Gartner Predicts Massive Growth for IoT
April 07, 2016

Pete Goldin
APMdigest

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The Internet of Things (IoT) will move toward mainstream adoption in 2016 for many industries, according to the findings of a recent survey by Gartner, Inc. The online survey was conducted in November 2015 among Gartner Research Circle Members and included responses from 465 IT and business professionals spanning 18 business sectors in North America, EMEA, Asia/Pacific and Latin America.

Although less than a third (29 percent) of responding organizations are currently using IoT, an additional 14 percent are planning to implement IoT in the coming 12 months, with an additional 21 percent planning to implement after 2016. In other words, the number of organizations adopting IoT will grow 50 percent in 2016, reaching 43 percent of organizations overall. In aggregate, the majority of organizations (64 percent) plan to eventually implement IoT. However, it is also important to note that another 38 percent have no plans to implement IoT, including 9 percent that see no relevance whatsoever in the technologies.

"While there is near universal acceptance of the importance of the IoT, less than a third of organizations surveyed were actively exploiting it," said Chet Geschickter, Research Director at Gartner. "This is largely because of two reasons. 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."

Industry adoption also varies widely with heavy industries such as utilities, oil and gas, and manufacturing leading adoption, and service-oriented light or "weightless" industries lagging. Gartner estimates that slightly more than half (56 percent) of businesses in asset-intensive "heavy" industries will have implemented IoT by the end of 2016, and approximately one-third (36 percent) of "light" or "weightless" will do so.

"2016 will be a very big year for IoT adoption. We are starting to see a wide range of IoT use cases across virtually all industries. But, the big challenge now is demonstrating return on investment. Executives need to validate the contribution that IoT can make in order to justify large-scale rollouts," said Geschickter.

Jessica Ekholm, Research Director at Gartner, adds, "We estimate that total IoT services spending will reach nearly $235 billion in 2016, an increase of 23 percent from 2015. The professional services segment constitutes the biggest opportunity for IoT, with spending forecast to surpass $215 billion in 2016 an increase of 21 percent in 2016."

"The largest consumer IoT services opportunity will be in health and fitness, followed by automotive infotainment, and home security and safety," Ekholm continues. "In 2016, 3.5 million consumer connected things will be in use, representing 87 percent of total consumer IoT in use, and on pace to reach 10.6 million units by 2020."

Gartner also made the long-term prediction that more than half of major new business processes and systems will incorporate some element of the Internet of Things (IoT) by 2020.

The impact of the IoT on consumers' lives and corporate business models is rapidly increasing as the cost of "instrumenting" physical things with sensors and connecting them to other things — devices, systems and people — continues to drop.

"Uses of the IoT that were previously impractical will increasingly become practical," said W. Roy Schulte,VP and Distinguished Analyst at Gartner. "The IoT is relevant in virtually every industry, although not in every application. There will be no purely "IoT applications." Rather, there will be many applications that leverage the IoT in some small or large aspect of their work. As a result, business analysts and developers of information-centric processes need to have the expertise and the tools to implement IoT aspects that play a role in their systems."

Privacy and Security Concerns

According to Gartner, the nature of IoT solutions, how they are deployed, and the types of data they generate and consume are giving rise to new security and privacy implications that organizations must begin to address. This is a rapidly escalating risk to the organization, bringing complexity unfamiliar to most IT and business leaders.

"The IoT has enormous potential to collect continuous data about our environment," said Ted Friedman, VP and Distinguished Analyst at Gartner. "The integrity of this data will be important in making personal and business decisions, from medical diagnoses to environmental protection, from commands to modify actions of machinery to identification and authorization of physical access. A black market for fake or corrupted sensor and video data will mean that data can be compromised or substituted with inaccurate or deliberately manipulated data. This scenario will spur the growth of privacy products and services, resulting in an extensive public discussion regarding the future of privacy, the means to protect individual privacy, and the role of technology and government in privacy protection."

By 2020, addressing compromises in IoT security will have increased security costs to 20 percent of annual security budgets, from less than one percent in 2015.

As use of IoT devices grows, however, the unique requirements of IoT architecture, design and implementation over multiple industry segments and scenarios will also grow. As a result, Gartner believes that the average security budget for IT, operational technology (OT) and IoT security requirements will respond to the growth of IoT devices across all business segments and scenarios, rising from less than one percent of annual security budgets in 2015 to 20 percent in 2020.

"Major cybersecurity vendors and service providers are already delivering roadmaps and architecture of IoT security, in anticipation of market opportunity," said Earl Perkins, Research VP at Gartner. "Small startups delivering niche IoT security in areas such as network segmentation, device-to-device authentication and simple data encryption are offering first-generation products and services, including cloud-based solutions where applicable. Large security vendors have already begun acquiring some of these IoT startups to support their early roadmaps and fill niches in their portfolios."

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