Why the IoT Fails: Avoiding Communication, Planning, and Budgeting Pitfalls When Implementing IoT Projects
The Internet of Things (IoT) appears to be an industry ripe with promise. Gartner predicts the number of IoT devices will increase by 31%from 2016 to 2017, reaching a total number of 8.4 billion. By 2020, the number is expected to grow again: Gartner’s analysts believe 20.4 billion IoT products and services will exist by that time.
The International Data Corporation (IDC) also forecasts a year-over-year growth of nearly 17%, resulting in slightly over $800 billion in 2017. Like Gartner, the IDC expects the numbers to continue their upward trajectory—the company says global IoT spending could equal almost $1.5 trillion by 2021.
The two research firms explain that this growth rises from widespread use and value in numerous industries, ranging from healthcare and manufacturing to utilities and smart building technologies. These IoT applications will only grow because, as John Greenough and Jonathan Camhi at Business Insider explain, the IoT “will be the future of the way businesses, governments, and consumers interact with the physical world.”
Yet despite these astounding statistics and projections, IoT-based projects today seem to be failing. Below, we’ll explore some common pitfalls and how you can overcome them and remain successful for the future.
THE IOT IS GROWING, BUT CHALLENGES REMAIN
Turning the IoT into the future of interactions with the physical world presents many challenges, a fact demonstrated in Cisco’s 2017 research study “The Journey to IoT Value: Challenges, Breakthroughs, and Best Practices”:
- Nearly three-quarters of IoT projects are failing.
- Roughly 60% of respondents reported that IoT programs look ideal during the planning stage but often prove more complex than expected.
- Only 26% of surveyed companies achieve success with their IoT initiatives.
The report analyzes the differences between companies that succeed or fail, eliciting several points of comparison. Companies with successful IoT implementations, for instance, evidence a technology-centric culture and internal and external IoT expertise. Companies with a higher failure rate lack those two features. They may also struggle with poor budget planning, project management, and data capture and analysis.
But the news isn’t all negative. Cisco reports companies that succeed with the IoT can benefit from actionable data. With it, they decrease overheads, enhance product quality or performance, and improve decision-making. Organizations also remain faithful to the IoT’s promise despite the difficulties.
In fact, 61% of surveyed companies share that “they have barely begun to scratch the surface of what IoT can do for their business.”
IOT PROJECTS CAN SUCCEED
IoT project failure can be attributed to either human error or business mistakes. IoT projects also collapse for technological reasons, but a business decision or human misunderstanding almost always precedes a technology malfunction.
Because of that, we’ll only go more in-depth about human and business factors and how you can overcome these issues and be successful with your IoT projects.
Human Factor: Collaboration
In Cisco’s press release for its IoT report, the authors warn companies against viewing IoT projects as being “all about technology.” Human factors like collaboration, accountability, company culture, and leadership are critical to success. They give people a reason to care about IoT initiatives, and they also give people a sense of purpose and wellbeing.
Soit comes as little surprise that 54% of surveyed companies list collaboration between IT and the business as the number-one priority. However, other respondents believe that collaboration may not be the most important factor to IoT project success:
- When contemplating IoT projects, IT executives emphasize more on technology, culture, expertise, and vendors.
- Business executives, by contrast, place more importance on strategy, business use cases, processes, and milestones.
Cisco also reports that 35% of IT executives view an IoT initiative a complete success, as compared to 15% of business executives. The difference in opinion poses dangers. It, for instance, can result in misalignment and miscommunication, ultimately threatening project success.
Fortunately, the challenge isn’t insurmountable. The Society for Human Resource Management (SHRM) offers advice about how to embrace collaboration and create high-performing teams. The organization’s research finds that such teams aren’t “a collection of people simply following orders.” Rather, they embody the following five characteristics:
- “A deep sense of purpose and commitment to the team’s members and to the [company] mission”
- “Relatively more ambitious performance goals than average teams”
- “Mutual accountability and a clear understanding of members’ responsibilities to the team and individual obligations”
- “A diverse range of expertise that complements other team members”
- “Interdependence and trust between members”
Developing these qualities takes time and effort, but with them, you can benefit from teams that strive together toward a common goal, such as completing a new IoT program.
Human Factor: Company Culture
Cisco also reports that 49% of companies surveyed rank culture slightly below collaboration. The surveyed respondents consider it a key element, saying it stems from top-down leadership and executive sponsorship—people who, according to the Project Management Institute (PMI), spearhead projects and often “significantly increase collaboration and support, boost project success rates, and reduce risk.”
- Deloitte Insights concludes its research by saying, “Organizations that create a culture defined by meaningful work, deep employee engagement, job and organizational fit, and strong leadership are outperforming their peers and will likely beat their competition in attracting top talent.”
- Forbes contributor William Craig outlines two studies that tie company culture to employee happiness and engagement, detailing how these traits affect their productivity and, ultimately, business performance.
- In a study by Duke University’s Fuqua School of Business, 50% of respondents say company culture affects creativity, profitability, and productivity.
Harvard Business Review (HBR) also tracks company culture and business performance. It also provides guidelines for creating a positive culture that drives results. HBR says a healthy workplace culture comprises six components:
- “Caring for, being interested in, and maintaining responsibility for colleagues as friends”
- “Providing support for one another, including offering kindness and compassion when others are struggling”
- “Avoiding blame and forgiving mistakes”
- “Inspiring one another at work”
- “Emphasizing the meaningfulness of the work”
- “Treating one another with respect, gratitude, trust, and integrity”
Such qualities may make a difference and can motivate colleagues and employees to invest extra time and effort into IoT implementations as they work together on projects.
Human Factor: Talent and Expertise
Regarding IoT expertise, 48% of surveyed company executives say they sometimes source that knowledge internally. IoT projects, though, demand expertise and skill sets not always found within the organization. In those situations, companies develop external partnerships for strategic planning, industrial network engineering, software or hardware design, and data analytics.
These partnerships form because without that reservoir of talent in-house, projects of all types fail much more often, a point demonstrated in “Rally the Talent to Win: Transforming Strategy into Reality.” The study, conducted by the Economist Intelligence Unit (EIU) and sponsored by PMI, asked companies, “How often have talent deficiencies significantly hampered the implementation and execution of strategy in the last three years?” Their responses reveal the extent of the problem:
- About 35% of respondents report “talent deficiencies significantly hampered more than one-half of their efforts at introducing and implementing strategy.”
- “On average, talent deficiencies undermine implementation and execution 40% of the time.”
- Survey respondents also indicate challenges with determining existing talent at their organizations (47%); acquiring talent (57%); developing talent (58%); and retaining talent (57%).
The Association for Talent Development (ATD) notes a similar trend in its downloadable white paper Bridging the Skills Gap. The paper reports 84% of respondents experience a skills gap that causes product development to lag or kills potential projects.
That being the case, the questions company executives must ask themselves is how they can enrich existing talent pools and when to work with third parties. Some companies invest in training and education, a tactic ManpowerGroup recommends and which companies around the world use. However, when those skills aren’t present and require an inordinate amount of company time and resources, you should either make key hires for IoT experts or partner with a vendor.
The second option shouldn’t be perceived as a failure—working with a third-party can be beneficial. As Inbar Lasser-Raab, vice president of Cisco Enterprise Solutions Marketing, says in the press release, “But where we see most of the opportunity is where we partner with other vendors and create solutions that are not only connected but also share data. That shared data is the basis of a network of industries—sharing of insights to make tremendous gains for business and society, because no one company can solve this alone.”
Business Factor: Project Planning and Management
As mentioned earlier, 60% of IoT projects fail because they prove more complicated than estimated. Cisco asked companies to share the reasons for project stalls, with the following five claiming top spots:
- Time to completion
- Limited internal expertise
- Data quality
- Team integration
- Budget overruns
Integrating across organizational teams requires collaboration as well as a workplace culture that encourages it, as detailed above. Integration, though, often demands strong leadership and project management too—a person or group of people capable of seeing the big picture and comprehending how each detail contributes to it.
In addition, IoT projects need careful business planning, which starts at the conceptual phase. Gartner’s research vice president and lead analyst for IoT research Mark Hung gives advice on the topic, urging companies to “move the conversation from talking about the IoT in general to talking about what it can do, or be, specific to your organization.” His colleague, research director Chet Geschickter, adds, “Be sure to balance pragmatism (what is proven to deliver now) with vision (how the IoT can enable transformational business moments).”
Karen Field, executive director of content at Penton for its IoT initiative, helps with that movement. Field says companies should answer five questions about their IoT projects prior to development and implementation:
- What is the purpose of the project?
- Who will benefit and how?
- What is the state of technology?
- How severe is change management?
- Is this a tactical or strategic project?
These questions dovetail with Hung and Geschickter’s advice, ensuring you and other companies conduct market research and define a problem before building an IoT solution.
For example, answering the technology question above helps you develop a framework for software and hardware design. Change management identifies hurdles that you must overcome before people will use the IoT service or product. The last question determines whether a project primarily offers short- or long-term value.
Business Factor: Data Analytics and Security
Another business factor is data analytics. Cisco says companies with “successful IoT initiatives drive smart-data windfalls.” Survey respondents seem to agree. According to Cisco’s report, 73% percent of organizations use IoT data in the following five ways:
- Decrease operational expenses
- Enhance product quality or performance
- Improve customer interactions
- Improve decision-making
- Reduce maintenance costs and downtime
Cisco’s press release augments the report’s findings. It notes “improved profitability was the top unexpected benefit (39%)” of IoT implementations. In addition, 64% of companies use IoT data to inform future technology investments.
But those benefits require more than a data-centric approach. They must also encompass a security-by-design methodology so data remains secure, private, accurate, and actionable. As Mary K. Pratt, IoT Agenda contributor, remarks, “The Internet of Things makes virtually every aspect of information governance more complicated. There are more devices, more vulnerabilities, more information that’s flowing. That makes IoT data security more complicated, too.”
The complexity, though, can be simplified thanks to an unexpected source: the US Department of Homeland Security. The federal body has been involved with the IoT since it became clear that the technology was and is a breeding ground for cyber attacks.
Homeland Security, however, aims to accomplish more than a call to arms or oversight of security vulnerabilities. It also proposes a set of principles to help companies and organizations combat security risks and experience IoT benefits:
- “Incorporate security at the design phase.”
- “Advance security updates and vulnerabilities management.”
- “Build on proven security practices.”
- “Prioritize security measures according to potential impact.”
- “Promote transparency across the IoT.”
- “Connect carefully and deliberately.”
Some of the principles may sound familiar even if you’re new to IoT initiatives. The fourth step, for instance, echoes risk management planning. The fifth step benefits you and your customers by helping you build a healthy company culture, assuring consumers about how their data is used and stored, and sharing knowledge across not only the IoT but also your specific industry.
THE IOT IS HERE TO STAY
People still refer to the IoT as “the Wild West.” Industry standards continue to change, and companies continue to figure out how the IoT intersects with their business goals. But the wildness shouldn’t deter your involvement with the technology—the IoT is too big and too beneficial for that.
Instead, address the human and business factors discussed here. Create a healthy corporate culture, encourage collaboration, source quality talent, build your business strategy, and employ data security and analytics. If you achieve those five things before, during, and after your IoT project, you could claim a coveted position as a company that gets and uses the IoT to drive business results.
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