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Thursday, March 10, 2016

Internet of Things Market Development Update for 2016

A growing number of technology vendors and digital transformation consultants are very active in the Internet of Things (IoT) marketplace. New market research indicates that IoT is starting to move toward mainstream adoption within several key industries, according to the latest global market study by Gartner.

That being said, although only 29 percent of Gartner survey respondents say they're currently using IoT technologies, an additional 14 percent are planning to implement IoT in the coming 12 months, with a further 21 percent planning to deploy after 2016.

Organizations adopting IoT will grow 50 percent during 2016, reaching 43 percent of respondents overall. In aggregate, 64 percent plan to eventually implement IoT. Nonetheless, another 38 percent have no plans to implement IoT, including 9 percent that see no relevance whatsoever in these technologies.

Lack of Business and Tech Talent with IoT Skills

"While there is near universal acceptance of the importance of the IoT, less than a third of organizations surveyed were actively exploiting it," said Chet Geschickter, research director at Gartner. According to the Gartner assessment, this is largely because of two important reasons.

Many organizations have yet to understand the benefits of IoT technologies, or they've not developed any ideas for how to apply IoT technologies within their organization. The second set of hurdles are talent related. Many of the survey participants reported insufficient expertise -- they lack IoT-savvy leadership.

Industry adoption also varies widely with heavy industries such as utilities, oil and gas, and manufacturing leading adoption, and service-oriented industries lagging. Gartner estimates that 56 percent of businesses in asset-intensive heavy industries will implement IoT by the end of 2016, and 36 percent of light industries.

For those that have already implemented IoT, Gartner believes the focus is on operational improvements. The primary business case for IoT is internally focused -- improved efficiency, cost savings and enhanced asset utilization; versus the external benefits of enhancing customer experience or increasing revenue.

However, the survey shows advancement on customer experience projects, doubling in nominal terms from 18 percent to 34 percent. This could indicate a higher IoT focus on end customers during the next 12 months. In effect, IoT programs and processes will likely be more about competitive strategies in 2016.

Security Concerns Impact Market Development

The survey found that the biggest IoT technology challenges for those that have already implemented IoT are cybersecurity, integration and managing business requirements. Moreover, orchestration of workflows and business processes could also become a major concern for those planning to implement IoT technologies.

"2016 will be a very big year for IoT adoption. We are starting to see a wide range of IoT use cases across virtually all industries. But, the big challenge now is demonstrating return on investment. Executives need to validate the contribution that IoT can make in order to justify large-scale rollouts," said Geschickter.

The online survey was conducted in November 2015 among Gartner Research Circle Members and included responses from 465 IT and business professionals spanning 18 business sectors in North America, EMEA, Asia-Pacific and Latin America.