February 15, 2023
Once upon a time, there was the Internet. Relatively speaking, it was easy to understand. The Internet was (and is) a network on which any computer on the planet can communicate with other like-connected computers, enabling users to correspond and share files.
But the Internet wasn’t (and isn’t) satisfied with only computers. It wanted to connect your phone, too, and then your tablet and then your television. Fast-forward to today and almost everything electronic is connected to the Internet or could be — from refrigerators to HVAC to security systems. This phenomenon is known as the Internet of Things (IoT), and it’s a topic on which business owners should gain some expertise. Where it’s at The extent to which the IoT is affecting your company, or soon will, depends on its industry and purpose, as well as perhaps where your operations take place.
For example, many construction companies have already had to adapt to installing HVAC systems with real-time monitoring and predictive maintenance capabilities. Meanwhile, manufacturers are using IoT tech to obtain and analyze production data, also in real time. And many other types of companies use IoT-connected vehicles to improve logistics and better handle fleet management. Even if your business isn’t using any IoT devices or equipment just yet, this tech might be all around you as you work.
Most newly or recently built offices and other facilities are “smart buildings” equipped with sensors throughout that allow property management to remotely monitor and control temperature, lighting and security. Many people also work from home in smart houses or in other locations on smart devices.
2 big reasons If you haven’t already, start researching which IoT devices, equipment and systems are becoming commonplace in your industry. There are two big reasons for doing so: 1. To gain or maintain a competitive edge. Many companies today are undergoing “digital transformations” as they move away from paper-based processes and brick-and-mortar locations to become more tech-based enterprises. Although there are certainly risks and challenges, businesses that get the IoT right may be able to reduce costs, gain operational efficiencies, and enhance their ability to harness data to boost productivity and profitability.
Work with your leadership team and knowledgeable employees to identify how IoT technology might improve your business processes long-term. Don’t restrict your research to only production; investigate how the IoT could improve other areas such as HR, training and inventory tracking. Once you’ve identified viable IoT technologies that may suit your company’s needs, learn everything you can about them. Carefully set budgets for procurement and implementation, making sure you’ll actually use any asset you acquire.
2. To heighten your awareness of cybersecurity. Perhaps the greatest risk of the IoT isn’t squandering money on technology that goes unused or doesn’t provide the desired results. It’s that every IoT-enabled item potentially creates a gateway that hackers could exploit to steal data, hold your systems for ransom or otherwise disrupt operations.
Some businesses might acquire and implement IoT-enabled assets “willy-nilly,” with little thought to cybersecurity, exposing themselves to great risk. Others might base themselves in smart buildings that aren’t properly protected — leaving them vulnerable to hacks or sudden shutdowns of key systems such as lighting or HVAC. The bottom line is it’s critical to know, on an ongoing basis, precisely what’s connected to the Internet and how much of a threat it poses to your company. Great potential and risk Like so much business technology, the IoT holds both great potential and significant risk.
Contact us for help assessing the costs and forecasting the financial impact of any tech investments you’re currently making or considering. © 2023
BG Advisors CPA, LTD. is a full-service CPA firm committed to helping growing businesses reach their goals. Combining decades of diverse corporate finance and tax experience allows us to bring world-class expertise to every client we serve.