The internet of things — and its $450 billion revenue opportunity — is stoking a frenzy among vendors looking to stake their claims. And corporate customers are just as excited about IoT’s potential to help them boost revenues and reduce costs.
About half of the companies we spoke to in a recent survey expect IoT solutions to make their businesses run more reliably and help them create premium-priced products that will rev up sales. Customers also expect IoT technology to streamline production, increase output and reduce waste.
IoT ambitions vary from industry to industry. Auto executives, for example, hope IoT can deliver better dashboard “infotainment,” introduce features that prevent collisions and support the move to autonomous driving. Healthcare providers and pharma companies, meanwhile, want IoT solutions that can help prevent fraud and develop drugs. And customers’ goals often differ from those perceived by vendors. For example, healthcare vendors consider care monitoring a priority, but customers are more hesitant because they’re not sure if IoT solutions can deliver near-term value in this area.
Above all, most IoT customers want products and services that are secure, easy to integrate with existing technology and operations systems, and capable of delivering a clear return on the investments required to them set up.
While executives are optimistic about IoT opportunities, it is still early days. About 90% of companies remain in the planning phase, and only 20% expect to have full-scale IoT solutions rolled out by 2020. Why aren’t they jumping in faster? We asked executives what their biggest barriers are when it comes to implementing IoT technologies. Here are their top responses:
Security concerns. When connected devices are collecting billions of bytes of sensitive data like proprietary corporate customer information and activity, and feeding it into analytics systems in the cloud, well… let’s just say there’s opportunity for something to go wrong. So perhaps it’s no surprise that 45% of customer executives named security as a primary worry when it comes to IoT implementation. And when asked what mattered most when selecting a vendor for IoT and analytics services, security was the top response.
Unclear economic benefits. An investment in an internet of things solution is a big commitment for a company. Cutting-edge vendor solutions require multiple components and integration services, and companies also need experts to manage those systems once implemented. At present, the return on all this investment is still unclear for most companies. They need to see convincing examples of how a vendor’s product, once implemented, can pay for itself and then some.
Difficulty of integration. It’s no small feat to connect the data feeds of thousands of machines a company might operate globally to cloud-based analytics tools. But that’s just the half of it. To get the full value from connecting the machines, those analytics tools must also relay their conclusions to a central decision-making system that adjusts machinery in real-time or orders new parts to prepare for a repair. There are so many devices with different kinds of inputs and no universal standards to simplify data ingestion and reaction. When facing those obstacles, customers hesitate to go all-in. No one wants to invest in new systems to steer the robots unless they’re sure that the data-collecting sensors can communicate with software that makes sense of the data and enables those customers to react.
Tomorrow’s IoT leaders won’t necessarily be the ones offering the flashiest, most buzzworthy devices. The real innovators will be the companies that help customers jump in and get the most out of this promising new frontier in technology.
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