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18 October 2019

Zebra says 61% of enterprises have IoT investments, but take a look around

It’s all well and good that Zebra’s Intelligent Enterprise Index report points to the majority of enterprises embracing IoT technologies on their path to becoming ‘intelligent,’ but from the outside looking in, we are not seeing the expected volumes of IoT devices to tally with that claimed proportion of adopters.

We keep tabs on the vendor reports on IoT adoption, but are always very conscious that the vendor has a vested interest in painting a rosy picture. Creating some ‘fear of missing out’ is, after all, a good sales tool, and convincing decision makers that their rivals are getting a competitive edge helps them sign on the dotted line.

So, major IoT player Zebra Technologies, one of the largest providers of supply chain and inventory management systems, ranging from labeling to RFID readers and the computers that link them to the internet, has polled the market, and found the following.

The index uses a points system to grade its respondents, and it found that 17% of enterprises are now considered to be ‘intelligent,’ up from 11% in 2018. Some 61% are now ‘on the path to becoming intelligent,’ up from 49% in 2018, and 22% are in the lowest category – ‘using half of their intelligence.’ Notably, that’s down from 40% in 2018.

So then, you will be asking, what exactly constitutes an ‘intelligent’ enterprise. Zebra says that it uses 11 criteria to gauge this, which include IoT vision, adoption, data management, and intelligent analysis. Essentially, it seems that companies that have managed to integrate IoT devices with existing business systems and new analytics tools seem to be strong candidates for the moniker.

To this end, Zebra says that there has been a 39% increase on the annual spend on IoT at the average business, up to $8.3mn, from $6.4mn in 2018. Over half said they expect to increase their spend by 21% to 50% in the next year. In total, 86% said that their spend would increase in the next two years.

However, in terms of enterprise expenditure, $8.3mn is not all that large. This is perhaps in conflict with the claim that 46% of companies have company-wide IoT deployments already, and that 67% have plans to deploy such projects in the future. The number doesn’t seem high enough. However, Zebra says that 62% of its respondents have an IoT vision, and are currently executing on it.

As for markets, the Retail sector has gained the most momentum in the past year, with Zebra saying it had leapt from the bottom of its ranking to second place, behind Healthcare. As for SMBs (Small and Medium Businesses, with between 50-249 staff), it Zebra found that 37% scored more than 75-points on its index – far better than the 17% scored by enterprises.

This might suggest that being smaller allows you to be more nimble, able to act quicker on adoption. It stands to reason that while the larger firms have larger budgets, they are also burdened by having much more corporate inertia to overcome, when it comes to actually rolling out an IoT project.

Security is another highlighted area. Currently, 97% say they monitor IoT security and use standards to ensure integrity, which is up from 95% in 2018. In terms of monitoring approach, 62% say they are constantly monitoring, up from 58% last year, while 35% say it is on a routine basis, down from 37% in 2018.

Here, there seems to be a shift away from the old-world approach of ‘checkups,’ which is encouraging. Strangely though, 67% report that they have a proactive approach to IT security and network management, which is down from 69% in 2018. One would expect this figure to be climbing, rather than falling, and it is not clear why this is the case.

As for the overall ecosystem, another shift seems to have taken place. In 2018, 43% worked with partners to implement IoT plans, but in 2019 that number was down to 36%. In 2018, 40% said they used partners to manage their entire IoT solution, and in 2019, that number had climbed to 49%. This means that pretty much half are buying a complete package from a partner, and are not trying to in-house things anymore. In 2019, 36% said that they were using several strategic partners, which is down substantially from 43% who said the same in 2018.

Some other notable points include that 22% expect resistance to their IoT solution’s adoption, but have no plan to address this issue. That’s down slight from 2018’s 24%, but still somewhat perplexing. Some 25% say that they expect resistance but have a plan to address this in place, up from 20% last year, while 34% say that they do not expect resistance. Interestingly, that is down from 36% in 2018.

As for timelines, 85% report that they will complete their IoT plans within the next two years, up from 84% last year. As for current completion levels, Zebra says that the average is 45% complete, which is up seven points from 37% in 2018. This year, 36% believe they will complete their IoT projects within 12 months, 49% say 12-24 months, with 14% saying 24-36 months, and 2% expecting it to take longer than 3 years. There’s not much of a difference here, compared to 2018.

The last notable section in the report asks about the progress made in the IoT project. There has been a big jump in those who say their IoT plans are 100% complete, from 8% in 2018 to 18% now. Notably, in the seven-point rating system, none of the respondents said they were ‘just starting’ (one point) in 2019, while that was 1% in 2018. Now, 69% say that they are over 50% complete, but not yet finished, compared to 74% last year – suggesting that these projects are getting there.

But it remains to be seen how completion translates to sales of IoT devices, subscriptions to cloud platforms, and the revenues for IoT connectivity providers. This index doesn’t really give much in the way of a sense of scale, in terms of numbers, meaning that many of these projects are going to be quite small.

That aforementioned $8.3mn doesn’t go all that far in a large enterprise, and given that 53% of the respondents have revenues of over $1bn annually, that’s not a great sign. Even with 22% saying they were in the $500mn to $1bn range, if 75% of all the respondents are in that ballpark and the average spend is just $8.3mn, then even a study that comes across as positively as this is evidence that we are still in the ramping up stages of the IoT.

“When we launched the Intelligent Enterprise Index three years ago, many enterprises were trying to understand where and how IoT solutions could be best applied within their unique business environments,” said Drew Ehlers, Global Futurist, Zebra Technologies. “We now see more urgency to improve operational visibility and facilitate the delivery of actionable intelligence all the way to the edge of the enterprise. I believe that is why enterprises are now demonstrating a much greater commitment to executing their IoT plans and why we’ll likely see a surge in investments over the next few years.”