iot snapshot 2016 - logicalis · big data characterize iot. communication ... automation were...

IoT Snapshot2016

IoT adoption and potential in the Brazilian market

Concept

ConnectivityInformation

Equipment

Inte

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ApplicationData

Ana

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AutomationIntegration

Dev

ices

Tech

nolo

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Routine

Machines

Processes

Net

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Com

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Control

Man

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Sensors Syst

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intelligence IP

BigDataMonitoring

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IoT Snapshot 2016 PromonLogicalis 3

The intense technological evolution we are currently observing is deep, radical and brings impacts yet difficult to measure – economic, political and social changes. The foundations of this process are related to what we call Internet of Things (IoT), which draws near the ICT world (information and communication technologies) and automation and control systems that are the backbone of operational processes in several sectors. Add to it concepts of analytics, artificial intelligence and machine learning and the bases over which future organizations’ operational models will be built on are defined.

In this IoT Snapshot study, we seek to introduce a portrait of how the Brazilian market is dealing with the Internet of Things and the transformations it offers. We realize that the technological paradigm’s potential leaves no doubt, however there is still a lot of learning room for all involved. New professional profiles, new skills and perhaps new company types will emerge to meet the demands in this digitalization process.

The changes are already underway and the power of IoT is incontestable.

Summary

Highlights 04

Methodology and sampling 05

IoT concept and maturity in Brazil 07

Expectations related to IoT 09

Who leads the projects? 11

Who pays the bill? 13

Challenges 14

Conclusion 17

Rodrigo ParreiraLogicalis Latin America CEO


Highlights

31% of respondents claim to have from moderate to high IoT adoption level.

For 62% of respondents, this will be an extremely important technology over the next three to five years.

Amongst the most relevant expected benefits, “productivity”, “cost reduction” and “operational efficiency” are highlighted themes.

47% of respondents claim to not know whether or not there is a reference Internet of Things supplier.

“IoT are technologies that allow to eliminate the gap between what happens in physical and digital worlds.”CIO, educational sector


Methodology and sampling

Seeking to investigate the current stage of knowledge, interest and adoption related to Internet of Things (IoT) solutions in the Brazilian market, the IoT Snapshot study, conducted by PromonLogicalis, has combined two approaches methodologies.

One quantitative survey – by Somatório Pesquisas e Informações, from April to May of 2016 – which conducted telephone interviews with 146 companies from different

industries. Sampling primarily encompasses large companies, both in terms of employees’ number and annual revenues, and sought to reflect the Brazilian market reality in regards to the most active segments in the country.

Complementarily, in-depth interviews in a qualitative approach were carried out by Stratica Consultoria e Pesquisas with 13 leading companies in their respective segments, all with IoT projects already implemented or underway.

Employee number Annual revenues (R$ million)

Less than 500

More than 3000

From 1000 to 2999 From 500

to 999

32%

19%31%

18%

Less than 100

Not informed

More than 1000 From 500

to 999

From 100to 49921%

27% 19%

22%

11%


“IoT seems to be novelty, but it’s been in the works for a long time. Internet and Big Data characterize IoT. Communication protocols standardization should be the greatest driver.”CIO, pharmaceutical industry

Serviices

Manufacturing

Government

Commerce

Agribusiness

Construction

Services 18%Utilities 8%Finances 7%Manufacturing (base and capital goods) 17%Manufacturing (consumer goods) 12%

29%

33%

10%

8%

6%

14%

Industries Economic segment details


Executives were invited to explain in a simple way what they understand as Internet of Things. Result analysis came up with two groups of answers: the ones related to purpose and the ones related to IoT projects requirements.

Combining quantitative result analysis to qualitative survey answers, it is possible to notice that, in general, technologies that allow integration/connection between objects or machines and allow process control and automation were treated as IoT. In this sense, the Internet of Things is being considered by many respondents as an evolution of industrial

automation technologies, including telemetry, machine-to-machine (M2M) and radio-frequency identification (RFID).

There is also the perception - observed mainly in qualitative interviews – of the Internet of Things as a concept capable of bringing innovation and improving customer experience, both by speeding up companies’ response time to market demands and enabling the creation of new channels/business models. This view seems more incipient, and practical cases are rare, however there is more disruption in their applications.

IoT concept and maturity in Brazil

Integration/Interaction

Automation

Monitoring

Process management

Information access

Mobility

Innovation

Decision making

Communication

43%

56%

34%

25%

16%

14%

11%

10%

36%

IoT Concepts – Purposes

IP Connectivity

Equipment/Machines

Devices

Systems/Applications

Sensors

Analysis resources

Technology upgrade

36%

51%

33%

23%

19%

14%

36%

IoT Concepts – Requirements


IoT – Adoption level

None29%

Very Low19%

Low21%

Moderated27%

High4%

IoT – Project status

No project35%

Under discussion31%

Underimplementation

13%

Implemented21%

Combining quantitative and qualitative answers show that, technologically, companies describe IoT as an integrated platform composed by three layers: sensors, network and analytics. And despite of having a great deal of current efforts focused on the two first layers, answers analysis show that especially for companies more mature in IoT knowledge and adoption, the big data analytics layer is considered critical. Furthermore, respondents claim that, sometimes, supplier’s lack of knowledge on the subject creates an obstacle for project development.

Although there is much hype concerning the subject, practical use examples are few and companies do not hesitate to admit that there is a lack of knowledge when referring to the Internet of Things. Still, 31% of respondents claim to have adoption levels between moderate and high. This notion is confirmed when we analyze IoT-related projects status, as 66% of respondents have only started to discuss this sort of initiatives.

62% of respondents believe that IoT will be extremely important in the next 3 to 5 year


Expectations related to IoT

Analysis point out that low adoption rates are greatly related to the novelty of the theme and the consequent early stage of market maturity – users and vendors – than the perceived value of Internet of Things solutions.

If today only one quarter of respondents see IoT as crucial for business, 62% of them predict that it will be an extremely important technology in the next three to five years.

Very high

High

Moderate

Low

Very low

Do not know

20%

7%

25%

14%

2%

32%

IoT – Current importance

Very high

High

Moderate

Low

Very low

Do not know

40%

22%

3%

4%

7%

24%

IoT – Importance in 3/5 years

Productivity/agility

Cost reduction

Operational efficiency

Decision making support

Innovation

Competitive advantage

New revenue sources

High Moderate Low

49% 32% 19%

42% 37% 21%

47% 34% 19%

44% 31% 25%

42% 28% 30%

29% 30% 41%

22% 14% 64%

IoT – Most relevant expected benefits


Among the most relevant expected benefits are themes such as productivity, cost reduction and operational efficiency, showing that once again, the current tendency to define IoT as a set of technologies directed at automation and process improvement.

When primary benefits are analyzed under the vertical view, it’s possible to notice that the least mentioned themes – innovation, competitive advantage and new revenue – although relating to more transformative applications, are more present in finances, services and commerce sectors.

Productivity, cost reduction and operational efficiency are the most relevant benefits expected by executives

IoT priorities – Industries

Productivity/agility

Cost reduction

Operational efficiency

Decision making support

Innovation

Competitive advantage

New revenue sources

15% 25%67% 33%22% 27%47% 33%

44% 15%50% 20%22% 55%37% 67%

22% 45%25% 33%22% 45%37% 22%

37% 25%17% 33%44% 36%26% 22%

26% 15%0% 20%33% 9%19% 33%

19% 20%0% 20%22% 9%7% 0%

37% 50%42% 40%33% 18%28% 22%

Services GovernmentUtilities CommerceFinance AgribusinessIndustry Construction


Who leads the projects?

Just as with other disruptive technologies, IoT projects impact processes that go beyond IT. Whether by complementary automation initiatives or situations of commercial and customer service models’ deep transformation, the Internet of Things adoption will invariably bring changes to business areas. Furthermore, as previously mentioned, a great deal of current technology use cases is connected to production/engineering environments, impacting these operational areas directly, including manufacturing plants. Facts such as these are some of the reasons it is not yet clear who will lead initiatives of this nature.

Numbers point to a certain balance in the engagement of IT professionals and production/

engineering professionals in IoT initiatives analyzed in the study - with a production/engineering predominance in projects already implemented or under development and IT prioritization in discussion-stage projects.

However, data analysis combined with qualitative interviews show that there rarely is isolated leadership in IoT directed movements –usually, projects come into actualization when there is a strong alignment between information technology and automation technology areas, as well as business areas and senior management sponsorship. Interviews also show that the IT manager is usually prioritize as the initiative leader after the investment decision is approved.

IoT – Engaged areas

Production/Engineering

TI

Commercial/Business

Customer Service

Finance

Administrative

Logistics

Marketing

HR

32%

52%

13%

19%

10%

6%

6%

6%

19%

Implemented

37%

42%

26%

5%

26%

0%

0%

5%

21%

Under implementation

47%

38%

18%

13%

11%

11%

7%

4%

20%

Under discussion


Some hypotheses justify this fact, among which are IT being the “guardian” of databases and other systems to which IoT technologies must be integrated with - such as, analytical systems. Moreover, issues related to data governance and the already quite strategic role of the CIO can weigh on the technology manager being responsible for this kind of project.

It is unclear, however, whether the current picture will be long lasting. The transformational potential of Internet of Things technologies is huge and initiatives are estimated to become more and more complex, involving not only M2M and machines to systems and databases communications, but also communications to public and other companies’ information. Thus, it will be decisive for IoT projects’ success the growing integration between areas and their combining knowledge, so that the technology’s full potential is completely realized.So, as initiatives mature and expand, the possibility of a new position emerging to take the lead of IoT projects increases.

“ROI is the biggest challenge. Gain in productivity and quality (especially short-term) do not necessarily mean increased revenue.”CIO, Healthcare sector


IoT Budget – 2016

No budget47%

Not informed9%

As demanded

10%

Defined budget34%

Budgets directed at IoT reflect in some way the current theme’s immaturity. However, the fact that 34% of respondent companies claim to have a defined budget for IoT initiatives point out the technology’s potential. Still, the majority of respondents – 47% – do not have an IoT budget at all.

Qualitative interviews show that at moment there are several possible budget scenarios, which varies according to companies’ profile and project type. In a great deal of cases, IoT projects end up being paid by industrial automation (TA) budget, usually independent from IT budgets. As for companies going for

pilot-projects, costs are generally paid by IT – although not included in the budget. Finally, in regulated sectors (such as utilities), investment tend to come from R&D department. Either way, for still being a new concept, what is seen is that investment decisions are made jointly by business and technology areas, always with strong support from senior management - who view in these initiatives clear chances of financial gain, benefits in terms of image and/or customer satisfaction. Currently, projects with proven ROI, which cause little disruption in business models and prioritize cost reduction are those with greater ease of budget approval and are concentrating IoT-driven spending.

Who pays the bill?


Despite countless business application possibilities for the Internet of Things - whether as a way to reduce costs and optimize processes, or as a tool to improve customer experience and create new business opportunities - adoption still faces significant challenges.

IoT projects are hindered by issues including low technology understanding, difficulties in proving return on investment, low professional training and even industry immaturity, which often shows how unprepared it is to support complex customer initiatives.

Challenges

Detachment

Tecnology

Culture/People

Cost/ROI

63%

64%

38%

40%

Main roadblocks and challenges – IoT

Detachment

Undemanding segment

No demand/not depending on IoT

Little information/needing more research

Other business priorities

Long-term trend

25%

33%

11%

11%

18%

Culture/People

Culture/High management

Professional training difficulties

Suitable suppliers for development

Issues with customers/integration

Other

25%

33%

11%

11%

18%

Cost/ROI

Budget/Cost

Undetermined ROI/ Difficult to measure

Crisis/Scenario

32%

34%

5%

Technology

Little technology maturity

Technological difficulties for implementation

Incipient technology/lack of cases

Connectivity issues

Information Security mistrust

Lack of technological mastery

Legacy/existing technologies

14%

28%

12%

7%

6%

4%

12%

Divided into four main categories, the challenges mentioned by respondents warn that detachment towards the theme and lack of technological maturity are the most critical points at the moment - mentioned respectively by 64% and 63% of respondents. This scenario is a reflection of a technology still in early stages of evolution, wrapped in such a futuristic aura that ends up causing estrangement in IT areas pressured by operational demands and cost reductions.


The scenario shows that there is room for the ICT industry to reinforce its educational role and show the Internet of Things’ transformational capacity for different economy segments.

There is discrepancy among respondents in relation to solutions acquisition model - composed of several items ranging from sensors to big data analytics systems.

Reasons to opt for separate purchase

Expertise/know-how

Need for complementarity

Competitiveness/Hiring prices

Little dependency

Equivalence

Implementation/stage model

35%

41%

13%

11%

8%

17%

Reasons to opt for single supplier

Ease of management

Ease of support/troubleshooting

Ease of implementation/integration

Process/communication simplification

Ease of hiring

Unified/standardize platform

Commitment

29%

37%

17%

16%

11%

6%

26%Purchase processMultiple suppliers

Separate purchases

43%

It depends9%

Single supplier

48%

Thus, 48% of companies believe that it is ideal to buy from a single supplier, while 43% opt for separate purchases. For those opting for the first option, things like ease of management, support and integration matter the most. Those opting for separate purchases are mainly concerned with issues such as expertise and the need for complementarity for available solutions.


When asked about who would be a reference supplier for IoT solutions, 47% of respondents said they do not know whether or not there is such a supplier. Expanding the discussion to this supplier’s profile, come prior to system integrators, mentioned by 51% of respondents. Large IT vendors and sensor manufacturers respectively take second and third positions with 29% and 24% of responses.

During the qualitative research, however, it was noticed that traditional automation technologies suppliers have had some advantage providing for IoT projects already underway.

The predominance of IoT initiatives under the automation world is one possible explanations for this. Amongst the main advantages of these players - in the view of respondents - are the knowledge over the client’s productive environment, ability to deliver integrated solutions and closer proximity to each sector’s specific characteristics and needs.

The interviews have also revealed that large IT vendors have brought to the market more disruptive views regarding technology use, but lack in vertical knowledge and, in some cases, lack in providing end-to-end solutions.

For 47% there is no ideal IoT solutions supplier

System integrator

Large IT vendor

Device/Sensors company

Engineering business

Carrier

Other

29%

51%

14%

9%

7%

24%

IoT Solutions – Supplier profile


IoT Snapshot study shows that, as the rest of the world, the Brazilian market is closely following Internet of Things’ technologies’ evolution and strongly believes in its transformational potential for the next years. But it also shows that it is a topic still in early stages of maturation - both from companies using it and technology vendors’ point of view.

Still rare, existing use cases tend to be concentrated in traditional areas of automation technologies use (such as manufacturing and utilities), and are being positioned as automation technology evolution, yet with little interaction with information, data analysis and decision-making systems. Applications with a more disruptive appeal exist but are generally restricted initiatives or pilot-projects, treated as proof-of-concept.

The potential, however, is indisputable. As technologies (from the sensors to cognitive computing) become more mature and economically viable, applications tend to become more complex and comprehensive, bringing benefits not only for business but also consumers and society.

Conclusion


IoT Snapshot 2016 is a PromonLogicalis® study.The information herein is of ownership or propriety of PromonLogicalis®, its subsidiaries or affiliates and is protected by law. Total or partial reproduction of this work is only permitted with prior approval of PromonLogicalis®.

Analisys, coordination and text

Lucas Pinz [email protected]

Fábio Hashimoto [email protected]

Leandro [email protected]

Thais CerioniMarketing [email protected]

Responsible Director

Yassuki [email protected]

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PromonLogicalis

PromonLogicalis believes that technology is capable of transforming business and people’s daily lives offering better quality of life, reducing environmental impacts and improving relationships.

Through well-establish solutions, specific integrations and always based on our IoT platform, EUGENIO, we act to implement new solutions and integrate them with legacy systems. Thus, we are able to include our clients’ business in the new scenario created by the Internet of Things.

iot snapshot 2016 - logicalis · big data characterize iot. communication ... automation were...

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