International study reveals IoT adopters are seeing strong gains in innovation and business efficiency, yet security remains a key concern with 84% reporting an IoT-related security breach

Tuesday, February 28, 2017 12:00 am PST

"The ‘Internet of Things’ means sensors connected to the Internet and behaving in an Internet-like way by making open, ad hoc connections, sharing data freely and allowing unexpected applications, so computers can understand the world around them and become humanity’s nervous system."

NASHVILLE, Tenn.--(BUSINESS WIRE)--A new global study ‘ The Internet of Things: Today and Tomorrow ’ published by Aruba, a Hewlett Packard Enterprise company (NYSE:HPE), reveals that IoT will soon be widespread as 85% of businesses plan to implement IoT by 2019, driven by a need for innovation and business efficiency. While the analysis confirms the clear business benefits from investments in IoT, Aruba’s report cautions that connecting thousands of things to existing business networks has already resulted in security breaches for the majority of organizations.

The research questioned 3,100 IT and business decision makers across 20 countries to evaluate the current state of IoT and its impact across different industries. The study shows that while virtually all business leaders (98%) have an understanding of IoT, many are unclear of the exact definition of IoT and what it means for their business.

In his new eBook ‘ Making Sense of IoT ’, commissioned by Aruba, technology visionary Kevin Ashton—who coined the term 'Internet of Things’— presents the following definition:

“The ‘Internet of Things’ means sensors connected to the Internet and behaving in an Internet-like way by making open, ad hoc connections, sharing data freely and allowing unexpected applications, so computers can understand the world around them and become humanity’s nervous system.”

The Expectations Dividend

When examining the business benefits of IoT, Ashton discovered that the real-world benefits gained from IoT exceeded even the original expectations. This ‘expectations dividend’ is evident in two key performance areas: business efficiency and profitability.

As an example, only 16% of business leaders projected a large profit gain from their IoT investment, yet post-adoption, 32% of executives realized profit increases. Similarly, only 29% of executives expected their IoT strategies to result in business efficiency improvements, whereas actual results show that 46% experienced efficiency gains.

Chris Kozup, vice president of marketing at Aruba, comments:

“With the business benefits of IoT surpassing expectations, it’s no surprise that the business world will move towards mass adoption by 2019. But with many executives unsure of how to apply IoT to their business, those who succeed in implementing IoT are well positioned to gain a competitive advantage.”

How Global Organizations are Using IoT

Aruba's research reveals varying levels of IoT maturity across different industry sectors. The following five vertical industries are leaders in their adoption of IoT and have realized tangible business benefits from a focused, use case approach to adoption.

Enterprises create a smart workplace for productivity and efficiency:

• Over seven in ten (72%) enterprises have introduced IoT devices into the workplace. Indoor location-based services ranks as the second most promising use case to improve employee productivity, after remote monitoring. Twenty percent report remote operation of building lighting and temperature as a key use case, but that number more than doubles to 53% when asked about future IoT implementations.
• Looking at the tangible results being realized today, 78% say the introduction of IoT in the workplace has improved the effectiveness of their IT team, and 75% find it has increased profitability.

The industrial sector increases business efficiency and visibility through IoT-enabled monitoring and maintenance:

• More than six in ten (62%) respondents in the industrial sector have already implemented IoT. Using IoT to monitor and maintain essential industrial functions was identified as the most impactful use case in the sector. Today, the use of IP-based surveillance cameras for physical security within industrial organizations is still in its infancy, with only 6% having implemented it. However, when asked about future implementations, surveillance jumped five-fold to 32%.
• Across the sector, 83% report increased business efficiency and another 80% have found improved visibility across the organization.

Healthcare introduces IoT to improve patient monitoring, reduce cost and foster innovation:

• Coming in as the third most advanced in its implementation of IoT, 60% of healthcare organizations globally have introduced IoT devices into their facilities.
• Across the sector, 42% of executives rank monitoring and maintenance as the number one use of IoT—higher than all other sectors. This underscores the importance of IoT-enabled patient monitoring in the modern healthcare industry.
• Eight in ten report an increase in innovation and another 73% report cost savings.

Retailers engage with customers and boost sales using indoor location technology:

• Just 49% of retailers are using IoT technology, but 81% of these report improved customer experiences. An improved customer experience is likely to have a significant impact on customer loyalty and ultimately, revenue.
• In-store location services delivering personalized offers and product information to shoppers was touted as the number one implementation for IoT, alongside monitoring and maintenance. Four in ten retailers ranked surveillance in their top three key use cases.

Governments lag in IoT adoption, struggle with legacy technology but still reduce costs:

• The slowest sector to adopt IoT, only 42% of municipalities have deployed IoT devices and sensors. A third (35%) of IT decision makers claim their executives have little to no understanding of IoT, double the global average, suggesting that lack of education is the biggest barrier to mass adoption in this sector.
• While nearly half (49%) of government IT departments are struggling with legacy technology, seven in ten IoT adopters in the public sector report cost savings and improved organizational visibility as the major benefits.

The Data Context and Security Challenge

Alongside these positive returns, the study also uncovers a number of obstacles that IT leaders feel are preventing IoT from delivering greater business impact. In particular, the cost of implementation (50%), maintenance (44%) and integration of legacy technology (43%) were highlighted as key issues.

Most notably, security flaws were found across many IoT deployments. The study found that 84% of organizations have experienced an IoT-related security breach. More than half of respondents declared that external attacks are a key barrier to embracing and adopting an IoT strategy. This confirms that a holistic IoT security strategy, built on strong network access control and policy management, will not only protect enterprises but also simplify the security approach for IT.

The ability to capture and effectively use data is described by Kevin Ashton as “what defines the Internet of Things”, but this appears to be another clear challenge for global organizations. While nearly all (98%) of organizations that have adopted IoT claim that they can analyze data, almost all respondents (97%) feel there are challenges to creating value from this data. Well over a third (39%) of businesses are not extracting or analyzing data within corporate networks, and are thereby missing out on insights that could improve business decisions.

Kozup comments, “While IoT grows in deployment, scale and complexity, proper security methodologies to protect the network and devices, and more importantly, the data and insights they extract, must also keep pace. If businesses do not take immediate steps to gain visibility and profile the IoT activities within their offices, they run the risk of exposure to potentially malicious activities. Aruba is enabling customers to rapidly assess IoT deployments within their facilities and determine any potential threats that may be present.”

Ashton concludes: “Since its inception in 1999, the Internet of Things has been ridiculed, criticized, and misunderstood. And yet here we are, less than two decades later, in a world where tens of thousands of organizations are saving and making hundreds of millions of dollars from the Internet of Things, using cars that drive themselves, subway stations that sense passengers, algorithms that diagnose deadly diseases using phones, and many other once apparently-impossible technologies. The future promises far more amazing things. The most important decision you can make now is how to be a part of it.”

Research methodology

A total of 3,100 IT and business decision makers were interviewed in November and December 2016. The respondents were from organizations of at least 500 employees, and were from both public and private sectors, but with a focus on the industrial, government, retail, healthcare, education, construction, finance, and IT/technology/telecommunications sectors. Interviews were conducted both online and via telephone using a rigorous multi-level screening process to ensure that only suitable candidates were given the opportunity to participate. Respondents were interviewed in the UK, Italy, Germany, France, the Netherlands, Spain, Sweden, Norway, Turkey, UAE, Saudi Arabia, the US, Singapore, Japan, Australia, India, Brazil, Mexico, China and South Korea.