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Successful IoT projects beget further innovation, says Vodafone

Vodafone’s M2M Barometer report says that, once organisations extract value from an internet of things (IoT) project, they quickly find further applications

Early adopters of machine-to-machine (M2M) or internet of things (IoT) technology are quicker to embark on further projects around their IT estate once they have seen the value M2M brings to their business.

This was one of the key findings presented in Vodafone’s third annual M2M Barometer report, which looked at a range of indicators, including take-up rates and barriers to adoption.

The report – based on a sample size of 659 – found more than a quarter of businesses worldwide were now using M2M technology, with 59% reporting significant return on investment (ROI) and 83% saying they saw M2M as “a source of competitive advantage”.

Vodafone director of M2M, Erik Brenneis, said: “Two years ago, only 12% of business had M2M solutions in place. Now it is 27%, and those already using it are using it more.”

Many of these early adopters are now moving from using M2M to enhance value internally to externally, according to Brenneis, who said that – like cloud and hosting before it – M2M decisions would be made less by the CIO and more by the CEO.

At this point in the lifecycle of M2M technology, CIOs lead projects in 36% of cases and CEOs in 16%, with 63% of projects having multiple leaders involved, reported Vodafone. In 46% of cases, M2M projects were funded direct from the IT budget, and 42% by the departments benefiting from them.

Connected fridges, but not as we know them

With a growing sense among IoT advocates that the need to avoid trivialising the applications of the technology is becoming more important in convincing doubters of its worth, the connected fridge has frequently been held up as an example of trivial technology.

However, connected fridges may turn out to be a familiar sight around the world, because one of the fastest-growing M2M adopters is the retail sector – where adoption rates were up 88% year-on-year, Vodafone found.

Retailers proved particularly keen to adopt M2M as a core technology around in-store digital signage, smart payment systems and supply-chain optimisation, including the use of in-store connected fridges that monitor their stock levels and temperature.

Analysys Mason principal analyst Michele Mackenzie commented: “Retailers are gaining awareness of the potential benefits that connected services can bring to their businesses.

“Benefits include strengthening the relationship with their customers through personalisation of the shopping experience, as well as streamlining retailers’ own internal operations.”

Elsewhere, automotive – an early leader in M2M – remained an enthusiastic adopter, with virtually all large consumer-facing car makers having some kind of connected vehicle project on deck. Transport and logistics grew more steadily for similar reasons, while another enthusiastic early adopter vertical, manufacturing, actually appeared to rein in its commitment to M2M, which Vodafone attributed to variations in the sample, and some economic constraints.

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Energy and utilities lead the sector overall as more governments introduce smart metering programmes, while consumer electronics was seen beginning to drive aggressively into the market, although consumer confusion was recognised as a barrier to M2M adoption here.

Healthcare and pharmaceuticals, the other main vertical where M2M generated plenty of take-up, grew strongly during the past 12 months as more products began to pass through the more measured development cycles and regulatory burdens needed in that sector.

“Increasing pressure on healthcare systems and rising awareness of the benefits of M2M has renewed interest in the adoption of innovative connected solutions,” said Mackenzie.

The report also looked at SMEs for the first time, and found almost a quarter were using M2M in some capacity, with the ability to compete better against large enterprises cited as a clear benefit.

With cloud already having enabled some small companies to serve many millions of customers with minimal headcounts, the ability to further automate business processes through M2M was found to have a similar effect.

The report cited the example of DriveNow, a Germany-based car-sharing JV between BMW and care hire firm Sixt, that is able to serve nearly half a million users with a handful of people.

Smart cities depend on private sector

One area the M2M Barometer did not survey was smart cities, where there has been much discussion and confusion at city government level over how to adopt M2M.

Earlier in 2015, a Gartner survey predicted that adoption of M2M among private sector organisations would prove the catalyst for smart city development in the public sector – and Vodafone came down broadly in agreement with this prediction.

“The challenge for smart cities is bringing it all together,” said Brenneis. “Nobody in local government has the budget to build a network overlay.”

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