Although the consumer implications of the Internet of Things have generated plenty of public attention, the real growth in the embryonic IoT market is coming from less visible industrial environments and business applications.
The early IoT advancements may come as a surprise to some, but in these industries, organizations moving quickly to deploy more connected products and services makes sense for a number of reasons.
Less than a third (29 percent) of the 465 IT and business professionals who responded to a Gartner survey last fall were using IoT at the time. However, 14 percent were planning to implement it within the next 12 months — a 50 percent jump. Another 21 percent planned to implement IoT after 2016, bringing the total to nearly two-thirds (64 percent) of the survey respondents.
Heavy Industry Interest
There have been plenty of market surveys over the past year that have found significant interest in IoT. What makes Gartner’s research particularly important is that it indicates that the fastest adoption is coming in asset-intensive “heavy” industries — such as utilities, oil and gas and manufacturing.
More than half (56 percent) will implement IoT initiatives by the end of 2016, while only slightly more than one-third (36 percent) of “light” or “weightless” industries will adopt IoT strategies this year, Gartner predicted.
The focus of IoT initiatives among the heavy industry companies was on internal operational improvements and efficiencies, cost savings and enhanced asset utilization, Gartner’s survey found, rather than on external customer-facing objectives, such as enhancing customer experience or increasing revenue.
However, the focus on customer experience would double during the next 12 months, based on the survey results. In the meantime, IoT opportunities in the ‘Industrial Internet’ were commanding the bulk of attention.
Not the Same Old
The truth is that many mainstream industries, from agriculture to manufacturing, have been implementing sensors and other machine-to-machine technologies to improve their operations for years. In fact, cynics in these industries have ridiculed the IoT idea as just another overhyped technology phenomenon, because they’ve been building connected systems and business processes for a long time.
However, real advancements in sensors/nanotechnology, cloud computing and big data analytics have brought dramatic change to the economics and business benefits of connecting “things,” and helped to fuel popularization of the IoT’s possibilities.
While much of the world is fixated about how the IoT can change the personal lives of consumers via wearables and other connected products, however, the real transformation already is well under way in many heavy industries and other enterprise environments.
Funds Flowing In
I found confirmation of this trend in a recent conversation with Brendan O’Brien, cofounder and chief evangelist at Aria Systems, a cloud-based billing solutions company. Brendan has been advocating the virtues of IoT for many years.
Aria has seen a significant rise in the number of industrial companies seeking help to implement pricing and billing systems to track and monetize transactions and data flows generated by IoT networks, Brendan told me. The company just received an additional round of US$50 million in funding, which it will use to respond to the growing demand for its solutions.
Aria isn’t the only company benefiting from growing venture funding of industrial IoT opportunities.
Funding of industrial IoT startups jumped 83 percent in 2015, and the number of deals in this sector has nearly quadrupled since 2011, according to CB Insights.
These trends suggest that corporate decision-makers shouldn’t be distracted or discouraged by the exaggerated hype surrounding various consumer-oriented IoT products and services that seem farfetched or of limited value.
Instead, they should pay attention to the tangible benefits a growing number of major enterprises already are achieving in their internal operations or fundamental business processes, thanks to their IoT initiatives.