Despite the rapid growth of the Internet of Things, concerns over data security remain the number one obstacle to further development.

That is the conclusion of a recent study by TEKsystems on the state of Internet of Things (IoT) initiatives. More than 200 IT and business leaders were polled by the Hanover, MD-based firm on project ownership, implementation status, risks, required skill sets and organizational preparedness. The purpose of this survey was to gain a better understanding of how organizations are being impacted by IoT, steps they are taking to prepare, resource barriers and challenges, as well as long-term IoT objectives.

Key findings from the study are:

• While 55% expect IoT initiatives to have a ‘transformational’ or ‘significant’ impact - just 22% of IoT initiatives have progressed to the implementation stage.

• Information security and ROI are cited as the biggest hurdles to address – and information security experts are cited as the most difficult skill set to find.

• Leadership of IoT initiatives still mostly reside with IT.

• Two-Thirds expect IoT projects to be handled with internal staff, yet most organizations are not highly confident in their “in-house” preparedness

The TEKsystems study reveals that there is still much hype around the IoT, with a minority of IoT initiatives actually making it off the ground. Only 22 percent of organizations polled were actually implementing IoT projects currently. Another 17 percent are piloting projects and have test projects underway; 19 percent are planning IoT projects and have moved to working on analysis, planning or seeking approval for projects; and 42 percent are considering an IoT project and are in early discussions on how such projects could impact the organization.

As noted, data security concerns continue to haunt IoT initiatives, with half (50 percent) of organizations polled citing the increased exposure of data and concerns of IT security as the greatest challenge to realizing the full potential of the IoT. That concern was followed closely by concerns over return-on-investment and making the business case for IoT initiatives (cited by 43 percent); interoperability with current infrastructure and systems (cited by 37 percent); finding the right staff and skillsets for IoT strategy and implementation (cited by 33 percent); securing the necessary budget for IoT projects (cited by 29 percent); concerns over early-stage technologies (also cited by 29 percent); and uncertainties over the best areas of application (cited by 28 percent). The inability to address increase in data needs, such as data analysis and storage, was cited by 15 percent of organizations.

“Less than one-quarter of organizations have reached the stage where IoT initiatives are transforming business processes, services and products,” TEKsystems Research Manager Jason Hayman noted. “The vast majority are in the preparatory (consideration and planning) or pilot stages.

The study also found that underlying data indicates larger organizations (those with $5 billion or more in annual revenue) are more likely than smaller organizations to be implementing IoT initiatives.

The study also asked which functional area has the primary responsibility for IoT-related initiatives. Two-thirds (64 percent) said IT takes the leadership role, though many organizations indicated that responsibility is shared. Business development was cited by 32 percent; operations by 29 percent; research and development by 27 percent; engineering by 24 percent; marketing by 20 percent; and sales by 12 percent.

How well do these various groups work together to initiate, fund, and manage IoT projects? The study results were a mixed bag. Only 9 percent said they ‘strongly agree’ that the various groups involved with IoT projects work together effectively. Another 44 percent said they ‘agree’. One-third (35 percent) were neutral on the topic while 12 percent said they strongly disagree. “While IT maintains leadership over IoT projects in the majority of cases, other departments are also identified as occupying leadership roles, indicating shared responsibility,” Hayman confirmed.

“Organizations that are already implementing IoT are more likely to report that leadership for these initiatives resides in the area of business development / strategy, according to underlying data. The majority of organizations (53 percent) recognize that a partnership approach is necessary for IoT projects to succeed,” Hayman said.

“Not surprisingly, data also shows organizations that have implemented IoT-related initiatives are more likely to agree their organization’s functions are able to work together effectively.” Where there is agreement among nearly all organizations is that the IoT will have impact on the organization over the long-term. Just how much impact the IoT will have, however, is a source of disagreement. Slightly less than half (43 percent) of organizations expect ‘some impact’; another 42 percent expect ‘a significant impact’; and 13 percent anticipate that the IoT will transform their business.

Survey respondents were very clear on where they expected IoT initiatives to impact their business on a long-term basis, factoring a five-year planning horizon. Top impacts expected were:

• 64 percent said creating better user and customer experiences

• 56 percent said sparking innovation

• 52 percent said creating new and more efficient working practices and business processes

• 50 percent said creating new revenue streams, including new products and services

• 36 percent said an increased ROI on IT infrastructure

• 35 percent said substantial cost savings and operational efficiencies

“The majority of organizations (55 percent) expect IoT initiatives to have a high level of impact on their business over the next five years,” Hayman said. “Data also shows organizations that have already implemented IoT initiatives are more likely than others to expect these projects will have a transformational impact on their business.”

“Long-term expectations for IoT include outcomes that will drive digital transformation within the business, including creating a better user and customer experience, and sparking innovation,” Hayman continued. “Larger organizations are more likely than smaller organizations to expect IoT to create new revenue streams. Technology (e.g., data management and analysis, and infrastructure management) is the top focus for nearly one-third of organization’s IoT initiatives, followed by products or services."

The TEKsystems study also looked into staffing and skill needs around IoT initiatives, and found that information security and big data analytics are the most needed but hard to fill roles, cited by 45 percent and 34 percent of respondents respectively. Other key job areas that are difficult to fill include architects (cited by 27 percent); cloud computing talent (cited by 23 percent); programmers and developers 9cited by 21 percent); business intelligence pros (cited by 19 percent); software engineers (cited by 17 percent); networking professionals (cited by 16 percent); and business analysts (cited by 13 percent).

Other hard to find or develop skills included mobile (cited by 12 percent); quality assurance or testing (cited by 12 percent); digital marketing (cited by 12 percent); project managers (cited by 11 percent); help desk or technical support (cited by 10 percent); and database administrators (cited 6 percent). “Approximately one-third of IoT project needs require support from external vendors versus internal resources,” Hayman explained. “Most organizations are not highly confident in their preparedness to complete each phase of an IoT initiative in-house. Less than 4 in 10 rate their level of preparedness in each phase as excellent or very good.”

“Those with business-related job titles are more confident than those with IT-related titles; they are more likely to rate their organizations as excellent or very good with respect to strategy definition, project planning and project design,” Hayman says.

Finally, “Organizations who are able to successfully implement IoT projects to better understand their business and customers will be positioned to make more strategic and informed decisions,” says Hayman. “However, only a minority of organizations have adopted IoT initiatives, despite a majority recognizing the potentially transformational impact these projects will have on their business.”

“Part of this measured adoption is likely due to a lack of confidence that IoT initiatives can be handled internally, and concerns over information security, ROI and interoperability with current systems,” Hayman concludes. “Organizations that are able to develop strong partnerships internally between IT and business leadership, and externally with key staffing and services providers, will be more successful and efficient in moving through the project phases and delivering meaningful results for the business.”