.
” 2014 values. A 2016 PwC survey of over 2000
executives in 26 countries about Industry 4.0
revealed potential annual digital revenue
growth of 2.9%, with a significant minority that
expect revenue increases of more than 50%
2017 over 5 years. At the same time the respondents
expected to see average cost savings of 3.5% a
year. This equates to savings of $493 billion a
year, for the next 5 years.
2020 One of the main drivers for Industry
4.0 adoption will be IoT. From 8.4 billion
connected devices in 2017 Gartner
predicts that there will be 20 billion
of these devices by 2020. Those
organisations that understand how
to use IoT will derive benefits from
genuine digital transformation and
the ability to envision and implement
Figure 1 new business models. Bloor sees this as a
key element of becoming a Mutable enterprise.
Gartner predicts 5G and Edge computing, along with IoT
a multifold increase
in connected devices
platforms and frameworks, are key enablers
by 2020. for Industry 4.0. Without this there will be
network problems, not only in providing
connectivity for the 20 billion IoT devices,
but also in transferring and processing the
huge volumes of data that will be generated.
The problems are not just about bandwidth.
Different IoT solutions will have different
network requirements. Some devices, like
autonomous vehicles and medical equipment
demand absolute reliability where low
latency will be critical. Other use cases will
see networks having to cope with a much
higher density of connected devices than seen
from traditional 4G networks. The promise
of 5G, the development of Network Function
Virtualisation (NFV) and the ability to process
some transactions and store data near to the
source of that data, i.e. at the Edge, will be key
determinants of the success of Industry 4.0.
How does it work?
IoT devices can be as dumb or as smart as you
want to make them. Within a production plant,
for example, simple sensors might collect
and store data and communicate via Wi-fi or
Zigbee (an industrial wireless communications
protocol) to a gateway device that contains
application logic. In other scenarios IoT sensor
data may need to be collected in real-time
from, for example, simple sensors, RFID tags,
tracking devices, even mobile phones across a
wider area via 5G protocols.
With current 4G technologies the different
bandwidth, latency and density requirements
would require separate physical instantiations
of the network. 5G provides for network slicing,
the ability to run different requirements at the
same time, while NFV makes it possible to

© Bloor 2018
 “’t anThinedreustry
isn
immune
im p a ct
the
o f Io T .
configure and re-configure standard hardware
for the different tasks rather than having
specialist, specific hardware implementations.
Some data and applications will be specific
to local IoT installations. Applications may only
perform functions as and when needed and
the data itself may be transient and not require
long term storage. Rather than running the
applications centrally and transmitting all the
data back to the centre it makes much more
sense to run the applications and store the data
locally, perhaps even in micro-datacentres
located by 5G network towers. This would then
minimise the amount of traffic required to be
transmitted to big data centre hubs.
Why should you care?
According to a 2015 McKinsey Report IoT has a
total potential economic impact of $3.9 trillion
to $11.1 trillion a year by 2025. Early adopters
have already moved to implement IoT projects
and gain significant business benefits. While
there seems to be some reluctance to share the
actual financial returns, which may be holding
back adoption by others seeking assurance,
there is a growing body of evidence that points
towards significant productivity gains. Hand
and Power Tool manufacturer, Stanley Black
& Decker reported a 10% increase in staff
productivity on a project to fully connect a
production line with IoT sensors, RFID tags
and wireless networks. European retailer,
C&A implemented IoT sensors in their stores
and logistics centre to monitor and control
energy usage. They achieved 20% savings in
their stores and 35% in their logistics centre.
The logistics centre savings alone contributed
€50,000 per annum to their bottom line. ISS,
one of the world’s leading facility services
companies uses internet connected boxes in
their UK based vehicles to monitor and control
driver behaviour and productivity in real-time.
This ensures compliance with government
regulations on usage and has resulted in a 36%
reduction in overtime payments.
There isn’t an industry immune to the
impact of IoT. From Connected Cows delivering
step change improvements in insemination
productivity, to JCB’s Livelink connected
equipment programme that delivers 95%
uptime on construction equipment through
early problem detection and more effective
planned maintenance, through to health
monitoring for the elderly at home that
© Bloor 2018
to
” “lionFrcoomnn8e.4cted
bil
reduces unplanned hospital admissions, IoT in 2017
devices t
projects are already delivering significant p r e dicts tha
Gartner 0 b il li o n
benefits and bringing forth new business models. l be 2
there wil devices
of these
What next?
Business leaders need to actively investigate how
by 2020.
”
IoT can help deliver a step change in productivity
and open up new business opportunities. Don’t
wait, run IoT pilot projects now that can take
advantage of existing data processing, data
storage, wireless and mobile network capabilities.
At the same time consideration will have to
be given to what data is held, where and for how
long, the scale and nature of data processing
required and implications for wireless bandwidth,
coverage, density and latency. Business CIOs and
CTOs need to be working with mobile network
and wireless equipment vendors to upgrade
existing wireless networks and ensure they
can take advantage of emerging 5g network
capabilities. Software defined networking (SDN)
is an essential element of these developments
and CIOs and CTOs should be ensuring that NFV
is built into any network upgrades. Figure 2
At the same time a review of data centre
In 2014 the European
strategy will be needed that reflects the need
Green Paper on
for increased high-performance compute M-Health estimated
requirements for machine leaning and big that it could produce
data analytics and the strong likelihood of the savings of €99 million
need to provision some data processing at the a year, a saving of
around 7% on EU
network edge.
health spending based
For most businesses this will result in on 2014 values.
increased use of hybrid and public cloud
infrastructures. Even for the largest, most
technically advanced enterprises there will be
a need to work closely with relevant datacentre
co-location providers that have a relevant mix of
centralised and edge-based facilities.
“totaIol pTohteanstiaal
f
impact o
economic on to
The Bottom Line li
$3.9 tril a year
illion
Revolutions are by their nature disruptive. They $11.1 tr 5.
”
create winners and losers. Businesses need to be by 02
2
y Report
implementing IoT projects now and be developing McKinse
2015
their 5g networks and edge computing strategies
to win in the 4th Industrial Revolution.
What is the bottom line? The implementation of 5G networks,
IoT and Edge computing are fundamental to unlocking the
revenue growth and costs savings promised by Industry 4.0.
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