The Internet of Things and the leadership imperative

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The Internet of Things has certainly been one of the most hyped technologies. But as we wind down 2017 it is clear that, in enterprise circles at least, the euphoria is much diminished as reality hits about the challenges of scaling IoT implementations.

Although the long-term prognosis for a disruptive technology like IoT is still transformational, it is clear that a number of things need to come together to make the vision of a “world of connected things” a reality in the near term. Yes, enterprises need reasons to invest that demonstrate a clear ROI, and they need to see complete whole-product solutions. Most importantly, however, they need sponsorship and accountability from the top – an organizational leadership imperative – in order to succeed with IoT.

At NGP, we have met more than 100 IoT entrepreneurs and executives, and have invested in a select few companies. In the course of this work, we have discovered that enterprises with CEO level commitment to IoT had far better outcomes than those where the accountability was in the hands of mid-level IT or local operational managers.

Projects without leadership commitment often don’t get beyond the proof of concept/trial stage. Data from recent industry research confirms this, finding that most IoT deployments are still basically proof-of-concept projects.

We see several reasons for these suboptimal situations:

IoT is FAR more labor intensive to deploy than IT

To monitor and analyze data from a thing, you first must add a sensor, a network and gateway to it. Enterprises need to expend significant upfront capital before they can even get the data.

IoT is hyperlocal

The benefits of IoT, whether in retail, facilities, energy, transportation or manufacturing, are highly localized. It is difficult to justify central corporate attention for IoT if the benefits initially accrue only to a specific site or geography.

IoT requires cross-functional collaboration

To deploy, monitor and motivate employees to adopt and use IoT, enterprises need to support the effort throughout the company. Many IoT projects require integration with operational technologies, which are often proprietary and owned by the manufacturing or service personnel. In addition, local facility managers and employees may need incentives or rewards to get them to use the solution.

ROI for IoT needs to be measured differently

Because there is a significant upfront cost to executing IoT projects, enterprises need to take a longer view on payback. However, the competitive advantages of creating a connected physical and digital workplace can be significant over time, and need to be taken into consideration when calculating ROI.

There is no question in our minds that IoT brings significant benefits. But the huge inertia of most organizations means that they can often only embrace this level of change if they are led and organized to do so.

IoT is too important to delegate to corporate IT managers, who are already preoccupied with Cloud migration, security and maintaining existing solutions, or to local managers, who are focused on short-term issues. Instead, it requires a new Czar – an empowered Chief IOT Officer – who has access to the budget, the resources, and the CEO support needed to deploy and deliver on the promise of IoT.

IoT will eventually transform our lives. Anything and anyone worth monitoring and managing will eventually have a sensor and a signal. Companies that can get ahead of the curve in analyzing these signals will reap enormous benefits in terms of productivity and competitive advantages. But getting there will require leadership at the highest levels. Only with CEOs leading the way – embracing change and dedicating key resources – will companies be able to make IoT happen.

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