Though the Internet of Things (IoT) is still in its infancy, global businesses have already made a significant investment in the field — and have seen substantial returns on their initiatives.
That’s according to a new study from Tata Consultancy Services (TSC), a global enterprise IT solutions business that employs some 320,000 consultants globally. TCS surveyed 3,700 high-level executives at multinationals based around the world about how much they’ve invested in IoT, how they’re using it, and what kind of return they’re seeing. The topline result: 79% of global businesses have IoT initiatives in place.
Most of the report’s findings are based on a sub-sample comprising 795 executives from leading businesses who were senior enough to respond in detail about their companies IoT initiatives. Many of the results were broken down by region or country.
In Canada, executives said they planned to spend $23.3 million on average in IoT initiatives this year, and that budget will grow to $26.5 million by 2018.
From Internet of Things: The Complete Reimaginative Force by Tata Consultancy Services
Over half of the Canadian executives surveyed (56%) said IoT initiatives implemented by their company had boosted revenue by 1-10% in the area of business in which they were launched. Another quarter (24%) said IoT initiatives had boosted revenue by 11-20%.
From Internet of Things: The Complete Reimaginative Force by Tata Consultancy Services
(Note: these numbers don’t reflect company-wide revenue growth, but growth for the specific area of the business impacted. For most companies, this would be a specific department, service offering or group of test stores.)
North America-wide, the average multinational business saw 15.6% growth in annual revenue in the affected area in 2014.
Satya Ramaswamy, TCS’ VP in charge of its digital enterprise business, said one of the clearest results of the study is IoT initiatives are helping businesses increase their revenue in a number of different ways. He said over the past decade, the trend among global businesses has been to use technology to cut costs to rock bottom. IoT, by contrast, promises to grow the bottom line by increasing revenues. “Better customer segmentation, opening new channels, and creating new products and services that never existed before… all of that is unleashing new sources of revenue,” he said.
While Canadian marketers might have the sense that IoT has been led by industrial companies looking to improve their manufacturing processes, the use case seeing the most traction has actually been marketing, Ramaswamy said.
According to the report, the most common use that companies have found for IoT technologies (ranked by 46.5% of respondents) is tracking customer behaviours through mobile apps. The second most common (at a close 44.9%) was tracking product flow to customers through distribution operations.
From Internet of Things: The Complete Reimaginative Force by Tata Consultancy Services
Ramaswamy said businesses’ enthusiasm for IoT marketing applications stems from a desire to bring modern developments in digital marketing into physical retail spaces. “Physical marketing is in one sense lagging digital marketing, but we believe that IoT is something that will fundamentally change the equation, and make physical marketing as targeted, as effective, and as personalized as digital marketing,” he said.
The three biggest barriers to IoT adoption, according to the survey were, in order: corporate culture, lack of executive-level buy-in and technological setbacks. “To a large extent these [initiatives] are all driven from the top,” said Ramaswamy, adding that the market leaders TCS identified “typically have a lot of support from the higher levels of the organization.”
Despite the return that businesses are already seeing on IoT initiatives, Ramaswamy thinks the real revolution is just beginning. IoT will enable companies to create new services — he gave the example of an auto manufacturer that installs monitoring devices on their vehicles, which alert the user when they need maintenance before a part actually breaks. That’s the kind of use-case that most of the clients TCS works with are still whiteboarding, and it could be a big revenue-booster in the long-run.
You can download the 186-page report, which goes into depth about how 13 different economic sectors are using IoT to differing degrees of success, at TCS’ website.
