IoT adoption barriers

Complexity and unclear value propositions

Despite a shared belief in the potential of IoT, industry leaders and consumers are facing barriers to adopt IoT technology more widely. Mike Farley has argued in Forbes that many IoT solutions are either too complex or lack a clear use case for end-users. “Instead of convincing consumers that they need complex systems to serve needs they don’t have, we should fix real problems people struggle with every day.” Many gadgets in the consumer IoT space have appealed to early adopters, yet failed to demonstrate relevance to ordinary people’s lives. In order to overcome barriers, “we need to stop making toys no one cares about and instead work on building simple solutions to real, everyday problems for real people.” A recent study by Ericsson regarding the adoption of IoT among Danish companies, has suggested that many are struggling “to pinpoint exactly where the value of IoT lies for them”. A company must identify where the value of IoT lies in order to capture it, otherwise non-action is the consequence. This indicates that a major roadblock to IoT adoption is not technical but analytical in nature.

Privacy and security concerns

According to a recent study by Noura Aleisa and Karen Renaud at the University of Glasgow, “the Internet of things’ potential for major privacy invasion is a concern” with much of research “disproportionally focused on the security concerns of IoT.” Among the “proposed solutions in terms of the techniques they deployed and the extent to which they satisfied core privacy principles”, only very few turned out to be fully satisfactory. Louis Basenese, investment director at Wall Street Daily, has criticized the industry’s lack of attention to security issues:

“Despite high-profile and alarming hacks, device manufacturers remain undeterred, focusing on profitability over security. Consumers need to have ultimate control over collected data, including the option to delete it if they choose…Without privacy assurances, wide-scale consumer adoption simply won’t happen.”

In a post-Snowden world of global surveillance disclosures, consumers take a more active interest in protecting their privacy and demand IoT devices to be screened for potential security vulnerabilities and privacy violations before purchasing them. According to the 2016 Accenture Digital Consumer Survey, in which 28000 consumers in 28 countries were polled on their use of consumer technology, security “has moved from being a nagging problem to a top barrier as consumers are now choosing to abandon IoT devices and services over security concerns.”[193] The survey revealed that “out of the consumers aware of hacker attacks and owning or planning to own IoT devices in the next five years, 18 percent decided to terminate the use of the services and related services until they get safety guarantees.” This suggests that consumers increasingly perceive privacy risks and security concerns to outweigh the value propositions of IoT devices and opt to postpone planned purchases or service subscriptions.

Traditional governance structures

A study issued by Ericsson regarding the adoption of Internet of things among Danish companies identified a “clash between IoT and companies’ traditional governance structures, as IoT still presents both uncertainties and a lack of historical precedence.” Among the respondents interviewed, 60 percent stated that they “do not believe they have the organizational capabilities, and three of four do not believe they have the processes needed, to capture the IoT opportunity.” This has led to a need to understand organizational culture in order to facilitate organizational design processes and to test new innovation management practices. A lack of digital leadership in the age of digital transformation has also stifled innovation and IoT adoption to a degree that many companies, in the face of uncertainty, “were waiting for the market dynamics to play out”, or further action in regards to IoT “was pending competitor moves, customer pull, or regulatory requirements.” Some of these companies risk being ‘kodaked’ – “Kodak was a market leader until digital disruption eclipsed film photography with digital photos” – failing to “see the disruptive forces affecting their industry” and “to truly embrace the new business models the disruptive change opens up.” Scott Anthony has written in Harvard Business Review that Kodak “created a digital camera, invested in the technology, and even understood that photos would be shared online” but ultimately failed to realize that “online photo sharing was the new business, not just a way to expand the printing business.”