The Internet of Things (IoT) is entering a new era. IoT began by linking devices and collecting data, but now plays a key role in digital transformation. Enterprises across various industries, including manufacturing, logistics, healthcare, retail, and smart cities, are realizing that simply connecting devices is no longer sufficient. The true value lies in how intelligently data is processed and how securely it can be scaled in mission-critical environments. Our Computer Economics Worldwide Technology Trends 2024 report shows that organizations adopting IoT report high ROI realization and strong cost efficiency, placing it among the top technologies for realized business value. This indicates that IoT is not just experimental but a proven driver of enterprise value. To sustain and expand this value, enterprises are embedding intelligence through AIoT and resilience through cybersecurity. AIoT is emerging as the next growth vector, enabling predictive insights, autonomous decision-making, and new business models at the edge. At the same time, cybersecurity has become a non-negotiable priority, as the expansion of IoT ecosystems presents new vulnerabilities. Together, AIoT and security-by-design are creating a road map for enterprises to maximize returns while sustaining trust and operational resilience.
According to Avasant’s Internet of Things 2025 Market Insights™ report, with 79% of projects now in production as of 2024. Enterprises are prioritizing it as a top investment area for resilience and automation. The report highlights that IoT is no longer viewed as a peripheral technology but as a strategic enabler of operational continuity, regulatory compliance, and growth. Enterprises are deploying IoT to support predictive maintenance, streamline supply chains, and enable real-time visibility across operations. At the same time, IoT is increasingly integrated with AI, cloud, and 5G to unlock intelligent decision-making at the edge. According to the report by Avasant and Nasscom, 85% of enterprises are planning to increase IoT investment in the next 12–18 months, while 91% will increase cybersecurity Investment. This trends underscores that scaling connected ecosystems and strengthening security are now mutually reinforcing priorities at the core of digital transformation.
From Data Collection to Autonomous Intelligence
Enterprises are moving beyond IoT platforms that only capture and display data. By converging IoT with AI and edge computing, they are transforming connected ecosystems into intelligent networks that can analyze patterns in real time and make autonomous decisions. This convergence is shifting IoT from a passive data layer into a decision-making engine embedded in day-to-day operations.
Across industries, enterprises are embedding AIoT into core operations. In manufacturing, sensors and AI models are embedded across production lines to anticipate equipment failures and reduce downtime. Logistics providers are piloting agentic AI systems that dynamically optimize routes, lower fuel consumption, and improve supply chain resilience. In healthcare, hospitals are deploying IoT-enabled predictive maintenance on critical devices to ensure clinical uptime and compliance with regulatory mandates. Retailers are using AIoT for personalized in-store experiences and real-time inventory optimization, while smart cities are leveraging connected infrastructure and edge analytics to reduce congestion and improve public safety. Utilities and energy providers are adopting AI- and IoT-enabled digital twins to simulate grid operations, forecast demand, and optimize energy distribution. These models also support decarbonization initiatives by testing the integration of renewable energy and emissions reduction strategies without disrupting live systems.
ms that bring computing closer to the source data. Edge AI allows devices to process data in real-time, reducing latency and enabling instant decision-making at the source. 5G provides the low-latency, high-bandwidth backbone required for large-scale IoT deployments, from connected factories to autonomous vehicles. At the same time, enterprises are integrating IT (information systems), OT (operational systems), and ET (engineering technologies such as computer-aided design, product life cycle management, and digital twins) to unify design, engineering, and operations. This convergence allows enterprises to create closed-loop, data-driven ecosystems where insights flow seamlessly from product design to production to real-time operations, enabling AIoT platforms to scale beyond pilots into enterprise-wide, mission-critical environments.
Enterprises are no longer adopting AIoT solely for monitoring and analysis, but for embedding autonomous decision-making into the edge of their workflows. Whether it is shop floor scheduling, warehouse orchestration, clinical operations, or grid management, AIoT is delivering measurable business outcomes, from reducing downtime and costs to strengthening resilience and compliance.
Expanding Risk and Accountability
While AIoT makes IoT more intelligent, it also increases complexity and with it, vulnerabilities. As IoT adoption accelerates, the attack surface is growing rapidly. According to the UN Conference on Trade and Development (UNCTAD) Digital Economy Report 2024, the number of IoT-connected devices is projected to increase from 16 billion in 2023 to 39 billion by 2029, a 144% increase in just six years. This explosive growth is not just fueling demand for AI-enabled, human-centric connected devices, but it is also expanding the number of vulnerable endpoints across enterprise ecosystems. According to Avasant’s Cybersecurity Services 2025 RadarView™, cyberattacks targeting botnet and IoT services have increased from 7% in FY 2023 to 9% in FY 2024. These incidents range from exploiting device vulnerabilities to disrupting operations in critical sectors such as healthcare, energy, and manufacturing. To safeguard operations and maintain trust, organizations are embedding controls across the device life cycle, networks, and supply chains.
Enterprises are responding by:
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- Embedding security-by-design into IoT procurement and deployment, making identity, authentication, and encryption mandatory at every stage of the device life cycle.
- Implementing zero-trust architectures, where every device, user, and data flow is continuously verified to reduce the risk of lateral attacks.
- Strengthening device life cycle management, with secure onboarding, automated patching, and safe decommissioning to prevent legacy vulnerabilities.
- Deploying AI-driven threat detection at the edge to identify anomalies in real time and contain threats before they escalate.
- Integrating IT and OT security operations, creating unified monitoring across enterprise, industrial, and engineering systems to eliminate blind spots.
- Ensuring regulatory and compliance readiness by adopting governance frameworks that align with data privacy, industry, and government mandates such as HIPAA, GDPR, and the EU Cyber Resilience Act.
- Expanding risk management practices to assess vulnerabilities in devices, networks, and supplier ecosystems using predictive analytics.
This structured approach is evident across sectors. In manufacturing, firms such as Bosch have partnered with service providers to conduct large-scale security audits, ensuring device life cycle protection and compliance with evolving regulations. Healthcare institutions, such as Schwarzwald-Baar Klinikum, are integrating IT and OT monitoring to secure connected medical devices, preserving patient safety while meeting stringent regulatory standards.
On the operational side, enterprises are deploying anomaly detection and automated incident response systems at the edge to minimize downtime during cyber incidents. This is particularly critical in utilities and energy sectors, where grid stability depends on real-time responses to threats.
At the Crossroads: Intelligence and Trust
The convergence of AIoT and cybersecurity is redefining the value proposition of IoT services. AIoT transforms IoT from a passive data collection system into an active decision-making engine, while cybersecurity ensures the trust required to operate at scale in sensitive industries. Together, they are creating intelligent and resilient IoT ecosystems.
Enterprises that embrace this dual focus are already realizing benefits that extend beyond efficiency. Manufacturers embedding AIoT into their equipment are offering predictive maintenance as a value-added service to clients and generating recurring revenue streams. Energy utilities are developing new revenue streams from anonymized, securely shared smart grid data. Healthcare providers are expanding telehealth capabilities with end-to-end secure AIoT wearables that comply with regulatory frameworks. These innovations show how intelligent and secure IoT is enabling both cost savings and growth opportunities.
To scale IoT responsibly, enterprises must move beyond pilots, embed security from the outset, and align deployments with sustainability and compliance goals. By doing so, they will shape the next generation of resilient, human-centric enterprises in the era of Industry 5.0.
By Norkit Lepcha, Lead Analyst, Avasant, and Sahaj Kumar, Associate Research Director, Avasant