Top 5 Challenges to IoT Adoption and recommendations to overcome them

The Internet of Things (IoT) offers businesses opportunities for incredible savings and growth. However, the journey is full of challenges that need to be addressed before making a significant up-front investment in IoT implementations.

Of course, different type of enterprises (medium, large, or global) and industries might have different priorities, but in almost all cases, our customers typically experience the following five challenges or roadblocks

Challenge #1 - Misunderstanding the ROI and immediate profit outcome

Even though enterprises are discovering the potential of IoT; they don’t understand the return on investment (ROI). Also, the usual high up-front investments can’t be afforded to invest in an IoT solution for experimentation purposes only. Another issue is that business cases usually focus on relatively simple cost savings and short-term profits.

Once we identify the Business Unit and their objectives, it is helpful to begin calculating the basic costs associated with that area of the business. General costs need to be considered but, also the other costs such as implementation downtime, consulting, platform, and security. It’s important to keep in mind that the solution itself comes with new costs.

By determining the actual cost of an IoT solution, an organization usually is less confident that an IoT solution is the right investment. However, to evaluate the assessment fairly, the organization also needs to look at some potential benefits it could gain from implementing an IoT solution.

Many enterprises look to IoT to reduce costs and expenses. Once one solution is in place, however, it may generate new potential benefits beyond its initial intended use. That is why many organizations should examine the new possibilities of a connected solution. Examples of new possibilities include:

• Extensibility to new business processes and scenarios. Once the underlying infrastructure is in place, it can be a lot simpler to add new capabilities and extend functionality to other processes and scenarios. Initial investment costs might be increased, but with proper planning, you can reduce the costs of other implementations down the road.
• Revenue-generating capabilities. While reducing operational costs is a major focus of IoT solutions, that same cost-reduction solution may also be able to generate increased revenue. Only when we collect and analyze the data, can trends reveal new revenue opportunities (i.e., better customer experience by providing personalized offers to customers, scaling based on user demand, or providing new services such as Predictive Maintenance).
• Potential qualitative benefits. An IoT solution can provide a soft return on investment, potential benefits, such as improved customer satisfaction, increased worker protection, and increased business flexibility. Adding value to the customer through reduced prices, increased security, or fast delivery to improve customer loyalty and ROI

Recommendations:

1. Start by determining a specific Business Unit or division to address a short-term tangible objective. Consider the new cost factors and look at the big picture to help make sure all the possibilities are also examined.
2. Engage with a digital advisor with experience building business cases and with a deep understanding of financial factors for IoT. A recommended practice is to run a business strategy workshop to review the potential business scenario(s) and to discuss the financial analysis of the value of the organization.

Challenge #2 - Product-centric focus

Products and services drive the majority of today enterprises; many of them are very successful and satisfy their customer needs. Based on our experience, the use of a product-centric focus from the idea generation, concept development, solution implementation, and commercialization is one of the key blockers for their digital transformation.

Enterprises with a product-centric approach are siloed organizationally and tend to communicate the brand promise in a unidirectional manner.

Recommendations:

1. Define use cases and the overall strategy using an outside-in, down-top approach. Enterprises need to anticipate customer’s needs continually, perhaps even before their customers are aware of them, then design the next iterations of the product to help meet and exceed those needs. Along the journey, collaborate with various Business Units to improve the customer experience and deepen their satisfaction.
2. Create a strategic plan to move to what is called “customer-centric.” At this level, enterprises are segment focused and have a customer-driven Profit and Loss (P&L) approach. Enterprises should use deep customer insights to develop new services and evolve the brand promise to align with their customer’s needs.

 Challenge #3 - Too much attention to OT-IT and fear-of-failure

Enterprises – especially those that are large or global – tend to have an Operational Technology (OT) and Informational Technology (IT) mindset. As a result, their main goal is to keep the Systems of Record updated and kept the organization running with optimum performance. Systems of Record are the Enterprise Resource Planning (ERP) systems which organizations depend on to run their business (i.e., core banking, customer relationship, human resources, manufacturing, and financials). Usually, both OT and IT tend to focus on the major technical elements such as performance, availability, scalability, and data quality. Also, some CIOs tend to underestimate the importance of the end-user experience. 

However, the real challenge of IoT adoption isn’t technical; it is more about finding the real business benefits and fear-of-failure. One of the key barriers for innovative IoT-based projects is the powerlessness to accept failure.

Recommendations:

1. Realize that not all IoT initiatives will succeed, instead, identify who can lead the Digital Transformation and bridge the gap between the IT and OT cultures, so competing priorities are met. Once benefits are significantly demonstrated, the organization should integrate the IoT solution into existing business processes.
2. While CIOs and TDMs must understand the major technical elements and costs, they should focus on the desired outcome and make sure the final objectives are stated.
3. Adopt an Agile methodology to move from a culture of fear-to-failure to an approach where people can fail quickly, then learn and adapt quickly to help meet the objectives.

Challenge #4 - Fragmented protocols and standards

The number of standards that exist today in each part of the IoT value chain and the lack of interoperability is a major problem and one of the greatest barriers that keep businesses from adopting IoT. Also, IoT devices manufacturers often use proprietary technology, and even some organizations develop their standards.

 Recommendations:

1. Even if existing standards, protocols, and solutions aren’t perfect, the organization should work within today constraints rather than trying to build their own.
2. Consider a cross-purpose cloud-based platform as your long-term IoT infrastructure and when possible, consider the use of standards protocols such as Message Queue Telemetry Transport, Advanced Message Queuing Protocol, and Hyper Text Transfer Protocol Secure. In this case, your things (i.e., devices, sensors, equipment or field gateways) might not be able to use one of these standard protocols and require protocol adaptation; the recommendation is to use a proven protocol gateway for IoT such as Microsoft Azure IoT Hub and related IoT services. 
3. Also, manufacturers should also consider the use of open industrial interoperability standards such as Open Platform Communications Standards (OPC) and the OPC Unified Architecture specifications. For more information, visit OPC Foundation. 

Challenge #5 - Data discoverability, security, and privacy

To realize the full potential of enterprises’ major IoT implementations (for example smart building or connected vehicles), solutions might need to take actions based on data from many sources. To succeed, enterprises are dependent on the resolution of issues such as data discovery, data formats, monetization models for data, and privacy/security implications. These issues can limit the impact of IoT.

As the threat landscape is always changing, security is not so much a destination to be reached as it is a continuous journey. Addressing the wide-reaching challenges of security in the age of IoT requires participation from the entire technology ecosystem — from cloud providers to hardware manufacturers and solution developers to the companies that ultimately operate the system.

Recommendations:

1. Start by defining the foundations for the data management (i.e., schema, data extraction, store, analysis, and governance) and connected things management.
2. Do not scale without adopting a security by design approach to help protect and track sensitive data and key security layers such as application data encryption, entity identity/authentication, message authentication/confidentiality, etc.
3. Create a plan to have a marketplace to discover data using application programming interfaces and ways to effectively manage IoT data.
4. Get familiar on how to assess IoT security from end to end. Please visit the Microsoft Security Program for Azure IoT, and learn how Microsoft brings customers together with trusted security auditors and Microsoft Services Security Consultant. Our specialist will evaluate your IoT solutions end to end and identify security priorities, vulnerabilities and effective mitigations.

To know more, please read the following whitepaper "Internet of Things Adoption in Digital Transformation Journeys"