A lot has been said about the Internet of Things (IoT) — a broad development in various technologies across industries that is fundamentally changing the innovation cycle everywhere — but how much is real?

“One of the things that we should grasp about the IoT is that we are currently in that stage when technology gets incredibly hyped,” says Jason Collins, Vice President of IoT Marketing at Nokia.

Continuing further, he describes the hype by comparing the early days of the internet when static pages and hyperlinks did not ignite the full potential of the internet and the crazy boom and predictable bust over web-based businesses came and went. Still, the world was left with the valuable piece of network and services infrastructure we now call the Internet.

“So the internet turned out to be kind of a big deal,” says Collins half-jokingly, before getting serious about how we can size the Internet of Things.

Keeping that outcome in mind, what is the potential size of the Internet of Things and how do we value it?

Valuing the Internet is tough. Today we are going online with our computers and smartphones and connecting billions of nodes; however, the value will extend well beyond that.

“Members of our Bell Labs team analyzed this and determined that it will be 36x the value of today’s Internet,“ he says. “That potential value of the IoT is dependent upon the number of devices connected and users’ perceived and experienced value of IoT devices and applications.”

If you think about that potential, we quickly recognize that we’re in the very early stages of how this connected technology can change the very fundamentals of digital transformation and business growth in the next decades.

How can enterprises leverage this growth opportunity?

Prior to the dawn of this new machine-type (M2M) connectivity, there were two main drivers of business — developing products and services and the sales of those products and services.

But this approach is now getting a major upgrade thanks to IoT technology. Key to this pivotal transformation is the data being produced in torrents by the connected devices that are expanding rapidly across businesses.

“But while this new connected world seems to be allowing enterprises and their customers alike to benefit from a huge pool of data, it’s not as simple as that,” says Marc Jadoul, Market Development Director in IoT at Nokia.

Perhaps it’s best to think of this in terms of “analog to digital.” Machines and networks that learn about their effective behavior through gathering data, and analyzing how to use them. He explained further that we should think of the IoT beyond an environment of communicating things and instead as a “connective tissue” or a “global nervous system” that provides context, and – why not? – meaning. This is the first step towards getting value out of the IoT.

Building upon that, the IoT then provides a “platform to solve problems” like the Internet once did via search and discovery. “Platforms like Google not only gave us access to the information but provided context,” says Jadoul. “In that same sense, Uber has provided a disruptive model for public transport and Airbnb a new platform for guest housing. They use connectivity and data to transform business models today and, eventually, you will see the IoT becoming an innovation platform in many other areas, like connected cars, digital healthcare, or smart homes.” The possibilities are endless because big data and new services will be driving the growth.

Wireless sensor networks are evolving into analytics-enabled applications, making IoT into a “bigger and richer experience than the current M2M,” says Jadoul.

However, digital transformation must go beyond the platform, the data, and the (still too often) siloed applications. It requires a shift in the culture and mindset of organizations in order to generate significant benefit from this technology.

Who’s leading the growth within an enterprise?

New innovation found in M2M often came from internally focused and driven cost savings and process optimization efforts, a.k.a. command and control. This is what we often call the Industrial IoT, or Industry 4.0.

While the early days of the IIoT were focused on these drivers, a new emerging Enterprise IoT approach will enable greater growth through product and service innovation, and yet-unseen business models. With that in mind, it isn’t surprising that the early enthusiasts of this new technology are not only on the traditional IT side of the corporate “houses,” but also in their product management ranks, the people who face the customers and are looking for portfolio innovation, an enhanced customer experience, and of course new revenue opportunities.

“The sooner that companies start seeing IoT as a catalyst for growth rather than a way for the IT guys to trim costs, the faster IoT will get off the ground in enterprises,” says Jadoul.

Where is IoT headed?

As connected technology matures and a shift in mindset occurs, IoT will create new value for its stakeholders.

“Companies have to start looking at solving business problems and extend their thinking beyond vertical, point applications,” says Lee L’Esperance, Business Modeling Principal at Nokia.”If they remain strictly verticalized, its siloed and the value is limited.” But seeing the benefit across traditional business groups, products and services will unlock true value, he adds.

IoT can be very impactful to business but it needs to be architected for creating a connective tissue rather establishing than point-to-point links. Motivating the ability to architect an IoT solution within a business context is about getting the business models right – and finding the sweet spots for creating value, growth, and RoI. We will explore developing business models in the next article and how you can create new value opportunities for your stakeholders.

This article was produced in partnership wth Nokia.