IoT Source’s top analyst, Steve Veith, shared his perspective on a new Capgemini report last week. This week, I want to expand our perspective on the report that Steve called, “one of the most valuable studies that I have encountered ” and highlight a number of particularly interesting data points.
The report opens with a critical question executives leading IoT transformations are asking, “how do we turn investment into a positive return?” Capgemini stated a number of issues, we’ve mentioned before, limiting returns including a lack of a clear business case, security concerns (per Gartner, total spend on IoT security was $1.174 billion in 2017, and predicted to rise by 28% in 2018), constrained analytical capabilities and uncertainty about IoT standards and protocols.
Capgemini surveyed senior executives from more than 300 global organizations who had already implemented IoT initiatives. In addition, they analyzed more than 300 cross-sector IoT use cases which spanned industrial manufacturing, retail, consumer products, energy & utilities, automotive and telecommunications. A fairly extensive process that helped unveil real-world challenges facing innovators and early adopters of the IoT.
Of the industries reviewed, industrial manufacturing and retail were the most prevalent integrators of the IoT. Although not a new insight, it does continue to support previous growth projections for IIoT and showcases the more immediate and measurable cost reduction, customer experience and productivity benefits available through the Internet of Things. It also pinpoints market pressures within both of these industries forcing companies to find new ways to compete on the global stage. Clearly, traditional retailers are being slammed by e-commerce giants like Amazon while industrial manufacturing companies are constantly under pressure to drive larger margins.
My favorite part of the Capgemini report was the 2×2 quadrant plotting responses to the question, “how should organization identify and prioritize use cases?” Plotted on an X-axis of “payback period from investment” and a Y-axis of “benefits from implementation” the top four use cases occupying the top-right quadrant (highest benefits from fastest payback) included:
- Environment monitoring
- Warehouse management, inventory monitoring and renewable plants supervision
- Smart metering
- Inventory intelligence
On the reverse end in the bottom-left quadrant (weakest benefits at the slowest payback) included:
- Situational awareness
- Monitoring and controlling climate conditions
- facility management
- Capacity utilization and workload management
As with any four quadrant analysis, the axis variables used to plot the data, in this case, IoT use cases, will increase or decrease ratings. In other words, the top and lowest use cases may change considerably if plotted by the cost to implement and short versus long-term gains. In this particular study, the benefit to payback does not identify the state of health the underlying companies held prior to the IoT implementation. An inefficient manufacturer may find faster payback from a warehouse management system than one with an already efficient operation.
Another interesting aspect of the report included three common themes the most successful companies held. These included: (1) the IoT project was considered a strategic initiative; (2) as such, it had strong executive leadership, and (3) the IoT project focused on the right use cases. Although not clearly stated, I imagine each project was planned effectively and driven by a defined business case.
A number of additional data points were reported by Capgemini. I highly recommend checking out the full report titled, Unlocking the Business Value of IoT in Operations.
Also published on Medium.