Vodafone
Vodafone IoT
Barometer 2016
Benchmarks and best practices to help
achieve the greatest return from Internet
of Things projects
vodafone.com/iot
Vodafone
Power to you
Vodafone IoT Barometer 2016 July 20162
Welcome
This is the fourth year that we’ve published
the Barometer, our annual study of how
the Internet of Things (IoT) is transforming
business. In that time, the market for
connected devices has truly come of age.
Our research has found that 28% of organisations already use IoT. A further 35%
are less than a year away from launching their own projects, and more than
three-quarters of businesses say that IoT will be “critical” for the future success
of any organisation in their sector.
So what matters now is not whether a business should adopt IoT, but
how. Organisations planning and implementing their own initiatives need
benchmarks and best practices that can help them maximise their returns.
In 2015’s report we started exploring these best practices through our
Sophistication Index, which proved to be one of the most popular elements
of the Barometer. This year we’ve gone further: right across the report we’ve
looked in much more detail at exactly which approaches businesses are taking
in their IoT projects, and which aspects have the biggest impact on return on
investment (ROI).
We’ve identified five key areas that are shaping the story of successful IoT
projects today, and within each we’ve identified best practices that you can
apply in your own IoT projects now.
The Barometer has always been a large, global study. This year we’ve expanded
the scope further, including organisations from Ireland, the United Arab
Emirates and the public sector. With nearly 1,100 total interviews, our sample is
about 70% bigger than in 2015.
As in previous years, we’ve turned to an independent analyst to provide
additional perspective on our findings; this year, it’s Matt Hatton of Machina
Research. We’ve also conducted in-depth interviews with leading companies
that have adopted IoT, including Philips Lighting. You’ll find extracts from
those interviews throughout the report, giving you a unique insight into
their successes.
Whether you’re one of the many organisations already using IoT, or are still
making plans, we hope you find the Barometer valuable. If you have any
comments or questions about the findings or how to drive your own initiatives,
please contact us at [email protected], or connect with us on Twitter
at @VodafoneIoT.
“76% of businesses say
that IoT will be ‘critical’ for
the future success of any
organisation in their sector.”
Erik Brenneis
Director, Internet of Things, Vodafone
CEO Vodafone Global Enterprise
Vodafone IoT Barometer 2016 July 20163
Contents
Defining the Internet of Things
The Barometer is an in-depth global study into how enterprises are using
Internet of Things (IoT) technologies. Here’s how we define IoT:
IoT connects objects such as cars, buildings and machines to the internet,
turning them into ‘intelligent’ assets that can communicate with people,
applications and each other.
IoT is a broad concept, capable of making all kinds of assets smart and
connected, from the smallest wearables and consumer devices to the largest
vehicles and industrial installations.
Despite this diversity, organisations that are setting out to build connectivity
into their facilities, infrastructures, products and processes face many of
the same decisions — and see many of the same results. It’s these common
experiences that the Barometer explores.
Executive summary ...........................................................................................................................................4
Continuity and change .....................................................................................................................................6
About the research ............................................................................................................................................7
1. Bigger commitment, better results ...................................................................................... 8
IoT remains a top business focus, and adopters are increasing their investment. Those that make a
bigger commitment see better results.
2. IoT supports business transformation ...............................................................................13
You can use IoT just to optimise operational processes. But when you build it into your products and use it to
transform your business, you’ll see greater results.
3. Leaders measure IoT within business processes ...........................................................18
Most adopters have clear goals, but the top performers are those that treat their IoT initiatives as business
projects instead of IT purchases.
4. IT integration is key to using IoT data effectively ...........................................................24
Adopters see that IoT applications are a gold mine of data and are focused on getting that data to the people
and applications that need it.
5. Security needs end-to-end attention .................................................................................28
Security and privacy can’t be ignored. Most adopters are cautiously optimistic, working with their IoT providers
to control the risk.
The future ........................................................................................................................................................... 33
Contributors ....................................................................................................................................................... 34
Vodafone IoT Barometer 2016 July 20164
Executive summary
Interest in IoT is higher than ever: 28% of businesses already have live
projects, with a further 35% less than a year away from launch. We’ve
explored how these businesses are using IoT in 2016, and which best
practices are driving success. Here are our five key findings.
1. Bigger commitment produces better results
IoT remains a top business focus, and adopters are
increasing their investment. Those that make a
bigger commitment see better results.
• IoT is at the heart of IT strategies. Adopters
assign 24% of the entire IT budget to IoT — on a par
with mobile, cloud and analytics (see chart, right).
Businesses that allocate more budget and run more
projects see stronger ROI.
• Interest in IoT is higher than ever. 76% of businesses
say that IoT will be “critical” to future success, and 63%
expect to have live projects within the next year.
• Adopters see strong results. 63% are seeing
“significant” return on investment, up from 59% in 2015.
What percentage of your overall IT budget do you spend
on the following technologies?
2. IoT supports business transformation
You can use IoT just to optimise operational processes.
But when you build it into your products and use it
to transform your business, you’ll see greater results.
• IoT is driving transformation. 48% of adopters say
they’re using IoT to support large-scale business
transformation and 29% say they’re using it to
connect multiple organisations into ecosystems
(see chart, right).
• Connected products are the growth area. Top
performers are using IoT to create connected products
and services. 46% of all adopters plan to launch
connected solutions in the next two years.
• IoT improves customer experience. 44% of adopters
say IoT has enhanced customer or user experience,
making it the most popular benefit seen.
Are you currently using your IoT solutions to ... ?
Level 5Level 4
Support
business
transformation
Level 3
Enable
connected
products
Level 2
Automate
processes
Level 1
Trigger
manual
processes
Connect
organisations
40%
50%
60%
30%
20%
10%
0%
Percentage of respondents
29%
59%
48%
64%
57%
10% 20% 30%
IoT
Cloud and hosting
Analytics
Mobility
24%
23%
22%
23%
Percentage of IT budget
Vodafone IoT Barometer 2016 July 20165
3. Leaders measure IoT within business processes
Most adopters have clear goals, but the top performers
are those that treat their IoT initiatives as business
projects instead of IT purchases.
• IoT produces measurable results. Adopters measure
on average a 20% improvement in key business
indicators like revenue, system uptime, cost and asset
utilisation as a result of using IoT (see chart, right).
• Effective planning is critical. 68% of adopters say
they set “clear targets” for their IoT projects — top
performers were more likely to have done so.
• IoT is a business initiative, not technology. 61% of
businesses say they consistently see IoT as an integral
part of wider business initiatives.
What percentage improvement have you measured?
10% 20% 30%
Reduced cost through automation
Reduction in system downtime
Optimised asset utilisation
Generation of new revenue streams
19%
20%
20%
21%
Percentage of respondents
4. IT integration is key to using IoT data effectively
Adopters see that IoT applications are a gold mine of
data, and are focused on getting that data to the people
and applications that need it.
• Businesses are integrating IoT with business
systems. More than 90% of adopters say they store
IoT data in the cloud, use analytics to support decision-
making, integrate IoT data with core systems like
enterprise resource planning (ERP), and use mobile
devices to give employees access to IoT data (see chart,
right).
• IoT is all about data. 81% of all businesses say that IoT
can only deliver real value if you effectively use the data
it generates.
• Sharing data is part of ecosystems. More than
two-thirds of those that use IoT say they feel safe sharing
their IoT data with other organisations.
How do you integrate your IoT solutions with other
areas of IT?
5. Security needs end-to-end attention
Security and privacy can’t be ignored. Most adopters
are cautiously optimistic, working with their IoT
providers to control the risk.
• Organisations are investing widely in improving
security. They’re focusing on staff recruitment and
training, process improvements and their relationships
with providers (see chart, right).
• Businesses are cautiously optimistic. While 30%
say they have changed or restricted the scope of IoT
projects to limit security risks, 75% say that security
risks are a fact of life, and more than 60% say they
already have the necessary skills, processes and
technology to manage IoT security.
• Providers have a big role to play. 76% of businesses
say that IoT should be secured end-to-end, and 91% say
that it’s important for them to work with an end-to-end
IoT provider.
What action is your business taking to improve the
security of your IoT projects?
10% 20% 30% 40% 50%
Training staff
Recruiting security specialists
Establishing a clear contingency plan
Establishing clear security best practice and guidelines for staff
Making security a major part of RFP requirements
Working with a specialist security provider
42%
41%
38%
45%
42%
40%
Percentage of respondents
Store IoT data and applications in the cloud
90%
Use big data and analytics platforms to support decision-making
94%
Integrate IoT data with core systems (e.g. ERP)
Give employees access to IoT data from mobile devices
92%
90%
20% 40% 60% 80% 100%
Percentage of respondents
Vodafone IoT Barometer 2016 July 20166
Continuity and change
Over the past four years, our research has stayed true to our central
focus of exploring the impact of connected machines — but we’ve
evolved, shifting from looking at awareness and adoption to impact
and best practices.
2013: The first M2M Adoption Barometer
• Interviewed 327 qualified respondents
• 12% had already launched M2M projects
• 55% said M2M was a “key priority”
• Americas ahead in adoption, at 14%
• 36% saw significant return from M2M
2014: Awareness and adoption get serious
• Interviewed 365 qualified respondents
• 61% of businesses had heard of M2M, 53% had heard of IoT
• Adoption rose to 22%
• 66% said they’d seen return on investment (ROI) within 12 months
• 75% said they were focusing on external-facing projects
2015: Measuring return and sophistication
• Interviewed 659 qualified respondents
• 78% of businesses had heard of IoT
• Adoption rose to 27%
• 81% of adopters increased their use of M2M year on year
• 59% said they’d seen significant ROI
• 79% said that M2M was about improving business processes, not
about buying technology
2016: The keys to IoT’s business value
• Interviewed 1,096 qualified respondents
• 89% have increased their use of IoT in the past 12 months
• 63% have achieved significant ROI
• 24% of IT budgets spent on IoT
• 48% use IoT to support large-scale business transformation
Vodafone IoT Barometer 2016 July 20167
About the research
In this, the Barometer’s fourth year, it’s bigger than ever. We enlisted
an independent research company to interview decision-makers on
a global scale about their use of IoT.
This year, we interviewed more people than ever: 1,096 qualified respondents. These respondents were carefully selected
to represent all kinds of:
• Regions: We surveyed 17 countries across all major regions: Australia, Brazil, Canada, China, Germany, India, Ireland,
Italy, Japan, the Netherlands, South Africa, South Korea, Spain, Turkey, the UAE, the UK and the USA.
• Industries: Respondents represented retail, manufacturing, energy and utilities, healthcare, transport and logistics,
automotive, consumer electronics, and industrials. For the first time we also surveyed public sector organisations.
• Sizes: We spoke to both SMEs and the largest multinationals. 15% of those we surveyed have more than 10,000
employees; we also included SMEs with as few as 10 employees.
• IT spending: Overall IT budgets ranged from under €10,000 to more than €50m.
• Roles: We only surveyed qualified decision-makers at senior manager level or above, but they represented a mix of
departments. 40% of our respondents were from IT functions; 13% were senior business leaders; 9% were from sales
and marketing; and 8% from finance.
Retail
Automotive
Industrials
Consumer
electronics
Transport
and logisitics
Healthcare
Public sector
Energy
and utilities
Manufacturing
8%
17%18%
12% 10%
13%
4%
10%
8%
Percentage of interviews across all sectors
Percentage of interviews across all regions Percentage of interviews across
all business sizes
Americas
29%
EMEA
43%
APAC
29%
10–249 employees
250–999 employees
1,000–9,999 employees
10,000+ employees
24%
33%
15%
28%
Vodafone IoT Barometer 2016 July 20168
Businesses are making IoT a priority. Our
research shows that they report stronger
results when they commit more budget
and run a greater number of IoT projects.
IoT is a bigger priority than ever
76% of all the companies we interviewed say that IoT will be “critical” for the
future success of any organisation in their sector. When IoT is so important to
your future prospects, the pressure is on to get results.
Organisations are working hard to bring IoT to life. Already 28% of businesses
have live projects, with a further 35% less than a year away from launch. And
for most adopters, the results are impressive. 63% of adopters are seeing
“significant” return on their IoT investment, up from 59% in 2015. (For the
regional view, take a look at the chart on the next page.)
We found a strong link between the ROI that businesses see from their IoT
initiatives and two key factors: the number of projects they have underway,
and the share of the overall IT budget they allocate to IoT.
Half of adopters have “many” IoT projects
When a business is truly committed to IoT, it sees opportunities to use it right
across the organisation. For instance, one Spain-based utilities company told us
that it was “boiling” with IoT initiatives:
Already, 13% of all adopters say they have “many” IoT projects, and a further
37% say they “run their entire business on IoT”. Organisations with multiple IoT
projects see better ROI, and those that say they run their business entirely on
IoT report the greatest benefits of all.
“IoT technology is universal in this company and definitely not an ICT
prerogative; we’re open to all types of suggestions. We have several ‘tele’
projects such as telemeasurement or smart metering, we’re looking at
smart security cameras to replace security guards, and we have a pilot
scheme of electric cars that we can fully manage remotely.”
Bigger
commitment,
better results
71%
71% of adopters that run
their business on IoT say
they see a significant return,
compared to 42% of those
that only have “a few” IoT
projects.
86%
86% of businesses
in the industrials
sector — including
companies in mining,
construction and waste
management — say they’ve
seen “significant” return
from implementing IoT.
Vodafone IoT Barometer 2016 July 20169
Netherlands-based Philips Lighting is a perfect example of a business that has
put IoT at the heart of its strategy. It offers IoT-based solutions that enable public
sector and corporate customers to remotely monitor and control street and
building lighting, driving down energy costs and improving quality of service.
It told us:
Businesses spend 24% of their IT budget on IoT
Many businesses already assign as much budget to IoT as they do to other high-
profile technologies, such as mobile, cloud and analytics — as Figure 1 shows.
On average, businesses spend 24% of their IT budgets on IoT. And more than
four in ten businesses spend over 20% of their IT budget on IoT.
There is a clear link between how much of the total enterprise IT budget is
allocated to IoT and the results produced. At one extreme there are those
businesses that allocate more than 40% of their IT budgets to IoT. 79% of them
say they have seen “significant” return on investment. On the other hand, those
that allocate less than 10% of their IT budgets to IoT still see good results, but
only 45% of them say the results are “significant”.
“IoT is becoming critical to our sector. There are compelling reasons for
our customers to demand connected lighting, and we have decided to be
part of it and to lead it. IoT is at the core of our strategy of becoming a
systems and services company.”
Bigger com
m
itm
ent, better results
20% 40% 60% 80% 100% 20% 40% 60% 80% 100% 20% 40% 60% 80% 100%
Seeing significant ROI
Seeing some ROI
Americas EMEA APAC
Seeing little or no ROI
53% 63% 70%
27%30%35%
13% 7% 3%
Percentage of adopters
Regional perspective: All regions see strong ROI from using IoT, but APAC leads
What percentage of your overall IT budget do you spend on the following
technologies?
Fig 1. Adopters allocate similar budget to IoT as to cloud, analytics and mobility.
10% 20% 30% 40% 50%
IoT
Cloud and hosting
Analytics
Mobility
24%
23%
22%
23%
Percentage of IT budget
N
um
ber of connected devices
79%
79% of businesses that
allocate more than 40% of
their IT budgets to IoT report
seeing “significant” ROI.
Vodafone IoT Barometer 2016 July 201610
Leadership backing helps to drive growth
Getting the business’s leadership on side is a vital ingredient in the success
of IoT projects. Cultural resistance can derail any new technology adoption,
particularly where, as with IoT, change is involved to how teams do their jobs. As
one UK-based transportation company told us:
In some cases, only board-level backing can overcome cultural resistance and
ensure that various IoT projects are being orchestrated effectively to avoid
fragmentation.
One China-headquartered distributor told us that it was committing a significant
— and growing — budget to IoT, and that senior management was taking a
leadership role in the initiative:
Businesses where the Board is involved in IoT purchases are more likely to
have increased their number of IoT projects in the past 12 months. They’re also
significantly more likely to say that IoT is “critical” to their success, at 86% versus
an average of 77%.
IoT projects come in all shapes and sizes
Some IoT projects are small: a quarter of adopters have fewer than 100 devices
connected. Others are huge: around one in ten organisations have more than
10,000 connections.
The number of connected devices varies significantly by sector: 12% of
consumer electronics adopters, for example, say they have more than 50,000
connected devices; conversely, 44% of manufacturers have fewer than 100
connections. These extremes of scale naturally reflect the variety of projects
that sectors may be engaged in and the kinds of infrastructure and products
they manage.
“Some departments love IoT, and you can’t deliver projects fast enough for
them. But the biggest problem we have is when other departments look
at IoT saying, ‘Why do I need to adopt, why do I need to change?’”
“Our senior management sees that IoT projects are worthy of our
investment as they help us attract new customers. The Board is pushing
us to integrate our projects and establishing a new functional unit to
handle the requirements.”
86%
86% of businesses that
involve the Board in their
IoT decisions say that IoT is
“critical” to their success.
The analyst view: Commitment and outcomes
Many businesses are still just dipping their toes in the water of IoT, with proofs-
of-concept and trials. For other, more progressive, companies it has become a
strategically critical issue permeating the entire operation as they recognise
that the additional capabilities, feedback mechanisms, closer client relations
and business models facilitated by the IoT will be essential to their future
success.
Enterprises that have, with the explicit backing of senior management,
committed their future to IoT will inevitably assign greater resources, and the
impact of their schemes will almost inevitably be proportionately greater. In
fact, the more sophisticated the IoT implementation and the more ingrained it
becomes in the enterprise’s operations, the more difficult it becomes to identify
a discrete ‘IoT’ element of IT, or any other, budget. IoT is just the way that these
companies work.
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su
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s
Vodafone IoT Barometer 2016 July 201611
Even small rollouts produce strong ROI
The number of connections involved in a rollout does not have the same level of
impact on ROI as budget and number of projects.
Our data shows that while larger projects — particularly with between 100 and
1,000 connected devices — are more likely to see significant ROI, small projects
and pilots also perform well, as Figure 2 shows.
That may be counterintuitive, but it’s logical. For example, you might be an
energy company remotely monitoring 100 expensive wind turbines and
avoiding days of unplanned downtime, or a retailer with 500 digital signs driving
increased sales through real-time promotions. In each case, the quantity of
connections may be low, but the impact on the efficiency and effectiveness
of a business process could be tremendous.
One China-based distributor we spoke to has an IoT project that gathers retail
sales data. This application is small, but the impact has been great:
Another benefit of smaller, simpler projects is that they’re a great way to quickly
demonstrate ROI and get the business on side as you progress toward larger and
more ambitious projects, as one UK-based transportation company found:
“At the moment, this system is being used by only 100 major outlets
selling our consumer products. When a product has been sold in one of
those outlets, the POS terminal transmits the data, giving sales managers
the ability to get real-time information on their mobile devices.
“It enables our senior heads in our strategy division to understand
how consumers react towards a product and its price so they can
advise the respective marketing and sales people to guide the retailer to
implement the appropriate product placement and pricing tactics. The
outcome is that our products become more marketable.”
“We started off three years ago with some big-bang type projects, but
justifying a programme on a regular basis is tough, it wastes money and
the business gets disappointed. So we’ve now gone to delivering in
incremental steps. This helps with proving that your spend is correct,
because you start to get some early return on investments and build
people’s confidence in the programme.”
55%
55% of businesses with fewer
than 100 connected devices
in their IoT projects report
seeing “significant” ROI.
Fig 2. Businesses see “significant” ROI no matter what size their IoT deployments.
Percentage of businesses seeing “significant” ROI
at different sizes of IoT deployment
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
<100 connected devices
101–500 connected devices
501–1,000 connected devices
1,001+ connected devices
55%
68%
70%
60%
Percentage of respondents
N
um
ber of connected devices
Bigger com
m
itm
ent, better results
Vodafone IoT Barometer 2016 July 201612
Regional perspective: Adopters around the world are increasing their commitment
Adopters increase their investment year on year
The vast majority of adopters say they’ve grown their use of IoT according to all
three of the indicators we’ve looked at, as Figure 3 shows.
This is clear evidence that commitment pays off, and that IoT is becoming a
central focus for the IT department. As one China-based aviation component
manufacturer put it, after experimenting with IoT for the first time:
The research suggests that the rate of year-on-year growth is actually
accelerating. In last year’s Barometer, we asked adopters if they’d increased their
overall use of IoT in the past 12 months. 81% agreed. This year, 89% say they’ve
increased their spend, projects and connections. In fact, many respondents told
us that they have more opportunities to use IoT than they can possibly work on.
As one Germany-based premium car manufacturer put it:
It’s important to note that as businesses increase their use of IoT, they’re not
just doing “more of the same”. For instance, one large US-headquartered food
manufacturer told us that as it added more projects, it actually evolved how it
procured and managed its IoT.
“In 2015, our first IoT project was proven successful and we won some
new clients. That’s when the CEO decided to incorporate IoT into our
regular IT development strategy.”
“We already have 24 IoT-driven features across our cars, and I keep saying I
have enough ideas for the next 5–10 years; I just need to implement them
in the car!”
“We’re gradually moving from small scale, one-off purchases of
technology to bigger investments. It’s certainly larger in scale, but also
more structured, more strategic. And I think we’ll continue to grow and
refine this over time as we move up the curve.”
In the past 12 months …
Fig 3. Adopters strongly agree that they’re increasing their investment in IoT, in terms of budget, connections and number of projects.
41%
Strongly
agree 48%
Agree
41%
Strongly
agree 48%
Agree
37%
Strongly
agree 52%
Agree
“Our organisation’s spend on IoT
has increased”
“The number of IoT connections in
our organisation has increased”
“The number of IoT projects in
our organisation has increased”
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In the past 12 months:
95%
of transport and
logistics adopters
have increased their
IoT spend.
97%
of public sector
adopters have
increased their number
of devices connected.
93%
of energy and
utilities adopters
have increased
their number of IoT
projects.
86% 86%
96%
86% 87%
97%
83% 88%
95%
20%
40%
60%
80%
100%
Pe
rc
en
ta
ge
o
f a
do
pt
er
s
Americas EMEA APAC
Increased spend Increased connections Increased projects
Americas EMEA APACAmericas EMEA APAC
Vodafone IoT Barometer 2016 July 201613
51%
42%
48%
41%
46%
40%
IoT supports
business
transformation
Enterprises are using IoT in many different
ways. Results are strong across all applications
at all levels of maturity, but businesses that
are more visionary in the way they use IoT
see broader benefits.
Adopters are using IoT in many different ways
There are now countless different IoT applications, from smart parking to pet
tracking, remote healthcare to connected cars, and smart grid to lone-worker
safety. And new ones are emerging all the time.
To find out which ones enterprises are using, we grouped IoT applications into six
broad categories that cover the vast majority of solutions. Figure 4 shows these
categories and what percentage of IoT adopters have a project in each of them.
Fig 4. Enterprises are adopting many different kinds of IoT solution.
Which kinds of IoT projects have you launched?
Optimising the utilisation of assets and
vehicles: for example, fleet management
solutions or remote machinery monitoring.
Reducing facilities operating costs: for
example, building automation.
Improving the safety and security of people
and sites: for example, connected security
cameras, lone-worker tracking, or pipeline
monitoring.
Automating supply-chain processes from
manufacturing to consumption: for example,
asset tracking, connected vending or digital
signage.
Building new connected product and
service categories: for example, connected
home solutions, usage-based insurance or
remote health.
Improving the efficiency, safety and
sustainability of public space: for example,
smart bins, connected street lighting or other
smart cities applications.
Vodafone IoT Barometer 2016 July 201614
Operational projects drive customer experience
Businesses are using IoT applications in all six of our categories. The most
popular categories are “operational”: they relate to asset utilisation, operating
costs, and safety and security. Nearly half of adopters say they have at least one
live project within each of those three categories.
Adopters told us that these applications aren’t purely about saving money. In
fact, “enhanced customer or user experience” — CX — is the benefit most
commonly reported by IoT adopters across all kinds of projects, with improved
employee productivity a close second.
One Germany-headquartered multinational automotive manufacturer describes
its connected car projects as being wholly motivated by a desire to improve the
customer experience:
A UK-headquartered transportation company similarly explains how its vehicle-
monitoring solution is having an impact on staff and passengers:
Connected products are the top growth area
Adopters that report “significant” ROI from their IoT projects are much further
ahead in launching new connected products and services using IoT.
49% of top performers say they have already launched new connected products
and services, compared to only 29% of those reporting “some” or “little” ROI.
This suggests that connected products are a strong contributor to ROI.
Other organisations are following these leading adopters, creating new
connected solutions of their own. Figure 5 shows what percentage of
organisations plan to launch each category of IoT project within the next two
years. New connected products and services are at the top of the list, picked by
46% of businesses.
“IoT has become an integral part of the customer strategy. IoT is not just
a technical discussion: we talk about what can be made possible, how we
can use it to make customers loyal.”
“IoT affects everything we do. It’s supporting a different way of working,
right the way from back-office through to front-office productivity, with
staff on platforms and in bus stations, helping out the travelling public.”
Io
T
su
pp
or
ts
b
us
in
es
s
tr
an
sf
or
m
at
io
n
44%
44% of IoT adopters report
“enhanced customer or user
experience” as a benefit.
49%
49% of organisations with
“significant” ROI say they’re
building new connected
solutions, compared to 29%
of those seeing “some” or
“little” ROI.
Fig 5. New connected solutions are the top priority for future development.
Which IoT applications do you plan to launch in the next two years?
Building new connected solutions
Automating supply-chain processes
Reducing operating costs
Improving public space
Optimising utilisation
Improving safety and security
46%
44%
43%
41%
39%
39%
Percentage of respondents
Public sector and energy
and utilities organisations
are most likely to have new
connected product and service
initiatives in the pipeline —
more than 50% say they plan
to launch within two years.
Vodafone IoT Barometer 2016 July 201615
Many adopters are far along the IoT maturity curve
Just as there’s a whole landscape of IoT solutions, so there’s a whole spectrum
of ways in which businesses can apply them. We devised a simple five-step
maturity scale, from using IoT simply to trigger an existing manual process, right
up to enabling large-scale business transformation and the creation of cross-
industry ecosystems. Take a manufacturer of generators, for example:
• Level 1 might involve connecting generators in the field so that they raise
the alarm when they break down.
• Level 2 might connect IoT services directly to engineer job allocation
systems and book in a repair automatically.
• Level 3 might allow the manufacturer to charge customers “as a service”
for each hour of power generated.
• At Levels 4 and 5, the possibilities expand: the manufacturer might connect
its smart generators to facilities disaster recovery tools and position itself as
a provider of business continuity services to mission-critical industries.
Figure 6 shows how businesses identified with one or more of these five levels.
As you might expect, the majority of businesses say they are using IoT in the
context of existing processes, with nearly two-thirds saying that their goal is
to automate (Level 2). But nearly half said they are using IoT to drive business
transformation (Level 4), and three in ten are working on connecting wider
ecosystems (Level 5).
IoT supports business transform
ation
Fig 6. Nearly half of adopters are using IoT to drive business transformation.
Are you currently using your IoT solutions to ... ?
Level 4
Support large-
scale business
transformation
Level 3
Enable new
products, services
and processes
Level 2
Automate
existing business
processes
Level 1
Inform or trigger
manual
processes
40%
50%
60%
70%
30%
20%
10%
0%
Percentage of respondents
Level 5
Connect multiple
organisations or
industries together
29%
59%
48%
64%
57%
Businesses in the
Americas are most likely to
be involved in creating cross-
organisation ecosystems with
IoT (33%); those in the APAC
region are more likely to be
engaged in large-scale business
transformation (61%).
In terms of sectors,
52% of consumer
electronics companies
are working on
ecosystems. This
perhaps reflects their
participation in areas
such as the smart
home, where cross-
company collaboration
is fundamental.
At the other end of
the spectrum, 82% of
transport and logistics
companies are working
on process automation
— reflecting the
incredible value to be
gained by optimising
high-volume movement
of goods and people.
Vodafone IoT Barometer 2016 July 201616
ROI is clear at each stage of maturity
Organisations report strong ROI at every stage of our five-step maturity scale.
It’s important not to neglect the value that even simple applications can deliver,
as one large US-based electronics manufacturer told us:
Simply being able to monitor and control a single device, or respond to a single
incident, can have big effects.
However, that hasn’t stopped organisations from thinking bigger. Building
on those initial benefits, they see grander possibilities, many of which need
extensive scoping and organisational change to capture. In our interviews with
businesses around the world, it was striking how many have long-term strategies
in place, with a clear vision for moving up that maturity curve. For instance, one
US-headquartered food manufacturer said:
At its greatest extent, the adoption of IoT has a broad impact even beyond the
organisation. One premium car manufacturer based in Germany explained how
IoT is transforming its whole business model, and how that ultimately disrupts
the entire industry status quo:
“There is a lot of value in just being able to connect to an asset such as a
turbine and showing customers its data. There are different ROIs as you
move up the curve to analytics. But there is a lot of value in that first
part — gaining visibility into how assets are running.”
“The time taken to deliver ROI is somewhere between weeks and months
if we’re talking about the benefit of capturing the data that we’re tracking.
We’re probably talking more into years to truly understand and
figure out all the ways to find that data, to come up with practical
applications that can ultimately be commercialised.”
“The major aspect of IoT is that instead of just selling the car, you sell
subscriptions to additional services to enable more features in the car.
Your revenue stream is extended into the future — but you have to prove
yourself on a monthly basis, because customers can cancel if they see no
added value. That is a new setup for the car industry.”
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The analyst view: From operation to transformation
Over the last few years the most forward-thinking organisations have progressed
from projects focused on efficiency to ones focused on transformation. These
schemes often require a fundamental organisational shift, for example, from
selling products to providing services (“servitisation”), with a rethink of business
operations across almost all functional areas including sales, marketing and
product development.
Such transformational IoT schemes require more coordinated effort, with
buy-in from various business units, and determination on the part of senior
management to push through these initiatives. As a result, they have inevitably
been slower to materialise. However, they are a natural evolution of enterprise
IoT, and naturally result in the greatest ROI. IoT has moved from being a cost
saver to being the competitive differentiator of the 21st century.
Vodafone IoT Barometer 2016 July 201617
Greater vision leads to broader benefits
Organisations that have already taken steps up the maturity curve, toward more
ambitious and sophisticated uses of IoT, report a greater variety of benefits.
We asked adopters which of 13 different benefits they have experienced
from IoT, from improved decision-making to greater compliance or reduced
downtime.
On average, 39% of those at Level 1 — using IoT to trigger manual processes —
say they have experienced each benefit.
By contrast, 52% of those that have reached Level 5 — using IoT to connect
organisations and industries together — say they have experienced each
benefit.
Figure 7 shows what percentage of adopters at each level of maturity report
seeing each benefit — we’ve marked only levels 1, 3 and 5 so the increase in
benefits stands out more clearly, but levels 2 and 4 follow the same pattern.
It’s interesting to note how organisations that reach Level 5 report a more
consistent spread of benefits, while those at lower levels of maturity are more
likely to see benefits concentrated in a few areas, such as customer experience
and reduced cost.
IoT supports business transform
ation
Fig 7. The more sophisticated an organisation’s use of IoT, the more benefits it sees.
Percentage of businesses at each maturity level reporting each type of benefit
Delivery consistency
Staff productivity
Decision-making
Sustainability
Customer experience
Internal oversight
Supply-chain insight
Compliance
New revenue streams
Reduced cost
Safety and security
Reduced downtime
Asset utilisation
30%20% 40% 50% 60%10%
10%
20%
40%
30%
50%
60%
Level 1
Level 3
Level 5
Enable connected
products
Trigger manual
processes
Connect
organisations
Vodafone IoT Barometer 2016 July 201618
Leaders measure
IoT within business
processes
Organisations that have clear targets and build
IoT into business processes see better results.
Enterprises measure ROI in many ways; top
performers involve outside providers.
Adopters quantify the business benefits they see
We looked in more detail at four benefits of IoT: revenue, asset utilisation,
downtime and cost savings. We asked enterprises that had reported benefits in
those areas what percentage improvement they’d measured. They reported an
average improvement of 20% in each of the four, as Figure 8 shows.
One Germany-based consumer electronics company shared its experiences of
generating new revenue through IoT:
Many of our interviewees told similar stories of ROI that’s both quantitatively
measurable and intuitively felt, as well as being both significant and rapid.
“We did have expectations, but did not expect them to be met so quickly. It
was like an awakening, because the project was implemented so quickly.
A quick ROI appeared, both perceived but also in numbers. We were
able to increase sales by 25%. Exponentially, it started to increase. It
was a huge benefit in our case.”
The scale of benefits
varies significantly by
region. The Americas reports
the strongest revenue growth,
with 55% of adopters there
measuring gains greater than
20%. APAC reports the greatest
cost savings, with 50% seeing
savings of more than 20%.
Fig 8. Adopters quantify their benefits — the average improvement is around 20%.
What percentage improvement did you measure in each area?
10% 20% 30% 40% 50%
Reduced cost through automation
Reduction in system downtime
Optimised asset utilisation (e.g. vehicles)
Generation of new revenue streams through new products and services
19%
20%
20%
21%
Percentage of respondents
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Vodafone IoT Barometer 2016 July 201619
Regional perspective: Respondents in all regions set clear targets for IoT projects
IoT can drive corporate revenue growth
We investigated whether IoT produces a noticeable effect on the business’s
overall corporate financials, particularly revenue. Businesses that reported a
“significant” ROI from use of IoT saw a much more positive movement in their
company revenue, as Figure 9 shows.
Organisations reporting “significant” ROI from IoT are three times more likely to
have increased their company revenue by more than 10% in the past 12 months
than those reporting “some” or “little” ROI from IoT.
Setting clear targets is essential to steering projects
We asked businesses whether they went into their IoT projects with
expectations: for example, if they had a general idea of what they wanted to
achieve, or a clear target.
68% of businesses say they had a clear target, which is an extremely positive
finding — IoT is so high-profile and the results so well publicised that you could
forgive many businesses for trying it out simply to meet board expectations or
to keep up with competitors. Only 5% say they initiated an IoT project with no
expectations at all. The best performing businesses were even more likely to
have set clear targets: 82% say they had a clear target in mind.
Leaders m
easure IoT w
ithin business processes
Consumer electronics
companies were most likely
to have clear targets in mind
for their IoT initiatives —
88% did so, compared to the
average of 68%.
21%
21% of organisations seeing
“significant” ROI from IoT say
that their company’s revenue
has increased by more than
10% in the past year.
How has your company revenue changed in the past year?
Fig 9. Businesses that report “significant” ROI from IoT have stronger company performance.
Adopters reporting “significant” ROI
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Percentage of respondents
Adopters reporting “some” or “little” ROI
7% 10% 50% 26% 7%
11% 7% 23% 38% 21%
Decreased No change Increased
by 1–5%
Increased
by 6–10%
Increased
by >10%
20% 40% 60% 80% 100% 20% 40% 60% 80% 100% 20% 40% 60% 80% 100%
Clear targets
Some expectations
Americas EMEA APAC
65% 57% 84%
14%33%28%
Percentage of respondents
Vodafone IoT Barometer 2016 July 201620
Having a specific and well-communicated target encourages more focused
application of effort during the project development and enables the business
to periodically assess its progress and make adjustments. As one Spain-
headquartered utility company explained:
The China-based aviation company we spoke to set its formal target for IoT
after experiencing some positive initial results and deciding to increase its
commitment. At this point the CEO and CFO set a company-wide goal:
Top performers use providers to measure results
Clear targets must be matched by clear performance metrics. We asked
businesses how they track results, and we saw varied answers. Encouragingly,
only 5% say they didn’t actually measure results, but adopters use a mix of
metrics: one-off and ongoing, qualitative and quantitative, existing and project-
specific, conducted internally and by external providers.
Figure 10 shows what percentage of adopters used different approaches to
measure their project ROI. What’s noticeable is that the ranking of options is
dramatically different between those seeing “significant” ROI and others.
“We analyse and study what the project is going to cost us. From there we
estimate the savings we expect to make from this new investment, we do
our cost-benefit analysis, calculate the ROI and if it’s favourable then we
proceed to implementation. After that there’s constant monitoring to
compare the real savings (or income) against forecast.”
“We set out to enhance our 2015 revenue by 15%. The CEO knew that
IoT would be a big part of hitting it, and the CFO calculated that all of the
fixed and operating costs of the IoT project would be more than covered at
that point.”
Fig 10. The best-performing IoT adopters call on outside providers to track their results.
How did you measure the ROI of implementing IoT?
+17
+17
-4
+14
+11
-11
+8
Tasked IoT provider to measure results
Brought in an external consultant or
auditor
Results were tracked as part of existing
reporting frameworks
Surveyed users/customers anecdotally
Conducted one-off benchmarking exercise
Set formal KPIs and controls specific to
the project
Results were built as part of a Business
Process Outsourcing deal target
41%24%
24%
23%
38%
37%
35%
35%
34%
31%
41%
45%
21%
21%
56%
“Significant”
ROI
“Some” or
“little” ROI
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Vodafone IoT Barometer 2016 July 201621
In particular, the most successful users of IoT are much more likely to involve
external providers in all three ways (highlighted in bold). 41% of organisations
that report “significant” ROI tasked their IoT provider with measuring results —
making it the most popular option among that group — compared to 24% of
businesses that have seen only “some” or “little” ROI.
One China-based retailer we spoke to described providers as being critical to
building the business case for investment in the first place:
Netherlands-headquartered electronics company Philips Lighting has seen this
trend from the other side of the table, as a provider of IoT lighting solutions.
It’s seeing measurement as a key value proposition not only during the initial
scoping of the project, but as a core feature of the solution itself:
“The current issue is that many abstract concepts are flowing in the
market. If the IT industry can provide more sound and persuasive
successful cases for our reference, I am sure that my boss would
invest more and more in this area without any hesitation.”
“We help customers of course during the offer phase to calculate the
cost and returns. But measurement and validation is a key aspect of
what the system does, so we measure the energy and compare it to the
baseline we had before and validate the business case.
“Customers are definitely coming round to the preference of having
a trusted supplier that delivers an end-to-end system, as opposed to
buying components and trying to deal with the issues inside their own
organisation.”
41%
41% of organisations that
report “significant” ROI
tasked their IoT provider
with measuring results.
Leaders m
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The analyst view: What does success look like?
Enterprises rolling out IoT initiatives within their organisations must set tight
parameters around what they want to achieve and what success looks like.
One of the recommendations that we generally make to our enterprise clients
is this: decide what’s next. It’s all very well running trials and proofs-of-concept
but there is a risk that the results are never acted upon. So when enterprises set
up trials they need to set parameters for how to measure success and decide in
advance what the next steps will be, depending on the possible outcomes.
A particular emerging trend that we’ve noted is the role of the ‘Trusted Third
Party’ to support enterprises as they navigate the choppy waters of IoT
deployments. Philips touches on the concept in its comment about trusted
suppliers. But we would go further. Deploying IoT is complex and enterprises
would benefit from having a third party not only to pull together the various
elements of the proposition — for example, devices, connectivity, data
analytics, and application enablement — but also to act on their behalf in
areas such as security, privacy and data management.
Vodafone IoT Barometer 2016 July 201622
Leaders see IoT as a business process purchase
The use of external providers to measure ROI is part of a broader trend in how
businesses are planning for, procuring and managing IoT solutions. Instead of
seeing IoT as a pure technology purchase, they’re putting IoT in a wider business
process context. As one China-based retailer put it:
Importantly, enterprises that say they see IoT as part of business processes
report stronger ROI, as Figure 11 shows.
This is a clear recommendation for anyone adopting IoT: don’t frame the
initiative as simply an IT project, using traditional IT KPIs. Start by finding a
business process that needs improving, and build IoT into the solution; draw on
the strengths of external providers to help drive and measure results. One UK-
based public transportation company has seen great success from doing so:
“We consider IoT projects to be business processes enabled by IT.”
“IoT started off three years ago purely as a tech purchase. We said, ‘Let’s
just go and do some discovery’ and we ended up going round in circles:
we’ve got all this data, what do we use it for?
“Then we started getting the organisation to think about the problems that
we have, taking the ones that are hurting us the most, and then applying
data to solve those problems.
“We managed to put across that this is more about how we operate
as an organisation. As a result, IoT is moving to very much more of
a business change, a business purchase, a business opportunity, as
opposed to a tech spend.”
67% of consumer
electronics companies
say they “consistently”
make IoT an integral part of
business process outsourcing
arrangements, compared to
55% across all sectors.
73% say that IoT is an integral
part of wider initiatives,
compared to 61% across
all sectors.
Fig 11. The best-performing IoT users treat IoT as part of wider business process activities.
How does your business see IoT?
“We consistently see IoT as
an integral part of a wider
initiative, like a company
car fleet purchase”
“We consistently see IoT
as an integral element
of a business process
outsourcing arrangement”
73%
64%
45%
42%
“Significant”
ROI
“Some” or
“little” ROI
20%
40%
60%
80%
100%
Pe
rc
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po
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en
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Americas EMEA APAC
55% 57%
72%
Regional perspective:
72% of adopters in APAC
say that they see IoT as
part of a wider initiative
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Vodafone IoT Barometer 2016 July 201623
Regional perspective: EMEA organisations are most likely to manage projects at a local level
Project management is aligned to business processes
In pursuit of strong and consistent project leadership, it’s easy to assume that
centralising management of IoT projects would produce better results and avoid
fragmentation. And for some businesses, that’s true, as a Germany-based truck
and car manufacturer explains:
But other management models deliver results too; in fact, we found that on
average IoT projects are more likely than other IT projects to be managed at
a local level, and as Figure 12 shows, enterprises reporting “significant” ROI
tended to manage at a local level.
We believe the choice of management approach is driven by the need to align
the IoT project more closely to the business process in question, and the needs
of the local users and customers. For example, one premium car manufacturer
based in Germany told us:
As a result, the use of different management approaches varies by type of
business and adoption profile. The very largest enterprises skew toward hybrid
or centralised models, as you might expect. Those with the very largest IoT
deployments in terms of number of devices, with more than 10,000 devices,
also skew toward hybrid approaches. Some sectors, too, are more likely to use
local management models than others: 32% of automotive and energy and
utilities companies say they manage at a local level.
“IoT is not a trivial issue. Our cars are developed centrally, the costs
are centralised, and the general strategy on what a car should contain is
developed centrally.”
“Connected car content is increasingly being managed locally — for
example you cannot offer Google in China because it does not exist there.
In the UK you need to offer different stolen vehicle checking systems
than Germany because legislation is different. In the old world we were
producing a global car, but the new IoT world is extremely localised.”
Leaders m
easure IoT w
ithin business processes
10% 20% 30% 40% 50% 10% 20% 30% 40% 50% 10% 20% 30% 40% 50%
Locally
Locally, but coordinated centrally
Americas EMEA APAC
Centrally
23% 29% 27%
30%32%33%
24% 24% 26%
Percentage of respondents
Which of the following best describes how you manage your IoT projects?
Fig 12. Managing IoT projects at a local level tends to produce better ROI.
Adopters reporting “significant” ROI
Adopters reporting “some” or “little” ROI
37%
31%
39%
24%
21%
Locally
Locally
Locally, but coordinated centrally
Locally, but coordinated centrally
Centrally
Centrally
28%
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Percentage of respondents
Vodafone IoT Barometer 2016 July 201624
IT integration is
key to using IoT
data effectively
IoT data enables businesses to be more
competitive. To use data effectively, it should
be integrated with other enterprise systems.
Most adopters already report extensive
integration, with greater ROI as a result.
Organisations use IoT to gather data
Respondents were clear that IoT applications generate rich and varied data, and
that IoT can only deliver real value if you effectively use that data. For example,
one premium car manufacturer based in Germany told us about its experiences
with the data gathered by connected cars:
The next question is what you do with that data. One UK-based transportation
company told us how its collected data translates directly into business value:
A large US-based electronics manufacturer notes particularly the wider value
that analysing and applying data on a large scale can create:
“All the data within the car and all the data the car gathers is valuable. We
have just started to appreciate that if we could combine all that data we’d
have a complete understanding of the world at our fingertips, would
know all road conditions all over the world, where traffic jams are, where
parking spaces are for instance. The question is, which of that data is the
most valuable to us?”
“In road transport, we’re using data that comes from traffic lights, cars,
sensors in the road, and people’s devices. We’re using a combination of
those data points to inform us what traffic looks like and therefore
make real-time judgement calls on how we manage traffic. That
changes everything: travel demand management, the messaging we send
out, and what we put on our real-time information website.”
“It’s not just about predicting the failure of a particular asset. You want
to be able to say, if there’s a part failure, show me a list of the millions of
assets out there that share the same part. Because of the data, you can
use that information to prevent issues at a fleet-wide level. People
can make better decisions; you can start to change your whole strategy.”
81%
81% of all respondents, and
90% of IoT adopters, say
that IoT can only deliver
real value if you effectively
use the data it generates.
Vodafone IoT Barometer 2016 July 201625
Regional perspective: Integration is consistently high across regions
Integration with other IT enables better use of data
Gathering raw data from IoT sensors and devices is only the first step in a
lifecycle in which data is stored, analysed and accessed by applications and by
users. IoT applications need to be aligned and integrated with other systems in
the IT landscape that perform these steps — from cloud hosting platforms to
analytics tools and mobile applications, as well as conventional IT systems like
enterprise resource planning (ERP).
We asked businesses about their experiences, and found that the majority are
already well advanced with their integration. Figure 13 shows the results.
Integration varies by sector
The degree of integration varies by sector. For example, retail is one of the
sectors most likely to integrate IoT data with core systems such as ERP. 61% of
retailers say they do so “consistently”. As distributed, supply-chain intensive
organisations, retailers are generally some of the most advanced in their use of
ERP systems.
Companies in the energy and utilities sector are most advanced in their use
of mobile devices for accessing IoT data. 76% say they do so “consistently”.
Transport and logistics is only slightly behind, at 73%. Both of these sectors rely
extensively on workers out in the field.
Automotive is perhaps the most advanced in the use of data overall. 94% say
that IoT’s value depends on effectively using the data it generates. 59% say they
consistently store their IoT data in the cloud, and 68% say they consistently use
big data platforms to support decision-making. When you consider the volume
of data that the connected car produces, and the complexity of the automotive
product lifecycle, this is easy to understand.
IT integration is key to using IoT data effectively
Fig 13. Most adopters already use IoT data widely across the organisation.
To what extent do you integrate your IoT solutions with other areas of IT?
64%
64% of adopters
“consistently” use big data
and analytics platforms to
support decision-making.
20%
40%
60%
80%Percentage of respondents
Americas EMEA APAC
49%
59% 60%
47% 51%
62%
52%52%
61%
69% 68%69%
Percentage of adopters who consistently integrate IoT with other areas of IT
Store IoT data and applications in the cloud
Use big data and analytics platforms to support decision-making
Integrate IoT data with core systems (e.g. ERP)
Give employees access to IoT data from mobile devices
54%
We do this consistently We do this in selected instances
56%
59% 31%
64% 30%
36%
36%
90%
94%
92%
90%
Vodafone IoT Barometer 2016 July 201626
Fully integrating IoT produces results, but takes time
We found a strong correlation between the integration of IoT with other IT
systems and the business benefits that adopters are experiencing. Achieving
effective integration between IoT and other enterprise IT systems is not always
easy, and some of those we interviewed have made it part of their long-term
vision for evolving their use of IoT. For example, one China-based retail and
distribution company we spoke to pointed out that it may involve significant
organisational change:
A UK-based public transportation business noted that legacy systems in
particular can be a stumbling block.
As a provider of IoT solutions, Netherlands-based Philips Lighting has made easy
integration, particularly with ERP systems, a key part of its offer to customers.
“I foresee that there may be a new department formed — something
called ‘Data Analytics’ or ‘Digital Analytics’ — to help handle all the
collected data.
“The data platform would be connected with our internal ERP system to
ensure that the data and insights drawn would be shared [with] different
business units.”
“When we’re dealing with new technologies, there’re loads and loads of
data points that come off and enable us to create an application. In other
areas where we’d like to have some data, legacy means we’re not quite
there yet. It’s a bit of a mixed bag.”
“Easy access to analytics and insights is what creates value for customers.
Our CityTouch smart lighting system gives customers energy reports
and analysis, but increasingly analytics needs to be flexible and
broader. That’s why we build our systems with interfaces to enable more
integration options.
“An example is a cooperation we have with SAP, which started in the city of
Buenos Aires. We connected our CityTouch application to SAP HANA, so
the customer can see the lighting status right on the HANA dashboard
across different city services.”
64% of organisations
that report “significant”
ROI from IoT say they
“consistently” integrate data
from IoT with core systems,
compared to 35% of businesses
reporting “little” ROI.
Similarly, 60% of businesses
with “significant” ROI
“consistently” store IoT
applications in the cloud,
compared to 47% of businesses
that report “little” ROI.
The analyst view: Start with data, not connections
If IoT is about anything it’s about data. Businesses should ask “What business
objectives do I want to achieve, and what data do I need to gather in order to do
it?”, rather than “What can I connect?”
Even the most basic of telematics solutions are based on data analytics. But as
applications have become more sophisticated, the complexity of data analysis
has escalated. Integration of IoT data into ERP systems is an inevitable step;
indeed the starting point should be the ERP system: what does the enterprise
need to operate more efficiently, and what IoT solution is required to meet it?
Integration of IoT with existing mobile enterprise platforms is also a growing
trend. We expect this kind of convergence to facilitate the integration, for
example, of field force technicians, fleet tracking and remote assets.
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Vodafone IoT Barometer 2016 July 201627
Sharing data is problematic only for organisations
new to IoT
To deliver value, data must be shared around the business, with decision-makers
and other users. But what about sharing it outside of the organisation, with
partners, industry bodies, and other third parties?
Selling, exchanging and sharing data can be valuable, and we expect it to
become a greater focus area in the coming years — indeed, nearly a third of
adopters are already engaged in using IoT to build ecosystems in this way.
But sharing does have its pitfalls, particularly if customer data is involved.
Businesses must be aware of data protection regulation, potential tensions
involving data ownership, and the complexities involved in developing the right
commercial models to govern the exchange.
To examine these issues, we asked if enterprises felt safe sharing their data with
others. There were striking differences between our whole base of respondents
and those who already have live IoT projects, and specifically those that have
reported “significant” ROI from their live projects. Figure 14 shows the results.
Businesses that use IoT are much more comfortable sharing data — whether
that’s because their experience with IoT has made them so, or whether the kinds
of organisations that are more enthusiastic about sharing data are also the kinds
that more enthusiastically adopt new technologies such as IoT.
79%
79% of adopters
seeing “significant” ROI
feel safe sharing data.
The analyst view: Agreeing the rules for sharing
The biggest challenge with ‘data’ is inevitably related to its sharing with third
parties. Our experience is that comfort around data sharing outside of the
organisation is still limited, but will emerge gradually.
In multi-tenant systems such as that envisaged in the IoT, everyone needs to
agree on a certain set of parameters, for example about who can use the data
and for what purposes. At first, data sharing will emerge within what we term
‘subnets of things’, i.e. common interest groups with a shared understanding
and trust on how data can be used.
The earliest of these to materialise have been based on smart cities data, where
diverse data sets are made available to third parties to build applications. Our
expectation is that the next emerging areas will be healthcare and supply chain.
To what extent do you agree that you feel safe sharing data with others?
Fig 14. Organisations with live IoT projects are more comfortable sharing data.
All respondents
Already adopted IoT
Significant ROI
17%
31%
41%38%
37%
35%
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Percentage of respondents
Agree Strongly agree
IT integration is key to using IoT data effectively
Vodafone IoT Barometer 2016 July 201628
Security needs
end-to-end
attention
Security risks are a fact of life in all areas of
IT, and IoT is no exception. While concerns
and confusion about security are affecting
adoption, we see enterprises taking steps to
manage the risks.
Caution about security risks is natural
There are barriers to adopting any new solution: some businesses are deterred
by cost; others wait until the technology is proven to be mature. But security
is often the biggest barrier, and IoT is no exception. 18% of businesses say that
concern about security breaches is a potential barrier to wider adoption of IoT in
their organisation.
Concern about security risks is natural: organisations should be cautious about
how IoT will affect the integrity of their infrastructure and the privacy of the data
they hold. And as IoT moves out of the lab and into the mainstream of business
processes, security is rising up the agenda: more than half of businesses we
talked to said they’re more concerned about IoT security risks than they were
in the past, and 30% said they were changing or restricting the scope of IoT
projects to limit security risks.
This year we investigated those concerns in detail, exploring how they’re shaping
behaviour and what enterprises are doing to address the risks.
Fear of the unknown is the main concern
IoT solutions are made up of many parts, from the devices installed in connected
assets, through network connections to back-end systems that are hosted
in data centres. We found that enterprises are more concerned about data
protection than about device or network security. Data protection covers all
aspects of how companies manage the data they have gathered, including what
happens in the hosting environment, applications and processing, data sharing,
and access by employees and other users.
We asked organisations to rank their top three reasons why they’re concerned
about IoT security. Figure 15 shows the results. The top concern is that IoT
security is an “unknown quantity” — the risks aren’t yet well understood, and
organisations haven’t yet developed the skills and processes to feel that they
can respond effectively.
18%
18% of businesses say that
concern about security
breaches is a potential barrier
to wider adoption of IoT in
their organisation.
Vodafone IoT Barometer 2016 July 201629
Second is that the complexity of IoT deployments is making it harder to manage
risks. There are many moving parts, particularly in large-scale IoT deployments.
Third is a concern about a reputational backlash from customers or the media
about the data that businesses are gathering. This is not a concern about system
security as such, but the related issue of privacy.
Businesses are taking a balanced view of risk
Enterprises are concerned about security, but that’s not the whole story. In fact,
many businesses are cautiously optimistic that the risks are manageable.
More than half said that IoT is no different fundamentally from any IT solution
when it comes to security. Consequently, many of the same proven best
practices and readily available solutions to conventional IT security challenges
apply. For example, one US-based electronics manufacturer said:
Furthermore, businesses are actually fairly comfortable that the actions they
need to take are achievable, even with the resources they have available — and
those that have already adopted IoT are even more confident.
“Security has not slowed down our adoption of IoT. Unauthorised users
will always try to hack into infrastructure — it’s nothing to do with IoT.”
56%
56% of all businesses say
that IoT is no different
fundamentally from any IT
solution when it comes
to security.
Security needs end-to-end attention
60%
60% of businesses
say their employees
have the skills to
manage IoT security
— that’s 84% for IoT
adopters.
69%
69% of businesses
say they have the
processes in place
to manage security
— that’s 89% for
IoT adopters.
65%
65% of businesses
say their technology
is robust enough to
safely process data
— that’s 84% for IoT
adopters.
What are your top concerns when it comes to IoT security and/or privacy?
Fig 15. Enterprises’ top concerns about IoT security highlight a fear of the unknown
33%
28%
14%
12%
8%
4%
1%
Knowledge: IoT security is an unknown quantity
Complexity: The increasing complexity of IoT connections is making it harder to manage risks
Reputation: We’re afraid of a customer or media backlash about the data we’re gathering
Management: IoT hardware devices are insecure and difficult to manage in the field
Mobility: The increased mobility of employees increases the risk of data getting into the wrong hands
Authenticity: We’re concerned about the authentication of third-party data we’re using
Reliability: IoT applications are mission-critical so the effects of a security breach can be huge
10% 20%
Percentage of respondents
30% 40% 50%
Vodafone IoT Barometer 2016 July 201630
Perhaps most fundamentally, enterprises are acknowledging that security risks
are a simple fact of life, an issue you have to get on and deal with.
A multinational automotive company based in Germany told us that it sees
security and data privacy as things that drivers and regulators have concerns
about, that simply must be addressed:
One way forward is to build security in as simply another project cost. As a
Germany-based consumer electronics company described it:
Also critical is a pragmatic and collaborative attitude across the project teams,
as one UK-headquartered transportation company explained:
Many organisations are actively working on security
Perhaps most encouragingly, enterprises are actively engaged in addressing
security in a variety of ways, from choosing to work with security specialists
and establishing policies, to recruiting and training new staff. In fact, only one
interviewee from our whole data set said they were doing “nothing”. Figure 16
shows the full list.
“Society has expectations and there are legal requirements you have to
conform to. It is just something you have to think about.”
“Security is simply a matter of costs. If you want to make data accessible
everywhere without any major issues, you have to be prepared to pay
for it.”
“IoT security is about balance: protecting information for the organisation,
while allowing it to continue to operate. It’s a balancing act. But
ultimately our security team is open-minded, it knows that it needs
to enable the organisation, not stop it. The relationship between
project teams and security is far closer than ever before.”
75%
75% of businesses we talked
to consider security risks to
be a “fact of life”.
Se
cu
rit
y
ne
ed
s
en
d-
to
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nd
a
tt
en
tio
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What action is your business taking to improve the security of your
IoT projects?
Fig 16. Adopters are taking a range of actions to secure their IoT projects.
People
42%
41%
Process
Providers
42%
40%
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Percentage of respondents
38%
45%
Establishing clear security best practice and
guidelines for staff
Establishing a clear breach contingency plan
Working with a specialist security provider
Recruiting security specialists
Making security a major part of RFP requirements
Training staff
Vodafone IoT Barometer 2016 July 201631
Security-conscious sectors, such as energy and utilities, are ahead in
committing to many of these activities — they know that, while it’s essential,
securing critical infrastructure and private data takes work. For example, 59% of
energy and utility companies were working on security guidelines, while 52%
say they’re working with a specialist security provider.
One large US-based electronics manufacturer we interviewed has taken many
steps to secure its IoT architecture, including acquiring specialist security
companies. But it’s not neglecting the human elements of achieving security:
Providers can play a greater role
At the heart of any robust security practice is effective governance, including
clear division of responsibilities, consistent policy enforcement and regular
monitoring. Today, this is not happening in many enterprises’ IoT projects.
We asked enterprises to say who, ultimately, should be responsible for ensuring
the end-to-end security of their IT projects. There was no consensus, with
only one in ten saying it is ultimately the responsibility of their own business
to secure their own IoT infrastructure. Responsibility was otherwise divided
between the different vendors involved, from system integrators and network
providers to device manufacturers, as Figure 17 shows.
This is an issue, particularly for businesses that are using multiple providers to
contribute to an overall IoT solution.
76% of businesses we spoke to said that IoT security should be treated as an
end-to-end solution, yet very few outside providers will have the necessary
visibility and control of the overall business process needed to effectively
validate security as a whole.
“We have tried to address at each of the different layers in the stack
how we can put in place practices around security — it is a focal point
of how we build solutions. Not only are we acquiring companies that
have security technology, but we are training our people in mandatory
classroom exercises. So not only are we bringing in the right technology,
but making sure that as we build our software from the ground up it has
the right processes and techniques.”
76%
76% of businesses we spoke
to say that IoT security
should be treated as an end-
to-end solution.
Security needs end-to-end attention
Who should be ultimately responsible for ensuring the end-to-end
security of your IoT projects?
Fig 17. Few enterprises believe it’s their responsibility to secure their IoT projects.
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Percentage of respondents
IoT service aggregator
Systems integrator
Communications or connectivity provider
Gateway provider
Software vendor
20%
19%
17%
12%
11%
The customer
Asset provider
Other1%
10%
9%
Vodafone IoT Barometer 2016 July 201632
For example, a device vendor can take responsibility for the security of its
hardware and associated firmware, and perhaps installation and patching
procedures, but it will struggle to take responsibility for how the customer
handles data, or the security of the solution’s communications channels.
If they’re to address their concerns about end-to-end data protection, we expect
more enterprises will start to take active ownership of their own security and
privacy governance, at board level.
But we believe that enterprises will also choose to work more with end-to-end
IoT providers that can take on greater responsibility and accountability for areas
of IT security, as well as providing advice, specialist security services and access
to people to support in-house IT teams. Security may be part of the reason why
91% say it is important for them to work with an end-to-end solution provider for
IoT, as Figure 18 shows.
For Netherlands-based Philips Lighting, as a provider of IoT, security is a topic
that’s taken very seriously at a business level. It too points out that security is
not purely about technology, but about operational processes:
“A clear IoT security strategy is so important if you offer the solution we do.
You need to have the skills and the structures — security is much more
than the right software code — it has to do with the processes you
install and you have to ensure a holistic approach to security.
“That’s why we have a Head of Corporate Security who designs the policies
that are deployed throughout the company, so we have processes defined
at every level on what we do in terms both of product security and
operational security … we regularly review and audit these policies and
how they are executed.”
91%
91% say it is important for
them to work with an end-to-
end solution provider for IoT.
The analyst view: Security is not an excuse
One of our predictions for 2016 was that “enterprises would stop using
security as an excuse for not delivering”. The Barometer seems to bear us out:
enterprises are taking on board that these are solvable issues.
There is nothing fundamentally different about IoT security, and while there is
no silver bullet, there are a number of things that enterprises should be doing.
The first is to identify threats to your specific situation and act proportionately
to the risk, focusing effort and resource on the most threatened and sensitive
data. Second is to pick your partners carefully as the chain is only as strong as
the weakest link, and identify security challenges both within each element and
end-to-end. Finally, the enterprise should accept that there will be a security
breach and ensure that the impact of any such breach is mitigated.
Above all, businesses must learn from others’ errors — or put their confidence
in a third party that can handle all issues around security and privacy, including
ensuring that other suppliers meet their obligations.
How important is it for your organisation to work with an end-to-end IoT
solutions provider?
Fig 18. Almost all enterprises say it’s important to work with an end-to-end provider for IoT.
Percentage of respondents
Very important Fairly important
47% 44% 91%
Se
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y
ne
ed
s
en
d-
to
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nd
a
tt
en
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Vodafone IoT Barometer 2016 July 201633
The future
IoT is an incredibly varied and complex
market, and generalisations are difficult. But
our research reveals a number of broad trends
that we expect to shape how enterprises use
IoT in the years ahead.
From “if” to “how”
Within the next two years, the majority of businesses will be using IoT.
Just adopting IoT will no longer be a differentiator — it’s part of the
IT landscape and digital strategy of every business. The decision to
take is how best to use it. That may be as a highly visible technology
that’s driving service quality, revenue or process efficiency. Or it may
be invisible to most employees, as an intrinsic part of the business
environment: quietly and autonomously monitoring the health of
vehicles, updating digital signage, optimising building systems.
From “technology” to “business outcome”
IoT will increasingly be treated as indistinguishable from business
processes; it will be part of the fabric of the organisation. IoT will be
seen as an intrinsic feature of a modern warehouse system, company
car fleet or security solution, for example. We expect business-led
approaches to procuring and managing IoT — including end-to-end
outsourcing — will dominate, in order to drive measurable business
results and more effective governance. At the same time, we expect
IoT, cloud, mobile and analytics will increasingly be conceived of and
purchased together as elements of an integrated solution.
From “caution” to “action”
IoT may be managed as part of the business, but just like cloud
or mobile, it’s still a technology, and cybersecurity will remain a
major consideration. Today, IoT security is dominated by fear of the
unknown; we expect that this will shift as businesses recognise the
value of data and the need to manage it. IoT will be absorbed into
overall IT security practices and businesses will invest in actively
protecting it as a mission-critical asset.
From “optimise” to “engage”
We’re already seeing that IoT applications of all kinds are not
only driving operational and process improvements, but having a
noticeable impact on the employee and customer experience. As
businesses increasingly look at building IoT into their products and
services, certain sectors will naturally take the lead in revolutionising
how they engage with their customers, among them automotive
(through the connected car) and healthcare (through mhealth).
Vodafone IoT Barometer 2016 July 201634
Machina Research
Machina Research is the world’s leading provider of market intelligence and
strategic insight on the newly emerging Internet of Things, Machine-to-Machine
(M2M) and Big Data opportunities.
We provide market intelligence and strategic insight to help our clients
maximise opportunities from these rapidly emerging markets. If your company
is a mobile network operator, device vendor, infrastructure vendor, service
provider or potential end user in the IoT, M2M, or Big Data space, we can help.
Within Machina Research’s rapidly growing team are 14 analysts focused
exclusively on IoT, including world-renowned industry veterans.
A member of the Industrial Internet Consortium and the Continental Automated
Buildings Association, Machina Research is headquartered in London with
offices in San Francisco, Toronto, Boston and Hong Kong.
Matt Hatton is a widely respected wireless industry expert with 20 years’
experience at the cutting edge of technology research. He is considered one of
the foremost industry experts on the Internet of Things, and is Founder and CEO
of Machina Research where he manages a rapidly expanding team of analysts
focused exclusively on the IoT. Matt holds an MSc in Telecommunications
(Distinction) from University College London.
Learn more at machinaresearch.com
Philips Lighting
Philips Lighting is a global leader in lighting products, systems and services.
Serving professional and consumer markets, it leads the industry in connected
lighting systems and services, leveraging the Internet of Things to take light
beyond illumination and transform homes, buildings and urban spaces. In 2015,
it had sales of €7.4 billion and currently it has approximately 36,000 employees
in over 70 countries.
Find out more at philips.com/smartcities
Contributors
Connected
lighting partner
Matt Hatton
Machina Research
Vodafone IoT Barometer 2016 July 201635
Contributors
Circle Research
Circle was founded in 2006 as an alternative to traditional consumer-focused
research agencies. Our mission is to uncover hidden truths about our customers’
target market. Through primary research we provide insights that enable
organisations to:
• Segment the market and tap into the customer buying journey.
• Invest in the right marketing channels and messages.
• Build a resonant and differentiated brand.
• Create great thought leadership content.
• Create happier, more loyal customers.
• Create successful new products or services.
Based in London, we work globally with ambitious B2B firms, including half of
the Top 10 B2B Superbrands.
Learn more at circle-research.com, or follow us on Twitter @circle_research
Vodafone IoT
Vodafone Internet of Things (IoT) connects machinery, vehicles and other
business assets to the network, delivering new functionality and enhanced
services.
Supported by more than 1,300 dedicated employees, Vodafone’s end-to-end IoT
solutions make it easy for businesses to deliver and deploy IoT solutions across
multiple territories.
We have been highly rated by prominent industry analysts including Analysys
Mason, Current Analysis and Machina Research. We have also been positioned
as a Leader in the Gartner Magic Quadrant for Managed Machine-to-Machine
Services.
For more information, visit vodafone.com/iot
Vodafone Group
Vodafone is one of the world’s largest telecommunications companies
and provides a range of services including voice, messaging, data and fixed
communications.
Vodafone has mobile operations in 26 countries, partners with mobile networks
in 56 more, and fixed broadband operations in 17 markets.
As of 31 March 2016, Vodafone had 462 million mobile customers and 13.4
million fixed broadband customers.
For more information, visit vodafone.com
vodafone.com/iot
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