The Internet of Things (IoT) has been advertised as a tidal wave of mobile and cloud innovation, an irresistible force that will bring with it new business models, unprecedented cost savings and the ultimate Big Data opportunity.  At the same time, Gartner recently placed IoT at the top of its annual “Hype Cycle” list. So it would be no surprise if you, as a small business owner or someone responsible for IT investments, are a little confused about how to approach this opportunity.  After all, you’re focused on the here and now. You have more practical concerns – how can the Internet of Things grow your revenue or boost your bottom line?

The goal of this article is to give you an easy model for thinking about the IoT, a simple framework that will help guide your business and investment decisions. I call it the IoT Chain. It consists of three links: Device, Network, and Application, connecting whatever “thing” happens to be important to your company to your desired business result.

Before we explore the Chain, let’s talk about what a worthwhile IoT solution looks like. Although the IoT can include anything from jet engines to home thermostats, an IoT solution is ultimately about data and connectivity. If you’re thinking about IoT, you should ask yourself this single question: what data would be helpful to my business and how can I collect, or distribute it, in a cost effective manner?

Sometimes this is obvious. For a company that delivers home heating oil, knowing when their customers’ tanks are near empty is critical. A farmer may want to know the moisture content of a remote orchard. These two examples point to one of the most compelling types of IoT applications – removing the need for human intervention. In the past, the only way to check a tank or test the soil would be to send a worker into the field. Any kind of manual data collection on this scale involves a great deal of time and expense. Now, with a few sensors and a cellular connection, this data can be delivered automatically to a company’s headquarters is real time. In other situations, the data was not just hard to get, but impossible. Imagine a mechanic trying to record the temperature of a jet engine while it flight. There are countless other examples of where both a micro sensor and its associated network connection can now be embedded in a mechanical system. If either of these situations sounds familiar (there’s data you want, but it’s always been too expensive to collect, or you think that advanced sensors can provide previously unavailable data) then the an IoT based solution might be right for you.

Now that we’ve decided there is a potential opportunity, what’s next? This is where the IoT Chain can help. Remember the IoT is about managing data related to your “thing,” moving it to (or from) a place where you can analyze it, and using newfound knowledge to improve your business. These three steps are represented by the three links in the Chain. Maybe you want to determine the weight being hoisted by crane in an automated way. You may have special order the scale device, but chances are it will hook up to your existing Wi-Fi network without too much trouble. And if you’ve never collected this data before, you’ll have to decide which database or related application is best for tracking, storing and then running predictive maintenance algorithms. In our simple example, you can see how our fictional colleague already had one of the links in the IoT Chain they only needed to implement two. The lesson here: an IoT solution doesn’t have to be brand new from the ground up. In many cases you probably already have existing technology you can apply to your IoT solution. Take a look at your particular situation and decide what links in the Chain you already have and where you need to apply new resources.

Consider this real world example, close to home in Seattle: parking meters. This summer, the city began replacing its automated parking pay stations. One of the most attractive benefits of the new stations is the ability to update the parking rate wirelessly. This validates one of our compelling IoT solution requirements: automated data transfer. Previously a technician had to visit each meter, individually and manually update the rate. And how does the IoT Chain apply to the new meters? In this case, the Thing and Device are integrated into the pedestal box found on the sidewalk. The new ones don’t look much different from the old ones, though they do contain new functionality. Seattle is presumably replacing an existing link in their IoT Chain with a more powerful or stronger version. We see something similar when we look at the Network link. The new meters will be able to process transactions more quickly. This could be the result of a simple upgrade from 3G to 4G wireless technology. In any case, we see another stronger link in the IoT Chain for Seattle’s parking meters. This same is true for the Application link. The new meters include improved pay-by-phone integration. Taken together, we can easily see how each of the stronger links connect the parking meter to the improved result of greater convenience for drivers and improved parking efficiency for the city.

This new parking meter effort by Seattle provides a useful IoT Chain comparison to the original effort. Back in 2002, Seattle had to develop each link in the Chain from the ground up. Converting from old, “dumb,” meters to a cellular-enabled meter is a major change. I suspect about the only link that was remotely present when the project launched was the Network link. The Device and the Application links simply didn’t exist in the old model.

If you find yourself in a similar situation to Seattle in 2002, where you can see the potential of an IoT Chain for your business and there is not an off-the-shelf solution, don’t worry, there is tremendous investment in this field. Countless firms, both big and small, are developing individual links or full solutions. Most are targeted at specific deployments, based on industry segments. In another example from the Northwest, Optimum Energy offers a suite of products and services designed to optimize commercial HVAC systems. So, if you don’t have enough IoT expertise in-house, ask your current IT provider for a recommendation. And in either case, The IoT Chain offers an easy template to guide your investigation.

Remember; first decide if you have a compelling argument for an IoT deployment. If there is a way to reduce manual touch related to distributing data, to or from a remote object, or you can collect previously unavailable data, then apply the IoT Chain to your situation. Every successful IoT deployment combines Device, Network, and Application to drive improved business results. And the best news is, you probably already have one or more links of the IoT Chain ready to go!

About the Author: Greg is a cloud evangelist who currently works at Microsoft, licensing Microsoft Azure and other cloud services.  Throughout his career, Greg has been involved with cutting edge  products; from mobile payments, at American Express, to field expedient construction, with the U.S. Army.  He has a passion for delighting his customers with new technology.