What is slowing the development of IoT?

Adam Jarvis of Capita Technology Solutions explores why industries are being slow to adopt potentially transformative technology.

The Internet of Things (IoT) has the potential to transform business - and society - on the same scale that the Internet has done over the past two decades. The way we communicate, sell, manage and manufacture services and products will be unrecognisable in the not-distant future as a result of the possibilities of IoT.  

And organisations of all shapes and sizes across a wide range of industries will have an opportunity to exploit it to their advantage, whether it’s applied to supply chains, location tracking, or health and wellbeing.  We are already seeing advances in the use of IoT: examples include groundbreaking new sensors monitoring jet engine performance, wearable health trackers, Internet deliveries and tracking, and ‘smart home’ applications. 

There is no doubt that these advances are likely to raise customer expectations – our customers demand ever improved efficiency and service as technology improves at pace. New research from Capita exploring the adoption of IoT has shown that companies today already recognise the potential impact IoT could have on their industries. IT decision makers across legal, finance, insurance and manufacturing industries were surveyed to establish their views on this disruptive technology, and an overwhelming majority – 70 per cent – said that IoT was relevant to their business.

Top benefits

Among those who had already implemented an IoT strategy, increased operational efficiency was the top observed benefit, with 32 per cent respondents saying they had seen this benefit. Among those yet to implement, improved customer service was seen as the top perceived benefit with 32 per cent expecting to see this benefit. However, just 30 per cent of IT decision makers say IoT is actually being implemented in their organisation – a huge disconnect between those who say it’s relevant and those who are actually using it. So what is holding them back from getting ahead of their competitors by being early adopters of innovative technology that has the power to revolutionise their industry? 

When asked to consider a range of technological trends – including big data, IoT, wearables and artificial intelligence – there were a number of factors which were repeatedly cited as barriers to their implementation. These include the culture of their organisation, from management pushback to risk aversion, and a lack of vision from senior management to see how these trends could provide the future success of their business. When asked specifically about IoT, concerns about security remained the biggest challenger to adoption, cited by 31 per cent of IT decision makers. 

A huge barrier to adoption was the perceived cost, in addition to concerns over data governance and legacy IT infrastructure. A belief exists that IoT needs to be integrated into the fabric of buildings in order to work, and so would only be considered if an office or site was moving or being completely renovated.

Skill gaps and misunderstandings

However, whilst it may be sensible to have reservations about the security and cost of such new technology, a more pressing concern is the serious skills gap which appears to be developing. Almost three quarters – 71 per cent – said they don’t have the skills necessary to identify the opportunities offered by IoT. The vast majority – 80 per cent – also said they are not properly skilled to be able to capitalise on any data provided by IoT. 

It is also clear from the research that there is a basic lack of understanding of what IoT actually means in practice, and leading from that is a failure to fully grasp the impact it could have on day-to-day operations within each industry. Many people we surveyed misinterpreted IoT as simply meaning the use of connected devices, for example mobile phones and tablets, for work purposes. Where it was understood, most thought of it primarily in consumer terms – such as using wearables to control the home environment.  

Our qualitative interviews with decision-makers revealed some telling responses about how IoT could be used. To give a couple of examples, an IT leader in the manufacturing space said: “If we had the ability to monitor staff interactions with fridges, freezers, and lighting it could have a huge impact on utility bills. We're miles away from this at the moment though as many of our outlets are so outdated. For brand new units perhaps…” 

Meanwhile, a counterpart in insurance said: “When your heating is controlled by an internet device, we can track when you're at home. If we can see someone is only resident for a small part of the year, the risk to us in terms of things like accidental damage is much lower, so we can amend premiums accordingly.”  

Minimising IoT's potential

These responses somewhat minimise the potential of IoT, to say the least – there’s little real consideration, for example, about the potential for it to change the way insurers interact with their policyholders, or how it could revolutionise what we know about the causes of claims – such as car accidents. In manufacturing, there’s no appreciation in this case of the detail that a full digital identity of each separate unit could provide.  

It’s clear that, for the majority of IT leaders, the Internet of Things is still fundamentally an abstraction. The concerns and barriers to adoption are understandable – cost, concerns over security, and adaptability of existing infrastructure are real issues. But it’s clear that more still needs to be done to educate industry on the potential benefits and full applications of IoT if they are to fully exploit this opportunity to increase efficiency, develop new services, and improve profitability.

Adam Jarvis, managing director, Capita Technology Solutions

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