Are IoT return on investment expectations over-hyped?

The Internet of Things (IoT) is touted as a future source of huge revenues, but concerns are mounting that Return on Investment (ROI) expectations are too aggressive.

An article on IDG’s ARNnet  discusses a report by Current Analysis that raises the topic of sky-high expectations surrounding IoT. And it suggests that in some cases lackluster ROI is making it difficult for businesses to justify IoT deployments.

This report comes amid news that IoT and data analytics are driving a major surge in technology mergers and acquisitions, in part because of high ROI expectations for the technology.

The study found that many businesses had aggressive, short-term expectations for IoT generated revenues. Specifically, more than 50% of those surveyed were expecting to see ROI from their IoT deployments in under a year.

“The speed with which many organisations require IoT implementations to at least pay for themselves is eye-popping, but also a clear sign that IoT in the enterprise is well beyond hype and into the realm of the actual,” said Jerry Caron, senior vice president of Current Analysis.

“Businesses have no patience for projects that don’t pull their weight, and clearly many believe that they are not just take a speculative gamble with their IoT plans.”

Yet worries about cost considerations remained the number one reason companies chose not to pursue IoT projects. The other leading reasons that IoT projects were passed over were the lack of compelling use cases and security concerns.

Hand drawn Return On Investment (ROI) concept, business strategy on blackboard

Jumping in without looking down?

Interestingly the study found that, despite widespread security concerns among surveyed firms, many organizations are jumping into the planning phase of IoT projects without implementing security mechanisms.

But for Caron, it all comes back to the question of whether IoT can live up to revenue expectations.

“Where justifying a project will depend on RoI timescale goals, it’s telling that more than 50 percent of enterprises hope for a payoff in under a year,” he said.

“For many projects, this may well be overly optimistic or otherwise unrealistic.”

And though these high expectations for IoT revenues are often overly aggressive, the report did find that in many cases such high ROI targets were exceeded.

Nearly 70% of businesses with deployed IoT technology reported that the project in question has already met their ROI targets, regardless of the initial goals.

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