IoT Customers Happy, So Why Is Adoption Stalling?

August, 2019

One of the most talked-about technologies in recent years is the Internet of Things (IoT), but despite generally happy customers, IoT has not yet achieved widespread adoption.

Promising benefits such as lower labor costs, better tracking of assets, improved business processes, efficient energy management, increased competitive advantage, and more, the IoT seems like a no-brainer technology for companies to invest in. Instead, the IoT lags behind most of the other technologies in our study in terms of investment, and it is the only technology we track in our Technology Trends  survey that is not increasing in its overall adoption rate this year.

As shown in Figure 2 from our full report, Internet of Things Adoption Trends and Customer Experience, the adoption rate for IoT is 18% of all organizations in 2018 and 2019. During the same period, the percentage of organizations making new investments in IoT also is essentially flat, ticking up from 25% in 2018 to 26% in 2019. This is the second year we have included IoT in our survey, thus we have no historical data before 2018.

Fig2IOT Adoption 1030x687 - IoT Customers Happy, So Why Is Adoption Stalling?

The Internet of Things is difficult to define, because, as its name suggests, it is more than one thing. IoT makes use of small sensors, RFID tags, and ubiquitous connectivity to make devices, vehicles, and other physical objects “smart.” Examples can range from using sensors connected to a pallet of ice cream to ensure its temperature remains constant during shipping, to using sensors to monitor electricity use in a building, to even smart clothes that can monitor body temperature and heart rate for fitness. In short, anything that can contain a sensor and a network connection can be part of IoT.

The immaturity of commercial solutions is likely the largest aspect holding back IoT. While sensor options abound, early IoT projects were mostly custom systems, although new tech firms are rushing to fill the space. Sure, companies can invest in “smart buildings” with automated lighting and thermostats, for example, but when it comes to making their enterprise smart and connected it takes some in-house expertise as well. This is changing, particularly in areas such as manufacturing and healthcare where medical devices and industrial equipment already ship with embedded sensors, allowing for analytics to track a device’s functionality, predict breakdowns, and other functions. Commercial IoT solutions for some sectors and applications are still farther away.

“We have no doubt that the adoption and investment rates will rise in the coming years, as more organizations take advantage of IoT’s abilities,” said Tom Dunlap, director of research at Computer Economics, an IT research firm based in Irvine, Calif. “But for now, widespread IoT adoption is being constrained by a few things. In addition to a limited (but growing) list of off-the-shelf solutions, a skills gap may be an issue. Most IT organizations have limited experience in working with all the elements unique to IoT.”

The full report provides an overview of IoT adoption and investment trends, providing data on how many organizations have solutions in place, how many are in the process of implementing it, and how many are expanding implementations. We also look at the return on investment experience, total cost of ownership experience, and considered or planned uses for new AI investment. We conclude with important principles to apply in planning and implementing IoT systems.

This Research Byte is a brief overview of our report on this subject, Internet of Things Adoption and Customer Experience. The full report is available at no charge for Avasant research subscribers, or it may be purchased by non-subscribers directly from our website (click for pricing).