Companies across a wide swath of vertical industries are deploying IoT in a range of use cases to improve business processes, drive revenue, and reduce costs. In our recent 2019/2020 IoT research study, Nemertes found that 67% of 403 participating firms said they had IoT initiatives (or would have them by the end of 2019.) Most are relatively new: The largest group of adopters said they launched the initiative in 2018.
But ensuring the success of these projects requires crossfunctional leadership. Many project first take root in the business units (BUs), under the guidance of business or operational technology (OT) leaders. Since the fundamental value of IoT accrues to business and operations teams, that makes sense. But it’s important to include IT in the mix to ensure that IoT projects achieve the highest possible (and sustainable) success.
The IoT initiatives in our study were almost evenly split between being led by traditional IT groups (51%) and operational technology (OT) or business units (29% and 20% respectively.). That gave us an unparalleled view into how IoT projects fare under different types of leadership.
What did we find? In general, projects led by IT did better than those led by OT and lines of business. Key findings:
- Organizations with more aggressive IT cultures, and those who considered IoT most critical, were most likely to report IT-led initiatives (please see Figure 1). By “aggressive” IT cultures, we mean companies who view technology as a strategic advantage; these companies were 57% more likely to put IT in charge. And organizations for which IoT was considered “highly critical” were 37% more likely to have IT leaders.
- IT-led IoT projects also correlated with visionary executive leadership, structured business cases, and early engagement in the planning process. By “visionary executive leadership”, we mean the presence of a senior-level corporate executive focused on driving IoT (versus individual sponsors within business units, or a more reactive executive leader). By “structured business cases” we mean having predefined IoT template cases that can be customized to each IoT initiative (versus ad-hoc business cases developed within each business unit, or no business cases at all). By “early engagement in the planning process”, we mean getting engaged in an IoT initiative prior to launch (versus following launch, or not at all.) In separate analyses, we found all of these things correlate with overall IoT success as measured quantitatively (specifically, in dollars generated, costs saved, or business processes improved.)
- Business goals for IoT varied based on leadership. IoT initiatives led by business units tend to stress cost-savings as a goal more than those led by OT or IT; OT-led initiatives tend to stress process improvements more than those led by business or IT. (Please see Figure 2.)
- Overall success is roughly equivalent for IT- and OT-led initiatives; both are greater than for business-led initiatives. We defined an IoT project as “highly successful” if it performed in the top third for companies of its size in its chosen goal (dollars saved, revenue generated, or process improvement). IT-led IoT projects aren’t significantly more successful overall than OT-led projects; but technology-led projects (whether IT or OT) are more successful than those led solely by business.
The upshot? The more IT, OT, and business work together, the more successful the IoT initiatives are likely to be. Or to put it another way, it’s time for IT to adopt the orphan technology of IoT.
About Nemertes: Nemertes is a global research-based advisory and consulting firm that analyzes the business value of emerging technologies. Since 2002, we have provided strategic recommendations based on data-driven operational and business metrics to help organizations deliver successful technology transformation to employees and customers. Simply put: Nemertes’ better data helps clients make better decisions.