5G, Cloud, AI, XR and digital twins are expected to significantly drive the growth trajectories of asset monitoring, remote control and connected offerings

To unlock the full market potential of digitalization, it is important that both drivers and challenges are well understood and properly addressed when deploying new digitalization enabled use cases. Furthermore, enterprises across the different industries are in different stages and have different deployment strategies, causing market fragmentation.

Drivers for an increased IoT use case utilization

50 percent of all enterprises who consider remote control and asset monitoring to be important have not yet fully utilized these use cases. Unlocking the full potential of the IoT market, therefore, lies with this majority group of enterprises’ scaled-up investments. These enterprises comprise low utilizers and scalers. In the case of remote control, more than 1 in 5 are scalers. For asset monitoring, this number is approximately 1 in 4. Almost all scalers expect extensive or full utilization of use cases within the next 10 years.

The other group of aforementioned enterprises are low utilizers of remote control and asset monitoring, despite the perceived importance of these use cases or their operation. Notably, more than 70 percent of the decision-makers from such companies identify operational efficiency, customer satisfaction and capex/opex reductions as key benefits in utilizing these use cases.

This indicates their awareness of the potential values associated with their utilization. It can, therefore, be expected that further momentum created by scalers will trigger the need for low utilizers to protect their competitive edge with increased IoT investments.

Relative position of each IoT use case based on its current relevance to decision-makers (y-axis), current average investment level (percentage of IS/IT budget) and average timing of current and future investments (x-axis) [self-reported]

As seen in Figure 7, remote control is the IoT use case with the highest share of decision-makers stating its importance, but with investment plans more geared towards the future. On the other hand, asset monitoring currently has the highest average share of IS/IT investment budgets. Connected offerings has a sizeable current investment level, and investments are more geared towards the mid-term.

However, enterprises are also facing significant deployment challenges. To fully unlock the investment potential, these challenges, as outlined below, need to be understood and addressed.

Challenges decision-makers must not underestimate

While IoT is a mature technology, its deployment is still not a simple process. Recent studies have shown that half of IoT projects have failed to deliver according to expectations, most of them in the early stages. One of the risks threatening IoT projects in successfully reaching their desired outcome is scalers underestimating key challenges, particularly regulation, existing solution capabilities, integrability and, notably, seamless cellular coverage.

It is therefore important, particularly for scalers, to learn from high-utilizer peers that are experienced in utilization of IoT solutions. Solution providers and communications service providers could also play an important role in facilitating this knowledge sharing, thereby contributing to IoT market growth and mitigating the risks of failure.

1. Legislation and regulation: While regulatory boundaries are important aspects, regulation also creates complexity, increasing effort and cost for enterprises. Therefore, it is unsurprising that 75 percent of decision-makers from high utilizers of remote control or asset monitoring (meaning they have a comprehensive experience), state that regulation represents a key challenge for their companies. However, less than 60 percent of decision-makers from scalers share this view, indicating these companies might be underestimating regulatory challenges (see Figure 8).

2. Capabilities of existing solutions: A significant majority of enterprises with comprehensive experience using asset monitoring claim that these solutions are not good enough. Far fewer scalers see this as a key challenge, which could indicate a potential underestimation of these challenges (see Figure 8).

One reason for low solution satisfaction is the lack of solution localization capabilities. Localization capabilities need to be an integrated part of the respective solution architectures.

3. System integration: Most IoT solutions require integration with a range of different devices, with operational data available to several back-end systems including enterprise resource planning, customer relationship management and more. Furthermore, there is an increasing need to share data in a trusted manner with ecosystem partners, as well as to incorporate emerging technologies such as XR and digital twins. On average, 67 percent of cross-industry decision-makers identify different aspects of system integration as a key challenge.

4. Seamless cellular coverage: Cellular coverage still represents a significant challenge that seems to be underestimated by For asset monitoring, 63 percent of all high utilizers identify cellular coverage as a key challenge. However, only 54 percent of all scalers share this view. This indicates a risk that these companies underestimate challenges related to cellular coverage. Infrastructure companies are particularly affected by lack of cellular coverage in rural areas. From a communications service provider perspective, investments in cellular network infrastructure often prove a difficult business case in rural areas. However, cellular network slices dedicated to the operations of critical infrastructures of societal interest, for example, energy or transport, would allow a separation of commercial and societal usage and could be one way to address this challenge by unlocking public funding.

The impact of emerging digital tools on growth of IoT use case utilization

Decision-makers across all industries expect emerging digital tools to become an integral part of IoT use cases. These emerging digital tools include AI platforms, digital twins, XR devices, haptic tools and low-power sensors.

These five digital tools have the largest growth expectation and most of the utilization growth is anticipated in the next 3–5 years, slowing down in the long term (7–10 years). At least 35 percent of all decision-makers claim to already be using one or more of these emerging digital tools in their companies. This means that the window of opportunity for digital tool suppliers has already opened and can be expected to start closing in five years.

AI and digital twins are currently the most established emerging digital tools for the use cases studied. As depicted in Figure 9, almost half of decision-makers state that AI and digital twins are being utilized by their companies in this context, with almost three-quarters expecting AI utilization within 3–5 years. This may include the usage of “digital shadows," which are also real-time digital representations of physical objects, but typically only represent the current status and don’t allow for running simulations. Digital shadows are nevertheless a first step towards digital twins.

Figure 9: Percentage of decision-makers stating that their companies utilize the following digital tools and components to extend the capabilities of IoT use cases today and intend to do so in the future [self-reported]

For XR, expected mid-term usage levels are somewhat lower, but still significant. Approximately 2 in 3 decision-makers expect their companies to use such devices in the next 3–5 years.

The utilization of these emerging tools is expected to complement currently used tools across use cases. For example, computer applications and dashboards are expected to be utilized in parallel with emerging XR tools to enhance IoT use cases within the next 10 years. In asset monitoring, digital twins will complement, not replace, existing solutions, and AI-enabled computer vision technology can complement digital twins, applying digital shadows to non-connected objects or even humans operating in the context of digital twins.

The emerging digital tools can further drive business process automation, fundamentally changing current job roles related to IoT use cases. However, despite the strong automation trend, human workers will still have a role to play in asset monitoring and remote control. Human capabilities will be enhanced by adding XR to their work environment. Field technicians will continue to inspect technical systems and AR will allow them to see vital information via an AR interface. This will improve efficiency, while valorizing job roles significantly.

Finance and infrastructure industries remain asset monitoring champions

As described in the chapter “Massive value, significant investments already today”, and can be seen in figure 10 below, enterprises in the finance and infrastructure segments currently have the highest utilization level of asset monitoring and are expected to keep this leading position over the next 10 years.

Infrastructure companies are leading the deployment of the emerging digital tools for asset monitoring. Of decision-makers from infrastructure companies, 73 percent expect their companies to use XR for asset monitoring in the next 3–5 years, and 84 percent expect to use digital twins. Longer term, infrastructure companies will also lead the deployment of low-power sensors.

Infrastructure companies are leading the deployment of the emerging digital tools for asset monitoring. Of decision-makers from infrastructure companies, 73 percent expect their companies to use XR for asset monitoring in the next 3–5 years, and 84 percent expect to use digital twins. Longer term, infrastructure companies will also lead the deployment of low-power sensors.

The finance industry is expected to become a top-two user of digital twins. Almost 80 percent of decision-makers expect their enterprises to use digital twins for asset monitoring in the next 3-5 years. This industry is also expected to become a top-two user of XR, AI-enabled predictive maintenance and low-power sensors in the next 7–10 years.

Emerging digital tools stand to benefit from cellular connectivity

Almost three-quarters of decision-makers from the infrastructure and finance industries see cellular connectivity as a key enabler for asset monitoring. Cellular connectivity can provide a broad range of benefits to digital tools, including low latencies, high data speeds and cyber security. Beyond asset monitoring, these benefits are also pivotal for XR and haptic devices to function well and secure in the context of remote control.

As shown in Figure 11, almost 90 percent of all decision-makers from high utilizers see low latency, high data speeds and cyber security as key benefits of using cellular connectivity for asset monitoring. However, a significantly smaller number of decision-makers from scalers share this view, particularly related to low latency and cyber security. Even larger differences exist for remote control.

These discrepancies indicate that the benefits of cellular connectivity might be underestimated by decision-makers across all industries, including the infrastructure and finance segments. From an enterprise perspective, this implies the risk that either sub-optimal connectivity solutions are chosen for the roll-out of asset management solutions, or cellular connectivity solutions may not be optimally designed. From a communications service provider perspective, this means that some enterprise connectivity needs might not be solved using cellular technology, or that cellular services might be difficult to monetize optimally.