THE INTERNET OF THINGS:

FROM THEORY TO REALITY

How Companies Are Leveraging the
IoT to Move Their Businesses Forward

IN ASSOCIATION WITH:
 TABLE OF CONTENTS

4 INTRODUCTION

5 KEY FINDINGS

6 PART 1: THE STATE OF THE INTERNET OF THINGS—

FROM ASPIRATIONAL TO OPERATIONAL
7 THE STATE OF DEVELOPMENT

9 CHALLENGES WITH IOT IMPLEMENTATION

11 PART 2: THE IOT—DRIVERS OF SUCCESS

11 
P RIORITIES—CONCENTRATING RESOURCES
AND FINDING SUCCESS

12 ENTRY STRATEGIES—HOW SUCCESSFUL COMPANIES ARE

STRUCTURING THEIR EARLY IOT INITIATIVES

14 THE IOT TEAM—HOW SUCCESSFUL COMPANIES ORGANIZE

16 IOT DEVELOPMENT—HOW SUCCESSFUL

COMPANIES ENGAGE PARTNERS

17 CYBERSECURITY—HOW SUCCESSFUL TEAMS

APPROACH DATA SECURITY

18 THE CHALLENGES—WHAT OBSTACLES SUCCESSFUL

COMPANIES FACE WITH IOT

19 PART 3: LOOKING TO THE FUTURE

19 HOW TO FIND SUCCESS WITH THE IOT

20 METHODOLOGY

20 ACKNOWLEDGMENTS

21 APPENDIX

3 | THE INTERNET OF THINGS: FROM THEORY TO REALITY HOW COMPANIES ARE LEVERAGING THE IOT TO MOVE THEIR BUSINESSES FORWARD
 INTRODUCTION

Of all the emerging technologies, the Internet of

Things (IoT) is projected to have the greatest impact DEFINING THE
on the industrial economy. Up to $11 trillion in annual INTERNET OF THINGS
savings and revenues are forecasted for 2025,1 and
IoT is projected to boost corporate profits by 21% by
20222. Even more important, the IoT is heralded as the
foundational technology for breakthroughs in artificial
intelligence, robotics and other potentially broadly
applicable advances.

But IoT could also be the most overhyped of new wave

technologies. For the frontline decision makers—the
executives who are charged with implementing IoT
in their company—it can sometimes be impossible to
separate the hype from reality. It can be even more
difficult to discern the practical steps needed to build
this reality.

To better understand the current state of IoT, Forbes

In this research, the Internet of Things (IoT)
Insights partnered with Hitachi Vantara to survey more
is defined as the interconnection of machines
than 500 senior executives around the world who are and devices through the internet, enabling
leading IoT initiatives within their companies. This the creation of data that can yield analytical
report highlights the key findings from this research, insights and support new operations. For
and addresses the following issues: brevity and in keeping with current usage,
Forbes refers to major technology categories
• Is IoT still an aspiration or is it becoming an such as IoT, artificial intelligence or robotics
operational reality? as technologies. It is recognized that each of
the technology categories comprises multiple
• How is IoT being leveraged within companies?
technologies and capabilities. For example,
• In broad terms, what do IoT implementations IoT is dependent upon sensors, wireless
communications, networks, cloud, storage, etc.
look like at this early stage?

• Are there companies that are more advanced with This report focuses on commercial and
using these technologies? industrial enterprises. We have not focused on
consumer applications such as wearables and
• What are some of the implementation smart appliances, as they operate in distinctly
lessons learned? different markets.

• What are the practical steps companies can take as

they begin their own IoT journey?

1 “Unlocking the Internet of Things,” McKinsey & Company, 2015.

2 “The Internet of Everything—The Next Disruption,” Cisco Systems, 2014.

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 KEY FINDINGS
• T
 HE IOT IMPACTS BUSINESS: Almost two-thirds (64%) of companies believe the IoT is important
to their current business, and over 90% believe it will be important to the future of their business.

• I OT IS THE MOST IMPORTANT EMERGING TECHNOLOGY: Of all emerging technologies,

executives believe IoT will be the most important, ranking it above others such as artificial intelligence or robotics.

• C
 OMPANIES ARE EMBRACING IOT: More than half of respondents—51%—say their company
has significant IoT programs in operation or that these programs are a major contributor to their business.
The other 49% remain in the early stages of IoT planning or are operating pilot programs.

• I MPLEMENTING IOT-BASED SOLUTIONS CAN BE CHALLENGING: When building out

IoT capabilities, companies say their greatest challenges are the inability to present a compelling return
on investment (32%), keeping the IoT secure (32%), cross-department cooperation (31%), integration of
disparate data (30%) and availability of skilled staff (29%).

• T HERE ARE BEST PRACTICES TO IMPLEMENTING IOT-BASED SOLUTIONS: By

examining companies whose IoT initiatives are meeting or exceeding expectations, we’ve identified
a few practices they follow to ensure success:

• T heir IoT efforts are typically championed by the CIO (53%)

• 6 6% include external vendors on their IoT planning team
• 8 1% use a third-party platform as the basis for their IoT operations

PART 1: THE STATE OF THE INTERNET OF THINGS—

FROM ASPIRATIONAL TO OPERATIONAL
Across different regions, and across multiple industries, the IoT is quickly becoming a competitive differentiator in
organizations. “The year 2017 is when the Internet of Things became operational,” says Patrick Bass, the CEO of
thyssenkrupp North America. “This is the year [the IoT] really went to work.”

In fact, when more than 500 executives were asked how important the IoT is to their current business, almost two-thirds (64%)
said it was important or very important (Figure 1). Not one executive said IoT was very unimportant, indicating that companies
understand the IoT is here to stay and that it needs to be part of their organization’s future.

While there’s agreement across industries that the IoT is important, there is also a sizable segment that believes the IoT is not
important to their current business. This is surprising given all the talk about IoT, but what this number could indicate is that
companies either don’t yet fully understand how IoT can dramatically improve their business or they’re still formulating their
strategy around these new technologies.

5 | THE INTERNET OF THINGS: FROM THEORY TO REALITY HOW COMPANIES ARE LEVERAGING THE IOT TO MOVE THEIR BUSINESSES FORWARD
 Figure 1. How important is the IoT to your company’s business? (By industry)

61%
57%
56% 55% 54% 54%
53%
51%
47% 46%
43%
38% 38 %
37% 36%
33
% 33%

28%

21%

16%
14%
10%
6%
6% 6%
2%
0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Energy Financial Healthcare Manufacturing Retail Information Telecom Transport Average
Services Technology

Very important Important Neutral Unimportant Very unimportant

“I see customers seeing rapid shifts in the market, and Figure 2. Technology initiatives that
that scares them,” says Dave Parsons, vice president are important to my company.
of IoT strategy and solutions at Hitachi Vantara. “Yet
while they’re acknowledging these shifts, and they’re
Internet of Things
definitely getting into it, companies are still trying to 33%
tackle the difficult dynamics.”
Robotics
26%
This rise of the IoT is indicated not only by the
number of companies considering it important to Artificial intelligence/machine learning
20%
their business but also by its place in company
priorities. When asked to rank the importance of Nano-technologies
various technology initiatives, executives ranked 9%
IoT highest, placing it above other initiatives like
3D printing
robotics, artificial intelligence and augmented reality 7%
(Figure 2).
Augmented reality
Why is IoT top of mind? This could be due to three 4%
reasons. First, unlike more specialized applications
Drones
like drones, IoT is seen as part of the future of virtually
1%
every industry from healthcare to financial services to

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 transportation. Second, by being integrated into legacy operational technologies, IoT costs less to implement
compared to other technologies. And third, IoT generates substantial new data that feeds other advanced
technologies, like artificial intelligence or automation solutions, thereby accelerating transformation even faster.

“The IoT and artificial intelligence are a match made in heaven,” says Bryan Kester, the head of IoT at Autodesk.
“What has been holding AI back is the shortage of good data, but as the IoT is deployed, it will create the kind of
clean data that can be used in sophisticated analytics. The IoT will not only support but speed up other solutions.”

THE STATE OF DEVELOPMENT

So companies acknowledge IoT is important to their business and their future success, but are they making the IoT a reality?
Where do companies stand with implementation?

When asked to assess their company’s state of development, 51% of executives surveyed say they have significant IoT programs
in operation or that these programs are a major contributor to their business; 49% remain in the early stages of planning and pilot
programs. All companies are embracing IoT, and while the extent may vary, this is clearly a global phenomenon as respondents
report development across Europe, the Americas and Asia-Pacific (Figure 3).

Given that some companies have only recently launched their IoT efforts, this state of development indicates a climate of
rapid adoption. “The Internet of Things is clearly moving fast,” says Dominic Venturo, chief innovation officer of U.S. Bank.
“Companies are seeing the value early and are making it a priority.”

Yet not all companies are moving at

the same pace. “There is an important
sequence here,” says thyssenkrupp’s Figure 3. Which best describes the state of development
Bass. “Companies are moving from of the IoT in your company? (By region)
digitization through digitalization to
digital transformation. The IoT is that
44%43% 44%
transformative end game. But you now
40%
see companies in every phase of that 38%
34% 36%
journey.”

Some predict a further acceleration

22%
of IoT implementation. Umeshwar
18%
Dayal, senior vice president and senior 16% 16%
13%
fellow (information research) at Hitachi 11% 11%
America Ltd., Global Center for Social 6%
5%
Innovation, North America, says: “The 2% 1%
0% 0%
use cases and the benefits [of the IoT]
Asia-Pacific Americas Europe Global
are just becoming public. When the
operational improvements and top-line Depend on IoT to conduct business Major contributor to the business
benefits become known, and they will, Significant IoT programs in operation Operating pilot programs
you will see even more acceleration in
In the planning stages
the IoT.”
This growth won’t be confined to a
single industry or subset of industries.

7 | THE INTERNET OF THINGS: FROM THEORY TO REALITY HOW COMPANIES ARE LEVERAGING THE IOT TO MOVE THEIR BUSINESSES FORWARD
 Figure 4. Which best describes the state of development of the IoT in your company? (By industry)

55%

45%
40% 41 41%
%
40% 39%
37% 38% 37%
35% 36%
34 %
33%
30% 31%
28% 28%
26% 26%
22% 22%
17%
16%
13%
10% 11%
8
%
8
% 9%
8 %
7% 7%
5% 6%
3 %
3% 2
%
0% 0% 1% 0% 0% 0% 1%

Energy Financial Healthcare Manufacturing Retail Information Telecom Transport Average

Services Technology

Depends on IoT to conduct business Major contributor to the business Significant IoT programs in operations

Operating pilot programs In the planning stages

“
Right now, it’s already making broad progress across a range of sectors
from energy to financial services and retail (Figure 4). “We are seeing
the IoT beginning to deliver across virtually all industries,” continues
Venturo. “Those who think it is limited to just the factory don’t realize
how important it has already become and what it will mean to them.”
We are seeing the IoT
As can be expected, the highly digitized and tech-savvy technology and beginning to deliver across
telecom companies are in the forefront in implementing IoT. But the data
also indicates that no major industry will be exempt from the IoT, and no
virtually all industries. Those
company will be immune from its competitive implications. who think it is limited to
just the factory don’t realize
“The common denominator here is that the IoT is capable of creating
data in every industry,” says thyssenkrupp’s Bass. “The value used to be how important it has already
in brick-and-mortar assets. Now the value of companies is in its data. You become and what it will
can go to any industry and see the valuable data that the IoT is creating.
That is what is driving such widespread adoption.” mean to them.”
The Forbes Insights and Hitachi Vantara survey also asked DOMINIC VENTURO
CHIEF INNOVATION OFFICER,
respondents to identify the functions they see as the highest
U.S. BANK
priorities for IoT. The most striking finding is the breadth of IoT
investment. The IoT is affecting many parts of organizations, most

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 heavily customer experience (55%), finance (48%) and
asset management (42%) (Figure 5). One reason for this Figure 5. To what extent is your
company prioritizing the IoT across
widespread impact is that IoT often has cross-functional
the following functions?
effects, such as when a product-based sensor tracks a unit
from manufacturing through distribution and to the customer. Customer experience
55%
It’s notable that customer experience ranks as the single highest Finance
priority for IoT capabilities. This may indicate the flexibility and 48%
wide applicability of the IoT. From its manufacturing roots, IoT is
Asset management
being used to customize products, predict demand and build a
42%
direct relationship with the customer through digitized products
and services. Product development
38%

For U.S. Bank’s Venturo, the importance of customer Environment & safety
experience doesn’t come as a surprise. “The IoT is extending 31%
the reach of the technology function to the sale and care Supply chain
of the customer. It is making the CIO the most important 30%
partner of sales and marketing.”
Manufacturing
27%
This role of IoT in improving the customer experience also
Warehousing & logistics
extends to manufacturing. “The IoT builds a direct feedback loop
27%
between the customer and production,” says Hitachi America’s
Dayal. “The production people can understand customer usage
and needs in real time, and you can ultimately provide better customer service based on data rather than sales calls.”

The strong focus on finance may surprise those who associate the IoT with physical processes like manufacturing. One driver may
be that organizations’ IoT initiatives have so many financial touchpoints—reducing costs in the supply chain, tracking valuable
assets, enabling variable pricing with customers—that companies view it holistically as a finance-oriented solution.

CHALLENGES WITH IOT IMPLEMENTATION

Every wave of technology adoption has its Figure 6. Top 5 challenges

challenges, and IoT is no exception. When building with building out IoT capabilities
out their IoT capabilities, executives struggle with
everything from integrating different data sets to Inability to present a compelling return on investment
having the right talent in place (Figure 6). As in most 32%
technology initiatives, cybersecurity remains top of Keeping the IoT secure
mind as both a challenge and concern. 32%

Cross-department cooperation
“Even though it is becoming operational, the IoT still
31%
remains in a period of experimentation, and many
companies recognize there are unknown obstacles Integration of disparate data
30%
they will have to solve,” says Autodesk’s Kester. “To
overcome these, many companies are adopting a Availability of skilled staff
fail-fast approach in which they learn quickly from 29%
mistakes and move on.”

9 | THE INTERNET OF THINGS: FROM THEORY TO REALITY HOW COMPANIES ARE LEVERAGING THE IOT TO MOVE THEIR BUSINESSES FORWARD
Despite some initial challenges, companies are finding
success with IoT. In fact, 42% of companies say their IoT Figure 7. How well are your company’s
programs are doing what they should be doing—saving IoT programs meeting expectations?
money, making the company more efficient or earning
new revenues (Figure 7). These leading companies will Exceeding expectations
be analyzed more closely later on in the paper when 3%

we’re discussing drivers of IoT success. Meeting expectations

39%
What’s worth remembering is that the growth of the Neither meeting nor not meeting expectations
IoT needs to be analyzed within context—this is a 51%
business solution that is only a few years old in its
Not meeting expectations
current form. Companies are still learning the ins
6%
and outs of IoT, so it’s no surprise that many are still
learning what works and what doesn’t. What’s clear is
that the IoT is moving from theory to reality across the bulk of the business economy.

“The IoT has come from nowhere to being a part of our industry in just two years,” says Satyam Priyadarshy,
Technology Fellow and Chief Data Scientist at energy company Halliburton. “This trajectory cannot be ignored—
the digital architecture will become the norm in our industry and many others in a short amount of time.”

The IoT has arrived. Its rapid expansion and early traction have established it as a competitive reality in the
market, and standing by is not an option. Companies need to move, and move quickly, to implement an IoT
strategy. Otherwise, they risk falling behind or being disrupted.

“Even though it is becoming operational, the IoT still

remains in a period of experimentation, and many
companies recognize there are unknown obstacles they
will have to solve. To overcome these, many companies are
adopting a fail-fast approach in which they learn quickly
from mistakes and move on.”

BRYAN KESTER
HEAD OF INTERNET OF THINGS, AUTODESK

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 PART 2: THE IOT—DRIVERS OF SUCCESS
Every major technology wave has a cadre of early adopters that pioneer the planning, testing and implementa-
tion of the solutions. The same goes for IoT. Our survey identified a subset of companies (42%) that state their
IoT programs have exceeded or met their early expectations (other companies are still in a wait-and-see mode).
As part of the research, we isolated the data from these more successful organizations to determine what steps
they’re taking to ensure success, and what other companies can do to follow in their footsteps.

PRIORITIES—CONCENTRATING RESOURCES AND FINDING SUCCESS

A key question for these more successful

Figure 8. How would you rate the success of your
organizations is, “Where are you finding
company’s IoT activities in the following functions?
success?” Accordingly, we asked these leading
(Successful companies, % who rated it successful
companies to assess their ongoing success with or very successful)
IoT in key parts of their organization (Figure 8).
Customer experience
71%
The first observation is that companies
are applying and finding a degree of Finance
success in many parts of their companies. 61%

“The Internet of Things is not just about Asset tracking and management
connecting machinery and parts,” Greg 58%
Kinsey, Vice President of industrial solutions
Product development
at Hitachi Vantara. “The IoT is about digital
57%
transformation, and to be successful it must
significantly improve your operating model.” Warehousing & logistics
51%

When looking across functions, the greatest Environment & safety

IoT success is being found in customer 49%
experience. Given the traditional arms- Supply chain
length relationship between the IT function 44%
and customers, this is an indicator of Manufacturing
how the IoT can revolutionize companies. 41%
Organizations are using IoT capabilities to
tailor products for customers, create more
predictive demand forecasting and digitize their products and services.

Halliburton is an example. “We have been using sensors to connect every part of the energy business,” says
Halliburton’s Priyadarshy. “By taking simultaneous readings on sensors in pipelines, production rigs, storage units and
other physical items, we can, for example, create an even safer environment for operations of the oil and gas industry.”

Hitachi America’s Dayal believes the IoT will increase the linkages between customers and production.
“The IoT certainly helps in assessing customer demand, but the important thing is how it links the
feedback to processes. The IoT helps a manufacturer determine production runs, or design a product, or
plan for higher demand.”

11 | THE INTERNET OF THINGS: FROM THEORY TO REALITY HOW COMPANIES ARE LEVERAGING THE IOT TO MOVE THEIR BUSINESSES FORWARD
 THE INTERNET OF THINGS AND THE CUSTOMER EXPERIENCE

Over 500 IoT executives were asked where they were finding the greatest success with the Internet of
Things. Their response—with customers. This can be surprising, as IT departments and production lines
have traditionally had only a secondary relationship with the end-customer. One way the IoT is changing
this is by using technology to create new customer offerings.

Figure 9. Do you operate IoT programs Figure 10. How does this IoT-based
designed to create new revenues? program generate revenue? (Successful
(Successful companies) companies with IoT revenue programs)

Create new products for sale to customers

60%
No
Creates a new service for customers
35%
Yes 58%
65%
Supports customization of current products
58%

Creates a data analytics product for sale

54%

This is not an isolated phenomenon—almost two-thirds of successful companies (those whose IoT initiatives
are meeting or exceeding expectations) are using the IoT to directly create new revenues (Figure 9).

One of the most interesting innovations is the ability to use the IoT to custom manufacture products rapidly
and cheaply (Figure 10). Instead of mass sourcing from distant manufacturers, Adidas, for example, is able
to use IoT-based additive manufacturing to customize athletic shoes near the end-customer. Transportation
costs are reduced, inventory is no longer required, and the customer is happier, thanks to the IoT.

ENTRY STRATEGIES—HOW SUCCESSFUL COMPANIES

ARE STRUCTURING THEIR EARLY IOT INITIATIVES

When adopting new technologies in the past, enterprises often deployed small teams that worked in isolation
to determine how to best design and implement a solution. This, however, does not appear to be the path to
success in IoT.

“The Internet of Things is not just another IT program,” says Hitachi Vantara’s Parsons. “To be successful,
you need the collaboration of a broad part of the organization, reaching across silos and transforming the
old businesses. You need strong support from above and to manage it across the organization.”

Patrick Bass of thyssenkrupp agrees: “The IoT is not an IoT project. The IoT is not an R&D project. The IoT is
a business/operations/integration project, and you have to organize for that.”

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 Our respondents agree with this sentiment, making
it clear that successful IoT programs are enterprise- Figure 11. Our company’s IoT strategy
is managed at the enterprise level.
led and not isolated projects. When asked where
(Successful companies)
the governance of their IoT programs lay, 67% of
the companies whose IoT initiatives are meeting or
exceeding expectations say enterprise level (Figure 11). 10%
Agree

At the same time, there is a strong learning curve to 23% Neutral

the IoT. “The successful companies that we are seeing Disagree

are not afraid to experiment,” says Hitachi Vantara’s 67%
Kinsey. “The high flexibility of the IoT enables an
organization to test different models and then apply
what they learned to more ambitious projects.”

This pattern is supported by our research. While

our survey respondents follow an overall enterprise
Figure 12. Our IoT strategy has been to
strategy, 66% of successful companies report they
learn from small projects and then move
have purposefully pursued smaller initiatives (pilot on to larger ones. (Successful companies)
projects, demonstrations, operational testing) to
develop expertise and a technology base for larger
2%
initiatives (Figure 12). Agree

Neutral
“The IoT’s flexibility allows you to build from a small 32%
base, managing risk and keeping costs down,” says Disagree

U.S. Bank’s Venturo.

66%
Whether large or small, projects should be
conducted with a larger vision in mind. “It doesn’t
matter how big or small the IoT project is. It’s the
larger objective that it is attached to,” says thyssenkrupp’s Bass. “Make it work at the tactical level, of
course, but also make sure you have a strategic objective in mind.”

“ You don’t create the Internet of Things as a stand-alone.

Its value will come when it connects to all parts of the
organization. That will lead to the transformation of the
entire organization.”
UMESHWAR DAYAL
SENIOR VICE PRESIDENT AND SENIOR FELLOW
(INFORMATION RESEARCH) AT HITACHI AMERICA LTD,
GLOBAL CENTER FOR SOCIAL INNOVATION, NORTH AMERICA

13 | THE INTERNET OF THINGS: FROM THEORY TO REALITY HOW COMPANIES ARE LEVERAGING THE IOT TO MOVE THEIR BUSINESSES FORWARD
THE IOT TEAM—HOW SUCCESSFUL
COMPANIES ORGANIZE Figure 13. Who is your company’s biggest executive
champion of the IoT?

The IoT demands enterprise-wide governance, CIO

but it also requires a fine degree of tactical 53%

execution. Companies that are currently most 28%

successful with the IoT are managing these CTO

dual objectives with a hybrid structure. 29%
38%
The IoT can disrupt old systems and ways of Head of line of business
working. It can challenge old business models,
16%
call for new kinds of workers and require a
3%
healthy budget. This effort is paralleled by the
technology architecture, which must bridge CEO
legacy systems, integrate data from disparate 1%

sources and be kept secure. This unity of 7%

effort demands a C-level executive to drive Other IT executive

Successful companies
IoT initiatives. 0%
Less successful companies
21%
Not surprisingly, successful companies are
much more likely than less successful ones—
53% versus 28%—to have a chief information
Figure 14. Who is responsible for the day-to-day
officer who takes on the role of champion and management of your company’s IoT initiatives?
central authority on the IoT (Figure 13).
CIO
“CIOs are the natural champions of the 17%
Internet of Things,” says U.S. Bank’s 10%
Venturo. “They combine the stature and CTO
the technology expertise that can drive this 61%
complex initiative forward.” 24%

Head of line of business

Yet a time-constrained CIO cannot be expected
16%
to manage the day-to-day development of all
3%
IoT projects. A significant majority—61%—of
successful companies therefore designate a CEO
chief technology officer (or equivalent) as the 0%
manager of the team. Virtually all companies 0%
house the management of their IoT programs Other IT executive
within the broader IT group (Figure 14). 3%
31%
There is a disturbing countervailing trend in
less successful companies: Almost a third of No individual has day-to-day authority
them, 31%, say that the management of their 0%

IoT programs are either in the hands of small 21%

teams or that no individual has day-to-day Small teams

authority. Hardly any successful companies 1% Successful companies

10% Less successful companies

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 report this management approach, indicating
that strong, enterprise-level direction is a Figure 15. Composition of the IoT team
precondition for success in IoT. (Successful companies)

“A company’s Internet of Things program CIO

is a diverse phenomenon, likely to bridge 80%

manufacturing, product development, lines 18%

of business and other non-IT functions,” says 2%

Hitachi Vantara’s Parsons. “Therefore, you have Chief information security officer
to make a point of having a diverse set of skills 39%
in the team charged with building out your 58%
Internet of Things capability.” 3%

Head of line of business

Autodesk’s Bryan Kester agrees: “Forward- 39%
looking companies are recognizing that the 17%
IoT is so cross-functional that you cannot let 45%
it get bogged down in silos. You need very
External IoT vendor
strong support at the C-suite level to make
38%
the IoT work.”
28%
34%
In four out of five successful companies,
the CIO is a prominent member of the IoT VP of information technology
development team (Figure 15). But these 32%

enterprises also extend responsibility 67%

to experts from the lines of business, 0%

cybersecurity and product design, ultimately Product designers

making their initiatives more successful. 28%
46%
This doesn’t come as a surprise to Halliburton’s 26%
Priyadarshy, who says, “A diverse solution Security specialists
demands a diverse set of contributors.” 26%
59%
16%

Programmer
19%
38%
43% Significant contributor

Mobile communications specialists Influencer

16% Not on the team
31%
53%

15 | THE INTERNET OF THINGS: FROM THEORY TO REALITY HOW COMPANIES ARE LEVERAGING THE IOT TO MOVE THEIR BUSINESSES FORWARD
IOT DEVELOPMENT—HOW SUCCESSFUL COMPANIES ENGAGE PARTNERS

Many companies express a high sense of urgency Figure 16. Does your company use a
in making their IoT programs operational. It is third-party IoT platform for its IoT
therefore no wonder that more than four out of five initiatives? (Successful companies)
companies seeing the most success with IoT report
using a vendor-sourced IoT platform as part of their No
initiatives (Figure 16). 19%

“There are some important reasons for using a

platform,” says Autodesk’s Kester. “Clearly security Yes
is one of them, but there is also an immediate 81%
need for scalability. You won’t get that from a
homegrown solution.”

The research indicates that companies are

increasingly forming collaborative relationships with Figure 17. Presence of vendors/suppliers
suppliers. Driven by the need for continued expertise on the IoT development team
and the complexity of the solutions, two out of three (Successful companies)
companies choose to include their systems vendors
on their internal IoT development team (Figure 17).
Third-party partners
included on team
“This is not IT as we have known it,” says Hitachi 34%
Vantara’s Kinsey. “Many IT departments have Third-party partners
not on team
focused on buying a piece of technology and then
66%
implementing it. The Internet of Things requires
many hands, and having your systems vendor there
will get you where you need to go that much faster.”

Who are the partners that are engaged by the most

successful companies? A broad range of providers Figure 18. Which of the following
external IoT vendors do you rate as
are included, but foremost are the suppliers who
important members of your IoT team?
provide the operational technologies, like the
(Successful companies)
hardware that sensors are embedded in. That said,
strategy consultants, software solutions providers Operational technology vendors
and IoT specialists all play important roles as 59%
members of the development team in organizations
Strategic consultants
succeeding with the IoT (Figure 18).
49%

Systems integrators
44%

IoT software/hardware vendors

43%

IoT specialist consultants

35%

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 CYBERSECURITY—HOW SUCCESSFUL
TEAMS APPROACH DATA SECURITY Figure 19. Managing security in IoT initiatives
(Successful companies)

The IoT is more difficult to keep secure than other IT initiatives

As in all things technology, IoT teams must keep
cybersecurity top of mind. Indeed, because the 36%

IoT creates a technological connectivity across 27%

virtually every part of the organization and 37%

presents more entry points for hacking, many The consequences of an IoT security breach can be
greater than other IT initiatives
believe that the cyber stakes are inherently
18%
higher in the Internet of Things.
43%
39%
The most successful companies are realistic
Our company has placed a higher security standard on IoT initiatives
about security issues, with more than a third
4%
agreeing IoT can be harder to secure than
26%
standard technology initiatives. Additionally,
70%
39% agree that the consequences of a breach
in IoT can be more serious than in other Disagree Neutral Agree
technology deployments (Figure 19).

“Every type of equipment or device is now a

point of vulnerability,” says Hitachi America’s
Figure 20. How confident are you in your
Dayal. “You have to build real security deep
company’s ability to keep its IoT programs
into your IoT network. It has to be part of the secure? (Successful companies)
original design and even culture of the IoT.”
0%
Recognizing these issues, many successful 7%
companies have placed a higher security Confident
standard on their IoT deployments. For this Neutral
and other reasons, successful companies report
Not confident
a high degree of confidence that they can keep
their IoT programs secure (Figure 20). 93%

17 | THE INTERNET OF THINGS: FROM THEORY TO REALITY HOW COMPANIES ARE LEVERAGING THE IOT TO MOVE THEIR BUSINESSES FORWARD
THE CHALLENGES—
WHAT OBSTACLES SUCCESSFUL Figure 21. The greatest challenges to building out
COMPANIES FACE WITH IOT IoT capabilities are…

Cross-department cooperation
As in so many technology initiatives, the greatest 35%
challenges companies face when building out 21%
their IoT capabilities do not lie in the technology. Quality of IoT technologies available
For those seeing the most success with IoT, 33%
obtaining cross-department cooperation—e.g., 21%
getting sales and marketing to share their Integration of disparate data
customer data with manufacturing—is seen as 31%
the most significant challenge, followed by the 21%
availability of the right talent and the integration
of disparate data (Figure 21). Availability of skilled staff
31%
21%
As noted previously, the Internet of Things is
moving quickly in virtually all industries and Inability to demonstrate return on investment
30%
geographic regions. The result is a particularly
31%
acute shortage of staff in this space, which may
be a driver of the inclusion of external partners in Concerns about keeping the IoT secure
29%
IoT development teams.
34%

“The Internet of Things is not really about Quality of vendors and partners
machines,” says Hitachi Vantara’s Kinsey. “It is really 24%
about people and transformation. If you can make 24%

it work with the people, you will see success.” Lack of cooperation from workforce
23%
48%

Lack of executive support

23%
28%

Lack of IoT vision or strategy

22%
45%

Lack of budget
15%
7%

Successful companies Less successful companies

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 PART 3: LOOKING TO THE FUTURE
If IoT has gained ground in industries
around the globe, what does its future Figure 22. How important is the IoT to your business
growth look like? today, and how important will it be in the future?
(All companies)
Based on the data, it appears companies Today
are “doubling down” on the Internet of 64%
Things. While about two-thirds of all 36%
companies now believe IoT is important 0%
to their business today, more than nine
out of 10 believe it will be important to In the future
their business’ future (Figure 22). 91%
9%
“I have yet to see a company that is 0%

going backward on the IoT,” says U.S.

Important Neutral Unimportant
Bank’s Venturo. “The more they learn,
the more they expand their goals and
their investment.”

When asking these early adopters what single piece of advice they would give to a peer who was beginning to build out IoT
capabilities, the biggest takeaway was creating a long-term IoT strategy driven by the needs of the business, followed by the
need to have strong senior executive support (Figure 23).

“The IoT is so transformative that no company can afford to ignore it,” says Autodesk’s Kester. “A company that does will find
itself at a major disadvantage on cost, agility and in its relationship with customers.”

HOW TO FIND SUCCESS WITH THE IOT

The IoT is here to stay, and organizations that embrace these new technologies will be better prepared for the future.
Here are a few recommendations to find success with the IoT.

1. BEGIN WITH THE BUSINESS CASE, NOT WITH THE TECHNOLOGY. IoT is not a standard technology
deployment where you buy, integrate and implement. It is much more about the digital transformation of a
business or a process. As our research indicates, building the business case and directing IoT to solve business
objectives are keys to success.

2. DEVELOP A COMPREHENSIVE IOT STRATEGY. The number one piece of advice offered by successful early
adopters is to have a dedicated strategy for the Internet of Things. The IoT requires the collaboration of many
stakeholders and by its nature reaches across multiple silos. It will require strong leadership, particularly from the
CIO and CTO. A central strategy with milestones, dedicated resources and a defined set of objectives will act as
a rallying cry for the workforce, and a road map for operational development.

3. START SMALL TO GO BIG. The IoT is new ground for most companies. But it also has the flexibility to cost-

19 | THE INTERNET OF THINGS: FROM THEORY TO REALITY HOW COMPANIES ARE LEVERAGING THE IOT TO MOVE THEIR BUSINESSES FORWARD
 effectively support experimentation and pilots. Start with an achievable project with a defined return, using it to test
your technology, organize your data and build out your team. By starting a little smaller, you will get there a lot faster.

4. IT IS ALL ABOUT CO-CREATION. IoT is not a job that will be started and finished by the IT department. It will
probably not be finished by just your employees either. Successful IoT implementation is the sum of contributions
from a broad base of participants. Bringing in the end-users and the lines of business, and collaborating with
customers and suppliers, is key to building a holistic, co-created IoT solution.

5. VIEW THE IOT AS A SOURCE OF COMPETITIVE ADVANTAGE AND COMPETITIVE THREAT. The IoT now has
a presence in every industry and in every region. If you have yet to launch a serious IoT initiative, then you are
behind a dangerous curve. At least some of your competitors are prepared to reap the IoT advantages of lower
costs, higher efficiency and enhanced customer offerings at your expense.

6. INSTILL A SENSE OF URGENCY IN YOURSELF, YOUR TEAM AND YOUR COMPANY. IoT has become a
major force in a period of just a few years. Early adopters have the expertise, teams and operational platforms to
rapidly roll it out across their enterprises. This is a phenomenon that is only going to accelerate—if you don’t get
onboard now, you will be disrupted.

“The IoT will not only be a source of competitive advantage, it will also be a source of competitive threats,” says
thyssenkrupp’s Bass. “This makes the IoT non-optional in almost every industry. The IoT has arrived. It is a critical part
of the future of every industry, and you have to get onboard with these technologies—and fast.”

METHODOLOGY
The data in this research is derived from a 2017 Forbes Insights survey of 502 executives who identified themselves
as responsible for, or familiar with, the IoT activities of their companies. Respondents were based in Europe, the
Americas and Asia-Pacific, and represented a range of industries, with not one comprising more than 25% of the total.
All respondents were director-level or above, and came from companies with 500 employees or more.

ACKNOWLEDGMENTS
Forbes Insights and Hitachi Vantara would like to thank the following individuals for their time and expertise.

• Patrick Bass, CEO, thyssenkrupp North America

• Umeshwar Dayal, Senior Vice President and Senior Fellow (Information Research) at Hitachi America Ltd.,
Global Center for Social Innovation, North America

• Bryan Kester, Head of IoT, Autodesk

• Greg Kinsey, Vice President Industrial Solutions, Hitachi Vantara

• Dave Parsons, Vice President IoT Strategy and Solutions, Hitachi Vantara

• Satyam Priyadarshy, Chief Data Scientist, Halliburton

• Dominic Venturo, Executive Vice President and Chief Innovation Officer, U.S. Bank

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 APPENDIX

LESSONS FROM THE INTERNET OF THINGS

AND MANUFACTURING: FIVE STAGES OF ENTRY
Manufacturers are early adopters when it comes to the Internet of Things. But transforming a production
line in mid-operation also presents considerable risk. Their early experience shows a pattern of risk-
managed, rapidly implemented entry that can be helpful to other industries as they assess the IoT.

STAGE 1: COST REDUCTION—GO FIRST FOR THE LOW-HANGING FRUIT

Cost reduction is an attractive first option in IoT deployment—it is typically low risk, offers a defined
ROI, and results can be realized quickly.

Example: Utilities have used sensors to track energy usage in households and businesses, forgoing the high
costs of on-site meter reading and field service.

STAGE 2: GO FOR OPERATING EFFICIENCIES

This is the stage of “doing what you already do, but doing it better.” Often an IoT network is used to
displace manual processes that can be high cost and prone to error.

Example: Sensor-based analytics that signal a maintenance requirement in advance, replacing time-based
maintenance schedules and forestalling a breakdown.

STAGE 3: USING THE IOT TO INCREASE FLEXIBILIT Y

The IoT is used to provide an unprecedented operating flexibility for the plant manager.

Example: Additive manufacturing systems (sometimes called 3D printing), when connected to suppliers,
enable rapid line turnover to support efficient production of small production lots.

STAGE 4: USE THE IOT FOR DIGITAL TRANSFORMATION

In this stage, a fully connected manufacturing process—from the supplier through production to the
customer—is able to adopt a completely new operational model.

Example: A railroad company operating in remote areas is able to use additive manufacturing to manufacture
parts on the spot when a critical part fails.

STAGE 5: THE IOT BECOMES THE FOUNDATION FOR INNOVATION

This is the most interesting part—when an IoT solution is fully operational, unforeseen business
opportunities emerge.

Example: A manufacturer of connected health monitors spotted clinical patterns that it now shares with
insurers and healthcare providers.

It should be noted that these steps are not necessarily sequential—there is a sense of urgency in entering
the IoT that causes these phases to overlap as success is achieved. Nonetheless, these steps demonstrate
an IoT entry strategy that manages risk while keeping the momentum of IoT going.

21 | THE INTERNET OF THINGS: FROM THEORY TO REALITY HOW COMPANIES ARE LEVERAGING THE IOT TO MOVE THEIR BUSINESSES FORWARD
 THE INTERNET AND OIL AND GAS—
MEETING THE CHALLENGES OF A TOUGH INDUSTRY
The upstream oil and gas industry, which includes the vast assets of the production fields, has always
faced unique challenges. Oil and gas production is an asset-intensive business operating in a volatile
market. Its far-flung assets are distributed across some of the most hostile terrain on earth, and operates
under close regulatory scrutiny. Workforce safety is always a concern, and its operators are currently
under severe cost pressure due to historically low oil and gas prices.

Enter the Internet of Things. Each step of the exploration and production process can be connected
within an IoT network, directly addressing the industry’s challenges:

1. IN EXPLORATION: Data collected from thousands of wellheads can complement seismic survey
data and be used to better predict the occurrence, depth and composition of deposits, and thereby
determine where and how to expand an oil field.

2. IN DRILLING: Drill bits, thousands of feet down, are equipped with sensors that predict blowouts
and dangerous high-pressure conditions.

3. ON THE PL ATFORM: Oil production—“roughnecking”—has historically been a dangerous

profession. But incident data and its corollary factors—time of day, weather, occupations, age of the
worker, time of shift—is being aggregated into analytics designed to predict, and thereby prevent, on-
the-job accidents.

4. IN MIDSTREAM DISTRIBUTION: Seventy percent of crude production is transported to

refineries by pipeline.* These far-flung assets have often been the source of high-profile and high-
cost accidents and spills. However, IoT-connected sensors, increasingly linked to drones, can provide a
real-time analysis of current and predicted faults.

For early adopters, the Internet of Things can allow companies in the oil and gas industry to meet the
challenges of today. The IoT can reduce costs, make other costs more variable, support environmental
compliance and create a safer work environment for employees.

* James Conca, “Pick Your Poison for Crude: Pipeline, Rail, Truck or Boat,” Forbes.com, April 26, 2014.

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 ABOUT FORBES INSIGHTS

Forbes Insights is the strategic research and thought leadership practice of Forbes Media, a global
media, branding and technology company whose combined platforms reach nearly 94 million
business decision makers worldwide on a monthly basis. By leveraging proprietary databases of
senior-level executives in the Forbes community, Forbes Insights conducts research on a wide
range of topics to position brands as thought leaders and drive stakeholder engagement. Research
findings are delivered through a variety of digital, print and live executions, and amplified across
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24 | THE INTERNET OF THINGS: FROM THEORY TO REALITY HOW COMPANIES ARE LEVERAGING THE IOT TO MOVE THEIR BUSINESSES FORWARD