Enterprise customers have tempered their expectations about the pace of IoT adoption. That’s the conclusion drawn from the latest report from global management consultancy Bain & Company, ‘Unlocking Opportunities in the Internet of Things‘.
Despite industry-wide reservation that stems from a lack of targeted solutions, integration complexities and other barriers to adoption, Bain & Company expects the combined markets for the Internet of Things (IoT) – which includes hardware, software, systems integration, and data and telecom services – to grow to $520 billion by 2021.
That figure represents a more than 100 percent rise on the $235 billion spent in 2017.
IoT adopters tempering expectations but still bullish
The report from Bain and Company was based on a 2018 survey of more than 600 executives. It revealed that overall, enterprise customers remain bullish on the IoT and its transformative potential.
More companies are running proof of concept trials than two years ago. And the number of enterprise customers considering exploring new use cases is up to 60 percent in 2018, compared with fewer than 40 percent in 2016.
However, expectations have been tempered when it comes to exactly how fast these technologies can be adopted. In part, this is a matter of preconceptions. Many are beginning to realise that complete solutions take longer than expected to implement and yield a worthwhile return.
Bain & Company suggests that IoT vendors seeking to tap into this pent-up demand have to “better address barriers to adoption, provide more consumable solutions, and ease concerns about integration with existing information technology and operational systems.”
“Our survey found that vendors are aligned with customers’ concerns about some barriers, such as security, returns on investment, but less so on others – notably integration, interoperability and data portability,” said Ann Bosche, a partner in Bain & Company’s global Technology Practice.
Based on our experience with previous technology cycles, the key to addressing these concerns lies in focusing on fewer industries in order to learn what customers really want and need to ease adoption.
The need for industry-specific application optimisation
The report also suggests that the major cloud service providers, such as Microsoft Azure and Amazon Web Services, as well as individual analytics and infrastructure software vendors, are lowering barriers to IoT adoption by offering simple, scalable implementations.
However, these horizontal services currently focus on breadth at the expense of customisation for industry-specific applications. According to Bain and Company, this oversight means there’s pent-up demand present and an opportunity for niche technology providers that can meet customer needs.
“The next few years will be critical to the development of IoT markets as leaders continue to make gains and expand their industry-specific offers,” said Michael Schallehn, a partner in Bain & Company’s global Technology Practice.
“Incumbents that fail to move quickly enough to address customers’ needs are likely to get leapfrogged by more nimble competitors. We think device makers, in particular, run the risk of seeing software and analytics competitors capture the value of solutions, leaving them to deliver lower-profitability hardware components.”