In the broadest sense, the term IoT encompasses everything connected to the internet, but it is increasingly being used to define objects that "talk" to each other. "Simply, the Internet of Things is made up of devices – from simple sensors to smartphones and wearables – connected together," Matthew Evans, the IoT programme head at techUK, says.

By combining these connected devices with automated systems, it is possible to "gather information, analyse it and create an action" to help someone with a particular task, or learn from a process. In reality, this ranges from smart mirrors to beacons in shops and beyond.

"It's about networks, it's about devices, and it's about data," Caroline Gorski, the head of IoT at Digital Catapult explains. IoT allows devices on closed private internet connections to communicate with others and "the Internet of Things brings those networks together. It gives the opportunity for devices to communicate not only within close silos but across different networking types and creates a much more connected world."

What a year! 2017 brought us transformation and excitement in the Internet of Things (IoT) space. It’s been a true transformation. We’ve seen almost every industry invest in IoT, and leading industries are quickly moving to implement IoT solutions that drive the bottom line. Consumer products, like wearables and connected electronics, are certainly a large part of the market. But IDC estimates more than 80 percent of IoT spend through 2020 will be on B2B applications and use cases.

That’s why IoT will be one of the primary drivers of the digital transformation in 2018 and beyond. Using IoT, successful companies will create a self-learning environment. In turn, those will drive digital disruption in the physical world. New business models will emerge, along with changes in work processes, productivity improvements, cost containment and enhanced customer experiences. With all this in mind, I want to share what I believe will be the top five IoT trends in 2018.

A significant finding: More than half (54 percent) of the respondents prioritized digital for ‘Product quality monitoring and predicting failures.’ And 52 percent said ‘Manufacturing plant optimization.’

A key tool to improve operations with digital data is the Digital Twin.Digital Twins are a huge next step in the world of IoT. In brief, the digital twin is a virtual doppelganger of the real-world thing. In a software-everywhere world, Digital Twin technology will help organizations bridge the divide between the physical and digital.

The Digital Twin serves as a looking glass into what’s happening within physical assets. They also give insight into changes required for the future. Leveraging your IoT investments, and IBM Watson, the Digital Twin visualizes the hidden insights and dependencies of usability, traceability and quality. And all of these will eventually be part of your operations revolution. Eventually, with sensors everywhere, operations and interactions could be customized for every client.

Ultimately, the Digital Twin accelerates the product development timeline at reduced costs. As the digital counterpart of a physical product, the Digital Twin allows product developers to create, test, build, monitor, maintain and service products in a virtual environment. In short, the Digital Twin empowers organizations to shift to an operations-centric view. Proactive and predictive maintenance enables front line personnel to act before costly delays or failures occur and keep product development.

Trend #2 Blockchain

In 2018, Blockchain will play a major role by enhancing security, making transactions more seamless and creating efficiencies in the supply chain. (If you’re not familiar with the term, check out the blockchain cheat sheet.) I expect the coming year will be one in which we see companies start to leverage blockchain in three key ways:

Build trust :  Blockchain can help build trust between the people and parties that transact together. Watson IoT blockchain enables devices to participate in blockchain transactions as a trusted party. While Person A may not know device B and may not trust it implicitly, the indelible record of transactions and data from devices stored on the blockchain provide proof and command the necessary trust for businesses and people to cooperate.

Reduce costs : IoT and blockchain enable participants to reduce monetary and time commitment costs by ultimately removing the “middle man” from the process. Transactions and device data are now exhibited on a peer-to-peer basis, removing most legal or contractual costs.

Accelerate transactions :  IoT and blockchain enable more transactions overall because it removes the middle man from the process. Organizations reduce the time needed for completing legal or contractual commitments through smart contracts.

Blockchain for IoT can transform the way business transactions are conducted globally by providing a trustworthy environment. These transactions are automated and encoded while enterprise-level privacy is preserved, offering security for all parties.

With IBM Watson IoT Blockchain, information from IoT devices is used in transactions. These blockchain-based solutions help organizations improve operational efficiency, transform customer experience, and adopt new business models. And it’s all done in a secure, private and decentralized manner. That means greater value for every participating organizations, a goal we should all strive for in 2018.

Trend #3 Security

As we rely on connected devices to make our lives better and easier in 2018, security is a must. All participants in the IoT ecosystem are responsible for the security of the devices, data and solutions. This means that device manufacturers, application developers, consumers, operators, integrators and enterprise businesses should all follow best practices.

IoT security requires a multi-layered approach. From a device point of view, it starts with design and development. Hardware, firmware/software and data must stay secure through the entire product lifecycle. It’s the same approach whether you’re a security analyst or operations person responsible for IoT solutions. IoT’s full potential will only be reached if security challenges are addressed. That requires a combination of interoperability, education and good design—and a proactive, not reactive approach to designing security features.

IBM’s approach to security:

At IBM, we take security very seriously. We understand the intricacies of IoT. And we have the combined expertise from across our entire organization to explore the issues and provide best practices. Our thought leaders from IBM Research, Security and IoT joined forces on a comprehensive overview of IoT Security. Read our latest POV on cognitive security for the Internet of Things for the implications, best practices and standards of IoT security.

Trend #4 SaaS

Many IoT implementations still require on-prem implementations. But in 2018, there will be more (and very clear) instances where Software as a Service (SaaS) is a viable option. Next year, I believe we’ll see more companies choose the SaaS approach to quickly create and prove out a variety of IoT scenarios at lower investment levels.

How to benefit with SaaS:

Here are three major benefits that SaaS brings to an IoT deployment and why I predict that it’s a trend to watch:

Organizations will realize benefits more quickly. Maybe you’re just getting started. You’re collecting and sifting through telemetry data to discover new insights. Or maybe you’re ready to unleash machine learning on heaps of data to predict future machine failures. Either way, SaaS gives you the option to be up and running in hours, not months or years.

There’s a lower cost of entry. A typical IoT solution is comprised of several components spanning many technologies. There is device-side firmware, multiple connectivity technologies, server-side logic, vast amounts of data, and machine learning. Do you have the budget to develop and manage all that infrastructure from day one of your IoT project? An IoT SaaS implementation makes it easier to start slowly and grow a solution over time.

There’s also Increased flexibility. Don’t limit your evaluation of the SaaS solution to your initial IoT needs. Given the uncertainty of how your business will leverage IoT, now is a great time for some experimentation. In the new year, take advantage of SaaS capabilities to push your IoT project further or to try multiple scenarios.

Trend #5 Cognitive Computing

Last on my trend list, but certainly not least, is Cognitive Computing. The Internet of Things is at the threshold of a tremendous opportunity. For over a decade we’ve connected things with unique IP addresses. But the commoditization of sensors, processors and memory now make it possible to makes everyday things more than just connected … they can be intelligent.

Beyond traditional IoT implementations, cognitive computing increases the amount of data to improve the learning environment. That, then, increases the possibilities of what can be done with edge analytics – making sensors capable of diagnosing and adapting to their environment without the need for human intervention.

Another huge advantage of cognitive IoT: the ability to combine multiple data streams that can identify patterns. With that, they give much more context than would otherwise be available.

Unlocking IoT value

Cognitive IoT, AI and machine learning enable enterprises to unlock IoT value. An exploding amount of IoT data requires a new approach to gather, analyze and understand it all. And that massive amount of sensor and device information can be used to enhance what’s already known. Plus, it can also uncover new insights capable of transforming industries.

While making sense out of dark data and edge data paves our way to revolutionary ideas and technologies, it requires a cognitive approach. One that can effectively handle increasingly large inputs while generating meaningful output. Programmable systems thrive on prescribed scenarios using predictable data. But their rigidity can limit their usefulness when addressing the ambiguity and uncertainty of IoT data. Cognitive systems, however, are not explicitly programmed. They learn from interactions with people and from experiences with their environment. And in doing so, they become able to keep pace with the complexity of the Internet of things, identifying data correlations that would otherwise go unnoticed.