IoT Adoption Will Reach 43% In 2016, Gartner Finds

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Adoption of the Internet of Things is expected to reach 43% of enterprises by the end of this year, with the heaviest users including companies in the oil, gas, utilities, and manufacturing industries, according to a global survey released March 3 by Gartner.

The survey of 465 IT and business professionals in over a dozen industries around the globe found these results:

That translates into 43% of enterprises and organizations planning to use IoT by the end of 2016 and 64% to eventually role it out. But for now, IoT is still in the minority when it comes to use.

"This is largely because of two reasons," Chet Geschickter, Gartner research director, wrote in a statement. "The first set of hurdles are business-related. Many organizations have yet to establish a clear picture of what benefits the IoT can deliver, or have not yet invested the time to develop ideas for how to apply IoT to their business. The second set of hurdles are the organizations themselves. Many of the survey participants have insufficient expertise and staffing for IoT and lack clear leadership."

Additionally, enterprises and organizations that are planning to implement IoT are concerned with figuring out ways to coordinate workflows and processes, while those that have hit the go button on IoT cite cyber-security and managing business requirements as their biggest challenges.

Who's Into IoT?

The industries that have glommed on or are planning to the use IoT are the so-called heavy industries of oil, gas, utilities, and manufacturing. According to the study, 56% of survey participants in the heavy industries are expected to implement IoT in 2016.

As for enterprises and organizations in service-oriented industries, only 36% are anticipated to use IoT by the end of the year.

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Part of the reason heavy industry is embracing IoT may be partly attributed to the way the technologies are being used. More than half of the survey participants, 52%, note they use IoT internally to cut costs, improve efficiencies, and bolster the use of assets, whereas 40% of companies and organizations apply it to improving customer experiences or pumping up revenue.

That, however, is expected to change in the future, Jim Tully, a Gartner vice president and analyst, wrote in Thursday's report.

"The survey shows a dramatic jump in focus on customer experience, doubling in nominal terms from 18% to 34%. This indicates that we can expect a much higher IoT focus on end customers during the next 12 months," Tully said. "In effect, IoT programs and processes will become competitive marketplace weapons starting in 2016."

Whether IoT is used for service industries, heavy industries, or other industries, the companies and organizations that use IoT will need to show a return on their investment to justify a large-scale rollout, said Gartner's Geschickter.

Some of the tech titans that have already embraced IoT include IBM, which last year announced plans to create a $3 billion designed IoT business unit and Cisco Systems, which is acquiring IoT cloud-platform company Jasper Technologies for $1.4 billion. The return on their investments should become evident as the years progress.