Businesses are increasingly adopting Internet of Things (IoT) technologies, even if some don’t yet truly understand the benefits they can bring to their company.
That’s one of the overarching themes of a new report from analyst house Strategy Analytics, which recently polled over 350 global businesses from 23 vertical markets for its IoT 2016 Deployment Trends and Usage survey. Verticals included academic, banking/finance, government, healthcare, manufacturing, retail and smart buildings.
The topline figure is that more than two-thirds (70 percent) of companies are now using or planning to use IoT in some capacity, a significant increase from the 32 percent recorded in last year’s study.
Big data analytics is the primary driver propelling these deployments, according to 56 percent of respondents, while the top IoT services deployed to date are for office security/surveillance, smart building controls, financial and healthcare analytics.
Despite this, 51 percent of adopting companies admitted they aren’t sure whether the new technology is paying off yet. Strategy Analytics director of IoT systems research and consulting, Laura DiDio, explained that this means companies don’t yet know if the project is saving them money or improving their business.
This is a fascinating point; here at IoB we’ve heard of similar stories, where piloted IoT projects have no succession plan, or there is no intention to make it into a full-scale deployment (Strategy Analytics further indicates that while 80 percent use or plan to deploy IoT within next 3 to 12 months, only 25 percent have full-scale end-to-end deployment.)
To our eye, it seems like some of the companies don’t know why they’re engaging with these technologies, or may be falling back on age-old industry values when rolling out such plans.
For example, Swiss Re customer technology manager Oliver Werneyer picked up on this at our Internet of Insurance summit last month, where he suggested that insurers can do more than just save money through Internet of Things projects.
IoT data problems
A clear and concise business strategy around the Internet of Things isn’t the only problem, with Strategy Analytics also highlighting the issues around legacy system integration and information security.
“Integration with legacy systems (41 percent) and security are the biggest impediment to IoT deployments. Only 13 percent of respondents said that IoT will strengthen security and 56 percent said security is their top technical challenge,” DiDio said.
“Another concern is that nearly half of businesses have not completed a detailed cost analysis which is crucial,” she added.”
Then there’s the issue of making sense of the data, something which highlights a shortage of skilled staff (mainly data scientists) and deploying adequate technology solutions.
”While data analytics emerged as the top reason for an IoT deployment, a significant percentage of companies struggle with how to analyse that data to benefit their business,” added Andrew Brown, Strategy Analytics executive director of enterprise and IoT research.
“The data deluge is problematic; over 50 percent report that they have too much data to be able to analyse it efficiently,” Brown continued.
“We also found that 44 percent of respondents currently perform some data analytics but admit they could do a better job and 31 percent of organisations do not currently store IoT data at all.”
Overall, the report concludes that while Internet of Things adoption will continue to surge, users will need to engage vendors, systems integrators and third-party consultants to provide training, deployment and ongoing maintenance to realise this concept’s full technical potential, cost savings and drive top line revenue.
Market at a ‘very early stage’
This report comes weeks after Vodafone’s fourth annual IoT barometer indicated IoT budgets are on the rise.
It revealed that 89 percent of companies (of over 1,000 polled across Europe) are investing in IoT and have increased their budgets in this area over the last 12 months. 76 percent of all companies interviewed believed that taking advantage of IoT technologies will be critical for the future success of any organisation.
Crucially, 63 percent of IoT adopters in the report already claimed to have seen “significant” returns on their investment, a small rise from 59 percent the year before.
The report also offers a different perspective of IT budgets. Whereas Strategy Analytics hints at IoT and data analytics falling under a single, combined segment of the IT budget, Vodafone’s report appeared to suggest that Internet of Things investment is standalone. The firm indicated that it now accounts for 24 percent of the average IT budget, putting it roughly on par with cloud computing and data analytics.
Speaking to me earlier today, Analys Mason research director Tom Rebecck painted a picture of a nascent market where ROIs are still unclear, both for vendors and end users.
“IoT today is still at a very early stage. Where we have numbers on IoT revenues, they are typically low (e.g. less than 5 percent of Intel’s revenues are from the Internet of Things) but growing quickly (averaging around 15 percent year-on-year).
“But, if we think of the long-term vision of IoT – areas like smart cities, smart agriculture, driverless cars – to realise the full potential there are lots of challenges that need to be overcome on aspects such as standards, data ownership, privacy, security, data formats, micro-payments for data, business models and so on. They will take many years to resolve.
“I think firms understand the potential benefits of IoT but are struggling with how to resolve these problems.”