Is The IoT Making Progress In Business?

A new study identifies cost and security issues as obstacles, but optimism is growing.

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Mention the Internet of Things and most people think about smart appliances or wearable electronics. But one of the biggest growth opportunities involves the digitalization of the workplace, and this is where a business case can be made—or lost—for widespread adoption of connected devices.

A new Economist Intelligence Unit study found that 21% of executives surveyed believe the IoT already has had an impact on their business, and another 30% believe it will impact their business in the near future. The most cited benefits were innovation, new revenue opportunities (including new markets and industries) and lower costs, with 47% saying the IoT will be one of the most important parts of their company’s digital transformation strategy.

It’s not all positive news. Of those surveyed, 56% felt progress hasn’t happened as fast as they expected. Some (29%) blame the high cost of IoT infrastructure, while others (26%) point to concerns about security and privacy.

What makes this study especially interesting, though, is its focus on business. IoT has become an umbrella term for everything from a smart watch to a connected car to cloud-based processing, and benefits in many markets are subjective. In a business setting, the results can be more narrowly defined, which makes it easier to figure out which sectors are benefiting the most and why.

As you might expect, the biggest improvements seen were in data management and analysis (38% of respondents). The IoT allows data to be collected from a wider pool of devices and analyzed much thoroughly. What companies do with that data isn’t clear from this report, but the ability to pull from more sources and devices is a potentially powerful tool for business. That ties in with improvements in B2B or B2C products or services (No. 2 on the improvements list at 29%), followed by technology infrastructure management (27%). Only 19% saw improvements in employee productivity, though, and only 18% saw improvements in customer service/support and supply chain management/logistics, while 16% reported no positive changes.

This isn’t surprising with new technology. In the first few decades of mainframe computers, companies that could afford to buy this equipment had a hard time showing improvements in worker productivity versus the cost of buying and maintaining equipment. The same challenge followed the introduction of minicomputers, which were certainly less expensive than mainframes but equally murky on ROI. That debate also followed PCs and all the related support costs for more than a decade. In fact, it wasn’t until the 1990s that productivity versus cost analyses began leaning heavily in favor of computer technology.

What companies learned from PCs, and eventually from tablets and smartphones, is that keeping employees connected made companies much more responsive to their customers, as well as much more cohesive internally. The IoT allows companies to refine that behavior even further, for better or worse. In forward-looking companies, it can empower employees to work together and become more innovative. In also can be used to count productivity and compare employees’ contributions to the bottom line on an unprecedented level. Which way companies go may depend on their competitive position in certain markets and the ability of executives to lead as well as to leverage statistics for improved management.

But what’s clear from this study is that businesses are willing to add new tools and adopt new technology. How they use them could have big implications for the future of semiconductors, software, and connected systems. (The full report, which was sponsored by IBM and ARM, is available here.)