The phrase ‘Internet of Things’ (IoT) has been a heavily discussed topic in recent times, with more companies curious to start working in the space. But what exactly does it mean? According to Gartner, the IoT is “the network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment.”

In other words, devices, systems and services can be automated in nearly all fields with advanced connectivity. Smart objects will also fall into the IoT – this refers to objects in the physical world that transmit information about their condition, environment or data to be analysed (with the help of embedded devices).

Despite the fact that the IoT presents a new software-driven and network-driven opportunity, there are various security challenges that need to be overcome.

Addressing the security challenges

According to a recent forecast by Gartner, twenty-six billion devices will be connected to the internet by 2020. The plethora of these new applications and embedded devices will significantly increase the amounts of data being generated, which will prompt the need for better storage and processing of such data. But more importantly, there will be a greater need to protect this data and secure the new internet-connected devices from the threat of hackers. This is crucial in certain industries that will experience big changes from the IoT, such as manufacturing – where trucks, appliances and manufacturing equipment will be connected to the internet. The damage in these situations could depend on the motives of those involved but it could mean that malicious outsiders gather private information or manipulate more sinister objectives, such as de-activating an alarm or damaging critical equipment in power stations.

As our own homes and wider infrastructure become increasingly connected, it’s imperative that we have secure, authenticated, encrypted connectivity among everything – from refrigerators to light bulbs to our cars. Only when security challenges are addressed will we be able to realise the full benefits of a truly connected environment. But as systems and applications become increasingly “connectable” from the outside world, security is a basic requirement that all should consider. With this in mind, how can system vendors ensure that their intellectual property (IP) is not susceptible to modification and that data transmitted remains secure?

Protecting your IP

Firstly, addressing the security issues should start with a new set of rules for software licensing, entitlement management and IP protection. As a starting point, the IoT environment would need an “interpretation HUB” (server-type) that can function as a knowledge base for connecting all the diverse options. The “HUB” would then require various levels of security, starting with the infrastructure and continuing to the software embedded within each end point device – preventing hacking and tampering on the one end, and collecting usage data and performance metrics on the other.

Secondly, organisations need to put these structures in place to prevent reverse engineering – by encrypting everything. To ensure maximum security, data encryption should extend to all links between devices, with authentication codes solely linked to corresponding hardware, securing the logins of people and systems. Though there are different levels and ways to protect IP, just one weak point could open a company’s door to a potential hack. The system is only as strong as the weakest point in the completed network – ultimately, this could be the human or the technology. Therefore, controlling access should be the top priority.

Thirdly, if a hacker should be able to enter the system, everything should be encrypted. This should involve encrypting data and protecting the software that is embedded into the sensors, networks and systems that collect, analyse and share the data. In an encrypted environment, hackers can find it more difficult to reverse engineer applications or remotely determine the specifics of an IT infrastructure.

Understanding the software monetization opportunity

Although there are concerns around security, there’s no doubt that organisations can benefit from the IoT – these connected devices will produce valuable information which will enable companies to better understand how their products and services are being used in order to better serve customers and further monetize their software to gain a competitive advantage.

The rapid rollout of high speed networks and low cost sensors are making the IoT idea increasingly viable. But, it is the ability to embed increasingly powerful software into the sensors, networks and systems that collect, collate, analyse and share the data being generated that is key to the success of IoT deployments. In short, IoT is an unprecedented, new software-driven market opportunity.

If software is at the heart of making the promise of IoT a reality, then a new set of rules for licensing and entitlement is indeed essential. The IoT exponentially increases the number of endpoints for software distribution. It also dramatically accelerates the rate of deployment. Managing these software licensing challenges will be the biggest test for organisations in today’s IoT and cloud environment – especially, with the multiple devices, objects and apps that will be joining the supply chain. But it will also be the biggest opportunity and this is where software vendors have a real chance to further monetize their offering. By truly understanding how customers are using the software in these connected devices, vendors can effectively build and adapt their software to ensure they’re offering the ideal customer experience and maximising the bottom line.

Companies that fail to recognise these fundamental changes to their business models are at risk of being disrupted by a new generation of players that are not committed to the old principles of the marketplace. The multitude of interconnected devices and services indicate a fundamental shift in the way objects can be controlled and intelligence gathered about them. It’s an opportunity not to be missed.

By Jamie Longmuir, software monetization expert, SafeNet (photo).