Despite high hopes for IoT data, most connected device developers and manufacturers are having a tough time using it.
If the value derived from internet of things data is so beneficial, why aren’t more companies using the data to its full potential?
In a study conducted by Forrester Research and commissioned by Xively, researchers found 51% of companies focused on manufacturing or developing IoT devices were collecting data for future use, yet only one-third were using the data for anything at present.
While this statistic is low — even if it is an improvement from McKinsey’s oft-cited statistic that only 1% of all IoT data collected is ever used — it proves there is a wide gap between the potential of IoT and companies’ ability to seize that potential.
“It’s a concrete example of how there’s opportunity in IoT, but if you approach it the wrong way, you’re going to be putting a lot of work and exercise into something that’s not going to have a really good payoff,” said Ryan Lester, director of IoT strategy at Xively.
Internet of things data: Goals versus reality
When asked about their motives for creating connected products, survey respondents said competitive differentiation, new product features and expanding revenue were top business drivers. They also cited four key use cases of connected product data: integration with existing systems; profiling and segmenting customers; providing feedback to improve product features; and providing insight to internal teams, partners and suppliers.
However, despite the well-defined goals, the majority of the 232 companies polled weren’t using the internet of things data as planned, which can lead to a great deal of data waste — and wasted opportunity.
Of those using the data, 34% claimed it was to profile or segment customers, 33% to provide data-driven insights to stakeholders and partners, and 32% to personalize customer interactions.
Why the gap?
“Everyone is drowning in data,” said Mike Gualtieri, principal analyst at Forrester. “The ability of devices to connect and generate data far outpaces the ability of organizations to analyze it.”
Bruce Sinclair, president of Iot-Inc., attributed the gap to not having a clear plan for internet of things data. “A value plan qualifies and quantifies the value you will be creating with your product,” Sinclair said. “Once done, you will know the information you need to create, and from there, you will know the data you need to capture. It’s a romantic notion to think that you can collect data, and then go back to it later and analytically mine it for gold. You need a plan upfront.”
A lack of talent also holds many companies back from prospering from the insight of IoT device data. “If they are capturing data without at least getting advice, they are wasting time and money,” Sinclair said. “The data will just pile up.”