By Alicia Asín, Co-founder and CEO of Libelium
2020 is ending… and now, what about the IoT?
The promise of the IoT market has been growing for the last 15 years, with many market analysts predicting that we would reach 50 billion devices by the magic year 2020. Now that we’ve arrived here, the reality is a little more conservative (we’re about 41 billion devices short of the forecast). Has IoT failed to live up to its promise? No, but the industry is evolving in a radically different direction to the one predicted a decade and a half ago…
Firstly, the failure to reach 50 billion connected devices this year shouldn’t really come as a big surprise – according to Gartner, more than 75% of IoT projects fail, mostly at the proof of concept stage (almost a third fail this early, according to Microsoft). So what are the main barriers to IoT adoption that are preventing the industry realising the hype of the mid 2000s, and how should the industry adapt to them?
What is happening in the IoT market?
The hyperfragmentation of the IoT market is probably the most important barrier to reaching the magic 50 billion devices. IoT is a totally sector-agnostic technology, with the power to revolutionise cities, agriculture, water treatment, environmental management, mobility, logistics, health… you name it, IoT could (probably) make it better. Added to this is the ability to transcend national borders – when we talk about IoT success stories, we’re talking about large scale projects rather than stand out countries.
This wide scope may sound good, but having so many parts to the IoT sector makes it hard to define the limits of the market. Indeed, is the IoT a market at all? Or more an aggregation of lots of different bits of technology in multiple applications and verticals? Sure, the variety of communication options, from sensors through to cloud platforms, brings competitiveness to the market.
However, it also adds a big layer of complexity to any end-solution due to interoperability issues. Multiply that by the problems in cross-application interoperability and you have a Gordian knot of devices and connections that, let’s face it, scares a lot of potential projects away.
Before I go on, one final point on hyperfragmentation – there’s also the segmentation between industrial IoT and consumer IoT. For simplicity’s sake, from here on I’ll be referring exclusively to industrial IoT, but it’s an added complexity that’s worth keeping in mind.
2) Everything starts with the hardware
Since the origins of the term Internet of Things, half of the concept has been undervalued, ignoring ‘things’. Even though the hardware underpinning IoT solutions is monetised in 95% of cases, many ignore and take for granted its importance in the IoT chain. Many believe that the real value of IoT is in the data, but conveniently ignore the fact over 80% of that data is processed in the devices themselves. The accuracy and duration of hardware such as sensors is a critical factor in IoT applications, and undervaluing it is a key reason for so many IoT projects falling at the first few hurdles.
I’m all the more puzzled by this ignorance of the importance of hardware when looking at IoT projects in air or water quality, the next big verticals in environmental IoT. Where projects are deployed there, IoT devices are closer to expensive meteorology equipment, with the added capability of analysing and integrating data in the cloud.
Smart Cities projects, also, have integrated advanced hardware into their processes. For example, the initial concept of putting a CO2 sensor on every streetlight at the lowest possible price has evolved in favour of increasing and enhancing the capabilities of the city’s weather stations. IoT is moving away from “cheap devices, vast data” to a more bespoke, holistic service for individual projects.
3) Size matters
A survey by Libelium showed that less than 12% of IoT projects can be classified as “large”, with the vast majority of those still in the proof of concept phase. According to analyst firm GSMA, 95% of companies adopting IoT are SME’s, largely thanks to shorter decision-making processes compared to larger organisations. Despite this, SME’s often struggle with scaling and replicating IoT solutions. On many occasions, this is blamed on a lack of clarity in the definition of the business case and the return on investment of the project.
However, IoT projects should have motivations beyond direct cost savings. For example, in terms of compliance, the purpose of using connected technology can range from environmental regulation to ensure the proper functioning of management systems within a business. Saving money is one driver for the implementation of IoT, but it is by no means the only reason to invest in connected technology.
4) Human factor
Advocating for the need for greater interoperability in IoT project architecture often goes hand in hand with ecosystem work. The different component parts that make up a full project are so complex that it is difficult for one company to master them all, and that’s without involving all of the market intelligence components to which you want to apply the solution. To put it in more simple terms, we often see technology companies offering complete solutions in smart agriculture without key knowledge of the agriculture vertical. This creates a gulf between the solution providers offering the tool and the end-users.
The need for ever more complex collaboration adds further challenges to the development of the project, such as the interaction of people from different companies and different corporate cultures. This, together with the complexities of the technology involved, makes it difficult not only to create a complete solution but to even calculate the total cost to the end-user of the operation. Ultimately, this puts many off building complex systems, further limiting the possibilities of IoT.
Perhaps the biggest human factor barrier to IoT adoption, though, is opporition to change. It’s a hackneyed, but nonetheless true, concept that organisations are made up of people who shape the corporate soul of a business. Opposition to new processes is perhaps the barrier that has grown the most in the last few years – Management teams are worried that, whilst exhaustive sensorisation and measurement of processes will help businesses improve, it will also expose problems that they are either unable or unwilling to confront.
5) Implicit obsolescence
Maybe those management hold-ups aren’t so misplaced as they appear, though. As IoT technology evolves, many assume that the maturation of devices means that hardware will need replacing every couple of years.
The necessary adaptation and evolution of technology to the latest developments makes tenders more sensitive to price due to the replacement and renewal requirements. Should this be a barrier? Financially, it’s understandable, but some of the “worst case scenarios” about how quickly technology becomes obsolete are hyperbolic at best.
6) Security beats privacy
Technology and information security is important, but it isn’t seen as critical in project planning. The lack of prioritisation of security in the proof of concept stage triggers a climate of hypocrisy where companies simultaneously claim security is a top concern whilst failing to allocate proper budget for secure data transfer between devices and the cloud.
Moreover, if the past six months have shown us anything, it’s that security trumps privacy more and more in the eyes of the public. Citizens are more flexible in what data they give up if it means greater security for them and their family. Where transparency helps to save lives, though, tighter security regulations should ensure those giving up data have nothing to fear from an attempted breach.
7) COVID and the Future
Is any article complete these days without a nod to the pandemic? Many of the changes we’ve seen over the past year will have a profound effect on the world for many years to come, and the IoT sector is no different. Remote working is accelerating the process of digitalisation, particularly in process automation and the remote control of production assets. Once industries are digitally transformed and connected, I find it hard to think of a scenario where they would revert back to their pre-IoT condition.
» Discover: IoT Technology Post-COVID
So, IoT faces several barriers, but it’s also proven to be one of the most sought-after technologies of the pandemic as industries look to move towards more digitally enabled processes. Where does that leave the future of the sector? Many of the aforementioned barriers to adoption come as a result of increasingly complex solutions with multiple layers of companies and interoperability issues.
My prediction for the future? IoT needs to move towards a business model that prioritises holistic IoT solutions, rather than focussing on one specific area. Post-pandemic, the sector needs to shift away from hardware and software providers, and become an industry that provides whole solutions to problems in every vertical.
Libelium is exploring new business models that will implement in the near future as part of its strategic shift from hardware vendor profile to whole IoT solutions provider.