IoT appeared as an emerging technology in the 2011 Gartner Hype Cycle. Since then, industry leaders have espoused on the values of IoT with fascinating imagery. Your car turning the lights on in your house as you pull into the garage, your refrigerator ordering chicken wings before Football Sunday, and more. Though many of these visions have not materialized, the promise of IoT remains strong, particularly given what was discussed in Part II of this blog series regarding the 5G powered opportunity expansion. But why has IoT not yet taken off as predicted?
A 2020 Beacham Research Report of Why IoT Projects Fail identified that only 12% of IoT projects were successful. More light illuminating the underlying causes to these IoT project failures from a 2019 survey by Microsoft, which found the top 4 challenges as follows:
- Complexity/Technical challenges – 38%
- Budget/Staff resources – 29%
- Lack of knowledge – 29%
- Have not found the right IoT technologies – 28%.
McKinsey entered into the mix in 2019 with a telephone survey of IoT practitioners from large companies implementing IoT projects. The number one capability gap identified by a significant margin was integrating IoT solutions into existing workflows, which 70% believed this to be a major obstacle to overcome.
Taken on their own, each of these surveys provides valuable insights into the challenges experienced when launching IoT projects. When taken together, a clear picture starts to emerge - successfully implementing IoT projects is difficult. Why do so many challenges exist ten years into IoT commercialization? Let us pull back the covers and see what lies beneath.
“Nothing in the world is worth having or worth doing unless it means effort, pain and difficulty….” Theodore Roosevelt
No, Theodore Roosevelt was not an IoT visionary; however, his words are a reality check for starting IoT projects. Organizations need to recognize the challenges that they must overcome for their IoT projects to be successful. These challenges can be grouped into three main categories: Complexity, Cost, and Culture.
Complexity Implications of IoT
By its very nature, technology is complex, but IoT is not a specific technology. IoT is an ecosystem comprised of multiple technologies that must work in concert to achieve desired outcomes. Each component has its own complexities, but when combined these complexities can become overwhelming. Each enterprise must map out its own path based on the goals and objectives of their IoT strategy and considering their current technology landscape.
Furthermore, there is no single body of authority to establish IoT standards and protocols. Each component of IoT has its own group of standards bodies that are completely independent from the standards bodies of the other components. And if all this complexity is not enough, these functional components are manufactured by different vendors, resulting in a lack of cohesion across components, data structures and protocols. All of which requires a broader set of skills to manage the entire ecosystem.
Managing an IoT ecosystem becomes a resource-intensive business proposition, which leads us to the second main challenge to achieving success with IoT, Cost.
Cost Implications of IoT
The cost implications of IoT come from many sources, as IoT is not a single technology but a combination of multiple technologies and skillsets. In many cases, components of an IoT ecosystem are not part of the current IT stack, therefore technology purchasing is often one of the first financial impacts experienced when launching an IoT project.
And though costs of technology can be high, technology is not the biggest cost concern impacting organizations. That comes from the human capital needed to manage the components of an IoT ecosystem. Because these components come from different vendors, they were not designed to integrate with each other nor operate as part of a broader ecosystem, resulting in the need for large teams of resources. As IoT projects scale, the complexity multiplies in kind, requiring additional skills and resources. It is quite common to see IoT teams grow from five or six supporting a Pilot to many dozens needed as the project moves into Production.
Additional cost and complexity surface when organizations look to integrate IoT projects with existing operational processes. The essence of IoT is to leverage new technologies to achieve new business objectives, which leads to the creation of new operational processes. To maximize value from IoT, all internal processes and procedures must be evaluated and modified to align to the context specific IoT vision. This creates tremendous stress on staff, as highlighted by a March, 2020 HBR interview with Aymeric Sarrazin, CEO IoT Services Unit at Siemens, who identified that change management related to staff and workflow processes was a significant challenge to IoT success. This leads us to the third main challenge to achieving success with IoT, Culture.
Culture Implications of IoT
To understand the cultural impacts from IoT, it is best to consider the vision and strategy defined for the specific IoT initiative. Most often, the reason to launch IoT initiatives is to transform what a business does or how a business operates. To expound, here are some definitions of IoT from industry experts:
- George Westerman, MIT Principal Research Scientist and author of Leading Digital: Turning Technology into Business Transformation:
- “IoT is commonly understood to entail the inter-networking of devices in the physical world by fitting them with sensors and network-connected devices, but our approach is to view IoT not as a technology, but as a leadership opportunity, a mechanism to transform businesses”.
- Oracle:
- “The Internet of Things (IoT) describes the network of physical objects—“things”—that are embedded with sensors, software, and other technologies for the purpose of connecting and exchanging data with other devices and systems over the internet. These devices range from ordinary household objects to sophisticated industrial tools.”
The common thread between these definitions is the need for complete transformation of existing business models. To maximize value from these transformations, an overhaul of all internal and external processes is required. When executed well, transformation can create powerful outcomes, such as with Amazon, which started as an online book seller in 1994 and transformed into a multi-billion-dollar technology company. When not executed well, the consequences are equally staggering, such as with Blockbuster Video, which started in 1985 and grew to dominate the US video rental market by 2000, only to file bankruptcy in 2010. The lack of transformational vision at Blockbuster is summed up by the fact that, in 2000, Netflix presented a partnership offer to Blockbuster but was rejected. As described by former Netflix CFO Barry McCarthy, “Blockbuster literally laughed us out of the office”.
Make no mistake, IoT is transformational. IoT is vision. IoT is a strategy. IoT is an opportunity for an organization to redefine who they are and what they want to become. This requires serious contemplation, extensive research, and thought-provoking discussion, and this starts with the CEO and the Executive Team.
As the vision and strategy for IoT start to materialize, it is critical that executives consider the impacts these decisions will have on employees. And the focus needs to be with line employees, those that make an organization run. This is the group whose work lives will be the most disrupted. This point is summarized in the below excerpt from a 2018 HBR article The Leader’s Guide to Corporate Culture:
“Unfortunately, in our experience it is far more common for leaders seeking to build high-performing organizations to be confounded by culture. Indeed, many either let it go unmanaged or relegate it to the HR function, where it becomes a secondary concern for the business. They may lay out detailed, thoughtful plans for strategy and execution, but because they don’t understand culture’s power and dynamics, their plans go off the rails. As someone once said, culture eats strategy for breakfast”.
A clear, concise IoT Strategic Vision that incorporates every part of an organization will be used to build a common and shared sense of purpose and serve as a conduit through which employees’ focus will be shaped. This strategic vision along with educating employees of the reasons why these changes are being made and the importance of their support, will lay the foundation that will help employees prepare for the impending changes that lay ahead.
To support employees during this transformational period requires training and coaching that is equal parts instruction on new business processes and guidance on how to cope with change. The more support provided to employees on how to cope with change, the more employees will support the IoT strategic vision. These efforts far outweigh the costs they generate, and provide the foundation needed to achieve success.
Pragmatic IoT Project Engagement Approach
IoT Strategy is an enterprise-wide, iterative process that provides the foundation for business transformation. For organizations venturing down the IoT path, or struggling with their IoT initiatives, the below graphic provides a step-by-step guide to help navigate this complex yet exciting journey.
Once organizations understand the complexity, cost, and culture aspects of IoT, they must still take a very tactical approach to IoT projects. The above guide provides a visual road map of the steps to follow when deciding to venture down the IoT path. Following the below 10-step, iterative process will improve the chances for success.
- Enterprise Strategic Vision – who/what do we want to become
- IoT Strategic Vision – C-suite owner, senior management team, business objectives
- Lines of Business – where to focus, identify use cases to achieve business objectives
- Gap Analysis – data needs, technology needs, skillset needs, budget
- Technology Analysis – vendors identified, IoT team identified, responsibilities assigned
- Tactical Plan - implementation plan, operational processes identified, measures and cadence
- Project Trial – trial run of project, measure outcomes, identify issues
- Project Evaluation – what worked, what didn’t, what needs changing
- Iterate – adjust based on evaluations, re-run trial, repeat
- Production – upon successful trial, determine implementation plan, move into production
Winning in the Emerging 5G Powered IoT Brave New World
Babe Ruth once said – “Yesterday’s home runs don’t win today’s games.”
Certainly, the pragmatic IoT Project Engagement approach discussed above defines one of the key components anchoring a foundation for future success. But how does one go about choosing the target “winning” use case? Understanding how this use case fits within the broader emerging new and disruptive business model landscape is a start. Diamandis’ unpacking of 7 of these new business models expected to dominate in the next decade is eye opening. Within the selected business model, drilling down on the various digital interactions between people, things, enterprises, and processes will of course inform leadership as to the potential impacts to cost and revenue. Interestingly, as mentioned by the GSMA, it is not just cost savings and revenue generation that are important; compliance is moving up the agenda quickly! Also, paying attention to emerging ESG trends can bring many economic benefits as well. A case in point is the dramatic scaling of IoT device footprint that has caused concerns in some circles regarding potential adverse environmental impacts. However, recent analysis by Accenture suggests that 5G powered IoT is fundamentally a green technology. Furthermore, recent innovations regarding EM energy harvesting from 5G networks to power future IoT devices and, hence, positioning 5G/Edge/IoT networks into 5G energy grids, are highly innovative and disruptive thus reinforcing this powerful potential green angle to the future 5G/IoT ecosystem. Now that’s a new home run to address not only today’s but perhaps even tomorrow’s game! Exciting times ahead indeed!
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