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The Internet of Things (IoT) is a maturing technology, and for many years it has promised benefits such as lower labor costs and better tracking of assets. But our data is showing that, on a relative basis, the adoption of and investment in IoT projects has remained fairly low. Early adopters of IoT are generally satisfied with their projects, and ROI is high. But wider adoption is being slowed down by a shortage of skills in IT, the customization usually required, and a lack of vision.
As shown in Figure 1 from our full report, IoT Adoption Trends and Customer Experience, the adoption rate is low compared with other technologies in our parent study, Technology Trends 2021. The percentage of organizations that have IoT projects in place is within the lowest one-third of the range, defined by the technologies with the highest and lowest adoption rates in the study. As for the investment rate, the percentage of organizations currently investing in IoT projects also is low. Investors include organizations that plan new implementations or enhancements to existing systems within an 18-month period.
For the uninitiated, the Internet of Things makes use of small sensors, radio-frequency identification (RFID) tags, and ubiquitous connectivity to make devices, vehicles, and other physical objects “smart.” Examples can range from sensors on a pallet of ice cream to ensure its temperature remains constant during shipping to sensors on (or inside) cattle to track their location.
As IoT has matured and we have followed its adoption trends, questions have emerged. What is different about IoT compared to SaaS, cloud computing, and other technologies that had much faster adoption? It appears that wider use of IoT projects may never happen in all sectors. And if adoption is going to accelerate, it will require vision.
“Several factors are holding back wider adoption of IoT,” said Tom Dunlap, director of research for Computer Economics, a service of Avasant Research, based in Los Angeles. “The biggest issue is that you can’t ‘buy IoT in a box.’ Even existing solutions require customization. Many IT organizations lack the skills, but more importantly the vision, to see how existing IoT solutions can work for them.”
Industry sector also plays a huge role in the relatively low adoption and investment rates for IoT. Manufacturing, energy management, and logistics all have compelling use cases for IoT. But sectors such as professional services and financial services are not likely to adopt much IoT, because their business is more people-intensive than asset-intensive. Organization size is also a factor, with larger companies that can afford the investment showing higher levels of adoption and investment this year.
When it comes to launching IoT systems, service providers are playing a bigger role in this space. Our research shows that many companies benefit from collaboration with service providers to co-develop IoT solutions. We cover this extensively in our Internet of Things Services 2020 RadarView.
Our full report provides an overview of IoT adoption and investment trends, providing data on how many organizations have the technology in place, how many are in the process of implementation, 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 IoT investment. We conclude with important principles to apply in planning and implementing IoT systems.