The internet of things market is valued at around $900 billion today. Industry experts have suggested that companies will spend almost $5 trillion on IoT in the next five years. The figures are staggering. Nevertheless, while there is no doubt about the lucrative opportunity that IoT presents for businesses of all sizes, as many as three-quarters of IoT projects are failing.
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For many companies, both those already investing in the IoT and those considering it, IoT poses key challenges. New research of IoT professionals found that 53% agree that quantifying a return on investment and providing a clear use case are IoT’s two biggest hurdles. The same study also found that over one-third (34%) of IoT professionals believe that the ability to measure its business benefits would encourage greater IoT adoption.
Fortunately, there are steps that businesses can take to ensure that IoT investments are not short-lived. And there are sustainable business models that can be scaled quickly and effectively.
While it may seem obvious, many companies still fail to set out clear goals and budget allocations before they begin to invest heavily into IoT. This is one of the major reasons why so many projects fail — and quickly. It is critical that businesses forward-plan and identify key metrics. However, it is just as important that business leaders start thinking more strategically, rather than being driven by device sales.
As it stands, 55% of IoT professionals see their long-term profits coming from the sale of hardware. While this is definitely a good revenue stream, it’s certainly not the only one. Pressure from commoditization makes it difficult for vendors to differentiate without offering a premium product. For IoT businesses, this means real monetization relies on value-added services, which transform hardware products into a “things as a service.” It is now all about improving existing capabilities and allowing new ones to be installed onto existing devices. As such, many businesses are turning to IoT app stores to increase their ROI and establish long-term revenue streams.
Sourcing the skills
Companies today are facing a range of new technical and business challenges. One of the key issues when it comes to IoT is a significant skills gap. Our research identified knowledge of big data and analytics as the most important skillset for IoT professionals, with 75% agreeing that it is a must-have for experts within the field. Looking at the skills issue in the short to mid-term, it is important that businesses reduce the pressure to source the right skills internally. Instead, they need to disrupt traditional recruitment methods by looking for new employees from different fields with the desired skillsets.
However, it is also important to remember the fast pace at which IoT is evolving. It will not be long before IoT technologies are built into all aspects of the business. Therefore, skills that are deemed important today may not be so in years to come. This means that remaining agile and constantly evaluating business decisions is essential.
Don’t underestimate the power of data
Perhaps one of the most valuable assets from IoT is the data it provides. Data collected from different IoT platforms, processes and devices is a very powerful tool for business owners to ensure sustained profitability and growth. This could be through selling the data from existing smart devices, enhancing services through analytics or using the information to explore new market opportunities. The data provides savvy businesses with a real opportunity to monetize IoT.
There are plenty of companies moving fast to grab their share of the IoT market. However, it is better to take small risks and adapt as necessary rather than make costly decisions without a strong foundation. After all, it is the small successes that will eventually culminate in the big business benefits.
All IoT Agenda network contributors are responsible for the content and accuracy of their posts. Opinions are of the writers and do not necessarily convey the thoughts of IoT Agenda.