The real challenge of the Internet of Things

More than 40 percent of organizations expect the Internet of Things (IoT) to transform their business or offer significant new revenue or cost-savings opportunities in the short term (over the next three years), rising to 60 percent in the long term (more than five years), according to Gartner, Inc. However, those surveyed said that many of their organizations have not established clear business or technical leadership for their IoT efforts.

The survey, which was carried out in October 2014 among Gartner Research Circle Members, was composed of 463 IT and business leaders who had knowledge of their organization’s IoT strategy.

“The survey confirmed that the IoT is very immature, and many organizations have only just started experimenting with it,” said Nick Jones, vice president and distinguished analyst at Gartner. “Only a small minority have deployed solutions in a production environment. However, the falling costs of networking and processing mean that there are few economic inhibitors to adding sensing and communications to products costing as little as a few tens of dollars. The real challenge of the IoT is less in making products ‘smart’ and more in understanding the business opportunities enabled by smart products and new ecosystems.”

A useful indicator of the degree to which organizations are prepared for the IoT is whether they’ve identified technical and business leadership for their IoT efforts. The survey found that less than one-quarter of survey respondents has established clear business leadership for the IoT, either in the form of a single organizational unit owning the issue or multiple business units taking ownership of separate IoT efforts.

“Organizations need executives and staff to understand the potential of the IoT if they’re going to invest in it,” said Steve Kleynhans, research vice president at Gartner. “While a single leader for the IoT is not essential, leadership and vision are important, even in the form of several leaders from different business units. We expect that over the next three years, more organizations will establish clear leadership, and more will recognize the value of some form of an IoT center of excellence because of the need to master a wide range of new technologies and skills.”

Even respondents who expect the IoT to have a significant or transformational impact are often working for organizations that haven’t established clear leadership. The situation here is a little better than average, however, with 35 percent of respondents from organizations that expect the IoT to be transformational having some form of leadership in place.

Many survey respondents felt that the senior levels of their organizations don’t yet have a good understanding of the potential impact of the IoT. However, attitudes toward the IoT vary widely by industry. For example, board of directors’ understanding of the IoT was rated as particularly weak in government, education, banking and insurance, whereas the communications and services industries scored above-average ratings for senior executive understanding of the IoT.

“New domains such as the IoT inevitably pose new risks and challenges and survey respondents were acutely aware of the possible factors that could inhibit IoT deployment,” said Mr. Jones. “Security and privacy are, unsurprisingly, top issues and industries dealing with intangibles were more concerned with security and privacy than those dealing with tangibles because many operate in very security-aware areas such as banking. Obtaining staff and skills is another major inhibitor for many respondents, particularly those who expect the IoT to be transformational because they are likely to need sophisticated skills relatively urgently.”

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