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Massive value and major investments are already here

Massive value and major investments are already here

A future of enterprise study, Issue #4.1

Significant business value is being derived across a wide range of industry segments already today

The derived values and versatility of the studied use cases; remote control, asset monitoring and connected offerings, can be extended across many industry segments.

The quantitative insight from this research demonstrates the potential for leveraging synergies between IoT use cases asset monitoring, remote control and connected offerings: 56 percent of the 4,500 decision-makers consider all three IoT use cases to be relevant and important to their business, while 13 percent say only one of the use cases is relevant.

These use cases are not fixed in how they are implemented and utilized across different industries today, and they are not expected to evolve in a completely harmonized way either. This is why this report will be describing these use cases and their future trajectories as illustrated in Figure 1, which depicts the interplay between IoT use cases, technology enablers and digital tools, serving as a point of reference when discussing the quantitative and cross-industry insights.

Figure 1: The interplay between IoT uses cases, technology enablers and digital tools in driving enterprise alue creation

The interplay between IoT uses cases, technology enablers and digital tools in driving enterprise alue creation

Asset monitoring: Using different technologies e.g., positioning, sensors, cameras, AI, etc. to remotely monitor or assess the condition of different assets, such as machinery, buildings, vehicles, devices or even people.

Remote control of computers, machines, or vehicles: The process where experts remotely assist employees or customers, or where computers, machines, devices, or robots are remotely operated, by replacing the on-site users in e.g., dangerous, or remote locations.

Connected offerings: Any product, service, or solution [or part thereof] that is connected to the internet and used to collect, exchange, or aggregate data to give the user (private or business user) a better experience.

The technology enablers such as cellular and cloud solutions, the blue box in figure 1, can be seen as core technologies needed to power these IoT use cases, not only today but also in the future.

Lastly, the purple box in figure 1, the advanced digital tools and components, such as artificial intelligence/machine learning (AI/ML), extended reality (XR) and digital twins, are expected to extensively enhance the capabilities for use cases both in the short, mid- and long-term perspective.

Industry segmentation puts the findings into perspective

To understand how these IoT use cases play out across different enterprises, this study adopts an industry segmentation based on two key criteria.

  1. Connectivity characteristics refer to the nature of the connectivity needs, and are shaped by how value is created, both internally and for the customers. For example, a company with only one large site will have different connectivity needs than a highly distributed company.
  2. Industry-shaping characteristics refer to factors that significantly shape or influence industries, such as regulation, type of production or offered services.

Using these two criteria, each studied enterprise can be allocated to one of the segments – see Figure 2.

Figure 2: The seven industry segments

  Asset-centric

Value creation based on mobile, distributed, connected equipment for production.

  • Industry examples: Agriculture, automotive, construction, transport and logistics

  Site-centric

Value creation based on connected production sites.

  • Industry examples: Discrete and process manufacturing, pharma, resource extraction

  Society

Value creation based on connected equipment for provisioning highly regulated governmental services.

  • Industry examples: Education, government, healthcare

  Finance

Value creation based on distributed, connected equipment for financial transactions.

  • Industry examples: Financial services, banking, insurance

  Service

Value creation based on distributed, connected equipment for professional service creation.

  • Industry examples: Professional services, media, journalism and other services

  Consumer

Value creation based on connected assets in consumer hotspots.

  • Industry examples: Retail, e-commerce, leisure, tourism and hospitality

  Infrastructure

Value creation based on highly regulated, connected, mission-critical infrastructures.

  • Industry examples: ICT, utilities, water/waste management
Share of companies belonging to each segment [self-reported]

Significant untapped digitalization potential for enterprises

On average, decision-makers in this study claim their companies are only halfway towards reaching their ideal digitalization level. Furthermore, around 50 percent of decision-makers state that their companies currently have a limited-to-moderate level of asset monitoring and remote control utilization, despite recognizing these use cases as a digitalization priority. This showcases a significant incongruence between the perceived strategic importance and current utilization levels in companies. The explanation for this is two-fold.

More than 50 percent of decision-makers stated a significant current willingness to invest in asset monitoring and remote control, regardless of current deployment levels. This number goes even as high as 80 percent for high utilizers and indicates that these companies are willing to invest even further to enhance existing solutions.

There are thus good reasons behind the expressed interest in these IoT use cases, with decision-makers agreeing that they lead to an array of values in almost all aspects of agility, resilience and advanced operations. However, capex and opex reductions are not at the top of the list of drivers behind the implementation of these use cases as some might expect. According to the decision-makers, the top-two values associated with asset monitoring, remote control and connected offerings were instead “customer satisfaction” (83 percent) and “improving innovation” (82 percent). This highlights the intentions of businesses to boost their agility and resilience with the help of IoT use cases.

On the other hand, the deployment of IoT use cases is still costly. More than half of decision-makers report that their companies currently plan to dedicate more than 10 percent of their total IS/IT budget on average across these use cases. This represents a significant level of investment.

80%

There is significant untapped digitalization potential in asset monitoring, remote control and connected offerings, with 8 in 10 decision-makers stating the main value drivers are boosting agility and resilience.

Challenges and the value of resilience

As shown in Figure 3, over two thirds of the decision-makers are dissatisfied with existing commercial solutions, and consider integrability with other systems and regulation as primary challenges. These challenges all risk slowing down the digitalization journey of companies.

Figure 3: Percentage of decision-makers stating each factor is a key challenge for their company when implementing IoT-centric use cases

Percentage of decision-makers stating each factor is a key challenge for their company when implementing IoT-centric use cases

Consumer enterprises (such as companies in retail, leisure or hospitality) have a below-average utilization level in asset monitoring across all industries. This segment seems to have the greatest challenges when it comes to the deployment and utilization of the use cases. Between 70 and 82 percent of this segment’s decision-makers classify cellular coverage, security, regulation and solution capabilities as key challenges – significantly above the average across all industries. The challenges associated with security and regulation in this segment may be the result of customer data privacy concerns and restrictions. For example, the GDPR implications of tracking customer data in connected offering cases or using surveillance cameras in asset monitoring. At the same time, across all industries, consumer companies are the ones who see the highest resilience value potential in connected offerings.

Cellular connectivity enabling scalability for growth

The study further revealed that business scalability is another important motive behind use case implementations. Business scalability can be facilitated through the interconnected nature of IoT use cases that transcends the need for physical proximity to devices or operations. For asset monitoring and remote control, decision-makers consider cloud solutions and cellular connectivity to be the top-two tech-enablers for IoT use cases. Both solutions are proven for scaling businesses. As also illustrated in Motor City’s case study, embedded cellular connectivity, in combination with the flexible storage and processing capacities provided by cloud solutions, can help companies to smoothly scale their businesses.

However, scalers might underestimate the role and importance of cellular connectivity and cloud solutions. As shown in Figure 3, around 8 in 10 decision-makers from high utilizers – but only about 6 in 10 decision-makers from scalers – consider these technologies to be key enablers in asset monitoring.

70%

Cellular technology is considered to be a key enabler for growth of IoT uses cases by 7 in 10 decision-makers

Figure 4: Percentage of decision-makers considering cellular and cloud solutions to be key technology enablers for asset monitoring, grouped based on enterprise use case utilization levels

A similar pattern is also evident in remote control and connected offering use cases. The difference in response rates between these two groups indicates a potential lack of awareness among scalers on the technologies required to realize their digitalization strategies. 8 in 10 scalers expect fast deployment and great indoor/outdoor coverage to be the key cellular connectivity benefits needed for enabling remote control and asset monitoring as full-scale solutions in the next 7–10 years.

At the same time, IS/IT decision-makers indicated that scalability, as one of the connectivity attributes – defined as “a means to accommodate growing data speed and expanding business needs” – is not deemed as important as other connectivity attributes, such as speed and performance, or dedicated resources. This suggests that the role of scalability is not fully known and is underestimated by decision-makers.

Recommendation

When designing/constructing their value propositions, communications service providers need to better incorporate the scalability-related attributes of cellular connectivity in their offering packages.

Infrastructure companies and the need for ubiquitous connectivity

Infrastructure companies (such as energy or transport network operators) have largely distributed, mission-critical assets to manage. Hence, they can benefit greatly from IoT use cases for remote operation or supporting field personnel. About 80 percent of decision-makers in this industry associate high resilience and agility values with the utilization of IoT use cases. At the same time, these decision-makers are also the largest group struggling with challenges. Notably, almost 7 in 10 decision-makers from infrastructure companies consider cellular coverage to be a key challenge. One reason for this could be the dependency on ubiquitous connectivity, whether it is deployed in rural or urban areas.

Remote control: A use case champion in site-centric companies

Among the industries covered in this study, site-centric companies are those who believe that remote control brings the highest agility and advanced operational values to their business. More than 8 out of 10 decision-makers in this segment attribute improved customer and employee satisfaction, as well as enabling scalability and a faster TTM, to the remote control use case.
Remote-control applications can also be utilized to ensure safety in potentially dangerous on-site operations. For example, as depicted in Ericsson’s Port of Tyne report, 5G-enabled remote control could perform tasks in dangerous environments, such as offloading containers from ships, thereby improving safety and efficiency. Furthermore, being able to simultaneously remote control several on-site operations can improve customer satisfaction while facilitating scalability and a faster TTM.

Finance and infrastructure companies are leading asset monitoring

Most industries find IoT use cases of high strategic relevance. However, finance and infrastructure companies stand out, particularly in asset monitoring utilization. As shown in Figure 5, current level of asset monitoring utilization in the finance and infrastructure segments are considerably above the cross-industry average. These two industries also stand out when it comes to driving resilience value through asset monitoring.

Figure 5: Percentage of decision-makers in companies that utilize asset monitoring extensively or fully today [self-reported]

Asset monitoring is particularly prevalent in the finance industry. According to 67 percent of surveyed finance industry decision-makers, asset monitoring is used extensively by their companies. This is 13 percentage points higher than the cross-industry average. With payment terminals and cash machines, the finance companies have an extensive number of connected critical devices in the field. Failures of these devices have a direct impact on revenue generation, which can explain the high level of asset monitoring in this industry segment.

"The broadband line that connects to the card terminal died and I couldn't take card payments for two weeks. It's frustrating as I could have potentially lost GBP 21,000 in sales, equating to GBP 10,000 in profit."

Store owner, <49 employees, London, UK

Society companies are lagging in asset monitoring

Society companies currently show a significantly below-average utilization of asset monitoring despite the perceived key challenges in implementation being below the cross-industry average. Figure 5 shows that only 37 percent of all decision-makers from this segment state that asset monitoring is extensively or fully used in their companies. This is 14 percentage points below the average across all industries.

Society companies and organizations show the lowest digital maturity of all segments investigated in this study. Less than 50 percent of all decision-makers from this segment claim that their companies apply a high degree of automation. Compared to other industries, substantially fewer decision-makers in the society segment see key values in asset monitoring, except for employee satisfaction. This indicates that this segment is primarily focusing on enabling employees to provide remote support rather than on automation.

Asset monitoring and remote control: Boosting crisis resilience

According to the Future of Enterprise 3 report, enterprises anticipate a more disruptive future, with natural disasters, energy crises and cyber attacks as the most likely and severe events.

Infrastructure companies are among the most vulnerable industries in crises due to the mission-critical and distributed nature of their operational assets. Work safety, particularly for technical staff, is crucial for these companies during crises and is identified as a top-three benefit from utilization of asset monitoring and remote control in this study. Both use cases have the potential to enhance resilience during times of crisis.

Paving the way to the future

Before continuing with a more future oriented view of business digitalization in the chapter “Unlocking the full digitalziation potential with the evolution of IoT use cases ” it could be interesting to take a closer look at how the company Motor City Wash works is utilizing cloud and 5G cellular solutions to ensure these IoT use cases bring additional business value, both to themselves and to their customers in the chapter “Applying a micro-factory automation approach – Digitalization insights from an industry case study ”.

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