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A third of SA’s IOT projects will fail to deliver ROI

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 16 Aug 2019
Kieran Frost, IDC research manager.
Kieran Frost, IDC research manager.

Internet of things (IOT) spending in SA will reach $3 billion (R46 billion) by 2023, but over 30% of implemented projects will fail to deliver return on investment (ROI) to local organisations.

This was the word from Kieran Frost, IDC research manager, speaking at the first public event of the newly-formed IOT Industry Council of SA this week.

He pointed out that IOT adoption in SA is expected to accelerate over the coming years, as organisations from both the public and private sectors look to improve their provision of customer services, expedite decision-making, improve the quality of products and services, accelerate their time to market, reduce costs and increase productivity.

However, constrained budgets, lack of adequate skills and security issues will hamper one-third of organisations’ IOT projects, he noted.

“Many local organisations are embarking on IOT projects and are aware of the potential value of IOT, but their ability to implement their IOT strategies and turn those initiatives into tangible business value is restricted by cost and lack of skills.

“We anticipate that about one-third of IOT initiatives will fail to demonstrate a clear return on investment, with some organisations lacking the necessary key performance indicators to monitor progress from the early stages of such projects.”

This figure, he explained, reflects the global 30% of IOT initiatives expected to fail during the period.

In terms of IOT adoption, he said the leading industries are manufacturing, followed by transportation, consumer and government.

“The manufacturing sector will continue to lead adoption of IOT; this is a natural progression of the past, where there has been increased utilisation of IOT and machine learning to deliver value though data aggregation. There is also a lot of maturity in the transport sector around IOT through fleet management and freight monitoring solutions, which are the main use cases, so we can anticipate these to increase in the medium-term.”

In the consumer sector, smart home devices and devices connected onto vehicles are gaining traction. More third-party providers such as insurance firms will be using connected devices in their clients’ vehicles for data analysis purposes, he said.

“Government is also increasing use of IOT, mainly for intelligent transportation and public safety purposes. For instance, the City of Johannesburg has CCTV cameras connected throughout the city, but this is an adoption of IOT that is relatively in its early stages. When taking into consideration what smart cities are all about, spending in this space is expected to increase in the next few years.”

Other industries expected to gain traction in the IOT space include agriculture, where devices will be predominantly used for animal tagging, and the energy sector, where more smart electrical grids will gain popularity in future, he predicted.

“With the current power supply challenges, Eskom is looking at conducting research into capabilities of smart grids and micro grids, so in the next five years or so we should start seeing great investments into this space.”