The semiconductor giant Arm is a company that I’ve followed closely for quite some time, and thanks to some very concerted strategic efforts made by the company over the last few years, I’m sure I will be following for a long time to come. Over the last couple years, I’ve written repeatedly that the company’s premier conference, Arm TechCon is the place to be if you are in any way involved in IoT (see my write-ups on the 2018 and 2019 conferences for in-depth coverage). This just becomes more and more true as the company stakes out its position within what it calls the emerging “5th wave of computing”—the point where AI, 5G, and IoT intersect and the variety of new data consumption models that arise in conjunction. And wow, is this wave emerging. The Economist recently published the latest iteration of its IoT Business Index, and the adoption numbers are staggering. Let’s take a look at the study and its key findings.
The IoT Business Index 2020 is actually the third study of its kind, with previous editions published in 2013 (see my coverage here) and 2017. It is compiled via a cross-industry survey by the Economist Intelligence Unit, in which 825 business executives are polled to gage the adoption rate of IoT technology. Not surprisingly, Arm sponsors this study—they’ve got a clear vested interest in keeping a finger on the pulse of the IoT industry and rate of deployment. Executives are polled globally, with approximately 30% respondents from North America, 30% from Europe, 30% from Asia-Pacific, and 10% from the rest of the world. The respondents span an impressive gamut of industries, ranging across automotive, construction and real estate, energy and natural resources, financial services, healthcare, infrastructure, manufacturing, outsourced facilities management, and pharmaceuticals and biotech. Half of the respondents came from larger companies (annual revenue of over $500M), while the other half came from smaller businesses.
Helpful to understanding the study is understanding the scoring system. The IoT Business Index is divided into two 10-point scales—one that tracks IoT adoption in products and services and one that measures adoption in businesses’ internal operations. Respondents are asked about both of these contexts and asked to rate their businesses’ adoption of IoT from ‘non-existent’ to ‘extensive.’ The Economist then converts these answers into numerical scores and aggregates them.
So what did the survey of this diverse group of executives report? It was a fairly dense study, but let’s break down some of the key findings. The chief finding, perhaps, was that both internal and external-facing IoT adoption increased significantly since the last report in 2017. While the aggregate score of IoT in products and services was ranked at a 4.43 in 2017, falling under the ‘in planning’ range, it increased to 5.96 in the 2020 report. This new score, according to The Economist, positions the overall rate of IoT in products and services just short of the ‘early implementation’ phase. For that matter, 13% of companies surveyed reported ‘extensive’ external IoT deployments, up from 8% in 2017. The growth of IoT in internal operations was even more stark, showing a leap from 4.34 to 6.62. This, according to the study, plants overall internal operations firmly in the phase of ‘early implementation.’ 22%, however, report they already have ‘extensive’ internal deployments—nearly 3 times more than 2013.
Seemingly, these increases correlate with an overall increased investment in IoT technology. The study found that 82% of organizations surveyed increased their investment in IoT over the past 3 years. For comparison’s sake, in 2017 only 62% reported an increase. For that matter, one out of five respondents said that their investment in the area increased by 50% or greater, and a majority report that their IoT investments have produced returns beyond what was expected (19% agreed strongly, while 38% agreed somewhat). Over 10% of manufacturers say they have more than doubled their investment in AI since 2017. This is what acceleration looks like.
The study also found that many businesses see the implementation of AI as key to maximizing the value of their IoT data. 56% say that IoT it is “one of many important sources” of data for AI initiatives. 25%, for that matter, see IoT as the sole data source for their AI efforts. An additional, and telling 64% of respondents, said that their IoT data has become more valuable as their AI capabilities increased.
One of the greatest barriers to adoption of IoT is the ever-present security concerns. The more end-points, the larger the threat surface for bad actors to exploit. The 2020 report confirmed that this is still on the forefront of executives’ minds. 45% of respondents said that they believe consumer adoption of IoT technology has been held back by security concerns, while 37% say these concerns were enough to prevent their company from pursuing an IoT strategy. On the bright side, 55% of respondents who claim their businesses have reached the point of ‘extensive’ IoT deployment say that they’ve achieved the level of security prowess necessary for IoT.
So what does this all mean?
The numbers reflected in the study indicate a number of things. First, and perhaps most importantly, is the fact that IoT is accelerating and maturing quickly. 2020 appears poised to be a major inflection point for the technology. Many organizations have now moved beyond the planning stage and are embarking on the early implementation phase. It’s also very significant that so many of those who have already deployed IoT technology are seeing significant return on their investments—even more than they’d expected. Many organizations see IoT and AI as intrinsically linked, and essential to their digital transformation. Overall this report paints a picture of increasing confidence in IoT, from a strategic and financial standpoint. With greater confidence in the technology and its potential benefits, deployments should only continue to accelerate. Arm, perhaps more than any other company in the business, has planted its flag right where it needs to in order to take advantage of this monumental shift in computing. It should be feeling quite bullish about its prospects right about now.
Note: Moor Insights & Strategy writers and editors may have contributed to this article.