Security concerns continue to hinder IoT deployments in the US

A number of reports pinpoint the COVID-19 pandemic has accelerated the digital transformation of companies globally, as remote operations replaced face-to-face interactions due to social distancing regulations. These reports include McKinsey & Company’s global survey of executives, which found companies have increased their investments in digitalisation and use of Internet of Things (IoT) technologies three to four years ahead of schedule.

The investments in digital solutions were directed towards enhancing customer and supply-chain interactions and companies’ internal operations, the McKinsey & Company study revealed.

However, the opposite seems to be the reality in the US with the pandemic slowing down IoT deployments, the results of a new survey conducted by Opinion Matters and commissioned by IoT solutions firm Eseye reveals. The State of IoT Adoption Study, which includes responses from 500 UK and US senior executives, finds a decrease in companies’ investments in IoT due to the pandemic.

Up to 36% of US executives surveyed say their organisations have reduced their IoT investments whilst 33% say their companies have totally canceled their IoT programmes. In the UK, 19% of the executives say their institutions will be cancelling their IoT projects due to COVID-19. This raises questions about the reasons behind the cancellations and reductions in IoT investments with companies expected to invest more or at least plan to increase or improve their digital capabilities to counteract the COVID-19 impacts on business operations.

However, with the majority of the US companies surveyed having fewer large IoT projects under deployment, Opinion Matters predicts the decreased focus on IoT in the US might be due to these companies doubting the success and advantages of deploying IoT technologies. Only 13% of the 250 surveyed companies in the US have deployed more than 10,000 devices whilst 87% say they have deployed fewer than 10,000 devices. The few deployments explain the immaturity of the US IoT market. Perhaps, if the US market was as mature as the European market, US companies that have cancelled their IoT deployments or reduced investments would not have done so.

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However, when asked the reason behind canceling projects and reducing investments, 41% of the US companies cited the security challenges associated with IoT rollouts compared to just 36% of UK firms. Within the electricity industry alone, the World Economic Forum predicts that there will be an increase in the number of cyberattacks due to systemic weaknesses that resulted from accelerated digitalization caused by the pandemic. New working patterns are expected to increase the vulnerability of utility and consumer data to attacks hence the need to develop new cybersecurity mechanisms and frameworks.

Up to 41% of US respondents highlighted device onboarding as a key issue that has hindered their IoT adoption. With companies adopting work-from-home policies, device onboarding has been high between employees to enable workers to access company files or data and to the network, a process vulnerable to cyber attacks if not done in a secure manner. As a result, IoT projects have failed to reach their full potential according to three-quarters of USA enterprises who have embarked upon an IoT initiative in the last 12 months.

Nick Earle, the CEO of Eseye, said: “Security of device and device onboarding was more of a significant challenge for USA respondents than the UK. This device onboarding issue may point to more stringent device certification programmes in the USA compared with the UK. However, the need for intelligent connectivity was not such an issue in the USA as it was in the UK. This could be because historically USA deployments tend to be domestic, rather than international. However, as Enterprise organizations based in the US deploy IoT globally, this becomes a much bigger issue due to permanent roaming and other cellular connectivity restrictions.”

IoT market drivers

Despite the challenge of security and device onboarding, organisations are willing to adopt IoT solutions to disrupt traditional business models and deliver tangible business benefits. Up to 36% of US companies say they will deploy IoT programmes to enter into new markets whilst 34% of UK companies highlighted the same.

A total of 45% of US companies view the cloud and remote access as the top technology drivers. Of these companies, 45% rated LPWAN, 44% rated intelligent edge hardware and 35% rated 5G as the secondry technology drivers.

US respondents were asked to what extent they agreed or disagreed with the statement, “I think the evolution of intelligent connectivity is going to be critical to continue to fuel adoption of IoT?” Interestingly, USA respondents were less concerned about this issue, with only 21% strongly agreeing with this statement, compared to 33% in the UKIn fact, nearly one-quarter of US (23%) respondents were ambivalent towards this statement, neither agreeing nor disagreeing.

Earle continues: “When looking to the future, 88% of USA respondents said that IoT is a priority, which was higher than the UK, with 85%. Likewise, we found that USA organizations were more concerned about management of the device and contracts, which could mean that they are starting to think about bigger, more global deployments which mirrors what we are starting to see in the market.”

The study explored IoT deployment in sectors including Smart Vending; Supply Chain and Logistics; EV Charging and Smart Grid; Manufacturing; and Healthcare and Medical Devices. Download the full report here.