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IoT Marches Into the Enterprise, Transformation Follows Quickly

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3 | IOT MARCHES INTO THE ENTERPRISE, TRANSFORMATION FOLLOWS QUICKLY

TABLE OF CONTENTS

4 INTRODUCTION

5 KEY FINDINGS

6 ROBUST IOT ADOPTION, MIXED RESULTS

7 MATURITY EQUALS SOPHISTICATION

10 WITH IOT MATURITY COMES ACCELERATED BUSINESS TRANSFORMATION

13 FOR GROWING BUSINESSES, IOT MEANS MUCH MORE THAN JUST CONNECTING “THINGS”

14 METHODOLOGY

14 ACKNOWLEDGMENTS

COPYRIGHT © 2018 FORBES INSIGHTS | 4

There have been ever-rising expectations for the Internet of Things (IoT), but how far along are companies,

and are they seeing these networks of interconnected devices and systems delivering business results yet?

This report, based on a survey of 700 executives conducted by Forbes Insights in partnership with Intel,

explores the growth, results and transformative effects delivered through IoT initiatives.

As indicated by the survey, a majority of executives, 63%, say they have already introduced new or updated

products or services that incorporate IoT capabilities, and 60% are leveraging their IoT infrastructure to

catalyze new business opportunities. In terms of IoT adoption patterns, the Forbes Insights/Intel survey

reveals four primary maturity clusters:

• LEADERS (14%): Organizations that have extensive IoT deployments across their enterprises.

• BUILDERS (38%): Organizations that have implemented IoT across selected functions or business areas.

• STARTERS (41%): Organizations that have begun implementing IoT on a limited scale.

• LAGGARDS (7%): Organizations that are either exploring or piloting IoT initiatives or have no IoT initiatives in place at this time but are planning to implement them in the near future.

The survey reveals that as IoT efforts mature within enterprises—and organizations embark on the journey

that takes them from laggard to leader—the sophistication of the organizations’ environment grows, and

greater benefits are realized. The intelligence and insights available through IoT systems are enabling

businesses to expand their horizons and explore new paths not possible before. Even more noteworthy: IoT

leaders identified in the survey are seven times more likely to be seeing rapid corporate growth than their

less advanced counterparts.

Interestingly, the more mature an IoT enterprise, the more hesitant its executives are to celebrate success,

reflecting their understanding that practical experience is gained as implementations and networks grow.

While a majority of leaders, 66%, agree that IoT is being overhyped and that its benefits will take more time

than expected to unfold, this is a view shared by only 35% of laggards.

Data is the fuel of the IoT engine, and for the most part, its availability to advanced technologies and

methods, from artificial intelligence to real-time analytics, is still limited. As IoT progresses across partner

networks, gaps in partners’ technology capabilities become more evident. Ultimately, IoT leaders not only

INTRODUCTION

Companies that lead in IoT are 7x more likely to see rapid growth.


KEY FINDINGS • IOT IS MAINSTREAM, BUT ONLY HALF OF EXECUTIVES SAY THEIR EFFORTS ARE

MEETING EXPECTATIONS. About half, 52%, say they are either leading the way with IoT or actively building IoT capabilities. The same number, however, report that their IoT programs are either close to or exceeding expectations—meaning half are not there yet.

• IOT HAS BEEN RAPIDLY EXPANDING. A majority, 84%, say their IoT networks have grown over the past three years. A similar number, 85%, anticipate growth in various components, especially visual analytics and cameras.

• THOSE THAT LEAD WITH IOT SEE BUSINESS BENEFITS. Leaders in the IoT space are seven times more likely to be seeing high growth rates versus the laggards. In addition, more than three-fourths of IoT leaders say IoT leads to increased revenue or profitability.

• EXECUTIVES ARE BULLISH ON THE IMPACT OF THEIR IOT LINES ON PROFITABILITY. Almost three-quarters of IoT-leading companies, 74%, expect a profit boost of more than 25% over the coming year because of IoT, versus 10% of laggards.

• FINANCIAL SERVICES AND HEALTHCARE LEAD THE WAY WITH IOT, WITH MANUFACTURING ADOPTION ACCELERATING. Close to six in 10 executives in the financial services sector, 58%, report having well-developed IoT initiatives, followed by healthcare organizations (55%). Growth in IoT systems has been most pronounced within the manufacturing sector.

• SKEPTICISM ABOUT IOT’S POTENTIAL IS HIGHEST IN THE EARLY STAGES, BUT ATTITUDES CHANGE AS ADOPTION GROWS. The survey finds executives are split on IoT’s role in business transformation, at least early on. About half, 51%, see IoT-driven transformation as advancing them past their peers. However, for leaders with mature IoT efforts, there’s no question: 94% say they are ahead of their peers.

• IOT IS TRANSLATING TO NEW BUSINESS LINES. Six in 10 executives credit IoT with opening new lines of business. A similar number are delivering IoT-borne services directly to customers.

have a much deeper appreciation and understanding about what’s required to produce successful IoT than

their laggard counterparts, they’re also more likely to be adopting advanced technologies and methods while

demonstrating a greater capability to tie IoT efforts more directly to their business requirements.

The following are the findings of this latest survey of IoT adoption. Throughout this paper, where appropriate,

we’ll make comparisons between leading companies and those lagging behind and provide a broad picture

of the steps enterprises need to take to achieve IoT success.


ROBUST IOT ADOPTION, MIXED RESULTS

Are IoT efforts meeting expectations at this time? Results are mixed. While executives understand the value of embracing IoT and will continue to do so, it may be too early for many to determine its rate of success.

While IoT is moving past the experimental or pilot stages and being readily adopted for production applications, only half of executives see their IoT initiatives as meeting or exceeding their initial expectations so far (Figure 1).

The more advanced or mature an IoT initiative, however, the more likely expectations are being met and exceeded. Notably, 84% of the leaders in the survey report their efforts have exceeded expectations, indicating that as IoT-based processes take hold, they begin to deliver impressive results. For companies in the earlier stages of IoT, the anticipated benefits are not readily apparent. For example, the majority of those companies that have started implementing IoT on a limited scale—the “starters”—report results are middle of the road, and only 2% have had their expectations surpassed. On the other hand, among the “builders”—those with some IoT activities within their enterprises—70% report above-average success. Still, only 5% of this group has seen IoT exceed their plans. (“Laggards” are not included, as they lack evidence of success or failure at this point in their maturity.)

Despite these varying levels of success, executives across the board have seen rapid IoT expansion within their companies. In fact, a majority of executives, 84%, say their IoT networks of connected devices, sensors, applications or nodes have grown over the past year, and for more than one-third, 35%, this growth has exceeded 10% (Figure 2).

Figure 1: Degrees of IoT Success (Respondents’ Ratings)

0% 0% 0% Overall Leaders

Not meeting expectations

Below expectations

Above expectations

Exceeding expectations

Meets expectations

1%

46%

37%

15%

6%

10%

84%

0% Builders

29%

1%

65%

5%

0% Starters

74%

1%

24%

2%


As IoT becomes a deeper part of an enterprise, it positively impacts the overall business, the survey shows. Close to three-fourths of leading IoT enterprises report corporate growth exceeding 10% in the most recent fiscal year, compared with only 12% of the “laggards” (Figure 3). This positive impact on the bottom line is only expected to continue: 75% of advanced IoT enterprises report increases in or potentially increased revenues, versus 41% of laggards—who have yet to see results—anticipating such gains in the future. At the same time, it’s noteworthy that two in five executives just starting the journey have positive expectations for this technology (Figure 4).

Figure 2: IoT Network Growth Over Past Year

Increased by more than 50%

Increased 10% to 49%

No change

Increased 1% to 9%

Decreased

34%

49%

16%

1%0%

Figure 3: Organizations Seeing Accelerated Growth in Most Recent Fiscal Year (Exceeding 10%)

73%

12% Leaders Laggards

Figure 4: Executives Reporting IoT Is Delivering, or Will Deliver, Increased Revenue/Profitability

75%

41%

Leaders Laggards

MATURITY EQUALS SOPHISTICATION

The maturity of IoT implementations—and potential business transformation—is also a reflection of the increasing sophistication of the technology and the way it is being employed. For example, Murali Selvaraj, chief information officer for Perkins+Will, sees his firm’s embrace of IoT as part of a “second wave” of IoT—employing devices and sensors to “help with the human condition.” For Perkins+Will, a global architecture and design firm, IoT is revealing new opportunities for human-centered design. The first wave of IoT, Selvaraj says, “was around efficiency, and was more transactional in nature—where we had IoT sensors all over the place, such as temperature controls. In the second wave, what I call the richer wave, we’re concerned with combining the human with the computer, and merging machine thinking with human thinking.”

For Perkins+Will, this consists of a new dimension to architectures and design of buildings—establishing intelligent cameras at strategic points around facilities to guide architects and designers in redesigning spaces, Selvaraj explains. Perkins+Will launched an internal startup called I/O, staffed by a team of data scientists, designers and architects charged with employing IoT technology to “reimagine architecture and design.”


While such firms have traditionally employed sampling techniques to determine or forecast optimum space usage in buildings, “with IoT, you don’t need to use a sample,” he says. The firm designed an intelligent camera that transmits data to base stations and provides analysis on the flow of people through rooms and facilities.

While IoT means one thing to an architecture firm, it means another to a manufacturing company. There is no single way to describe the Internet of Things—it varies industry by industry, both in types of systems and in use cases. The survey reveals that financial services and healthcare currently lead the way with IoT. Close to six in 10 executives in the financial services sector, 58%, report having well-developed IoT initiatives (as leaders or builders), followed by healthcare organizations (55%) (Figure 5). Growth in IoT systems has been most pronounced within manufacturing, with 47% of executives in this sector reporting growth in their networks exceeding 10% over the past year (Figure 6).

The compelling advantage of IoT is that it brings industries together into close collaboration. Companies within separate industries that may have had minimal contact may now be connected on a 24/7 basis. For example, one of the world’s leading transportation companies is sharing IoT data with manufacturing partners to better serve customers at all points. At UPS, the global delivery company, data flowing from its massive truck fleet has aligned the company closely with its vehicle manufacturing partner, says Jack Levis, director of process management at UPS. “We get IoT data on the health of an engine,” he explains. “Our automotive engineers came up with analytics on top of that to look for indicators that a failure may happen in the future. With analytics, we went from preventive maintenance to predictive maintenance. We do this by looking at which part is behaving differently from its peers. We’ve found some new vehicles behaved differently from their peers, and worked with the manufacturers on opportunities to fix their production line.”

Figure 6: Organizations Seeing Accelerated Growth in IoT Networks in Most Recent Fiscal Year—By Industry (Exceeding 10%)

42%

41%

35%

28%

24%

27%

47% Manufacturing/industrial

Communications

Healthcare

Energy

Financial Services

Transportation

Retail

Figure 5: IoT Maturity—By Industry(Reporting “selective” to “extensive” IoT implementations)

58%

55%

53%

51%

51%

47%

47%

Financial services

Retail

Communications

Transportation

Healthcare

Energy

Manufacturing/industrial


When looking at the greatest challenges executives see so far with IoT, finding the right applications, timeliness, and privacy and security concerns with the data collected top the list (Figure 7). For leaders in IoT, the pace of implementation has turned out to be the most frustrating aspect of their IoT rollouts, with 29% reporting issues with timeliness. Likewise, leaders have discovered, as reflected in the data, that accessing or making use of data generated or owned by third-party firms could be an inhibitor to their IoT plans. For the most part, the laggards—who are still in the earliest stages of IoT—are most concerned with acquiring or developing the most appropriate software (Figure 8).

Data storage is a pressing issue that will only grow as IoT adoption spreads. “With the amount of data incoming from sensors on our trucks, there is a lot to manually review, aggregate, store and analyze,” says Jeremy Stickling, VP of human resources and safety for Nussbaum Transportation. “We need to be able to store and aggregate the data at a

macro level, but still have slices of data that are granular enough to give an accurate indicator.” Nussbaum partners with transportation intelligence provider SmartDrive to assist with this challenge.

With data being such a key component, many organizations often find themselves with profoundly large and varied data sets. For Nussbaum, that means converting large amounts of data coming off truck sensors to actionable insights. Stickling reports that IoT is creating questions that haven’t been pondered before, and thus requires learning. “For example, what are specific g-force movements that indicate unsafe or fuel-inefficient driving?” he explains. “What is a reasonable throttle position? When hauling heavier loads, what type of throttle usage is necessary versus

Figure 7: Top IoT Challenges

24%

23%

23%

22%

22%

25%

25%

25%

Implementation and rollout has been slower than expected

Accessing edge devices/nodes maintained by third-party firms

Developing/maintaining appropriate algorithms/software

Data/image storage issues

Managing false positives/false negatives

Privacy/security concerns and challenges

Remote or edge equipment/nodes difficult to maintain

Too much latency in data transfers between edge equipment/nodes and central servers

“With the amount of data incoming from sensors on our trucks, there is a lot to manually review, aggregate, store and analyze. We need to be able to store and aggregate the data at a macro level, but still have slices of data that are granular enough to give an accurate indicator.”

JEREMY STICKLINGVP, HUMAN RESOURCES AND SAFETY,NUSSBAUM TRANSPORTATION


Figure 8: Top IoT Challenges—Leaders vs. Laggards

29%

27%

23%

22%

21%

20%

22%

22%

24%

25%

20%

27%

18%

18%

22%

18%

Implementation and rollout has been slower than expected

Accessing edge devices/nodes maintained by third-party firms

Too much latency in data transfers between edge equipment/nodes and central servers

Developing/maintaining appropriate algorithms/software

Privacy/security concerns and challenges

Managing false positives/false negatives

Remote or edge equipment/nodes difficult to maintain

Data/image storage issues

Leaders

Laggards

overkill for these situations? As we continue to track the data from these sensors, we need to establish reasonable thresholds for alerts to ensure we can tell an accurate story.”

WITH IOT MATURITY COMES ACCELERATED BUSINESS TRANSFORMATION

As these are still the early days for IoT, the survey finds uncertainty about the extent of business transformation that has taken place. Executives are split on IoT’s role in business transformation, at least early on. About half, 51%, would consider their enterprises to be ahead of their peers’ IoT-driven business transformation (Figure 9). However, as IoT efforts mature and take hold across the enterprise, there’s no question that transformation takes hold as well: 94% of IoT leaders say they are ahead of their peers in terms of transformation, versus 29% of laggards (Figure 10).

For UPS, IoT has increased data-driven decision making at an organization with a history steeped in data analytics. “UPS has always been an innovative company,” says Levis. “It has always been our culture to be a quantitative company—IoT and artificial intelligence fit with us.” Still, he advises, change management is a key piece of the process. “You still have to move people from seat-of-the-pants decision making to quantitative decision making. That may be counterintuitive to many, so they have to see the benefits.”

IoT is translating into new business lines as well, the survey finds. A total of 60%

Figure 9: Executives Compare Their IoT-Driven Transformation Progress With Their Competitors’

A pioneer: An innovator and first mover in IoT develop-ment and transformation

A leader: Ahead of our peers in IoT development and transformation

A follower: Behind our peers in IoT development and transformation

In the middle of the pack: On par with most of our peers in IoT development and transformation

A slow starter: Have not really begun IoT development and transformation

14%

37%27%

21%

2%

Note: Does not add to 100% due to rounding.


of executives indicate that their IoT initiatives enabled their organizations to expand or transform themselves into new lines of business, while 36% are considering potential new business directions (Figure 11). In addition, 63% already deliver new or updated services directly to customers via their IoT networks, and almost all the IoT leaders, 97%, indicate they have been able to expand their range of products and services, compared with 29% of laggards (Figure 12). Business areas that have seen new ventures or expansion include preventive maintenance, partner platforms, software upgrades, as well as tracking and tracing (Figure 13).

Overall, executives are bullish on the impact of their IoT lines on profitability. Currently, just about all credit IoT with playing a direct role in increasing profits, and all expect the same impact in the year ahead. Notably, at the high end, 13% report a profit bump of 15% or greater thanks to IoT—and by next year, 41% anticipate IoT-produced profits at the same rate. For the most part, executives see an increase of 5% to 15% by next year as a result of their IoT efforts (Figure 14).

Among IoT leaders, 76% report their revenue bump exceeded 15% as a direct result of their IoT efforts, versus 8% of laggards. Almost three-quarters, 74%, expect a profit boost of more than 25% over the coming year because of IoT, versus 10% of laggards.

For UPS, the impact of its IoT-driven On-Road Integrated Optimization and Navigation (ORION) system has translated into huge savings. “It ended up saving 100 million miles driven per year, which ended up saving $300 million to $400 million per year,” according to Levis. The system employs package-level detail, customized online map data, fleet telematics and advanced algorithms to determine the most efficient delivery route for each driver every day.

IoT-driven initiatives are helping to shift attitudes toward productivity as well. As a result of its IoT efforts, Nussbaum Transportation has seen a higher percentage of drivers now focus on safety rather than solely productivity and rushing through their

Figure 10: Comparing IoT-Driven Transformation Progress With Their Competitors’—Leaders vs. Laggards

Leaders Laggards

29%

94%

Figure 12: IoT Opening Up New Lines of Business—Leaders vs. Laggards

Leaders Laggards

29%

97%

Figure 11: Has IoT Opened Up New Lines of Business?

Yes

We’re still considering how our IoT initiatives can create new lines of business

No

60%36%

4%


workload. “As trucking has traditionally had a ‘go-go-go-get-it-done’ mindset, the paradigm has shifted, and productivity comes from carefully executed load planning and scheduling,” Stickling says. “At Nussbaum, we are always looking at ways to improve our grading system. Truck manufacturers are constantly adding new sensors, which our company evaluates on a case-by-case basis to see what they are tracking. We are also very in tune with Camera Vision—real-time visual analytics—as we think that is the next level of IoT.”

In terms of industry groups, manufacturers are seeing the greatest transformations from IoT. A majority of executives within manufacturing firms in the survey, 51%, “strongly agree” that IoT is opening up new lines of business for their organizations. Healthcare organizations follow with 43% (Figure 15). In addition, 37% of financial services executives report their IoT efforts have enabled them to offer new products or services, along with 28% of those with communications companies.

Figure 13: Business Areas Seeing Expansion From IoT

Platforms for partner development 48%Preventative maintenance 48%Software upgrades/updates 48%Tracking and tracing 48%Information monetization 44%Value-added personalized customer experiences 42%After-sales service 40%

Figure 15: Executives “Strongly Agreeing” That IoT Is Opening Up New Lines of Business—By Industry

36%

28%

26%

21%

51%

43%

37%

Manufacturing/industrial

Communications

Financial services

Energy

Healthcare

Transportation

Retail

Figure 14: Impact of IoT on Profits

45%

41%

13% 12%

30%53%

5%1%

Help(ed) increase profits by up to 5% per year

Help(ed) increase profits by 5% to 15% per year

Help(ed) increase profits by 25%+ per year

Help(ed) increase profits by 15% to 25% per year

It has/will not increase(d) profits

Most recent year Next year


FOR GROWING BUSINESSES, IOT MEANS MUCH MORE THAN CONNECTING “THINGS”

The IoT revolution is much, much more than an “Internet of Things.” More than simply providing real-time connections to objects or devices, IoT is building into a force of astounding change sweeping across the business landscape, knocking down the barriers that separated businesses from their customers, from their employees and from one another. As no other technology has done before, IoT is opening up vast opportunities for innovation. The enhanced ability to see and process what’s going on in and around organizations is energizing business and IT leaders to reevaluate the ways they’ve organized their businesses and underlying processes, as well as to open up new ways to reach customers. However, there is still much work to be done. Valuable data needs to be identified and integrated, and partners and customers need to be brought on board within connected networks. The benefits have to be obvious to all. Most important, IoT-enabled business transformation requires an opening up of corporate cultures to move forward. Innovation occurs at all levels. “You have to learn to trust the data, almost like a pilot has to learn to trust the instruments,” says Levis at UPS. “In our organization, we involve thousands of people, including the knowledge of our drivers, which are by far the best in the business.”

Trust in people and trust in data is the fuel that is powering today’s and tomorrow’s digital businesses.

“You have to learn to trust the data, almost like a pilot has to learn to trust the instruments. In our organization, we involve thousands of people, including the knowledge of our drivers, which are by far the best in the business.”

JACK LEVISDIRECTOR OF PROCESSING MANAGEMENT,

UPS


METHODOLOGY

Forbes Insights, in partnership with Intel, conducted a survey of 700 executives familiar with their organization’s implementation of IoT programs. The survey included responses from the United States (57%), Canada (9%), the United Kingdom (5%), France (4%) and India (4%). Seventy percent of respondents were in the C-suite of their organization, including chief information officers (17%) and chief technology officers (16%). Respondents were divided equally across seven key industries: communications, energy, financial services, healthcare, manufacturing/industrial, retail and transportation.

ACKNOWLEDGMENTS

Forbes Insights and Intel would like to thank the following individuals for their time and expertise:

• Jack Levis, Director of Process Management, UPS

• Murali Selvaraj, Chief Information Officer, Perkins+Will

• Jeremy Stickling, VP of Human Resources and Safety, Nussbaum Transportation


ABOUT FORBES INSIGHTS

Forbes Insights is the strategic research and thought leadership practice of Forbes Media, a global media, branding and technology company whose combined platforms reach nearly 94 million business decision makers worldwide on a monthly basis. By leveraging proprietary databases of senior-level executives in the Forbes community, Forbes Insights conducts research on a wide range of topics to position brands as thought leaders and drive stakeholder engagement. Research findings are delivered through a variety of digital, print and live executions, and amplified across Forbes’ social and media platforms.

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IoT Marches Into the Enterprise, Transformation Follows ...info.forbes.com/rs/790-SNV-353/images/Intel-IoT#1-REPORT-FINAL-… · in business transformation, at least early on. About