Why do most IoT projects fail?

An unacceptable number of IoT projects fail to fulfil their potential. Around 74 per cent of projects fail, and only 12 per cent are considered successful, according to a study by Beecham Research. This evidence suggests that strategic challenges are limiting IoT performance.

There are several reasons for this, one of which is the fact that IoT depends on a specific set of technologies that are often outside the scope of business. In many cases, organisations are transforming their existing products into IoT devices or entering a new market.

Another reason is that IoT is a complex technological landscape with highly specific demands. There is also a shortage of certain skills and some organisations find it difficult to recruit the staff needed to develop solutions properly and bring them to market. Add to this the typical technological challenges related to scaling up and managing scale and what we have is a perfect storm of problems to overcome for every large-scale IoT project.

A total of 57 per cent of unsuccessful projects relied more on internal resources, while in successful IoT projects this percentage was 36 per cent. On the other hand, 49 per cent of successful projects relied more on a combination of internal and external resources, while only 17 per cent of unsuccessful projects did so. This finding suggests that focusing only on internal resources is less likely to achieve the desired results – a carefully chosen combination of internal and external resources is more likely to generate success.

A balance is clearly needed to ensure that these agreements are cost-effective, but a rough division seems to be that external resources focus more on technical challenges and internal resources on commercial challenges. Some overlap is clearly needed to create an integrated project approach.

How do you measure success?

For user organisations, the successes of the IoT, for the time being, seem to be measured in terms of solving short-term problems, such as saving money, creating new types of networks that can be monitored for predictive maintenance purposes, improving some operations and so on.

The users interviewed had a good idea of what their challenges were, both commercial and technical, in order to make progress in the future. But the commonly desired results – greater efficiency, reduced costs, new business models, greater security and better use of data and assets – were not fully achieved for more than 30 per cent of them.