Enterprise IoT: A cost-cutter today, a money-maker tomorrow

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Credit: Stephen Lawson

This is the year companies will start to use the Internet of Things to build better products, Gartner says

The Internet of Things has made many enterprises more efficient. This year it will start making them more competitive.

IoT covers a collection of technologies almost as wide as the Internet, and the range of uses is even more broad. Some just help you run your business better, while others can get you into a new business.

For example, a shipping company that attaches tracking devices to containers can more easily follow their movements and better understand its operations. If that same company installs temperature sensors inside chilled containers, it can guarantee food and drink shipments will stay cool and charge a premium for that service.

This will be a big year for transitions from the first use of IoT, for internal operations, to the second type that enriches the business as a whole, according to research company Gartner.

Gartner survey results released Thursday show 14 percent of enterprises will deploy IoT for the first time this year, a big rise from the 29 percent already using it. And while most early adopters were looking inward and trying to save money, the next generation wants to use IoT to better serve its customers.

Just over half of today's deployments are internally focused, while only 40 percent are intended to boost revenue or give customers a better experience, Gartner says.

IoT use will also expand out from heavy industries like utilities and logistics, with billions invested in capital, to light industries like insurance and retailing, Gartner analyst Chet Geschickter says. These new adopters will also look to make money from IoT.

For example, a car insurance company might start by using probes on customers' cars to better understand their driving risk. Then it could use a similar probe to detect whether a vehicle's even being driven and start up a part-time, mileage-based coverage plan. That would be a product that could set the insurer apart from its rivals. 

Why are enterprises just starting to tap into these new business opportunities? They never thought of them before, Geschickter said.

Finding ways to use IoT for profit rather than just savings requires IT, operations and business leaders to put their heads together and think creatively. "This is just now starting to happen," Geschickter said.

The survey results show just how early it is in the IoT era. A typical enterprise expects to spend about $7 million on deployments this year, based on the midpoint of estimates made in response to the survey. In most cases, that's trial deployment money, not enough for a full-scale rollout, Geschickter said. The big deployments should come around 2017 or 2018.

In addition to getting everyone on the same page about IoT, enterprises face ongoing challenges in security, integration and managing business requirements, he said.

Most enterprises -- 64 percent -- eventually will use IoT, according to the survey. It drew responses from 465 IT and business professionals in 18 different industry sectors around the world. Only 9 percent said they didn't think IoT was relevant to their businesses at all. The survey was conducted in November 2015 and asked about plans over the next 12 months and beyond.

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