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In most areas of IT, ROI is king – this is not the case for IoT. Would you believe that only 3 in 10 respondents are measuring the ROI of IoT?

A February survey of 660 members of the 451 Alliance looked at the trends and factors affecting IoT budgets, the importance of ROI and IoT, and the security concerns of IoT.

 
 

Report Highlights

 
 
  • IoT Budgets Rising – While IoT budgets remain a small percentage of overall IT budgets, spending is increasing, with an average budget change of almost 42%. This increase in spending is driven by security concerns, data analytics, and a desire to improve operations.
  • ROI and IoT – More than 9 in 10 IoT respondents who track ROI on IoT projects report a positive ROI, with less than 7% reporting negative ROI. However, measuring ROI on IoT initiatives remains a challenge for many.
  • IoT Security – Security is a top consideration for IoT applications. IoT can help prevent security breaches, but it can also open the door to them. IoT respondents are aware of the risks and are responding to them by budgeting for IoT security.
 
 

IoT Budgets

 
 

Spending increases are up for IoT – 94% of IoT respondents anticipate a budget increase in the next 12 months. The average budget increase across all organizations surveyed is 41.7%. Only 4% said they expected a decrease in IoT spending.

 
 
Overall IoT Spending
 
 

Drivers of Budget Increases

 
 

According to respondents, ‘Improved security’ (46.1%) is the top driver of increased IoT spending in 2019. ‘Data analytics capabilities’ (41.5%) and ‘Improved daily operational efficiencies’ (40.4%) are also leading drivers of increased spending.

 
 
IoT Spending Drivers
 
 

Interestingly, ‘Improved ROI’ (30.7%) and ‘Regulatory compliance’ (22.4%) are at the bottom.

Improved ROI is an important driver for many IT investments, but that doesn’t appear to be the case in the world of IoT.

 
 

A Closer Look at ROI and IoT

 
 

Measuring the ROI of IoT initiatives is not always easy. In fact, only 7 in 10 (70.8%) respondent organizations even track ROI from their IoT investments.

 
 
Tracking ROI for IoT
 
 

And of those who track ROI, one-third (33.2%) say it’s very or somewhat difficult to measure.

 
 
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Among those who do track ROI, 93% say the ROI of their IoT initiatives is positive (35.9% very positive; 57.4% somewhat positive).

 
 
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Because ROI is so overwhelmingly positive and difficult to measure, many organizations appear not to see it as priority.

Among those not tracking the ROI of their IoT initiatives, 'Not required to do so' (45.4%) and 'Uncertain how to measure ROI' were the most commonly reported reasons.

An additional 23.3% of respondents not tracking ROI are deploying IoT initiatives regardless of their ROI potential.

 
 
Reasons for Tracking ROI
 
 

ROI is not a major driver of IoT spending, while security topped the list among our respondents.

 
 

Security is a Major Driver of IoT Spending

 
 

62.8% of respondents report that their organization uses IoT-connected endpoint data to reduce risk. Of those with risk-reducing IoT initiatives, 73.9% say they are intended to ‘Improve business process monitoring to reduce operational risk’ and 52.1% say ‘Fraud detection/reduction.’

 
 
Uses of IoT Data
 
 

However, security is a double-edged sword – it’s a reason to use IoT, but it’s also a reason to be cautious. Security concerns (44.3%) were the most commonly reported inhibitor to IoT initiatives, with 22% of respondents saying it was the biggest inhibitor.

But IoT respondents are aware of the security risks – 20.3% say security will receive the most of their organization’s IoT budget in 2019.

 
 
IoT Budget Spending
 
 
 
 

Appendix - IoT Definitions

 
 

Internet of Things (IoT) Initiative

A project that a) gathers data from embedded sensors and circuitry (in factory machinery, cameras, field equipment, etc.) or end-user devices (e.g., smartphones, tablets, wearables, etc.), and b) uses that data to optimize business operations, enhance customer targeting/increase sales, reduce risk, and/or to create new products or services.