Why 72% of IoT Projects Fail and How OEMs Can Beat the Odds

The Internet of Things (IoT) holds immense potential, with global IoT spending expected to reach $1.1 trillion by 2025. For Original Equipment Manufacturers (OEMs), IoT represents an opportunity to revolutionize their industries. However, despite the promise of transformative change, a staggering 72% of IoT projects fail to progress beyond the Proof of Concept (PoC) phase, leaving businesses to face wasted resources and unrealized benefits.?

So, why do so many Industrial IoT (IIoT) projects fall short of expectations? Below, we explore the common reasons for failure and the actionable strategies that can help OEMs beat the odds and achieve IoT success.???

First Things First: 6 Reasons Why Many IoT Projects Fail??

1. Undefined or Unclear Business Goals?

IoT projects are inherently complex, and without well-defined goals, they are destined to fail. Only a few organizations that set effective IoT goals enjoy fruitful results. The lack of clear objectives among stakeholders is one of the primary reasons for project failures. To overcome this, OEMs need to involve stakeholders from the beginning, align on project value, and establish specific a checklist such as solution ownership, customization, costs and time to market. Setting SMART (Specific, Measurable, Achievable, Relevant, and Time-Bound) Objectives and clear ROI metrics is key to aligning stakeholder expectations and ensuring project success.???

2. Lack of Data and Device Integration?

Integration challenges are a significant cause of IoT project failures. Data is the backbone of IoT, but according to studies, less than half of structured data is actively used in decision-making, while less than 1% of unstructured data is utilized at all. This lack of integration results in limited insights and poor decision-making capabilities. Ensuring seamless data integration and using data effectively is crucial for achieving desired outcomes from IoT initiatives.?

3. Scalability Challenges?

Scalability is a vital factor for sustaining industrial IoT projects. A Gartner report suggests that 30% of IoT projects fail due to scalability issues, resulting in wasted investment. As businesses grow, IoT solutions must be designed to handle increasing volumes of data and devices. Choosing a platform that can scale with business needs is critical to success.?

4. Security Concerns?

Security is a major hurdle in successfully launching and managing IoT projects. The potential for data breaches—impacting both organizational and customer data—is a concern that cannot be ignored. End-to-end encryption, multi-factor authentication, intrusion detection and prevention systems (IDS/IPS), and comprehensive exposure management strategies are necessary to mitigate security risks. Security measures must be implemented from the outset to safeguard both devices and data.?

5. Delayed Timelines?

A study estimates that 75% of IoT projects take twice as long as planned. For OEMs, building enterprise-grade applications in-house can take years, involving extensive development, configuration, and testing cycles before they are ready for deployment. Delayed development time often lead to project fatigue and reduced motivation among stakeholders.?

6. Hefty Costs?

Large-scale IoT projects are often costly, running 45% over budget while delivering 56% less value than anticipated. The high costs associated with development, maintenance, and upgrades often deter OEMs from seeing projects through to completion. Careful financial planning and choosing the right platform can mitigate these cost concerns.?

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4 Ps for Launching Your Successful Industrial IoT Project?

Unlocking the potential of IIoT projects requires addressing critical success factors systematically. These “4 Ps” — Planning, Processing Data, Prioritizing Security, and Platform — provide a structured approach for OEMs to overcome common IoT challenges and achieve their goals.?

1. Planning with Clear Goals?

Success begins with failproof planning. Stakeholders at OEMs must be aligned early in the process and have clear, measurable goals that align with the organization’s objectives. Collaborate across IT, OT, engineering and business teams to ensure alignment and prevent "analysis paralysis." Defining SMART goals helps maintain focus and accountability throughout the IoT journey.??

2. Processing Data Effectively?

One thing that cannot be overlooked when it comes to IIoT adoption for digital transformation is that Data is the lifeblood of IoT success. Collecting and integrating data is only the beginning—success depends on extracting actionable insights from it. Accurate collection and transformation of asset data makes real-time analytics reliable and allows stakeholders to optimize processes like Asset Lifecycle Management (ALM) through APM, inventory or warranty management to save on running costs. Processing data effectively ensures data isn’t just stored but leveraged to make informed decisions. Learn more about data's role in successful IoT strategies.?

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3. Prioritizing Security from Day One?

Building a secure Industrial IoT ecosystem is essential to protect sensitive data and maintain trust. Proactively implement measures such as multi-factor authentication, end-to-end encryption, and threat detection systems. Consider security not as an afterthought but as a foundational element of the IoT architecture. Secure platforms help avoid costly breaches and ensure business continuity.?

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4. Platform That’s Scale-ready?

An IoT platform forms the backbone of a successful project. Opting for an Application Enablement Platform (AEP) like Flex83 ensures seamless integration of devices, scalable architecture, and advanced data management capabilities. Platforms like this simplify complex development processes, allowing OEMs to save time and reduce costs while achieving operational, product, and customer service excellence. With over 30 pre-built microservices, Flex83 can headstart your IoT project at 80% completion, allowing you to focus on building your unique (custom) application logic that meets your business needs.?

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The Road to IIoT-driven Business Transformation?

Industrial IoT projects are not inherently destined to fail. By addressing the common causes of failure and leveraging robust platforms like Flex83, OEMs can unlock the transformative potential of IoT. The journey to success may be challenging, but with the right strategies—clear objectives, data-driven insights, strong security measures, and a scalable platform—OEMs can beat the odds and lead their industries into a connected future.?

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