After installing automated light switches, some simple things like linking switches together or creating some scenes for different events can be done with no additional hardware. However, in order to do more advanced things with schedules, conditions and the like it became clear that a centralized controller would be the way to go.
I had a few choices of how to control my Insteon setup. Many people use the very popular Universal Devices ISY-99 which is a small standalone box to control Insteon devices and can be administered with a web interface. Recently, Smarthome has also released their hub which supplies similar functionality. Some more advanced alarm systems like HAI or Elk have home control capabilities and they can be used as well.
I chose to use the computer I already had, and just add some software. I've long been a Mac user, and wasn't interested in getting a PC just to run the automation system, but I found a fantastic software solution in Indigo (in fact, Indigo's support of Insteon was one of the main reasons for selecting Insteon in the first place). The downside is that your computer must remain running at all times (or at least all times you want to automation running). I didn't have any problem leaving my computer on all day, so this didn't bother me at all.
In order to have your computer communicate with your Insteon network, you need to purchase a PowerLinc Modem (PLM). This is basically a wall-wart looking thing that plugs into an outlet and has a USB connection to your computer so it can communicate with the lighting setup.
Once setup, Indigo supplies super-intuitive controls to easily manage devices and set up all sorts of crazy rules, actions and triggers and even set up your own custom control pages with whatever kind of graphics you choose. It also supports a free iOS app, so everything you set up is controllable from anywhere your phone can connect. You can download the program from their site linked above, and there's a 30-day free trial so you can just see what it's like, or poke around its more advanced capabilities.
Things were all running fine and well with Indigo, but when an upgrade to version 5 was released then things kind of got crazy. Indigo 5 now has support for plugins, and they're relatively straightforward to create. These plugins run the gamut from new and novel ways to access information, which you can use in some of your automation logic, or ways to control completely different devices. For example, someone has written a plugin called Smartphone Radar that can check your router logs for evidence that your phone has accessed wifi, and then make a decision on whether or not you are at home. You can then have different lighting behaviors contingent on this. There are plugins to control iTunes, plugins to interface with certain alarm systems, plugins to access your iCal calendar, plugins to send notifications to your phone and more. I'll touch on some of these (including posts I've written) in more detail in later posts.
At this stage Indigo is fully the center of my automation setup. I try to have it tied to as much as I can in the house. Currently it has ability to communicate with my lighting setup, garage doors, whole home audio system, pool equipment, smartphones, weather station, alarm, and Prowl for notifications.