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Edition #12 | October 2020

IoT: Connecting to the business opportunity
PUBLISHED OCTOBER 8 2020


Intro: Expectations and realities 


The hype around the Internet of Things (IoT) - the system of smart devices capable of communicating and sharing rich data over wireless networks - has been building for years, and it’s easy to understand why. Rarely has a technology encompassed, and promised, so much for businesses. With the right combinations of connectivity and automation, a company can track- and even control- assets remotely, and vastly extend its ability to reach customers or smooth supply chains. 


Even amid the pandemic, while investment in the IoT is expected to slow, it continues to rise, led in part by health applications like bedside telemetry. According to research firm IDC, after reaching $742 billion this year, global IoT spending is tipped to bounce back to double-digit expansion in 2021, and post a robust 11.3% compound annual growth rate for the 2020-2024 period. 


Yet the track record of IoT indicates the enthusiasm should be tempered with caution. By some estimates nearly a third of IoT projects fail to make it past the proof of concept stage, mainly due to costs or confusion around the bottom-line benefits.

Reasons for IoT Failure in POC

Diagram - Reasons for IoT failure in POC
Diagram - Reasons for IoT failure in POC
Source: Microsoft IoT Signals

With any IoT project there’s potentially a lot at stake, particularly when it comes to investment and security. That makes it critical that IoT implementations are assessed rigorously, planned meticulously and connect not just a few devices, but directly to business goals. 


This edition of Perspectives will act as a guide to the wide and, at times, challenging world of IoT - how to decide whether it’s the right fit for your enterprise, how to overcome the problems that typically accompany IoT implications, and how to ensure it pays dividends in terms of business efficiency and acceleration.

i. Establishing a business case  


Strong interest in IoT is due in no small part to the high-profile success stories. Early examples of manufacturers connecting environments to boost quality control and smooth supply chains have been joined by cases of companies applying IoT to extend services in compelling new ways - take machinery maker John Deere’s push into smart agriculture, or telco Orange’s foray into home security. 


Innovative young companies like UK-based Mysense, which uses connected devices and AI to improve home care for the elderly, show these achievements aren’t limited to large firms - and that in the right context, the impact of IoT can be tremendous. One survey by Forbes and Intel, of enterprises with IoT initiatives underway, found a significant majority had managed to leverage the IoT to expand services to customers and enter new business lines.

Of enterprises with IoT initiatives:

Diagram - Of enterprises with IoT initiatives
Diagram - Of enterprises with IoT initiatives
Source: Forbes/Intel

For all the potential of IoT to take enterprises to new places, particularly when starting out, it’s vital that any would-be adopter spend time defining the specific existing business problem or need an IoT project is designed to address. 


“The biggest challenge with IoT is that the concept is so broad, businesses may not know exactly how they can benefit from it,” says Chen Zhu, IoT Director, China at ThoughtWorks. “The first step is to find the right problem. We’ve seen a lot of companies waste money on trying to overcome the wrong ones.”

Quote from Chen Zhu, IoT Director, ThoughtWorks China
“The biggest challenge with IoT is that the concept is so broad, businesses may not know exactly how they can benefit from it. The first step is to find the right problem.”


Chen Zhu

IoT Director, ThoughtWorks China

In other words, IoT shouldn’t be a solution in search of a problem - as was arguably common a few years ago, when, as ThoughtWorks Principal Developer, Michael Fait, recalls, makers of consumer goods were busily installing WiFi modules in everything from toothbrushes to sausage fryers. “The IoT isn’t just connecting devices,” he says. “It’s building systems with connected devices that have a specific purpose.” 


So how does an enterprise identify an area of IoT opportunity? These will inevitably vary depending on the nature of the business, as well as its technological readiness, but there are a few telltale indicators to look out for: 

Is the IoT right for me? A business checklist

Diagram - Is the IoT right for me? A business checklist
Diagram - Is the IoT right for me? A business checklist
Source: ThoughtWorks



* The business is facing challenges managing a significant number of - or significantly complex - physical assets 


“When we think about what kind of companies can benefit most from IoT, it’s generally those who have a lot of physical assets or locations,” says Zhu. “In the past, sensing or managing 10,000 branches globally would be very difficult. If you really want to know what’s happening in them at any given time, connecting them through the IoT can make that possible. You’re able to monitor inventories, infrastructure, all the assets in those premises without the need to conduct physical inspections.” 


Especially initially, “IoT solutions were often targeted towards very easy use cases - devices with a single embedded computer,” says Stefanie Grewenig, Lead Developer at ThoughtWorks. “But what we’re seeing, especially in the automotive industry, is the need to connect and manage products with a lot of powerful computers. That’s a very different use case. So while there’s a lot of IoT support out there, for manufacturers with complex products, it’s not always useful, and getting value out of the IoT will require quite a lot of work.” 

* The business (or its customers) would clearly benefit from the ability to maintain an asset or product remotely 


Automating the reporting of maintenance issues and enabling fixes to be delivered from a distance is one of the main ways the IoT can be applied for relatively quick gains. 


“Maintenance causes very big logistical problems,” says Zhu. “For example, if you’re scaling to more locations and having problems with certain servers, in the past you had to send someone into the field to do the diagnostics. That drastically lowers efficiency, and the feasibility of services. But if the IoT gives you access to current and historical data about the growth and operations of different machines, you can use that to identify patterns and track problems, and improve your operations and efficiency.”

* Connecting devices enables the collection of useful information that would otherwise be time-consuming or impractical to source


Kevin Ashton, a technologist generally credited as coining the term Internet of Things, pointed out computers are generally far better than humans at capturing data, but need people to put them in a position where they’re sufficiently connected to the physical world to do so. Given the importance of data-based decision making to modern digital businesses, once those connections are made, great things can happen. 


Fait has seen cases where the IoT automated the collection and reporting of data from a critical transportation system that previously had to be painstakingly gathered and delivered manually; and where a maker of warehouse vehicles was able to connect the products it sold to track and better understand usage on a daily basis - an ability that can inform everything from preventative maintenance to future product design. 


“Any time you can connect a physical device to an IoT ecosystem that allows you to get information that would otherwise be very tedious to collect, you might have a business case for IoT,” Fait says.

Quote from Michael Fait, Principal Developer, ThoughtWorks
“Any time you can connect a physical device to an IoT ecosystem that allows you to get information that would otherwise be very tedious to collect, you might have a business case for IoT.”


Michael Fait 

Principal Developer, ThoughtWorks

* Connecting devices to an ecosystem creates direct benefits for - or extends services to - the end-customer 


With the IoT paving the way for more visibility over the business and greater access to data, companies are presented the opportunity to draw on new insights to improve outcomes for customers - and even foster new revenue streams. 


Grewenig cites the case of a firm ThoughtWorks has worked with, that sells smart meters to help consumers monitor and optimize their electricity usage. It quickly realized the data collected by the meters could serve far more purposes than originally intended, from measuring the usage of specific appliances - and flagging when they were due for refills or replacements - to detecting irregularities in electricity consumption that could be a sign of someone in the home in distress. 


“You could subscribe to your grandmother’s smart meter if you’re worried, and it would, for example, detect if someone switches on the light and never switches it off, and send you an alarm because something may have happened,” she explains. “This isn’t an obvious IoT use case that’s directly related to the core business, but was made possible through connecting the electricity meter to the internet and understanding the data better.”

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ii. Design and implementation 


Ensuring an IoT project serves a distinct and tangible business goal or customer outcome is the first step to overcoming one of the biggest challenges facing IoT projects - a lack of business buy-in and leadership. A study by networking equipment giant, Cisco, identified collaboration between IT and the business, and a technology-focused culture driven by the leadership and executive sponsorship, as the most critical factors in the success of IoT projects, beating out even domain expertise.

Top Factors Behind Successful IoT Projects:

Diagram - Top Factors Behind Successful IoT Projects:
Diagram - Top Factors Behind Successful IoT Projects:
Source: Cisco Survey

“We wish (the IoT) was only a tech issue,” Fait says. “To make a smart IoT ecosystem, so the user has a positive experience and you have a good flow of features and data, a lot of things have to come together - the designers, the hardware people, software, manufacturing. What we see in a lot of companies is strict divisions between the departments, with hierarchies and politics, when what you need is a cross-functional collaboration journey.” 


The automation that IoT enables also isn’t always well received - especially among those responsible for manual processes and oversight that automation may alter or phase out, whether due to simple risk aversion or fears of obsolescence. This can be addressed by taking steps to adopt technology in a transparent and sensitive way. 


“Something we’ve seen throughout the projects we’ve been working on, is that because there are often manufacturing timelines where everything has checkpoints and legal restrictions, or requirements that mean someone has to sign off on something at certain points of time, a high degree of automation is something they really hesitate to introduce,” says Grewenig.  


Another issue is that because the IoT links devices, it’s mistakenly identified as being mainly about the hardware. Yet to leverage it successfully, “you have to become a software company, learn and understand what good software looks like and what the capabilities are,” says Fait. “The software is what adds the functionality and produces the actual benefit, not the sensor or device itself.”   


Because software development is a key success factor, businesses should also be mindful of the limitations placed on the IoT by varying standards and protocols, and how these can sometimes prevent software from achieving the desired goals. 


“In many use cases the hindrances are the boundaries between companies and different manufacturers and brands,” Fait says. “Take the smart meter example - you have the manufacturer, the electricity company, the owners or manufacturers of the household devices, and all those things have to come together and talk to each other. When the hype around IoT started everybody was talking about common standards so we could make really good ecosystems out of anything, but we haven’t seen that actually take off.”

Quote from Stefanie Grewenig, Lead Developer, ThoughtWorks
“If you have a platform that is actually usable, that enables developers to deliver quickly and with confidence the solution will work as intended in the real world and will be secure, it allows the business to stop focusing on technical problems and start thinking about what they really want to get out of their IoT projects.”


Stefanie Grewenig 

Lead Developer, ThoughtWorks

By trying to reduce these complexities and working as much as possible towards standardized processes and platforms that can be used as a foundation for the creation of various IoT applications, companies can vastly accelerate the development process for software running on embedded systems, according to Grewenig. 


“Developer experience has nothing to do with a developer wanting to be spoiled - it’s all about speed,” she says. “If you have a platform that is actually usable, that enables developers to deliver quickly and with confidence the solution will work as intended in the real world and will be secure, it allows the business to stop focusing on technical problems and start thinking about what they really want to get out of their IoT projects.”   


As they can be so complex and involve so many (literally) moving parts, it’s particularly advisable with IoT projects to stick to the time-honored principle of starting small. 


“Especially when the technologies are new, we always advise clients to start with lower-cost demonstrations or products,” says Zhu. “You can use the results to verify your ideas and whether they really work, and take it from there. Don’t waste too much time or resources on trying to find the perfect solution from the beginning - because we often have limited knowledge of new solutions, what seems perfect may end up being the wrong thing. Start off with experiments, and repeat.” 

Quote from Chen Zhu, IoT Director, ThoughtWorks China
"Don’t waste too much time or resources on trying to find the perfect solution from the beginning - because we often have limited knowledge of new solutions, what seems perfect may end up being the wrong thing. Start off with experiments, and repeat.”


Chen Zhu 

IoT Director, ThoughtWorks China

iii. Facing up to the security challenge 


Security is an issue that warrants special attention with IoT as there is no getting around the fact that connecting devices vastly increases the enterprise’s potential attack surface. 


With more and more devices incorporating what are essentially powerful miniature computers, security breaches don’t just potentially expose critical data; they can have consequences in the physical world. Typical applications of IoT extend the reach of the enterprise into consumers’ personal lives by placing connected cameras and microphones in homes, with significant implications for privacy. 


“In the past, maybe a company could touch you with just one finger - but in the future they’ll be able to touch every corner of your life,” says Zhu. “You’re connected at home, on the way to the office, in the office, everywhere. The lines between the physical world and the digital world are blurred.” 


Research shows consumers are keenly aware of the potential vulnerabilities the IoT brings - and that their concerns are a major barrier to adoption. A global survey by Consumers International and the Internet Society found 63% of consumers see connected devices as “creepy” and that fewer than half believe these devices will protect their privacy and process information in a respectful way. The same study found security concerns are as strong a deterrent as price to buying smart devices.

Smart attitudes

Diagram - Smart attitudes
Diagram - Smart attitudes
Source: Consumers International/Internet Society

To some extent businesses share this apprehension, with security and privacy by far the biggest concerns for companies implementing IoT, according to research by DigiCert. This shows for an IoT project to be successful, security has to be a primary consideration from the very beginning. 


“Security can’t be one thing you do at the end of an IoT project,” says Fait. “It has to be driven from the beginning by cross functional teams, which should also be creating different mechanisms to cope with security issues.” 


Among the key principles gleaned from ThoughtWorks’ experience is to always build in backups and failsafes to both enhance security and mitigate risk. “There’s a lot to be learned from what we’ve seen the manufacturers we work with do right,” says Grewenig. “Like making it possible to separate systems that critical security information flows through, and creating very elaborate hardware setups that ensure that though ‘optional’ systems like an entertainment system or air conditioner might fail, essentials like the brakes and airbags will always work.” 

Quote from Michael Fait, Principal Developer, ThoughtWorks
“If you look at the top vulnerabilities of IoT devices, there’s a lot of stuff that hasn’t been done on the web in the last 20 years, like setting short, standard passwords that are never changed. We have to, at the very least, apply everything we’ve learned over the past couple of decades to the systems with connected devices we’re building now.”


Michael Fait 

Principal Developer, ThoughtWorks

Running through potential security scenarios is a good way to identify potential weak points and set priorities - because, as Fait points out, no business or project can address every possible weak spot. “We spend an extensive amount of time doing threat modeling - deciding what it is we don’t want; what we need to take care of because it’s not good, but won’t kill us; and what things we have to make sure don’t happen at all,” he says. 


Finally, amid all the focus on emerging threats and newly connected environments, enterprises shouldn’t forget to reinforce and apply old best practices. 


“If you look at the top vulnerabilities of IoT devices, there’s a lot of stuff that hasn’t been done on the web in the last 20 years, like setting short, standard passwords that are never changed,” says Fait. “We have to at the very least apply everything we’ve learned over the past couple of decades to the systems with connected devices we’re building now.”

OWASP IoT Top 10 List of Security Vulnerabilities

Diagram - OWASP IoT Top 10 List of Security Vulnerabilities
Diagram - OWASP IoT Top 10 List of Security Vulnerabilities
Source: OWASP

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iv. The next stage of the IoT 


When it comes to the IoT, businesses may have even more to look forward to. The rise of 5G networks could prompt a significant leap forward. According to Zhu, while the focus is usually on 5G being faster, the real payoffs will be wider coverage and lower latency, which together will allow for much greater densities of devices and connections. 


“What you couldn’t do in the past will become feasible,” he says. “You can’t do genuinely real-time remote control with 4G, but (with 5G) there are application patterns that will make it possible. People really won’t have to go work in the field anymore. Because you’ll be able to get VR, construct alternate realities and have real-time control, working remotely will be just like being there.” 

Quote from Chen Zhu, IoT Director, ThoughtWorks China
“What you couldn’t do in the past will become feasible. You can’t do genuinely real-time remote control with 4G, but (with 5G) there are application patterns that will make it possible. People really won’t have to go work in the field anymore. Because you’ll be able to get VR, construct alternate realities and have real-time control, working remotely will be just like being there.”


Chen Zhu 

IoT Director, ThoughtWorks China

Zhu sees this opening the door to all kinds of innovations with the potential to reduce risk and promote positive impact, whether robot-conducted cleanups of environmental contamination or remote operators taking the wheel on behalf of tired drivers. Yet these will have to be balanced with privacy, security and other considerations - factors that Fait sees limiting the industrial application of 5G-enabled IoT to some degree. 


With 5G “the whole smart home will evolve, and there will be a lot of solutions made possible, especially for the elderly,” says Fait. “But if you’re a factory you don’t want to rely too heavily on connectivity for your production. Even if 5G allows you to do things faster, it’s a mobile network, and can still go down. That’s why I expect it will have a bigger impact on household devices, wearables and mobile devices.” 


Grewenig, meanwhile, sees more progress on standardization as the key to unlocking more of the IoT’s possibilities.

Quote from Stefanie Grewenig, Lead Developer, ThoughtWorks
“In the ideal world, a developer would never have to bother writing something for a particular piece of hardware. They could just write code and deploy it wherever it’s of use. Writing software for a car would be like writing applications for mobile.”


Stefanie Grewenig 

Lead Developer, ThoughtWorks

“In the ideal world, a developer would never have to bother writing something for a particular piece of hardware,” she says. “They could just write code and deploy it wherever it’s of use. Writing software for a car would be like writing applications for mobile.” 


Streamlined development processes and interoperability would pave the way for more new business models that the IoT has enabled enterprises to create and explore; at times (like in the case of the Smart meter company) almost by accident.


“I was impressed at how quickly (the startup was) able to shift their business focus,” Grewenig says. “There was the original business model where they enabled people, and then they just expanded into all these different areas like servicing appliances or elderly care, that weren’t planned in advance. None of this was pitched originally to their investors, but sometimes the best opportunities come up along the way - as long as the business is in a position to act on them.”

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