The Internet of Things (IoT) has been called “the mother of all infrastructures”—and it’s a revolution that has arrived. IoT is no longer just a niche solution for a handful of businesses but a core technology that’s fundamentally transforming how we work and live. And interestingly, it’s spurring an entirely new computing model called edge computing, which promises to forever alter how businesses interact with the physical world.

Edge computing refers to data processing power at the edge of the network, closer to the source of data. With edge computing, each device—whether it be a smartphone, drone, sensor, robot, HVAC unit, autonomous car, or other intelligent device—takes some of the data processing performed by the cloud and packages it up for processing and analysis at the edge.

Consider this: In just two years, 45 percent of all data created by IoT will be stored, processed, analyzed, and acted upon close to or at the edge of the network. And in just three years, 5.6 billion devices will be connected to an edge computing solution.

Several factors are fueling the growth of edge computing. As the cost of sensors and processors decreases, the number of intelligent devices has been skyrocketing. By 2020, it’s predicted that 50 billion things will be connected to the Internet. These devices will send trillions of messages—exponentially increasing loads across the network as well as the quantity of data that can be turned into actionable insights.

At the same time, the pace of business is intensifying, with instantaneous reaction times becoming a critical competitive advantage for many industries. Edge computing can help businesses very rapidly and inexpensively analyze and store portions of their data closer to where it’s needed, making it an important complement to cloud computing.

A valuable strategic advantage

As edge computing goes mainstream, it provides a major strategic benefit for a wide range of industries. Here are five ways edge computing will transform businesses in the near future:

1. Lowering IoT solution costs: Edge computing allows you to process and analyze mission critical data closer to the device itself, reducing the amount of data that flows back and forth between the cloud and the edge of the network. Businesses can select which services run at the edge and what data gets sent to the cloud, lowering IoT solution costs and obtaining the most value from their overall IoT solution.
2. Added security and compliance: Edge computing helps to address the security and compliance requirements that have prevented some industries from using the cloud. With edge computing, companies can filter out sensitive personally identifiable information and process it locally, sending the non-sensitive information to the cloud for further processing.
3. Faster response times: Without a round-trip to the cloud, data latency is reduced, lowering the time it takes to glean actionable insights from that data. In this way, edge computing is poised to help autonomous vehicles avoid collisions, stop factory operations before equipment fails—and improve any situation requiring the instantaneous analysis of data.
4. Dependable operation even with intermittent connectivity: Edge computing enables manufacturing equipment and other smart devices to operate without disruption even when they’re offline or Internet connectivity is intermittent. This makes it an ideal computing model for businesses that count on the ability to quickly analyze data in remote locations such as ships, airplanes, and rural areas—for instance, detecting equipment failures even when it’s not connected to the cloud.
5. Interoperability between new and legacy devices: Edge computing converts the communication protocols used by legacy devices into a language that modern smart devices and the cloud can understand, making it easier to connect legacy industrial equipment with modern IoT platforms. As a result, businesses can get started with IoT without investing in expensive new equipment—and immediately capture advanced insights across their operations.

A complement to the cloud

It’s important to note that, in the same way PCs haven’t displaced the datacenter, edge computing will complement rather than replace cloud computing. Most businesses will use a combination of both depending on the problem at hand—processing some data locally, and sending some to the cloud for analysis.

While edge computing will be used in situations like those we’ve described here, the cloud will continue to provide critical value for many other scenarios. For example, businesses will continue to use the cloud to configure, deploy, and manage IoT devices, and for analyzing large datasets from dispersed sources—especially when instantaneous action isn’t needed.

But what’s truly exciting is what happens when you combine the power of cloud and edge computing to deliver the true value of IoT. Suddenly businesses will be able to analyze and take action on different types of data with incredible agility and precision, giving them a critical advantage against their competitors.

Edge computing will power the next wave of business transformation. The time to start is now, to avoid the risk of getting left behind. To learn more, please see our recent blog post, “Microsoft Azure IoT Edge – Extending cloud intelligence to edge devices,” and visit the Azure IoT Edge website.