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The IoT explosion is upon us -- what's holding CIOs back?

The IoT explosion is certain, CIO reservations and ill-fated use cases notwithstanding. So says new research from Gartner, HCL. Also: Microsoft launches IP protection program.

A population explosion is underway -- but not of the human sort. We're talking things, as in the internet of things,...

aka the computing devices that have the ability to transmit data wirelessly.

According to a Gartner report released this week, this will be the year in which the number of connected things surpasses the number of people on the planet.

The report predicts that 8.4 billion IoT-enabled devices will be in use worldwide in 2017, a 31% increase from 2016. That number is expected to soar to 20.4 billion by 2020.

With stats like that -- and with IoT shaping up to be a $2 trillion industry this year, according to Gartner -- it's easy to see why businesses would want to up their stake in the technology. But enterprise IoT adoption isn't quite as robust as you'd expect. In fact, the consumer space accounts for a lot of the IoT explosion. Consumer IoT applications represent 63% of total IoT applications in 2017.

Gartner's tally comes the same week as the release of an HCL Technologies study  showing that 50% of senior IT and business decision makers believe their organizations are already lagging on IoT. Only 38% of organizations are using IoT; a further 57% plan to use it in the future -- and the overwhelming majority of respondents (82%) agreed that organizations embracing IoT are likely to be in a better position in the marketplace. The HCL findings are based on the responses of 263 global senior IT and business decision makers who were interviewed in the fall of 2016.

So, what's holding IT executives back?

Enterprise reservations about the IoT explosion

A lot of things, it turns out.  Bryce Austin, CEO at IT consulting company TCE Strategy, said the biggest challenges he sees for CIOs around enterprise IoT adoption are security, data absorption and device connectivity, in that order.

"Security has already proven to be a huge issue and it's only going to get worse until device manufacturers are held responsible for using reasonable design principles," he said. "Data absorption is another huge issue. The mountain of data that the IoT is generating has to be collected, stored and (most importantly) made sense of. Regarding device connectivity, many competing technologies are in play to keep these devices connected to the systems that need to talk to them."

Peter Middleton, a research director at Gartner and an author on the report, called out these roadblocks to enterprise IoT adoption: 

  • Regulations that impede rapid changes in regulated industries
  • Lack of clear business benefits
  • Complexity of system integration requirements
  • Immaturity of solutions
  • Business culture barriers between engineering/operations

Fellow Gartner analyst Alfonso Velosa echoed that.

"We talked to a lot of enterprises," said Velosa. "They haven't really laid out clear business objectives. They also haven't been thinking about the cultural issues. Why are you doing a project? How are you actually going to leverage the data from an asset? How do you get people aligned? At its heart, the internet of things is about business process transformation. … That takes time."

Nearly half of respondents in HCL's study said an uncoordinated, siloed approach to IoT is preventing their organization from moving beyond pilots into revenue-generating opportunities.

"With a lot of aggressive technology selling going on in the name of IoT, it’s extremely difficult for businesses to see a clear and rapid path to realize full value," said Sukamal Banerjee, CVP & global head of IoT WoRKS at HCL Technologies.

What's all that mean? The enterprise doesn't quite have IoT figured out yet. Of course, advice abounds.

For CIOs and IT executives behind or frustrated in their IoT journeys, Gartner's Middleton suggested they start by establishing a cross-functional IoT center of excellence to coordinate IoT efforts. And he offered this sage advice: Don't build an IoT solution looking for a problem -- look for a business value generator."

That is, unless you treat IoT as an experiment -- and are prepared to have it fail.

"I would suggest to businesses that they set aside funding for pure experimentation with IoT," said TCE Strategy's Austin. "Think of it as an R&D budget, much like pharmaceutical companies have. IoT needs to be explored by almost every business, but not every business will find good real-world applications to put it into large scale use until the technology matures further."

IoT, at your $ervice

It's clear that some enterprises need a little support on their IoT journey. That's where IoT services come in -- and in a big way. Gartner forecasts that total IoT services spending (professional, consumer and connectivity services) will reach $273 billion in 2017. In the HCL study, 73% of respondents said they plan to enlist the support of a specialist IoT service provider.

"IoT services are central to the rise in IoT devices," said Denise Rueb, research director at Gartner. Austin agreed, but emphasized the importance of putting business value first.

"IoT services are of critical importance when used in the right application," he said. "I would challenge CIOs to help their business partners develop financial models around proposed IoT applications that must have a reasonable ROI."

Another fly in the ointment? According to Velosa, choosing IoT services is only going to get more complicated for CIOs as control shifts towards the business.

"In many cases, the business unit -- the operations teams -- will actually be the ones running the project and picking the vendors," he said. "In our most recent survey, only about 30% of CIOs will be running IoT projects."

But, as we know, CIOs will almost certainly be expected to ensure the technology actually runs and they will also be called on to fix it when it doesn’t. "CIOs will want to make sure they are influencing the decisions," he warned.

(Sigh) Some things never change.

CIO news roundup for week of Feb. 6

The IoT explosion wasn't the only thing making tech headlines this week:

Microsoft offers protection against intellectual property-risk in the cloud. In a bid to protect its cloud customers from patent infringement lawsuits, Microsoft launched the Microsoft Azure IP Advantage program Wednesday. According to Microsoft, the program is aimed at protecting innovations that customers are developing in the cloud. The program provides uncapped indemnification coverage for customers and will cover any open source technology that powers Microsoft Azure services, such as Hadoop. "We want software developers to be able to focus on coding, and businesses and enterprises to be able to respond to the changing needs of their customers with agility without worrying about lawsuits," Brad Smith, president and chief legal officer at Microsoft, wrote in a blog post. As part of the program, 10,000 Microsoft patents will be made available to Azure customers and if Microsoft decides to transfer patents to non-practicing entities in the future, they can never be asserted against customers, Smith added.

Intel investment to create 10k jobs in Arizona. Chip maker Intel is investing $7 billion to complete a chip factory in Chandler, Ariz., said chief executive Brian Krzanich after a meeting Wednesday with President Trump. The Fab 42 facility will create about 3,000 full-time jobs at Intel and more than 10,000 jobs in Arizona, the company touted. "The 7 nanometer chips that we're targeting for this factory … will power state-of-the-art computers, data centers, and other high-tech devices. They will enable amazing breakthroughs in artificial intelligence, automated driving, medical research and treatment, and the factories of the future," Krzanich wrote in a letter addressed to employees. Intel is the latest in a list of companies that have made job announcements in response to Trump's job-creation promises.

House updates email privacy statute. The U.S. House of Representatives passed the Email Privacy Act -- H.R. 387 -- Monday. The act would require law enforcement agencies to get court-ordered warrants to access emails stored with third parties for longer than 180 days. The Email Privacy Act updates the 31-year-old Electronic Communications Privacy Act under which U.S. law enforcement authorities can legally obtain stored emails older than six months using a subpoena issued by a prosecutor or FBI agent. "Establishing these privacy protections are critical for both ensuring that Americans' rights are protected, but also ensuring that all cloud computing providers are covered by the same warrant for content requirements," H.R. 387's sponsor Kevin Yoder said.

Next Steps

Check out our previous Searchlight roundups on the Asilomar AI Principlesnet neutrality's future and what the Oculus trial means for VR.

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How has your organization prepared for the IoT explosion?
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Great read and definitely agree that security is an big component. The other side to the story is in the massive data collection, best ways to store and more to the point interpret all the data points. We have all these points of data collection but right now its all disconnected and while people focus on security, which is important, how do we use the data to expand our business?
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