Looking ahead at the investment plans of industrial customers, Europeans are poised to hold a narrowing lead, with more than twice as many extensive implementations in 2020 as their US counterparts. Looking almost 10 years ahead—an imprecise endeavor, but one that can shed light on aspirations—the investment plans of executives in both regions could result in a more competitive position, with the US expecting to see similar levels of POCs and implementations as the Europeans.
The key challenge for both regions remains addressing cybersecurity concerns, not only by the vendors but also for customers, who will need to ramp up their security investments significantly to benefit fully from IoT technologies. Bain research finds that customers would buy more IoT devices, and pay more for them (about 22% more on average), if their security concerns were addressed. Becoming a leader in security remains a powerful opportunity for European IoT champions.
IoT providers in both regions could also speed their progress in reducing barriers by focusing their investments on fewer industries, which would allow them to develop greater expertise and deliver more comprehensive end-to-end solutions to their customers. The learning curve effects from POCs will allow vendors to overcome the implementation concerns of their customers by offering more packaged solutions that can scale more easily.
Partnerships with industrial vendors are especially important, as they provide specific domain knowledge and system integration capabilities. Without these partnerships, IoT vendors may continue to struggle to sell solutions that integrate smoothly with customers’ businesses and processes.
Leading industrial companies are moving quickly past the proof stage, and now, it’s all about scaling. Over the next two to three years, clear winners will emerge, as the benefits of early investment kick in and their POCs scale up to operational levels. Companies that have put off investment will lose ground to competitors that are learning how to derive value from the Internet of Things and becoming more data-driven every day—skills that will form the basis of competition in a world of extreme automation and artificial intelligence.