Basking Ridge, N.J. – Enterprise adoption of the Internet of Things (IoT) is poised for huge growth over the next five years, and is expected to have a huge impact on businesses across industries, according to new research conducted by ABI Research for Verizon Enterprise Solutions. The report finds that the number of business-to-business (B2B) IoT connections will more than quadruple between 2014 and 2020, reaching an estimated 5.4 billion connections globally.
The report, "State of the Market: The Internet of Things (IoT) 2015: Discover How IoT is Transforming Business Results," also reveals that organizations will introduce more than 13 million health and fitness tracking devices into the workplace by 2018. On the other end of the spectrum, Verizon’s telematics experts said 14 auto manufacturers account for 80 percent of the global automotive market, and they all have a connected car strategy.
The IoT will also play a future role in where companies decide to invest and open facilities. By 2025 smart city capabilities will become a critical consideration for companies due to their impact on operating costs and talent availability, said Verizon.
While the report indicates that enterprise adoption of the IoT is starting to gain momentum, Verizon is already making big gains. Verizon grew revenue by 45 percent year-over-year in its IoT business in 2014, with 4GLTE activations growing by 135 percent. Verizon currently manages more than 15 million IoT-enabled connections for a wide range of industries.
According to the report, machine-to-machine connections managed by Verizon resulted in the following growth by sector in 2014:
|Finance and Insurance||128 percent|
|Media and Entertainment||120 percent|
|Home Monitoring||89 percent|
|Retail and Hospitality||88 percent|
|Transportation and Distribution||83 percent|
|Energy and Utilities||49 percent|
|Public Sector/Smart Cities||46 percent|
|Healthcare and Pharmaceutical||40 percent|
What’s driving businesses to adopt IoT-enabled solutions? Growth is fueled by technological, political and social factors, according to the report. One example cited shows that the use of social media and mobile technology has transformed consumer and citizen expectations. In addition, shrinking costs for sensors, connectivity, and processing power is making IoT a better value proposition to more companies, as well as changing regulatory requirements across a number of industries, said the report.
"When you look across the spectrum, IoT covers a multitude of solutions, from wearable devices, to remote monitoring of energy management devices to industrial transportation to improve safety and efficiency. New use cases are created every day; however, the business case for IoT and enterprise adoption often gets overlooked," said Mark Bartolomeo, vice president IoT Connected Solutions at Verizon, in a press release. "Within the past year, amid an improving economy, we've seen a number of new entrants starting to use IoT as a roadmap to improve their customers' experiences, accelerate growth and create new business models that are driving societal innovation."
Verizon defines IoT by the “Three As.” For a solution to be considered as part of the IoT, it should demonstrate the Three As: Aware, Autonomous, and Actionable. See the Verizon table below.
An interesting trend noted in the report is the replacement of customized solutions, which entails many enterprise IoT implementations, with more off-the-shelf solutions. However, along with these broader implementations comes greater security challenges. Digital certificates may be the answer. “Digital certificates can help address C-suite and public concerns and meet regulatory requirements around IoT and security,” said Verizon.
Despite the growth, widespread enterprise adoption is still low, said Verizon. The company estimates that only 10 percent of enterprises have deployed IoT technologies extensively, which includes connected car applications. For example, Verizon's telematics experts report that more than 600 million vehicles worldwide are currently not connected to a network.
But organizations should start to take a closer at implementing IoT technologies now if Verizon’s prediction is true. Verizon predicts: “By 2025, best-in-class organizations that extensively use IoT technologies in their products and operations will be up to 10 percent more profitable.”
Three key areas where IoT can help businesses focus on increasing revenues, improving operational efficiency, and finding new ways to do things. “The ability to gather data and turn it into insight is an important factor in building and sustaining competitive advantage,” according to the report.
Some of the biggest barriers cited by Bartolomeo include complexity around building a strategy and developing IoT solutions, as well as the creation and ratification of industry standards.
"As machine-to-machine technology adoption continues to move downstream with millions of endpoints connected, it will change how we see cybersecurity and privacy," Bartolomeo stated. "Our role is to help key decision makers tackle complexities like security head-on by encouraging a more proactive posture in order to create value for their organizations while reducing potential risk."
The report covers key factors that are driving IoT deployments and includes guidance on how to develop an IoT strategy.