Mumbai, July 23, 2015: A new global survey has shown that the Internet of Things (IoT) had already had a major impact on the revenue of companies which had implemented it.
The study called TCS Global Trend Study 2015 by India’s Tata Consultancy Services revealed that many of the surveyed companies with IoT programs in place had reported an average revenue increase of 16 percent in 2014, in their respective areas of business. In addition, about 9 percent of firms had an average revenue increase of over 60 percent. The biggest product and process improvements reported by companies were more customised offerings and tailored marketing campaigns, faster product improvements, and more effective customer service (in part, by being able to identify product problems before customers knew about them).
The IoT, said the TCS report, was a “really big thing” for many large global companies. The global survey had revealed that some 79 percent already used IoT technologies to track their customers, products, the premises in which they did business with customers, or their supply chains. This year, companies with IoT initiatives that completed all the survey questions said they would invest US $86 million – or 0.4 percent of revenue – apiece to further their projects. They expected their IoT budgets to rise by 20 percent by 2018 to $103 million.
Some of the other key findings of the survey were:
- Companies with high-priced product offerings would spend much more on the IoT this year than those with low-priced offerings. Firms with the most expensive products would spend the most money on the IoT by a wide margin. In other words, spending on the IoT correlated strongly with the price of a company’s products or services. Those whose offerings sold for more than $10 million on average (for example, makers of aircraft engines and power turbines) would spend an average $335 million each this year on IoT initiatives. In stark contrast, those with products priced at $100 or less would spend about one-eighth that amount, an average $39 million.
- Mobile apps were the most frequently used IoT technology. The most common
approach to using IoT technologies was to track customers through mobile apps,
which 50 percent companies did today. - The second most common approach to using IoT technologies was tracking products as they moved through production and distribution.
- Only about one quarter of companies tracked the products they sold to customers through embedded sensors. About the same percentage used IoT technologies to track what customers are doing on their premises – their stores, branches, and so on.
- IoT adoption was greatest in North American and European companies; they were ahead of Asia-Pacific and Latin American companies on certain measures. North American companies would spend 0.45 percent of revenue this year on IoT initiatives, while European companies would spend 0.40 percent. Asia-Pacific companies would invest 0.34 percent of revenue in the IoT, and Latin American firms would spend 0.23 percent of revenue. North American and European companies were more frequently selling smart, connected products than were Asia-Pacific and Latin American companies.
- In gaining benefits from the IoT, industrial manufacturers were far ahead of 12
other major global industries. They had reported the largest average revenue increase from their IoT initiatives last year (29 percent), and they had forecast they’d have the largest revenue increase from the IoT by 2018 (27 percent over 2015). Industrial manufacturers were also in the lead for using sensors and other digital technologies to monitor the products they sold to customers (with 40 percent of the companies doing so). They were second in IoT spend, at an average $121 million per company. - To fully capitalize on IoT technologies, the most important issues to resolve were
strategic and cultural. Technology challenges trailed in importance, but they also
loomed large. When asked to rank the importance of 21 success factors, executives rated two strategic issues: identifying and pursuing new business and/or revenue opportunities that the IoT made possible, and determining what data to collect, as first and third, respectively.
Image Credit: TCS