Microsoft: IoT adoption in businesses is critical for success

The global internet of things market is growing at an exponential rate, and businesses are encouraged to increase IoT adoption for operational and economic success. A recent report by Microsoft noted commercial, enterprise-grade organizations in particular are seeing a significant increase in IoT adoption, investment and use cases across various industries.

According to Microsoft in its "IoT Signals" report, enterprise IoT adoption ensures economic success; on average, businesses expect a three-year payback -- roughly a 30% ROI -- from IoT implementation, and Gartner research showed less than 5% of businesses have not met that expectation in the last five years of surveying.

"For organizations that have not begun to investigate IoT and its potential contributions, the time is now," said Eric Goodness, Gartner research vice president. "[IoT] capabilities are improving legacy systems and wringing out costs while improving service levels."

Gartner research is in line with Microsoft's findings; according to Goodness, IoT programs have a strong track record of ROI and very low failure rates. Goodness attributes the necessity of IoT implementation to optimization and transformation opportunities within the enterprise.

Microsoft identified five overall top motivations behind IoT adoption: Efficiency and operations optimization (top priority for 56% of respondents), employee productivity (47%), safety and security (44%), supply chain management (40%) and quality assurance (40%). However, use cases vary across industries. For instance, supply chain and inventory optimization is most important for retail companies, while manufacturing values automation, quality and compliance, production planning and safety benefits of IoT adoption.

Overall, Microsoft found that once organizations adopted IoT, they experienced business benefits that aligned with their particular, original motivations for adoption. Nearly a quarter of enterprise decision-makers reported high success with their IoT implementations and 41% reported moderate success. Despite a third reporting low success with their implementations, 88% still believe IoT is critical to overall success.

Of the 3,000 enterprise representatives surveyed by Microsoft, 85% have established IoT projects within their organization, ranging in completeness from rudimentary learning phases to complete, in-use phase. Microsoft predicted that adoption is projected to keep growing at a rapid pace, and that by 2021, adoption will increase 9% and 94% of businesses will be using IoT by then.

An IDC report verified the stated support for IoT implementation. According to the IDC "Worldwide Semiannual Internet of Things Spending Guide," global IoT spending is expected to grow 15.4% from $646 billion in 2018 to $745 billion in 2019; IDC predicted spending will surpass the $1 trillion mark by 2022.

Enterprise industries such as manufacturing, transportation and utilities account for $329 billion -- or 44% -- of 2019's predicted spending, with consumer, government and healthcare IoT spending representing the remaining portion, according to IDC.

While Microsoft proved IoT's positive impact on business operations, it is not without its drawbacks, challenges and investments to make implementations profitable and efficient. Survey respondents noted complexity and technical challenges, lack of resources and lack of knowledge as major challenges.

"IoT is a tsunami of data, dependent on people," said Alfonso Velosa, Gartner vice president and analyst. "IoT projects are simply business projects hiding under a technology label; success means ensuring all parts of an enterprise are clear with goals and initiatives."

Velosa noted that while IoT implementation is necessary, there are three main challenges to implementation that businesses are typically not prepared for: prioritizing implementations and identifying how its aligned with business goals and supported; building a culture around the deployment and ensuring technological and business implications are understood by employees; and ensuring technological understanding, accounting for vendor training, realistic implementation in the field, connecting analog technology with IoT, scaling data, considering custom integration and development, and the need for programmers.

Lack of knowledge is an overarching concern from enterprises; without knowledge of specific equipment, underlying problems or how to optimize an IoT program, it will take longer to implement and delay benefit to the company.

Only 19% of Microsoft participants noted security as a potential challenge to IoT implementation, but Velosa stated implementing security measures is often reactive.

"IoT projects are implemented in a business sense and, if they're lucky, there's a good technological architecture that has strong security measures," Velosa said. "If they're not lucky, they have to scramble to retrofit."

Gartner identified security-related measures -- such as social, legal and ethical issues; IoT governance; and trusted hardware and operating systems -- as top trends in IoT development for 2019. In fact, security is the most significant area of concern for IoT adoption within organizations according to Gartner.

"Starting out, almost every company upfront wants good security. That is not a concern," Velosa said. "Integrating [security into the architecture] and getting the data out of other implementations is more difficult."

As IoT becomes widely deployed, organizations lose control over the source and nature of software and hardware used in IoT initiatives, which inhibits trust and security in IoT deployments, making it a priority for 2019. Gartner predicted over the next four years, software and hardware combinations will be deployed that will create more secure systems.

Additionally, corporate strategies and the ownership and deductions made from IoT data must remain ethical and socially acceptable, which is why Gartner called for education on the topic, GDPR compliance and formation of ethics councils. Similarly, IoT data dissemination and uses requires a governance framework to ensure proper handling, storage and deletion. Gartner described governance as anything from device audits and firmware updates to control over devices and how IoT information is used.

Other IoT trends identified by Gartner include AI integration, infonomics and data broking, shifting from intelligent edge to intelligent mesh, sensor innovation, creation of novel IoT experiences, silicon chip innovation and wireless networking IoT technologies.