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OVER 80 percent of multinational companies increased their revenue by investing in Internet of Things, claims Tata Consultancy Services.
The TCS Global Trend study on IoT surveyed 795 executives from large multi-nationals, finding the trend providing a huge potential for revenue increases, but also the significant challenges for businesses transitioning to the new model.
The study found the age of IoT is well underway, although many businesses are not ready to realise the full potential fo the technology.
“Leaders in using IoT technologies are using it to completely re-imagine their businesses by changing every aspect…from business models and products to business processes and workplaces,” said Natarajan Chandrasekaran, CEO and MD of TCS.
The TCS study indicated that the companies investing in IoT are reporting significant revenue increases as a result of these initiatives, with an average increase of 15.6 percent in 2014. Nine percent saw a rise of at least 30 percent in revenue.
Investment in IoT is still growing, with 12 percent of surveyed company executives planning to spend $100m on the area in 2015, while three percent were looking to invest a minimum of $1bn. The report also shows that companies predict their IoT budgets to continue increasing year-on-year, with spending expected to grow by 20 percent by 2018 to $103m.
Companies at the very forefront of this drive for innovation through IoT have seen the biggest benefits from their investments. The top eight percent of respondents, based on ROI from IoT, report a staggering 64 percent average revenue gain in 2014 as a direct result of these investments.
This is thanks mostly to IoT benefits to businesses, including offering more bespoke products and services. This is expected to continue evolving, so that by 2020 the main benefit would be increased sales due to adding considerable value to the customer.
This is reflected in the finding that the most frequent use of IoT technologies by companies is tracking customers through mobile apps, used by almost half of all businesses (47 percent). More than half (50.8 percent) of IoT leaders admit to investing in IoT to track their products and how these were performing, whereas this is only the case with 16.1 percent of the respondents with the lowest ROI from IoT.
Despite the encouraging data on IoT investment and its impact on revenue growth, the report also revealed that major challenges remain in realising the promise of IoT for businesses across all sectors. The report found that the three biggest factors holding companies back were corporate culture, leadership, and questions around technology.
The report also indicated that while industrial manufacturers are successfully investing and reaping ROI from IoT, the healthcare sector, which could benefit a lot from IoT, has remained under-developed, due to regulatory restrictions and data security concerns that currently hinder innovation.