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CIOs and CEOs who are developing IoT strategies will function best in an innovative environment that accommodates failed projects in the pursuit of solid initiatives that return value to the business.
Estimates are that more than 50 billion Internet of Things (IoT) devices will be in use worldwide by 2020. Not all of these devices will be connected to each other, and not every company manufacturing or deploying them will have a formal IoT business plan. Still, board members and other corporate stakeholders who are already using IoT to control the security and the energy consumption of their homes—or who are checking in with Amazon Alexa on traffic and weather conditions before they start their morning commutes—see IoT working for them. They will be pressuring CEOs and CIOs to move forward with IoT in the business.
This is the job of board members. They are supposed to challenge their C-level officials to do better—and IoT appears to be an area of virtually unlimited potential. However, in pursuing IoT strategies, CEOs and CIOs also need to plan for success.
Security, connectivity, best practices, and in some cases, reliability, are still largely unsettled IoT issues in enterprises. There's a lot we don't know about IoT, and this creates room for failure.
Why do IoT projects fail?
"8 out of 10 IoT projects fail even before they are launched," said Ganesh Ramamoorthy, principal research analyst at Gartner. He believes that the IoT failure rate is high because many IoT projects are started just to have an IoT project—instead of first defining a clear business case where IoT can really deliver a benefit.
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Dave Lafferty, an oil and gas industry consultant and former BP manager, holds a similar view.
"The Board of Directors hear about this [IoT] Big Data thing and they go to the IT manager and say, 'What are we doing with Big Data?' And the IT manager says, 'What is Big Data?' So they hire a consultant for a gazillion dollars and they get five PowerPoint slides that say Big Data is connecting everything to everybody and the company is off and running with it," he said. "An organization can get so caught up in the hype that they fail to establish any true business objectives for the project."
What's the recipe for avoiding IoT failures?
Treat IoT like any other IT project commitment or investment: Identify a business case first.
You might be able to improve security and energy efficiency while reducing costs by placing IoT technology throughout your facilities. Or you could use IoT to activate drones that can penetrate dangerous and remote areas, reporting back with telemetry and photos so you don't have to send people into these areas. Or you could monitor the movements of your trucking fleet to ensure that it's moving optimally. What you want to avoid is a project that is "IoT for IoT's sake"—without a clear business case— because eventually you will be asked for a payoff on the investment.
Don't run headlong into an IoT project without doing the research first.
"I think that some organizations just don't do their homework because they cannot overcome the urge to dive in headfirst and have an immediate play around the IoT," said Mark Lochmann, an oil and industry consultant. "Everybody's doing it, or at least talking about it, and companies want to show they're doing something too, even if they don't know exactly what the benefit to their business will be."
Accept and plan for a "natural" failure rate for IoT, since few companies have much experience with it.
Tech companies often have a skunkworks area, where a small project team is given free rein to research and innovate, with the understanding that some of their brainstorms will work, but that many will also fail. Other companies operate on budgets that do not allow them the same amount of skunkworks experimentation as high tech, where innovation is a core value—but it's still a good idea to set up a small innovation center in IT to test out IoT applications and ideas, knowing that many will fail but some will pay off. Before you do this, though, you should explain the rationale and get board and executive buy-in.
In an ideal setup, the CEO or CIO who must please the board while moving forward with IoT is best positioned if there is a place in the company for IoT innovation that allows failure—and also a highly vetted IoT deployment function that invests big dollars and opens up on grander scale for IoT projects that have a use case to return tangible value to the business.
This is the balance that senior managers responsible for IoT should strive for as they move beyond theory and into planning and deployment.