The Internet of Things has already begun to transform global industry and commerce. The basic idea behind IoT—adding a layer of sensors, networks, specialized software, cloud services, and powerful compute and storage resources on top of existing industrial processes and equipment—will have a far-reaching impact on manufacturing, energy, oil and gas exploration, transportation, and other industries.
While it sounds like an amazing opportunity, some companies are much better positioned to reap the benefits of IoT than others, according to a new IDC white paper, “Prepare for Billions: The IoT 2020 IT Infrastructure Readiness Indicator.” The paper lays out the current state of corporate IoT readiness, dividing companies into four categories:
- IoT All-Stars: ready for IoT growth
- IoT Pros: significantly ready
- IoT Rookies: minimally ready
- IoT Amateurs: unready
In its research, IDC used a custom IoT framework, which it calls the IoT IT Infrastructure Readiness Indicator, to assess companies and assign them to one of the four categories.
The IoT framework has four spokes (see inset image) that measure organizations on cloud-first delivery; data flow and action control; governance, risk management, and compliance (GRC); and advanced analytics and insights. In addition to grading companies on their IoT readiness, the framework can also help companies understand their strengths and weaknesses when it comes to IoT strategy and IoT infrastructure planning.
Ideally, companies can use the framework to move up the ladder by better leveraging their infrastructure and using IoT to achieve a stronger competitive position in the marketplace. Organizations that are ready for IoT are also more prepared to capture the value of IT wherever it is, whether it’s in the cloud, in a back-end data center, on the factory floor, or out in the field. In essence, being IoT-ready means being IT-ready.
IoT survey results
IDC surveyed 600 corporate and line-of-business IT executives. The research company applied the results to the IoT framework to determine where organizations fall on the IoT-readiness spectrum. Participating companies had at least 500 employees and either had an IoT strategy in place or were prepared to deploy an IoT strategy within the next 12 months. Survey participants came from industrial companies as well as other types of businesses that use IoT.
The results show a stark difference between companies with high IoT readiness (IoT All-Stars and IoT Pros) and those with low IoT readiness (IoT Rookies and IoT Amateurs). For example, when it came to automation tools within a cloud-first delivery model, over half of IoT All-Stars used such tools, compared with less than one in four IoT Amateurs (see inset image).
IDC concluded that on these and other cloud-related measures, the high-readiness companies “employ more advanced technologies, are more open to making technology investments, and employ IoT across more platforms.” The report adds, “IoT Pros and especially All-Stars more aggressively use technologies to get the full value out of their IoT infrastructure.”
Understanding the big picture for IoT
Yanick Pouffary, chief technologist for Hewlett Packard Enterprise IoT and Intelligent Edge services, has analyzed the results of the IoT survey and notes the IoT All-Stars seek to understand the “big picture” when it comes to implementing IoT solutions.
“The All-Stars are the ones who are really thinking, ‘What do I want to achieve as a business outcome?'” Pouffary says. “And they very often focus on the value IoT will bring to the company to deliver a more compelling customer experience, to deliver a more compelling outcome for the business.”
In contrast, Pouffary says, the IoT Amateurs and IoT Rookies may be considering a limited scope of IoT, perhaps focusing just on increased efficiency for a certain process. According to the IDC paper, the business drivers of the IoT Amateurs and IoT Rookies likely emphasize minimizing cost and business risks; in contrast, the IoT Pros and IoT All-Stars are likely to concentrate on customer experience, competitive differentiation, and time to market.
Of the low-readiness organizations, Pouffary says, “They see IoT as something they need to do, but not as a digital transformation enabler. It’s almost like they are treating IoT as a ‘necessary evil.’ They don’t see this as an opportunity to transform themselves and leapfrog their competitors.” Moreover, she says, “they don’t necessarily understand a perfect storm is mounting, that everyone is looking at IoT. Their current traditional competitors are going to morph, and unlikely competitors are going to appear, causing disruption even more than their traditional competitors.”
Unlikely competitors may include startups or disruptive firms from adjacent industries. Pouffary points to the example of Uber, which has not only upended the taxi industry, but is also changing adjacent industries such as the car rental business. Uber is even experimenting with the delivery of goods as well as the design of self-driving vehicles—areas that are traditionally the domains of delivery companies and auto manufacturers.
All is not lost if a company is graded an IoT Amateur on the IoT Readiness Indicator. It’s still possible to move up the ladder. But doing so is not just a matter of investing more in IoT; it requires a real attitude change on several fronts. Companies need to think bigger when it comes to implementing an effective IoT strategy, setting goals based on the IoT framework and carrying out pilot projects.
Indeed, industrial companies should consider how they themselves can cause disruption. “IoT is not just about getting more information,” Pouffary says. “It’s about changing business models so that you can be a leader and disrupt your traditional industry, as well as the adjacent industries. It is about thinking big and acting tactically.”
Data-centric vs. action-centric IoT
The second spoke of IDC’s IoT framework addresses Data Flow vs. Action Control, or data-centric vs. action-centric IoT. Data-centric IoT devices are viewed primarily as sources of data. Such devices include cameras, force sensors, connected temperature gauges, and other types of sensors that generate data related to operational conditions, the location of equipment or materials, or other physical parameters in industrial processes.
Even though such data-centric devices may generate large amounts of data that is sent over the network, they don’t necessarily help to improve business processes in real time. “This usage hierarchy may reflect that gathering data and, more importantly, figuring out how to collect the right kind of data is a prerequisite to taking any kind of action,” the IDC paper explains. The IDC survey data found that 70 percent of IoT Amateurs are predominantly data-centric.
High-readiness companies, on the other hand, focus on action-centric IoT. They regard IoT devices as actual change agents for the business, capable of taking prescriptive action based on the data being generated.
For instance, a predictive maintenance system might use data from vibration sensors to determine that a piece of machinery needs to be recalibrated, and automatically take the equipment offline at an optimal time to start the recalibration routine. Or, an autonomous mining vehicle may use location data and cameras to determine a path that requires the least amount of fuel and poses the lowest risk to nearby workers and other mining equipment.
Among IoT All-Stars, 52 percent say they are roughly an equal mix of data-centric and action-centric, while 44 percent report being primarily action-centric. This compares with 19 percent of IoT Amateurs reporting a mix of the two approaches, and just 11 percent that say they are predominantly action-centric.
Pouffary warns low-readiness organizations to not take a “lukewarm” approach in their ability to leverage information from IoT sensors. She says, “The IoT Amateurs will think, ‘As long as I’m getting more data, I am data-centric.’ What they fail to realize is with that data, you now need to become action-centric, so that you can actually act on the new insights.”
Pouffary adds, “It really is about thinking big as you make your investment, so you don’t shortchange yourself in the choices you are making. You need to think reusability, you need to think scaling, you need to think action-centric, you need to think bigger.”
However, she stresses that IoT is not big data. She says data is simply a currency—what you do with the data is what matters: “How fast you act from the data you gather is what will differentiate you and will enable a company to succeed and lead.”
Adopting an action-centric big picture is important even at the IoT pilot stage. Pouffary says low-readiness businesses tend to experiment in a very siloed manner, and even if they are very efficient with a single use case, they have trouble expanding to other use cases.
This is not the case for high-readiness firms. “The All-Star companies from the beginning understand that they need to lay the right foundation,” Pouffary says. “They understand right away that the value is in the actions they can take.”
Building out an IoT infrastructure, from the “things” to the edge to the core/data center
The IDC IoT survey found nearly half of IoT Amateurs, Rookies, and Pros were designing and deploying new infrastructures for IoT, compared with just one quarter of IoT All-Stars. This may seem counterintuitive, but according to the IDC paper, the latter group prefers to leverage or adapt existing IT infrastructure investments and use new components as needed. “Doing so gives them the flexibility, scalability, and agility they need to accommodate changing applications, data analytics frameworks, and governance standards,” the report states.
Nevertheless, to realize a good return on IoT investment, companies need to invest in a modern application portfolio as well as a modular and flexible IT infrastructure. “Your infrastructure must operate as a service-ready entity with resources you can compose on demand,” IDC says, adding that when designed as part of a data center-wide initiative, such an infrastructure can also support other advanced computing technologies, including artificial intelligence, big data, analytics, next-generation application development and delivery, and edge computing.
According to IDC, 43 percent of all IoT-generated data will be preprocessed at the edge by 2020. In addition to investing in real-time analytics at the edge (which, incidentally, is a powerful way to boost action-centric IoT), edge computing “minimizes the possibility of inundating the core data center infrastructure and streamlines data flow and control across the entire IoT IT infrastructure,” it says.
Despite rising awareness of IoT and more advanced IoT and IT industrial solutions coming to the marketplace, Pouffary believes that some companies will fail to make the transition from IoT Amateur to Rookie, Pro, and All-Star. “I don’t think the IoT Amateurs are going to go away,” she says. “Why? Because many, many businesses don’t have an appetite for change.”
Still, Pouffary believes that many businesses will make an effort to maximize the benefits of IoT. “In five years, there will be two buckets: the Amateur bucket, those who are really doing IoT enough just because they need to, and then you will have the IoT Pros and All-Star bucket, those who really understand the strength and value of IoT. You will have even more consistent connectivity, consistent compute, consistent analytics, and they will be able to really focus on business outcomes.”
To learn more about the IoT framework, download the IDC white paper, “Prepare for Billions: The IoT 2020 IT Infrastructure Readiness Indicator.”
IoT readiness: Lessons for leaders
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