Organisations are now investing billions in the Internet of Things (IoT) to create business efficiencies and improve productivity. Gartner claims that over a third (37 per cent) of the 8.4 billion connected “things” in use globally will be implemented inside companies.
Last year, we undertook research among IT leaders in the UK, US, Sweden and Denmark to find out their views on the IoT, including the challenges and barriers, opportunities and benefits. While those in the Oil & Gas and Utility sectors are leading the way in terms of IoT projects, there are clearly some roadblocks. To stay ahead of the competition, they must focus on technologies that offer maximum security and performance alongside support for open interoperable standards.
The research looked at IoT in relation to smart cities, utilities and industrial IoT (IIoT). The IoT utilities sector could be worth as much as $15bn by 2024 while in smart cities, it is predicted to reach a staggering $147bn by 2020, and IIoT projects could hit $195bn by 2022. Over half of the IT leaders investing in IoT already have a fully implemented strategy, while a third are rolling one out.
With a long track record of using SCADA and ICS platforms to drive business and operational efficiency, Oil & Gas firms are most eager to embrace IoT, with 88 per cent considering enablement as a priority.
Utilities are not far behind, while over three-quarters of firms investing in IoT say it is a top priority. The fact that it plays into several other key areas, such as IT automation, data analytics and organisational connectivity, could be the reason for this. While power providers see it as a great way not only to improve safety and quality of life for citizens, but also to improve efficiencies and service reliability.
Take Oklahoma Gas & Electric, which has deployed a robust IoT network, helping to reduce operational costs, lower emissions, minimise the number of service vehicles on the roads and empower consumers to manage their own energy supply. The beauty of the firm’s expandable IoT network is that it had also been used to connect 250,000 LED street lights — improving service levels, reducing energy consumption and accelerating resolution of outages.
Such initiatives are not just confined to the US: smart lighting projects, for example, can be found all over the world, in cities including Glasgow, Paris, Copenhagen and London.
While the benefits are potentially huge, there are also some challenges holding up deployments. Some 90 per cent of IT leaders in our survey have had problems implementing their strategy, with over a third claiming to have encountered “extremely” or “very” difficult challenges.
Security is the biggest potential roadblock to IoT projects, with over half of respondents citing it. Cyber attacks are among the top threats for power and utility companies, and many lack the skills to address the risks. Add to this the eye-catching news headlines warning of nation state attempts to target the critical infrastructure sector. It is widely believed that Kremlin hackers were behind sophisticated attacks on Ukrainian power suppliers in December 2015 and 2016, which led to blackouts for hundreds of thousands of innocent customers.
Half of respondents want proven security with multi-layer protection and continuous monitoring to protect smart city IoT, while 44% say the same about smart utilities.
A third of IT executives also admit that funding is a major barrier to IoT projects, while the same number point to a lack of commitment from higher up the organisation. Slightly fewer (30%) claim the Board’s lack of understanding of the benefits of IoT is getting in the way of progress.
If IT leaders can get better at communicating business benefits of IoT to the Board then they stand a great chance of turning things around. Once the C-Suite hears the success stories, they will be more willing to release funds.
We also looked at the criteria by which IT leaders evaluate IoT technologies for use in projects. Surprisingly, network topology is the number one criterion. The majority favour a combination of star-based networks and mesh networks — the latter being particularly resilient to cyber incidents, such as signal jamming and therefore well suited for use in critical national infrastructure (CNI).
Network performance is also high up the priority list, illustrating the continued importance of latency and bandwidth to effective IoT systems. Next come standards — a key requirement for over half of IT bosses. In fact, 45% want open standards for smart city solutions, while a similar number say the same for utilities projects. Open standards are vital to keeping costs down and choice of products high for IT leaders. They promote performance, security and reliability, while backwards compatibility helps ensure that legacy assets don’t get stranded.
According to the survey, US firms appear to be most mature in their approach to IoT, with two-thirds claiming to have a fully implemented strategy in place, versus 47 per cent in the UK, 44 per cent in Sweden and just a quarter in Denmark. It’s clear the rate of IoT adoption varies by geography, as it does by industry. The UK seems to have the most trouble at present, with just 3 per cent saying projects are challenge-free.
The most important thing to remember is the end user. Power and utilities firms looking to utilise IoT technologies to drive internal and external benefits will only achieve success if they get the customer on board. This makes awareness-raising and education programmes vitally important to sell customers the benefits of any new IoT project. An eye-catching new solution might have the potential to transform the customer experience, lower costs, improve efficiencies and drive greater business agility, but if your customers aren’t with you, that planning and investment may be in vain.
We have now entered the IoT age, but unlocking real value from these technologies requires more than blind investments in technology. Those organisations most likely to pull ahead of the competition will be the ones that focus on security and standards to drive success.
Phil Beecher, President of Wi-SUN Alliance
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