Research firm Gartner recently predicted three things related to Internet of Things (IoT) – 6.4 billion connected things by 2016, 43 percent CIOs planning IoT projects in 2016, and more than half of major business processes having some element of IoT by 2020.
However, Ganesh Ramamoorthy, principal research analyst, Gartner, states that despite the industry’s big bets on this technology’s success, eight out of 10 IoT projects fail even before launch.
What makes a successful IoT project? And if there are so many failed attempts to learn from, why are CIOs so inclined towards it?
Dr. Jai Ganesh, VP and head, Mphasis NEXT Labs, recently deployed an IoT analytics project. According to him, the success of an IoT project depends upon several factors, but the most important one is future-proofing the investment.
“For any successful IoT project, it is important to measure the business outcome even before the pilot is running,” he said. Ramamoorthy believes that, in spite of IoT project failures, CIOs want them because a successful one can give big business benefits.
Does this problem exist only in India? According to both Ramamoorthy and Dr. Ganesh, it is a global issue.
In the event of no concrete business process, the IoT project itself becomes the goal. According to Dr. Ganesh, if RoIs aren’t fleshed out properly, it ends up being a shiny new project without any particular use. “This is usually when CIOs start questioning the logic behind the undertaken initiative and the budget behind it,” he said.
While CIOs have always had a beef with budgets, Ramamoorthy insists that this problem is irrespective of that. “A budget depends on the amount of risk a company is willing to take. One can have a million dollar budget with the risk of having no returns from the project if it fails because they can afford it. Even if the budget is minimal, one should be able to procure at least the basic business benefits out of an IT project with the right business outcome,” he added.
The technology itself is riddled with inherent challenges, which makes large scale implementations difficult—and this is where the real benefits will eventually be seen.
Another problem is standardization. “Many times, the vendors themselves get confused about which standardizations will prevail in the long run. The industry is waiting for some sort of strategy to emerge and everybody is sitting on the fence,” Dr. Ganesh added.
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Ramamoorthy explained that, when a CIO clearly understands what business benefit they wish to achieve from any particular IoT project, they take their first strategic step towards the successful deployment of an IoT project.
But why do CIOs overlook business objectives that are the starting point of an IT project? It is possible that the race to digitization has made them hasty. “Many CIOs start an IT project with one objective, but end up seeing that it’s no longer suitable for the project at work. Often, they fail to meet the goal they set out to achieve because of this lack of business understanding,” said Ramamoorthy.
Does one need to hire a new IoT specialized IT team? Dr. Ganesh disagrees. “There cannot be a special IoT team; instead a couple of IoT experts are enough,” he said. Ramamoorthy added, “If the team has no representative from the business side, it is bound to fail. An IT team can't function smoothly without inputs from the business side.”
Does the size of the company affect the implementation of an IoT project? Yes, and yet no.
Smaller companies usually have no CIOs, which means tech decisions are often taken by the business head or the CEO. So, while the business plans are laid carefully, the person in charge might not understand the tech itself, leading to an inevitable failure. Ramamoorthy added that, while larger companies or enterprises have dedicated CIOs who understand the tech, without the input of the business team, he might not be able to gauge the business benefits correctly.
While Dr. Ganesh believes that the industry is still a few years away from large scale investments in IoT, Ramamoorthy proves to be more optimistic. “If anybody has a little bit understanding of how IoT works and knows how to successfully entwine it with business, it should not be difficult,” he said.