Internet of Things (IoT)

Technology is shaping the world like never before. The government and business leaders in India must harness the opportunities offered by technology and its implications on the future of work.

COVID-19 and the resulting geopolitical fall out have made it more urgent for corporate leaders to ensure that India is able to respond to the new normal. They also need to ensure that the country can seize the opportunity to increase its market share in the global manufacturing economy.

COVID-19 has precipitated companies’ entire focus towards industry 4.0. Two things have become more important for companies: focusing on adopting digital technologies that constitute the Industrial 4.0 revolution, and investing in new products and services that enable them to thrive in the fast-evolving economic environment.

This report discusses why we believe IoT, the most critical technology of the Industrial 4.0 revolution, has a future despite facing continuous challenges in the market. It covers impending drivers that build a stronger case for the technology. We will also discuss how the technology could benefit market players by creating opportunities for monetisation and evolving new business models. Towards the end, the report provides recommendations on the way forward.

Importance of IoT in Industry 4.0

Manufacturing modernisation relies on a set of technologies clubbed as Industry 4.0. Deloitte Global’ s third annual survey also took a closer look at Industry 4.0 technologies that could be CXOs’ imminent priorities and have the greatest impact on their organisations.

IoT, AI, cloud, and big data/analytics are the ‘big four technologies’ that could provide the bedrock to connect organisations, generate data, and drive more intelligent operations. Using its sensors, network, and analytics, IoT provides the core tools to automate data collection and generate insights. It is the most important component in the digital stack for the industrial sector.

In the following sections, let us understand the market potential that IoT opportunity is expected to create and the drivers that support its adoption.

The IoT opportunity

Across the world, spending on software and hardware related to IoT is projected to grow rapidly, from US$726 billion in 2019 to US$1.1 trillion in 2023, according to a market research report.2A recent IoT industry spending report reveals that Asia/Pacific accounted for most of the spending on IoT in 2019, with India spending US$20.6 billion.

The above trend is also corroborated by another recent market research covering pre- and post-COVID-19 market analysis. According to this research, the industrial IoT market is expected to grow at a CAGR of 16.7 percent from 2019 to reach US$263.4 billion by 2027.

What has held back IoT adoption in India

The transformational nature of IoT has not been a matter of debate. However, at least in India, adoption of IoT has still been somewhat at the niche stage. Some of the key challenges that need to be addressed are mentioned below.

• Lack of clarity on what to prioritise
• Lack of vision and short-term value realisation
• Lack of right talent and skills for implementing and maintaining IoT ecosystem
• Technical challenges of connectivity, compatibility, interoperability, and cybersecurity

Revenue opportunities driven by IoT

When IoT shifts from being a cost to a revenue generator, companies realise the maximum benefits of connected operations.. Monetisation opportunities typically are driven by various data monetisation models, including the following: