2020 took its place in the pages of history as a year in which everyone was surprised and even the planning did not work. What should we learn from the corona virus outbreak? We asked ourselves, “Can smart cities prevent the pandemic?” We have even taken Pandemic measures with 5G and IoT. Some of us said that this has been our new normal, and some of us have said that meter reading methods should change during the pandemic process. In short, we all agreed that Covid-19 would have an impact on digital transformation and IoT investments. However, we tried to predict how Digital Transformation and IoT Investments would be affected by covid-19. GSMA Intelligence from this perspective; It reported last year’s performance of IoT and digital transformation.
How have Digital Transformation and IoT Investments been affected by Covid-19 and what awaits us in this area in 2021? based on gsma intelligence report. GSMA Intelligence Enterprises speak: IoT gets real.
IoT 2020 Summary
What Happened with COVID-19 and How Did It Affect It?
IoT projects were suspended after Covid-19. – Internet of Things projects; The proportion of companies aiming to complete in 2020 has contracted by 21% in 2019 to 2020. It is known that businesses with fewer than 250 employees, which we would call the SME segment, have stopped their projects. Overall, businesses reported a decrease in IoT projects from 63% in 2019 to 50% in 2020.
IoT field installations are scaling. – Although average field installations have increased; IoT field installations of most organizations are small and there are few commissionings. While these site installations take place with less than 50 devices; It accounted for less than 20% of total installations compared to 2018. This is the case as their use case matures and new capabilities emerge, while midsize field installations are growing.
Integrations remain the main concern. – Basic concerns in IoT projects; integration with older systems, as well as data security/privacy and cost. Employee/in-house resistance peaked this year and reflects the fact that training on the benefits of IoT should go beyond the C Level level. Companies to fully embrace digital transformation; C LEVEL needs to go through an exchange management process that will also support IoT and Digital Transformation for all six executive employees.
Revenue generation is the most measure of IoT success, but the regulatory compliance goal is increasing. – Companies participating in the GSMA Intelligence survey; 52% invest in IoT on behalf of new revenue generation and 68% attribute IoT success to revenue generation. IoT ranks second with 65% of cost savings as a measure of success; The share of companies that see the regulatory compliance goal as a measure of success has increased from 31% in 2018 to 52% in 2020 due to the impact of data privacy and security regulation regulations.
The importance of 5G for IoT success. – Most of the survey respondents; He is familiar with 5G features and considers that their successful IoT implementation needs the benefits of 5G. 63% of companies say they need fast mobile broadband (eMBB) for IoT applications to succeed. However, improvements to be achieved with 5G’s lower latency (URLLC) and increased network capacity (mMTC) are also seen as gateways to corporate digital transformation.
Enterprise IoT in Numbers
Most businesses; it has IoT as part of its digital transformation goals rather than independent initiatives. – 61% of IoT applications; it is decided by their headquarters rather than local businesses.
IoT; it is seen as a corporate and industry transformation. – This is a 3-point drop compared to 2019. At the same time; A 39% (6-point increase over 2019) firmly believes ioT can be transformational for companies and industries. However, he says, technology has not yet been possible. This shows that opinions about IoT have changed from exaggerated to reality
He thinks corporate networks are needed. – Most (88%) of these businesses state that they are willing to invest in such networks. Infrastructure and hardware providers; they are still preferred partners in front of mobile operators.
IT(IT) technology departments are driving IoT investments. – This is a decrease compared to 2019-(53%). But the move of IoT investment decisions away from the MONOPOLY of IT/IT departments is an encouraging sign. However, OT and IoT requirements need to be taken into account further.
Most businesses; He sees IT/IT integrations as a major challenge to IoT integration. – Especially those working in retail and utilities report challenges related to IT integration. However, producing enterprises; Due to the Covid-19 pandemic, it is struggling with OT integrations that can be explained by the need to change business processes almost overnight.
Most businesses; another challenge is on-premises/employee resistance to the adopting of IoT. – Internal resistance, since 2018 26%; continues to grow as a significant challenge. This is an indication that management requires clearly communicating IoT benefits and ensureing employee engagement.
Covid-19 Impact Stopped IoT Projects
IoT projects are problematic. As we expected, businesses have confirmed that IoT projects have been suspended or postponed. The overall proportion of companies that initiated but did not complete the IoT project (including PoCs) increased from 12% to 22%. However, Covid-19 will also drive digital transformation. Those with existing IoT projects are more stable than before; Only 5% of those who already implement IoT solutions say they have no other IoT plans, compared to 18% in 2019.
Short-term projects paused. The percentage of companies planning to implement IoT projects within a year decreased by 21 points from 60% in 2019 to 39% in 2020. Most of this change came from businesses with fewer than 250 employees (SMEs). Only 30% (52% in 2019) have plans to launch IoT projects immediately. This is compared to 15% in 2019, with a third of all businesses planning to implement IoT projects in more than two years. That’s because I don’t know what more careful planning and a lack of faith that he will soon return to normal.
Funding for IoT Becomes Harder
Allocated IoT budgets are in decline. 56% of businesses have or will have IoT budgets in 2020 (down 7 points year-on-year). This, combined with the postponement of projects, marks a change of ranking in prioritization activities. IoT budget allocation for production, transport and storage; partly as a result of an effort to ensure the occupational health and safety of employees, ahead of others (61%).
However, IoT funding remains necessary. Many of those with an IoT budget, separated or transferred from the IT or OT departments, are still waiting for their funding to increase. This shows companies’ compliance with the digital transformation commitment.
Digital Transformation Is Still Among the Goals
Despite project delays and funding cuts, digital transformation is still among the target cards.
Digital transformation is a necessity. Almost two-thirds of businesses (63%); has commissioned IoT as part of broader digital transformation initiatives. 2019 corresponds to a rate higher than 60%. This tends towards emerging markets and newer IoT projects and emphasizes the importance of digital transformation perception. As IoT begins its journey, businesses in emerging markets see digital transformation as a natural advancement of their industry; projects also take a more zero approach with processes that usually start from the ground up. Conversely, businesses in developed markets; has more mature IoT projects. They do not see digital transformation as motivation for IoT projects.
IoT Projects Are Scaling
IoT field installations tend to increase. Most IoT site installations are small small projects with few, but the number of site installations is increasing. The smaller scale reflects the fact that smaller businesses are doing IoT projects with fewer devices. 80% of IoT projects of small businesses (under 250 employees); field installations were less than 500 devices, compared with 53% of the IoT projects of large enterprises.
Balances Are Changing. Site installations in very small IoT projects (less than 50 devices) compared to a third in 2018; less than 20% of total installations. Medium-sized installations increased the most as their use cases matured and new capabilities emerged. Looking ahead, businesses plan to scale further: Half of businesses’ planned IoT projects; It includes more than 500 IoT devices. While the automotive and consumer electronics sectors are leading the way, 64% of businesses from all sectors plan to install more than 500 devices.
IoT Device Lifecycle Under 5 Years
Scales over time. Almost a third of new installations have fewer than 50 IoT devices, compared to 6% of site installations 5 years ago. These figures have reduced the number of projects involving more than 5000 IoT devices over time. IoT projects are no longer just about PoCs! – This situation is in terms of data-driven insights and process improvements of connected devices; it shows the importance of adopting on-premises IoT benefits to prove and scale the value it brings.
Most businesses expect a device lifecycle of less than five years. This excludes more mature IoT projects (commissioned and planned five years ago) and new deployments (commissioned in the last 12 months and not fully planned). Overall, just over a quarter of companies expect IoT devices to be in the field for more than five years. Those who work in public services (32%), as predicted, have the longest planning cycle; businesses in the automotive and transportation sector (14% each) are likely to use the devices for less than a year.
In-House Employee Resistance Is An Obstacle to IoT Projects
Integration, security and cost remain the biggest challenge in IoT projects. When it comes to IoT integration; Most businesses still find IT/IT difficult to overcome (69% of businesses, no change compared to 2019), and nearly half see OT integrations (45%, down 2 points compared to 2019) as a challenge.
Employee/internal resistance for institutions showed the greatest increase. This reflects the fact that training and efforts to adopt IoT investments and benefits extend beyond the C Level level, and that implementing changes requires employee engagement. There was a 7-point year-over-year increase in larger businesses listing internal resistance as a challenge (42%).
More businesses see the uncertain ROI as a challenge. Alcause less than a third of businesses see return on investment as a challenge; It’s amazing to see this number increase as IoT scales and matures. Manufacturers in particular are more interested in return on investment (27% in 2020 and 23% in 2019). However, people in the transportation industry; sees return on investment as less of a challenge (27% in 2020 and 32% in 2019). This coincides with the fact that his views on IoT capabilities are more positive.
The Approach to IoT Is Changing – From Exaggeration to Truth…
A broader recognition of the shortcomings of technology. Companies investing in IoT agree that IoT will have an impact on their companies and related industries. But at the same time longer in the field; they now see the challenges more clearly as they have active IoT installations.
IoT perception and impact are changing depending on the vertical sector. Utilities and healthcare are the sectors most disillusioned by IoT (change of perception). At the same time, it is the two vertical sectors that should benefit most from being interconnected during the pandemic. Transportation is the only sector that improves IoT perception. However, on the overall average, 55% of IoT decision makers believe IoT will positively impact their companies and industries.
First and Weights Change in IoT Success Criteria
There are basically 3 reasons why an institution or company is researching or planning on behalf of Digital Transformation and IoT Investments under covid-19 impact. While this is the first and most important income impact from 2 reasons; in second place was cost savings and last place was compliance with regulations.
Looking at the last 3 years, revenue generation has had increasing importance and a large percentage of decision impact as the main criterion of IoT success.
|Share of Importance||% 58||% 68||% 68|
urce:Enterprises speak: IoT gets real
Revenue generation has become the most important measure of success in 2020 due to the pressure of companies to grow. Revenue generation is crucial for the first five years of the IoT journey. This is especially true for those in the first year of investment (71% compared to 63% for those who first implemented IoT five years ago).
Looking at the last 3 years, the percentage of decisions of IoT investments focused on cost savings is decreasing.
|Share of Importance||85%||% 69||% 65|
e:Enterprises speak: IoT gets real
Cost savings are still important! However, in the current environment, we see less importance in 2020, a 20-point decrease compared to 2018. The longer ioT investment plans last, the less focus is on cost savings. Compared to 60% of those who first implemented IoT more than five years ago; 67% of “adopters” see cost savings as a measure of success.
Compliance with Regulations
Due to digital transformation and the proliferation of IoT, the country’s administrations also make the regulations they consider necessary in their regulations. In fact, these technologies cause users serious concerns about the protection of personal data.
|Share of Importance||% 31||% 51||% 52|
Source:Enterprises speak: IoT gets real
GSMA Intelligence Compliance of regulations for more than half of the businesses surveyed was a measure of success, which was 31% in 2018. The importance of compliance with regulations increases as IoT matures and scales. The longer the patrity planning period, the more important it becomes to comply with legal requirements. Awareness of regulatory pressures also increases over time.
Generating Revenue is the Target of IoT Investments
Creating income is the first goal that comes to mind. When asked if IoT was used to save costs or make new revenue, participants were evenly divided in 2019 (50% each). But in 2020, revenue generation ranked first with 52%. While this is a small percentage change; It reflects the steady movement to use data-driven insights to create new revenue streams as a reason for IoT deployment. (in addition, 68% of businesses see income production as a significant measure of success, as discussed earlier.).
Data first. Organizations not only use data to monitor performance and gain operational visibility! At the same time, new opportunities in their departments; (almost a third of all businesses surveyed) and aim to use data to create new revenue (23%) across the entire business. Meanwhile, 13% plan to use data insights to completely change their business model.
Priority of IoT Investments Distances Those From Cost Savings Focus
Mixed picture between verticals. The Covid-19 pandemic has affected businesses to various degrees. Those most affected – retail, automotive and utilities – had their day-to-day operations disrupted. Cost savings, which is an important indicator of IoT success at the beginning of a project and is an intuitive measure of IoT success; may be less relevant in the current environment. – Instead, security and security are often at the top.
Overall cost savings of less than 5%. Most companies achieve gross operating cost savings of less than 5% as a result of the adopting of IoT. The bigger the business; the greater the cost savings! – For those who report savings of more than 5% in operating costs, there is a correlation with business size; E.g. 17% of SMEs compared to 27% of large enterprises.
Regulations in the Production Sector The Importance of Compliance Increases
Compliance with regulations as a rising IoT success criteria. The proportion of businesses seeing compliance as a measure of success increased from 31% in 2018 to 52% in 2020. In addition, 46% of businesses chose regulatory compliance over business results as the reason for IoT investments. Year-over-year increased by 2 points.
Regulatory compliance in manufacturing sectors. Those in the manufacturing sectors adapt to regulatory measures as well as self-imposed measures (e.g. ISO certification). They are also now following new rules imposed by the pandemic to ensure the safety of workers. Contrary to what is expected, some verticals (such as the retail sector, where IoT can help with social distancing measures) and countries; reported a decrease in compatibility as a measure of success. China, with a decrease (69%) compared to 2019 (76%); (but still well above average) is the leader in compliance in all countries.
Data Security and Privacy Regulations Accelerate IoT Investments
Data security and privacy requirements are the basis of regulations. To comply with the regulation, businesses must take into account data privacy requirements and turn them into processes. To ensure data security compliance, they need to make IoT investments by understanding security risk thresholds. IoT security; voluntary recommendations/guidelines (e.g. in the United Kingdom and Australia); we expect businesses to pass laws that must comply (e.g. the US IoT Cybersecurity Act).
Internal governance. IoT has better inter-company interaction (e.g. Asset management) and to ensure that the same applications are monitored in multiple sites and locations; can help streamline internal processes using data and machine learning/artificial intelligence.
Brazil and South Africa take the fore in insurance requirements. 64% and 62% of businesses surveyed in Brazil and South Africa, respectively, believe IoT helps meet insurance requirements. This may be because they are key markets for insurance telematics.
Digital Transformation and IoT Investments in covid-19 have changed meaning as can be seen from the report. Previously, investments made in the focus of cost savings in years, Digital Transformation and IoT Investments under covid-19 effect are seen as regulation compliance and income-oriented projects.