Is Germany IoT-ready?

The networking of products, machines or plants is advancing in leaps and bounds. IDC predicts that the current 14.9 billion connected "things" worldwide will double by 2020. To gain insights into the implementation plans, challenges and success factors of German companies in the use of Internet-of-Things technologies, IDC conducted a primary market survey in October 2016. Although 72 percent of respondents rank the Internet of Things as very or extremely important to their business, the majority of organizations are still in the evaluation and planning stages of IoT initiatives. In this regard, large enterprises are driving IoT adoption more strongly than medium-sized businesses. Obstacles to more rapid IoT implementation lie in tight budgets (28 percent), a lack of expertise (24 percent) and the high complexity of IoT solutions (27 percent). The fact that many companies are still in an early phase is also reflected in ad hoc financing: this usually involves project budgets (25 percent) or budgets from the specialist departments (23 percent). Typically, companies go through four stages in the implementation of IoT use cases: In the first step, objects, assets or products are networked. The resulting information provides the basis for the second stage, the monitoring of the corresponding objects and processes. In the third stage, companies use the available information to optimize processes and procedures. And finally, at stage four, new offers and services for customers are realized through IoT use cases. Across all industries, use cases that are based solely on the networking of objects are still implemented most frequently. Many companies are therefore still in the first phase, which is dominated by the internal focus as opposed to the customer focus. This illustrates that many companies have only just begun with implementation. However, organizations should by no means get stuck at the first or second stage.

The Internet of Things not only offers companies the opportunity to optimize internal processes, but also to implement completely new business models. It is therefore a key element of the digital transformation of companies. However, the study results make it clear that organizations are still focusing too much on optimizing internal processes.

Underestimated potential

The potential to offer added value to customers, differentiate from the competition, or tap into new revenue streams through connected products and services is often unrecognized. IDC is convinced that companies that focus their IoT activities on customer benefits at an early stage will benefit most from increasing connectivity.

Although IoT use cases differ by industry, companies face similar challenges. First and foremost, these are security, financing and know-how. Only if decision-makers succeed in developing answers to these pressing challenges will the Internet of Things become the engine for digital transformation projects in their company.