90% of Fortune 2000 firms face barriers to IoT implementation

A recent survey commissioned by digital transformation consultancy Software AG has found that though a quarter of Global Fortune 2000 companies deemed Internet of Things (IoT) the most important initiative at their organization, 90% said they experience expertise and skills-related barriers to the implementation and expansion of the technology. The survey, conducted by tech market research firm VansonBourne, drew on responses from business and IT leaders in North America, Europe, and Asia Pacific, at companies making over $500 million in annual revenues.

Companies are realizing the potential of always-connected devices which can better harvest data to improve processes. The so-called Internet of Things is moving from buzzword status to practicable technology, implemented in sensor-enabled passenger trains to monitor and replace parts before they wear out, or IoT-enabled thermostats or plant sprinklers to let you lower the temperature or water your plants when you’re away from home.

According to the VansonBourne survey – ‘IoT: The platform for success’ – 98% of respondents view IoT as an important initiative at their firm, with 25% seeing it as the single most important initiative at their firms. The high priority placed on the technology likely stems from the survey’s focus on IT and business leaders dealing with technology, though they obviously see IoT as an important business enabler.

The most cited driver for IoT utilization was ‘improving operational efficiency’ (50%), while boosting productivity ranked second at 44%. A further 43% of respondents tagged increasing revenues and improving customer satisfaction as a main driver behind their organizations’ utilization of IoT.

Nine in ten said that their companies encounter challenges and barriers to IoT implementation. A lack of internal expertise was the most cited shortcoming (31%), with managing and processing data (29%) and too many legacy systems (28%) cited as other main barriers to implementation.

As such, 97% of respondents work with outside vendors to implement IoT, while 93% implement a hybrid approach to IoT – buying an IoT platform from an external vendor and then customizing it in-house. This points to the fact that companies want and need platforms that take care of the basics, but allow for customization and flexibility.

Relatedly, 72% of respondents said that their IoT vendors should be doing more to help them. The report’s authors believe this highlights a strong desire for collaborative vendors that can work with an organization at length to achieve the best, customized IoT solution.

Meanwhile, those firms that are confident that their IoT platform won’t regress in the next year believe, on average, that their IoT platform will expand by over 25% in that span of time. This expansion is expected to be essential for 29% of firms, who see IoT at the forefront of their organization, driving the firm forward and differentiating it from the competition. Only 5% expect their IoT platform to run in the background, with other more important drivers urging on success.

Most respondents, however, think a lot of work remains ahead. 89% feel their organization needs to improve its IoT plans, with 26% saying significant improvements are needed for their IoT platforms currently. Furthermore, only a quarter believe that their company’s IoT platform will be highly advanced in 12 months – which hints at transformations being a multi-year affair.

Moreover, firms that were building their own platform were less likely (16%) to expect a high level of advancement, compared to those buying a platform from an external vendor (28%).

Commenting on the survey results, Software AG North America President and CEO Raj Datta said “Organizations know they cannot deliver IoT with off-the-shelf packaged applications or with ground-up in-house builds. They need to rapidly deploy IoT in way that is easy to customize, open enough to seamlessly integrate with their existing landscape while remaining proven, secure, and robust.”

“This points to the need for a platform with rich functionality out-of-the-box that still gives customers the ability to quickly create business solutions to suit their unique needs,” he concluded.

A recent report from Bain & Company projects the IoT market to more than double from $235 billion to $520 billion. This nonetheless represents a dampening of headier expectations from two years earlier, as companies have become increasing concerned over issues of cybersecurity, integration with existing technology, and less certain returns on investment.