The Internet of Things (IoT)

The Internet of Things (IoT) has huge promise and potential: In 2016, global spending on IoT reached $700 billion and is expected to reach 1.3 trillion by 2020.1 Another estimate suggests that IoT is expected to add 1.7 trillion to the global economy by 2019, which in part is attributable to efficiency gains.

But that potential, in the internal operational sphere, is often going unrealized. At many organizations, IoT initiatives designed to optimize operations do not achieve their goals or reach meaningful scale. We found that more than six out of ten organizations have failed to take operational IoT initiatives past proof-of-concept stage or beyond implementation at one or two sites.

There are a number of reasons why promise is failing to turn into reality:

  • No clear business case: Around 50 % of organizations struggle to establish a clear business case for their investments.
  • Security concerns: 62 % of organizations are grappling with cyber risks that pose significant reputational and financial consequences.
  • Constrained analytical capabilities: 60% of organizations say they do not have the analytics capabilities to take advantage of the data generated from IoT sources.
  • Uncertainty about IoT standards and protocols: More than 50 % of organizations say uncertain standards are a significant challenge.

To manage these challenges, we believe that organizations should focus on three critical areas.

First, create a clear and compelling picture of how the IoT can tackle critical problems.

Second, put together a leadership team that has both business and technology acumen, allowing you to devise a coherent IoT strategy and navigate the organization through the changes required.

Third, drive scale by focusing on a tightly defined group of high-potential use cases, moving quickly to enterprise-wide adoption.

Using this as a guiding framework, organizations will also need strong technology competence:

  • Robust analytics and development platforms to take advantage of growing volumes of structured and unstructured IoT data.
  • Advanced analytics and AI capabilities that are both delivered centrally as well as “at the edge.”
  • A “Security-by-design” approach that addresses cyber security threats and which follows best practices for data management and security controls.