When Internet of Things (IoT) first appeared on the telco radar screen it was often dismissed as glorified telemetry. In fact, that’s exactly what it was, but looking back it was also telemetry with commercial intent fueled by tiny and inexpensive sensor chips and ever more capable network technology. If, by using these technologies in combination, you could get all your productive bits and pieces to connect and exchange data… then you’d be on to a winner.
That was the general idea and in the intervening decade or so, IoT has steadily progressed and branched out until it now packs a real technological and business punch across nearly all sectors.
It’s never experienced any hockey-stick growth curves, although IoT boosters are ever hopeful that it might. But its steady progress is tied to, and maybe somewhat dependent on, the ever-lowering costs for transmission services and the billions of remote devices still coming onto the market. So for a network operator, IoT is not a sudden revenue booster but a “slow and steady does the trick” sort of play – so now, where there’s human industrial activity there’s almost certainly an IoT application doing some data collection, collation, analysis and orchestration.
In terms of investment, according to global mobile satellite communications provider, Inmarsat, IoT is now set to outshine those other industrial technology bright spots – cloud computing, next generation security, and big data analytics – at least in terms of corporate budget sharing.
Inmarsat’s research report “Industrial IoT in the time of Covid-19” (available for download) draws data from companies in the oil and gas, mining, agriculture, electrical utilities, and transport and logistics sectors, to find that they together plan to spend an average of 10% of their IT budgets on IoT projects over the next three years when pre-Covid the proportion was on average around 7%. Furthermore many respondents said their companies planned to invest the ‘greatest’ proportion of their IT budget on IoT.
That’s music to the ears of companies like Inmarsat, who find themselves nicely positioned in the IoT value chain. In Inmarsat’s case, IoT has become a very big deal and the use of increasingly broadband satellite services as one of the primary IoT connectivity solutions has come as a welcome development, meshing nicely with the satellite company’s existing narrowband service capabilities.
Inmarsat attributes much of the current sustained IoT spending bump to the pandemic. “Despite already seeing rapidly increasing levels of IoT adoption, Covid-19 has emphasised the importance of Industry 4.0 technologies like IoT for business continuity. With the world’s production and supply chains becoming increasingly interconnected and digitalised, those companies producing digital twins of their supply chains and sharing data, are the ones reaping the benefits.” says Mike Carter, President of Inmarsat Enterprise.
It’s not that IoT is in competition with, say Cloud, or Big Data, or even AI – rather the opposite as investment in IoT may often imply more investment in cloud and data analysis tools. However sector spending totals and sector rankings do matter in a world where the hunt is always on for young talent – nobody fresh out of university wants to join a sector in decline.
There are variations in the rate of IoT spend between industry sectors, according to Inmarsat, but the levels of spend on corporate averages actually appear quite consistent. The research points out that oil and gas firms intend to invest the most in IoT over the next three years (an average of $3.2 million per company), followed by electrical utilities ($3.1 million), transport and logistics businesses (£3 million), mining operators ($2.7 million) and agricultural businesses ($2 million). Expressed in that way sector enthusiasm seems quite consistent across sectors.
So what is the result of all this investment? The Inmarsat research indicates that mainstream adoption of IoT is already making a significant difference to operational cost-savings for many organisations, with a 15 per cent reduction in costs expected at the end of the next twelve months, rising to 30 per cent by 2026. Most optimistic at almost every date are mining respondents who expect IoT to deliver approximately 33 per cent in cost savings in five years’ time. That’s a return worth chasing.