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Security remains top concern of enterprise IoT customers

Enterprise customers remain eager to implement IoT systems to improve their businesses, and Bain & Company expects the markets for IoT hardware, software, systems integration, and data and telecom services could grow to $520 billion in 2021, more than double the $235 billion spent in 2017. But customers’ plans are limited by their beliefs that technology providers haven’t adequately addressed the major barriers that keep them from ramping up to scale.

Bain’s recent survey of more than 600 commercial and industrial customers of IoT systems found them wary of the same barriers they faced two years earlier: security, integration with existing technology and uncertain returns on investment. (See Figure 1.)

Security concerns weigh particularly heavily. Forty-two percent of executives listed it is a top concern, nearly as many as two years ago. Our research finds that enterprise customers would buy more IoT devices and pay more for them (about 22% more on average) if their security concerns were addressed (For more on this, see the Bain Brief “Cybersecurity is the key to unlocking demand in the internet of things.”)

Integration also remains a top barrier. Vendors haven’t made it easy for customers to integrate their IoT systems into business processes or IT and operational technology — and they may be underestimating their customers’ concerns about integration. If vendors invest in learning more about typical implementation challenges in their customers’ industries, they’ll be able to offer more complete end-to-end technologies.

Priorities are shifting, too. Predictive maintenance emerged as one of the first attractive IoT use cases as sensors and analytics helped companies determine more precisely when maintenance or replacement was necessary. Schindler, for example, worked with GE’s Predix platform to implement a broad predictive maintenance program designed to optimize maintenance on more than 60,000 elevators and escalators worldwide. But some of the interest in predictive maintenance has waned because customers found that the returns on investment have taken longer than expected. Legacy data formats and missing historical data are part of the problem, and insights have been harder to glean than first promised.

Figure 1. Source: Bain & Company

Interest in remote monitoring, on the other hand, has risen because it tends to be an easily integrated or standalone application. Industrial equipment leader ABB, for example, bundles remote monitoring into its connected robotics systems and connected low-voltage networks, which allows customers to troubleshoot and quickly identify issues requiring greater attention.

The next few years will be critical to the development of IoT markets as leaders continue to make gains and expand their industry-specific offerings. Incumbents that fail to move quickly enough to address customers’ needs are likely to get leapfrogged by more nimble competitors.

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