Eight out of ten businesses that invest in the Internet of Things reported revenue growth in 2014. On average revenues grew by 16% as a result of their investment in the IoT, finds Tata Consultancy Services in a new research. According to managers the biggest barrier to implementation of the IoT is the prevalent business culture.
Tata Consultancy Services (TCS), one of the globe’s larger IT services firms, recently released a research report into the Internet of Things (IoT). The study, titled ‘Internet of Things: The Complete Reimaginative Force’, brings the effects of the IoT in a wide range of sectors into view and is based on input from nearly 800 managers worldwide.
The study shows that there is a correlation between the investment in IoT technologies and revenue growth – with 80% of businesses that invested in IoT seeing their revenues grow in 2014. On average their revenue grew by 16% in 2014, and nearly one in ten (9%) reported growth of more than 30% as a consequence of their investment in the IoT. The executives also continue to see the IoT as a growth market – 12% expect to invest more than $100 million in the IoT, and 3% of the companies even expect to invest a minimum of $1 billion in the technology. Compared to 2015 the respondents expect the average IoT budget to increase from $83 million to $103 million in 2018 – an increase of 20%.
IoT deployment by region
The research finds that North America and Europe are clearly the forerunners in the area of IoT, compared to the Asia-Pacific and Latin American regions. While there are regional differences, IoT technology is predominantly being deployed in the monitoring of products during transport in the supply chain (45%), and meeting customer needs through their use of mobile apps (47%). Around a quarter (26%) of companies use IoT technology in products by imbuing them with sensors that relay use and performance information back to the company.
In the Asia-Pacific region the technology is relatively often used to monitor industrial sites, such as, for example, shops and offices. 35% of the Asian businesses deploy the technology this way, considerably more than European and US companies, where less than a quarter use the technology.
Natarajan Chandrasekaran, CEO of TCS says: “The age of IoT is well underway. The question is, whether businesses are ready to realise the full potential of this technology. Our latest global trend study finds that leaders in using IoT technologies are using it to completely re-imagine their businesses by changing every aspect of operations, from business models and products to business processes and workplaces.”
Results show that in 2015 North American and European organisations will continue to be large scale investors in the technology to keep their forerunning position. North American businesses are spending 0.45% of their income on IoT programmes, while European businesses are spending 0.4% of their income. In Europe this represents an expected average of $93.9 million per surveyed business, with French respondents averaging $138 million per business – $30+ million more than American business invest in their IoT programmes. In the Asia-Pacific region businesses are investing an average of 0.34% and in Latin America businesses are investing 0.23% of their income in IoT.
Manufacturing industry profits most
Respondents in the manufacturing industry reported the biggest revenue growth out of IoT. On average investment in IoT in this industry delivers revenue growth of 28.5%. Banks and financial service providers are another industry in which IoT investments bear considerable fruit – financial services seeing a revenue impact of 17.5%, followed by Media & Entertainment with an impact of 17.4%. The automotive industry sees the lowest income growth (9.9%) from IoT investment.
Despite encouraging figures around IoT investments and favourable prospects, the researchers also highlight that there are still significant barriers to be overcome within all sectors before the lofty promises of IoT can be fully realised. The multi-national respondents said that business culture remains one of the biggest stumbling blocks, because employees will be forced to start thinking differently about customers, products and processes. Convincing them of the merits of these new ways of thinking is the second biggest stumbling block, with leadership of the businesses needing to invest considerable time and resources into making IoT introductions a success. Finally, the technology itself is seen as a barrier, because much still needs to be developed and integrated within current businesses systems, while protection and privacy issues also still require considerable attention.
Chandrasekaran adds: “Now is the time for every leader in every industry to reimagine the possibilities for their businesses in a world of smart, connected things.”