Gartner: Enterprise spending and investment driving Internet of Things boom

According to the latest IoT report from Gartner, worldwide spending will be in the trillions in just a few years - and while security is still a major issue, there will be a lot of opportunity for businesses to sell in to the space.


Gartner has released its yearly global Internet of Things (IoT) forecast and although it notes consumer applications will make up the majority of connected 'things', enterprise spending is behind the beginning of the IoT boom. And this will mark opportunity for vendors to sell into the space, protect, and manage the data.

Looking forward to 2020, Gartner revised total connected endpoint shipments down to 6.5 billion from 6.6 billion in the 2015 forecast. Regardless, by 2017 the analyst firm expects 8.4 billion connected things to be in use worldwide in 2017, up 31 percent from 2016, and reaching 20.4 billion by 2020.

Image: Flickr Creative Commons/Eric Fischer
Image: Flickr Creative Commons/Eric Fischer

In total, Gartner expects spending for endpoints and services to reach nearly $2 trillion in 2017 alone.

Bettina Tratz-Ryan, VP for smart city and smart ecosystems research worldwide, tells Computerworld UK that Gartner has noticed an increase within industry-specific shipment for IoT. "We attribute this to the fact that manufacturing and utilities are more getting into the ability to connect their machines to IoT, and are doing asset management, real-time information, industry 4.0 domain management contracts and so on," she says.

There will be more connected consumer devices on the market, but enterprise businesses are likely to spend a lot more. Businesses are predicted to represent more than half of overall IoT spending this year at 57 percent – cross-industry at $280 billion and vertical-specific industry at $683 billion.

Specific industry verticals, such as process sensors for electrical generating plants or real-time location devices in healthcare, will predominantly drive connected 'things' for businesses throughout the year. But going into 2018, cross-industry devices like those used in smart buildings – such as LED lighting and physical security systems – will take the lead. By 2020, Gartner expects cross-industry devices to reach 4.4 billion units worldwide, with vertical industry-specific devices at 3.2 billion in use.

"It's becoming really interesting for enterprises because it looks like IoT is not just a technology for asset tracking, but we're also seeing a lot of services and applications being sold as well," says Tratz-Ryan. "We're seeing an opportunity to take the data from IoT and move it into a broader business process perspective."

Organisations, then, will begin to examine how they're operating – whether that's in processes, manufacturing, or customer relationships – by integrating IoT into their product portfolios.

 "The ecosystem will become the name of the game," says Tratz-Ryan. "Before, it was just about getting IoT in place, so a lot of the initial implementations came from very proprietary systems. Now we're actually seeing – even in highly specialised and sensitive environments – there are multiple sensor categories and sensor technologies that need to be embedded to support that business value chain approach."

"The ecosystem is quite critical because it supports a variety of different technologies from different manufacturers, but also the data flow all the way into procurement, resource management, and so on," she explains. "If you have the whole value chain from shop floor to top floor, that becomes important as a differentiator."

Despite the enormous swell in spending that's expected to take place in the coming years, security is the elephant in the room.

"The increase of threats to unsecured IoT leads us to believe that IoT remains a very critical point of entry for security compromisers," Tratz-Ryan says. "That's why professional service companies and security companies will all focus on IoT – but we'll also see that the complex networks in smart cities or autonomous driving, where you will have so many different entry points, will be a natural challenge to make IoT safe."

"And it's often not that a system is so complex, but it's also the administrators of the systems – the managers and the maintenance crews all have to have proper digital security knowhow, which is often very complex and not always available."

This chimes with a recent report from 451 Research, which noted security as a major roadblock to IoT adoption. Part of this is due to the fairly new territory of a crossover between hyper-connected industrial systems and more traditional, walled-off systems.

Nevertheless, this could also prove to be fertile ground for services enterprises such as Accenture to take contracts on providing the bridges for businesses to first start making use of IoT.

See also: Businesses ignoring half of their security alerts, warns Cisco

"By 2017, we have $273 billion just for professional services, connectivity services, and enterprise services," says Tratz-Ryan. "So companies have the opportunity to help customers implement IoT, get the right value out of the data, make it secure, and for the devices to be managed – the whole aspect of using data, from IoT for artificial intelligence and machine learning – it's all a test bed for these service companies to put their customer on the IoT journey."

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