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Tata finds 26 companies set to spend $1 billion on the Internet of things this year

July 28, 2015, 12:48 AM UTC
Photo courtesy: ERIC PIERMONT AFP/Getty Images

Twenty-six companies (including 14 in the U.S.) plan to spend $1 billion or more each on Internet of things initiatives this year according to research out from Tata Consultancy Services. That billion-dollar group comes from seven industries: six from banking and financial services; five from automotive; four from travel, hospitality, and transportation; four from high tech; three from insurance; two telecommunications firms; one retailer; and one from healthcare and life sciences.

Those companies are outliers, but a broad swath of businesses intend to invest $86 million this year–or 0.4% of their revenue—on Internet of things projects according to Tata Consultancy. And while surveys about the purported value of the Internet of things are a dime a dozen, this one also offers excellent points about the cultural changes that would need to accompany the technical implementations if businesses really wanted to take advantage of the promise of the Internet of things.


First off, spending 0.4% of revenue is a significant number, and by 2020 those same firms expect their investments of $86 million per year to rise by 20% to $103 million. The more complicated news is that Tata believes not all of that spending will come from the information technology budget. For example, it counts tracking a customer via mobile applications as the internet of things in action, and those apps are usually a marketing expense. Supply chain automation is usually a manufacturing expense as opposed to IT, but is clearly another popular use case for the internet of things.

The survey seems to make it clear that no one class of firm will benefit from the internet of things craze which is bad if you’re banking on Cisco’s or Intel’s storytelling around the IT side of the trend, but good if you’re looking at the wave of connected sensors and data that they can generate as a macro trend that can change the way businesses operate in a number of ways. It’s there that the research offers perhaps the most valuable insights.

Chart courtesy of Tata Consultancy Services

You can download the report for the stats about who’s tracking what and how much money they have or what their products cost (it’s interesting data for sure), but the most relevant bit isn’t found in percentages. It’s found in the summary of the companies that have generated the most revenue from their existing investments in connected technology. Tata sums them up as having the following characteristics:

First, the early IoT leaders are more likely to digitally reimagine their businesses and produce substantial value for customers – not just value for themselves. Second, they deliver that value through new business models, product and service offerings, product bundles, and data. Third, they appear more likely to see the breakthrough potential of the IoT: getting the ultimate truth on how their products and services are performing for customers, as well as actual usage patterns. Fourth, IoT leaders organize themselves to act rapidly based on this performance and customer usage data. Fifth, they are better at dealing with internal resistance to hearing the truth that IoT technologies reveal about product and service performance. Sixth, they make IoT reliable in the field, especially to reduce the risks of security breaches. Seventh, they make small test investments before making broader and bigger ones.

Most of these items are customer or partner focused, and that’s not just some feel-good corporate B.S. The internet of things is about building value, but that value has to accrue to the end customer and partners, because it’s dependent on a true sharing of data to build its value. The internet of things makes information cheap and available, which can be used to build amazing services like Disney’s MagicBands or predictive services that let you know a machine will break before it does. Yet, the same cheap access to information also can lower barriers to entry for competitors and switching costs for customers. So, when a customer or partner doesn’t see the benefit of a connected product he or she opts out, whether it’s a consumer sick of providing personal data or a supplier that no longer wants to share error data with manufacturer because then she gets the blame.

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The final two points that Tata offers in that quote above about building reliable and secure systems and then testing small projects before deploying bigger ones are common sense, but bear repeating. So, whether your company is planning a big or a small investment in the Internet of things, keep in mind that there’s a lot more involved than technology and some IT spend. A lot of your success will be based on culture.

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