Why is IoT locked in ‘proof-of-concept hell’? Stakeholders don’t talk to each other, and return on investment is hazy

Canalys Forum 2020 Some Internet of Things projects are stalling, trapped in what analyst Canalys terms as a “proof-of-concept hell,” though it believes the limiting factors are cultural rather than technological.

On the private equity front, funding for IoT has crashed with just $500m spent on investments in the first three quarters of 2020 compared to $1.3bn in the corresponding period of last year.

The biggest beneficiary to date has been Samara ($400m), which developed an industrial IoT platform for fleet management, asset tracking, and managing networks. In second place was Infarm with $170m. This is a business that builds and distributes vertical farms and warehouses to be installed in urban areas.

“There are so many cool use cases. But why isn’t IoT deployment more advanced and more widespread? Why is it still an emerging technology?” asked Matthew Ball, chief analyst at Canalys.

The answer, he ventured, is that customers are caught the “proof-of-concept hell.” The Register isn’t sure which of the nine circles that would resides in, but cynics out there might suggest “Fraud”.

Many IoT projects have “failed to get beyond the proof-of-concept stage,” Ball said, but the reasons for this are due to “internal politics”.

“IoT projects have multiple stakeholders: IT, department heads, digital officers, security and data controllers, plant managers and building managers. They often don’t speak to each other, or they don’t want to because it slows things down. But ultimately, they all need to sign off on projects.”

The line of hurdles doesn’t end there – business process change is required to make IoT function but that can’t necessarily happen when the “stakeholders” are not communicating.

“Return on investment is another [hurdle]. The cost benefits of IoT projects are not always clear,” said Ball. “We see successful IoT projects focus on clearly showing improvements in productivity, customer experience, compliance, and safety, as well as enabling new revenue streams.”

Marc Waters, HPE’s managing director for UK, Ireland, Middle East and Africa, told us when the business case is strong, projects progress, and that he’d seen examples of growing adoption at the edge in retail (including video analytics at the edge), manufacturing, and energy.

He told us that IT and operational technology teams are starting to come together under the control of the CIO.

“CIOs used to be predominantly in the data centre or the workplace but we are starting to see CIOs have more jurisdiction over the operational part of the business. They are bringing together different teams.” ®

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