A majority of executives at large global companies expect the Industrial Internet of Things (IIoT) to significantly impact business performance and competitiveness over the next three years, according to a new study released by the Business Performance Innovation (BPI) Network, San Jose, Calif. However, many companies are lagging in IoT readiness, setting the stage for competitive advances and dislocation among IoT leaders and laggards.
“Executives point to better supply chain intelligence as one of the key areas they are looking toward when it comes to IIoT technologies and their ability to achieve measurable performance improvement,” says Sally Lopez, content director.
The study also suggests that large-scale integrators and other channel partners will be among the biggest IIoT beneficiaries over the next several years. They will likely play a significant role in planning and implementation due to major internal gaps in the technical skills and management know-how needed to deploy and integrate IoT into operations and new products.
The report, “The Impact of Connectedness on Competiveness,” was developed in partnership with the CMO Council, San Jose, Calif.; Internet of Things Institute, powered by Penton, Clovis, Calif.; and The Nerdery, Bloomington, Minn. The study was based on a global survey of some 350 executives around the world and interviews with innovation leaders at large global enterprises.
“Executives are telling us that IIoT technologies are about to play a significant role in business and industrial performance, delivering significant improvements in operational efficiency and uptime, as well as growth from new business models, products, services and customer experiences,” says Dave Murray, head of thought leadership. “Nevertheless, less than 2% of large companies say they have a clear vision for how to move forward or have large-scale implementations underway. That dichotomy suggests we are experiencing the lull before the storm of IoT transformation. This is an opportunity for real competitive differentiation and advancement.”
Key findings of the IIoT survey include:
- 52% of executives at large enterprises and 41% of executives at all companies expect IIoT to have a significant or major impact on their industry within three years. Some 55% of all executives say IIoT is gaining adoption within their industries, including both pilots and larger-scale adoption.
- However, just 1.5% of executives at large companies say they have a “clear vision with implementation well underway,” while another 57% are either beginning implementation, have pilots underway or are committed and in the planning stages.
- New products and services lead as the area most companies say they will focus their IoT investments (35%), followed by customer touch points (29%) and manufacturing (23%).
- More cost-efficient operations (47%, product and service differentiation (36%) and improved customer engagement and satisfaction (34%) are seen as the top benefits of IIoT.
- Security and data privacy are seen as top concerns by executives, followed by the cost and complexity of IIoT adoption and the need for new management and workforce skills and training.
“The tidal wave that is connectedness and IIoT is building rapidly and it is unavoidable,” says Chris Locher, vice president of software development at The Nerdery. “Companies see massive opportunities to increase efficiency, gather data in new ways and pivot into new business models. The challenge of the IIoT revolution is that it is accompanied by a great deal of white noise and confusion. How will companies capture those opportunities? How do companies avoid the risk of a failing at an IIoT initiative? How do you find employees with the skill to do it? The sheer scale and implications of IIoT can lead to information overload and create analysis paralysis and confusion for business leaders. The key to moving confidently into this new space is starting with small, focused efforts or bringing experts to start to build the required skills, behaviors and business models.”
Making the transformation to IIoT-enabled business will clearly require new skills and management thinking. Chief among those requirements, according to executives, are new technical skills (51%), better data integration and analytics capabilities (41%) and re-thinking of business model (33%). Most executives, however, say their companies have significant gaps in these areas.
Some 31% of executives say their organizations face a “major skill gap” in their IoT readiness, while another 31% say the talent gap is “large, but improving somewhat.” Twenty percent say their IoT skills are quickly improving, while another 7% believe they have most of the skills in place.
Similarly, just 12% give their company an “excellent” rating in their capacity to develop and deploy applications that utilize real-time insights and systems monitoring. However, another 35% rate that capacity as “good.” One third rate their corporation’s ability in this area as “moderate and improving.”
“Global businesses clearly are working to put the needed skills in place to address the opportunity of connected, intelligent products and machines, but those talents are in short supply. We can expect for the time being that system integrators, consulting and software engineering firms with the right skills in connectivity, sensor technology, data analytics and complex integration will benefit from the race to keep pace with IoT enablement,” says Murray.