The Economist first published the IoT Business Index since 2013, and its latest edition suggests that things are going well – much improved over the first follow-up study in 2017, which found that the needle had barely moved. Now, the report says that between 2017 and 2020, there has been a step-change, having polled 825 executives at the end of last year.
The high-level findings are that 58% of companies are now deploying IoT technologies for internal use, with 45% of respondents saying they used IoT technologies for external products and services. Finally, 57% of companies say they have seen a stronger return on their IoT investment than anticipated.
Diving a little deeper, the study finds that since 2017, the average company has moved from planning to being just shy of implementation, in terms of applying IoT technologies to products and services, leading the report to conclude that we are on the cusp of a spike in adoption. As for IoT adoption in internal operations, the average score jumped further, from planning to firmly within the early implementation bracket.
As for executive opinions, 82% said their organizations had grown their IoT investments in the past three years, which is up from 62% in 2017. Some 20% of businesses grew their investment by over 50%, with 10% saying their investments had more than doubled. In terms of delivering more than the anticipated RoI, 38% answered ‘somewhat,’ with 19% answering ‘strongly’ – meaning 57% answered positively. However, this would imply that 43% were answering in the negative, but this does not necessarily mean that these 43% did not realize any RoI.
The report also says there is now a clear ‘path to business value’ for IoT technologies, declaring that successful companies are the ones that merge IoT data with other data sets, make use of analytics tools, and plan multi-year paths to higher value capabilities.
The next frontier of progress, it continues, is using IoT data more strategically. It says that over two-thirds agree that understanding the value of data helps articulate IoT business cases, but only 16% strongly agree that ‘the use of the IoT at my organization has been informed by an overarching data strategy.’ To this end, The Economist says that most implementations to data have focused on product and operations monitoring, rather than prediction and design.
Some 26% say IoT data is pivotal to current or planned uses of AI, and 56% say that the IoT is ‘one of many important sources’ for AI initiatives. Some 64% agree that ‘the value of IoT data to my organization has increased as we have developed our AI capabilities,’ too. The study notes that many respondents view the IoT and AI as two component pieces of advanced analytics capabilities, and that algorithms trained on IoT data sources provide the best value and competitive differentiation.
The final high-level conclusion regards security, with 45% reporting that security concerns have held back consumer adoption. Notably, consumer goods and retail respondents were least likely to agree with that assertion, which might indicate that their heads are stuck firmly in the sand.
Some 37% or respondents said that security concerns have discouraged their company from pursuing an IoT strategy, however, it seems that security capabilities grow as companies adopt – with 55% of the companies that said they had ‘extensive’ IoT adoption saying that they have the necessary internal security expertise and resources.
Notably, a quarter of companies interviewed in 2013 were ‘IoT deniers,’ but now that figure is just 6%. The report believes this number is going to further fall. Since 2017, the number of firms saying that their IoT deployments have had major positive impacts on their business has nearly doubled, to reach 41%.
In terms of the most successful sectors, Facilities Management and Agriculture both reported a 67% rate for whether the IoT had exceeded expectations, with Infrastructure just behind on 65%. In terms of internal adoption rates, IT scored 67%, Financial Services scored 60%, and both Agriculture and Infrastructure scored 54%. For external usage, IT was the leader, with 56% in extensive or early development, followed by Infrastructure and Agriculture, both on 53%, and Manufacturing on 50%.
As for the speed of adoption, there has been an increase in the number of companies that said IoT progress had been slower than hoped – up from 47% in the 2017 study to 60% today. The report believes this is likely due to the impact of initial slow adoption, reflecting an urgency to catch up. Energy and Financial Services are most keen to speed up.
In terms of investments, the respondents collectively say they want to increase these by 11-50% over the next three years. Compared to 2017’s 1-10% finding, this indicated strong growth. Today, 7% of companies are looking to more than double their investments, with Facilities Management, Automotive, and Pharmaceutical the leaders in this regard.
As for demographics, The Economist said that respondents were drawn from Europe (30%), North America (30%), Asia-Pacific (30%) and the rest of the world (10%). Seventy-five respondents work in each of the following industries: financial services; manufacturing; healthcare, pharmaceuticals and biotechnology; information technology; energy and natural resources; construction and real estate; automotive; infrastructure; agriculture/food; and outsourced facilities management. Half were drawn from companies with annual revenue of more than US$500mn and half from smaller companies.