Video: The Internet of Things must be futureproofed
The enterprise and industrial markets are poised to become the biggest Internet of Things (IoT) battlegrounds, with $300 billion in anticipated revenues by 2020 -- nearly twice that of the consumer market, according to a recent report from management consulting firm Bain & Company.
Getting in on the IoT action won't come without challenges, however. Companies such as manufacturers need to mobilize today to focus their resources on identifying the right IoT platform, based on their starting point and capabilities, the study said.
The report, Choosing the Right Platform for the Industrial IoT, shows that executives at industrial companies are struggling to determine where and how to invest in IoT. These decisions are complicated by fragmentation in industry sub-sectors and the critical requirements of IoT technologies.
Bain surveyed more than 500 industrial companies and 150 IoT vendors worldwide for the research, and found that among companies considering adopting IoT products, about 60 percent are still at the planning or discussion stage.
Industrial uses promise to be among the largest markets for IoT devices and services in the coming years, said Michael Schallehn, a partner in Bain's Technology Practice and an IoT expert.
That means a lot of opportunity but also requires a thoughtful allocation of resources to make sure the right tools are in place, Schallehn said. Now is the time for industrial companies to make investment decisions and select the right partners, as they define their goals for IoT and move from proof-of-concept initiatives to scaling their IoT environment, he said.
The Bain research shows that platforms will play an essential role in the development of the industrial and enterprise IoT, because they provide an integrated suite of services including connecting and authenticating devices and sensors, ensuring security, aggregating data, performing analytics, and providing access to internal and external developers.
Organizing an enterprise's computing and network resources around an IoT platform presents some challenges, however. Industrial companies are still hampered by concerns about how IoT technology will mesh with their existing environment, how they will manage security of IoT components, and whether or how their investments in IoT will result in tangible, bottom line results.
Because of these challenges, delivering on an IoT project can be difficult, even for some of the larger industrial companies that have already invested billions of dollars in developing their IoT platforms.
In fact, a majority of IoT projects fail to get off the ground. A study by Cisco earlier this year, in which the company surveyed 1,845 IT and business decision-makers in the US, UK, and India, showed that 60 percent of IoT initiatives stall at the proof-of-concept stage. Just 26 percent of companies have launched IoT initiatives that they consider a complete success.
Bain said partnerships with software companies are essential to delivering an end-to-end IoT environment. This might include start-ups that may be off the radar for typical enterprise relationships, the firm said. Indeed, it's the smaller platforms that often have better traction in the market, especially when it comes to addressing specialized use cases and niche applications of IoT, according to Peter Bowen, a partner in Bain's Technology Practice.
Despite the challenges they face with IoT, industrial companies are well positioned to succeed, Bain said. It's survey identified industrial device and equipment makers and their potential partners such as cloud service providers, network companies, and analytics vendors as the companies customers trust most. "However, they have to act aggressively, prioritize their efforts, and execute well to rise to the top," the report said.