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The internet of things – why doesn’t corporate investment match optimism?

by James Simoniti , 15.09.2015

In my last article, I briefly introduced the Internet of Things (IoT) and how it has the potential to revolutionize how a number of industries conduct business. Recent estimates from McKinsey suggest that by 2025, the IoT could have an economic impact of up to $11.1 trillion per year, with over two-thirds of value created in business-to-business environments[1]. These estimates are supported by optimism amongst IT and business decision makers with over 80% agreeing that “IoT solutions will be the most strategic technology initiative for their organization in a decade”[2].

Despite an increasing number of firms implementing IoT solutions in the past year, overall adoption trails optimism significantly, with only one-quarter of businesses currently using a solution[3]. As previously discussed, security is the key barrier to IoT integration; although it is evident this is not the only factor holding back wide scale adoption. This article will explore two further factors –network capacity of IT systems and the skills required to oversee and manage corporate IoT implementation.

Network capacity represents a huge obstacle for IoT implementation

The very nature of the IoT places significant demand on networks. A proliferation of new devices and smart objects connecting to a company’s network requires a surplus network capacity, something many businesses simply do not maintain. Currently around 57% of networks are at full capacity, and upgrading this is not seen as a business priority; slightly over half of 400 IT professionals in a recent Infoblox study stated that ‘network infrastructure management’ was a high priority in their organization[4]. Therefore the adoption of IoT solutions in businesses requires planning and investment - not just in the solutions themselves, but in the corporate infrastructure that IoT relies on. This additional requirement for IoT adoption is acting as a barrier that many companies are struggling to overcome.

The expertise required to deploy and oversee IoT systems is too uncommon

It is not simply a case of increasing network capacity and connecting new devices. Introducing an IoT system to a business is a large scale, complex, time consuming effort. It requires highly skilled, specialist IT personnel to oversee implementation, and subsequently provide technical support once in use. Smaller businesses may lack such expertise, and external consultants can represent a significant investment. These ‘hidden costs’ (which are less hidden for many) of the human resource involved in deploying an IoT system further adds to the challenge of integrating IoT on a meaningful scale

IoT implementation is far more complex than just buying and installing the products – numerous other factors and costs must be considered. It is for this reason that IoT suppliers should consider a more holistic approach to sales. They should not only look to offer the products and solutions themselves, but also provide expertise and end-to-end support and integration to ensure their customers purchase decisions are not reliant on too many factors. Messaging should focus on this path to implementation, rather than product benefits alone – as it is evident that the realities of integration are holding back purchase ahead of any other factor. Ultimately the process requires streamlining for many businesses, which will help make the transition to IoT infrastructure as straightforward as possible, allowing businesses to reap the extensive benefits of the IoT.

James Simoniti is an Analyst at GfK UK. He can be contacted at james.simoniti@gfk.com.

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[2] https://www.zebra.com/content/dam/zebra/press-releases/en-us/2014/zebra-tlp-final.pdf

[3] https://www.zebra.com/content/dam/zebra/press-releases/en-us/2014/zebra-tlp-final.pdf

[4] http://www.computerweekly.com/news/2240223584/Internet-of-Things-already-stretching-networks-to-capacity