Report Shows Plenty of IoT Opportunity for Channel
How are large global companies using The Internet of Things? How much are they spending on the implementations and where are they investing? How does IoT improve business models, products and revenue? What are IoT’s key benefits?
How are large global companies using the Internet of Things (IoT)? How much are they spending on the implementations and where are they investing? How does IoT improve business models, products and revenue? What are IoT’s key benefits?
Tata Consultancy Services, a global provider of IT and business solutions, answers those questions in “Internet of Things: The Complete Reimaginative Force,” a survey of 715 executives from large companies worldwide that already have IoT initiatives underway. An additional 80 respondents plan to implement IoT solutions by 2020.
VARs looking to develop IoT practices, consult with customers on implementations, or unearth new IoT business opportunities can find a wealth of information in the report that can help fuel their initiatives and inspire their teams. To start off, here are some main solution sets the executives have applied IoT technologies to:
- Premise Monitoring. Banks, retailers, hotels and airlines, for example, are placing sensors, cameras and other devices in areas where they do business with customers.
- Product Monitoring. Companies embed sensors, software and other technologies into their products—coffee machines, refrigerators, big-haul trucks and aircraft engines—to monitor usage and performance.
- Customer Monitoring. Using mobile apps loaded on a smartphone or a wearable to track consumer behavior.
- Supply Chain Monitoring. Adding sensors, cameras and other digital devices to production and distribution operations.
One of the main points of the report was to find out how big companies view IoT and how the technologies change the way they operate. Here are a few takeaways:
- Serious Initiatives. About 80 percent of big companies already use IoT technologies, mainly to track consumer behavior, products and supply chains. By 2020 92 percent of all large global companies plan to have IoT initiatives in place.
- Huge Investment. Each company with an IoT initiative in place plans to invest $86 million, about .4 percent of revenue, to expand the projects. They expect their IoT budgets to increase by 20 percent in three years to $103 million.
- Big Companies, Big Spend. Spending on IoT solutions corresponds with the price of a company’s products and services. Companies that sell products for more than $10 million—aircraft engines or power turbines, for example—will each spend an average of $335 million on IoT initiatives. Those with products that sell for $100 or less will spend roughly one-eighth of that, or about $39 million.
- Going Mobile. Mobile apps are the most frequently used IoT technology. About 50 percent of the companies use them to track customers. About 25 percent of companies use embedded sensors to track the products they sell to customers. Another 25 percent use IoT to track customer behavior in stores and various branches of a business.
- Global Adoption. North American companies plan to spend .45 percent of revenue this year on IoT initiatives, European companies .40 percent, Asia-Pacific companies .34 percent, and Latin American .23 percent. North American and European companies, it turns out, sell more smart, connected products than Asia-Pacific and Latin American companies.
- Nice ROI. Companies with IoT programs in place said average revenue increased 16 percent last year in areas where the technologies were deployed. About 9 percent of the firms had an average revenue increase of more than 60 percent. The biggest gains were realized through customized offerings and tailored marketing campaigns, faster product improvements and more effective customer service, mainly because problems with products were solved before customers knew about them.
- Manufacturing Wins. Out of 12 global industries, industrial manufacturers gained the greatest benefits from the IoT, including a 29 percent revenue increase. Manufacturers attributed their improvements to the use of sensors and other technologies to monitor the products they sold. Manufacturers ranked second in IoT spend, averaging $121 million per company, just behind the travel industry’s $129 million.
- Challenges. Executives said they needed to resolve a number of strategic, cultural and technology issues to fully leverage IoT solutions. Top strategic issues included identifying and pursuing new business opportunities, and deciding what data to collect. Top corporate/cultural challenges included the struggle to get employees to change the way they think about customers, products and processes. Finding top executives who believe in the impact of IoT and are willing to invest in it also posed challenges.
- Where VARs Can Help. Technology-related issues include how to handle big data, deciding which IoT technologies to develop internally vs. externally, integrating IoT data with enterprise systems, and ensuring that solutions are reliable and secure.