A pair of studies suggest that the Internet of Things (IoT) opportunity for managed service providers (MSP) in the months and years ahead is about to increase, as organizations start to significantly increase their level of investment.
A new report from 451 Research estimates the number of IoT connected devices (excluding PCs, smart TVs, and game consoles) will reach approximately eight billion in 2019. By 2024, the research firm predicts nearly 14 billion devices will be connected, representing a 12 percent compound annual growth rate. Overall, 451 Research estimates the dollar value of this IoT market will quadruple in the next five years, increasing from $172 billion in 2019 to $658 billion by 2024.
A second piece of research published by Microsoft reveals that enterprise IT organizations are going to need to rely on a lot of external IoT expertise. The IoT Signals report finds 85 percent have launched an IoT project. Among those adopters, 88 percent said they believe IoT is critical to future business success, with most of them expecting to a see a 30 percent return on investment (ROI), inclusive of cost savings and efficiencies, within the next two years from now.
At the same time, however, 38 percent of IoT adopters conceded complexity and technical challenges are a barrier to furthering IoT adoption. Almost half (47 percent) say there are not enough available skilled workers. Nearly one-third of projects (30 percent) fail in the proof-of-concept stage, most often because implementation is expensive or bottom-line benefits are unclear.
Finally, nearly all IoT adopters (97 percent) expressed IoT security concerns when implementing IoT. In fact, many organizations might be underestimating the level of IoT security challenges they will face trying to secure not just new systems, but also legacy platforms connected to the Internet that are likely to need continuous patching.
Organizations are still plowing ahead
Microsoft is betting IoT solutions will span everything from the network edge to the cloud. Microsoft has revealed that it plans to have invested $5 billion in IoT and intelligent edge technologies and the associated ecosystem on which they are deployed by 2022. Microsoft also notes that the ecosystem already consists of more than 10,000 partners. In effect, IT services providers that have not yet begun to build an IoT practice are already falling behind.
It may be a while before most of these IoT projects find their way into production environments. The one thing MSPs should keep in mind is that funding for IoT projects typically comes from line of business (LOB) units. In fact, the spending on IoT projects in the years ahead will eventually reach into trillions of dollars.
The challenge MSPs will face as they seek to tap into that opportunity is that each IoT solution will require a significant amount of vertical industry expertise to build, deploy, and manage. An IoT solution for the healthcare industry will be very different from one for an oil and gas company. In most cases, savvy MSPs will partner with consultants that already have experience in specific industry sectors to gain access to the required expertise.
In the meantime, MSPs would be well-advised to also expand their technical expertise. It’s already clear most IoT solutions will encompass everything from next generation 5G networks to Big Data analytics platforms infused with machine learning algorithms. In effect, the IoT bar MSPs need to be able to get over is a lot higher than many might initially appreciate.
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