The United Kingdom Flags With Its IIoT Adoption Strategy

The Industrial Internet of Things (IIoT) is infiltrating more and more aspects of our lives, from TVs and watches to cars and factories. Yet the technology seems to be far more popular in other countries than it is in the UK.

According to data gathered from the Organization for Economic Cooperation and Development (OECD) and search engine Shodan, the UK ranks bottom out of 12 countries with the most IIoT devices. Smaller European nations such as Denmark, Switzerland and the Netherlands have virtually twice as many online devices per 100 people as the UK.

The IIoT industry is still in its early days, but many tech companies have been quick to develop IIoT devices, software and systems. Examples of current UK IIoT start-ups include developer of ‘smart product’ platforms Evrythng, ‘smart’ thermostats and central heating developer OpenTRV and Blue Sense Networks, who make iBeacon hardware and proximity applications.

And yet, IIoT implementation has not gone mainstream. A study conducted in November 2015 by IT staffing company TEKsystems suggests that businesses are having trouble getting IIoT initiatives past the conceptual stage. Only 17 percent of businesses surveyed had pilot programs in place, whilst more than 40 percent are in early discussions about the impact IIoT technologies could have.

 According to Jason Hayman, Research Manager at TEKsystems, “IoT will enable the collection and aggregation of data that will drive digital transformation deeper within organizations, enabling better insight into customer experiences and sparking innovation. IoT is going to change the business-customer relationship in ways organizations haven’t even thought of yet.”

The TEKsystems report suggests that most businesses are still simply talking about IIoT or running test programs to assess the feasibility of IIoT implementation and the potential return on investment (ROI). Hayman explains that there are several reasons for this sluggish IIoT adoption, including the security concerns associated with increased data exposure and problems related to interoperability with existing infrastructure.

Feedback from the survey also highlighted a lack of confidence in the business side’s and IT’s capability to implement IIoT and successfully make the necessary changes. Respondents also reported that a lack of talent with the right skills factors into their tentative approach to IIoT. This was particularly the case with information security skills. The principal concern, however, appears to be that business leaders are struggling to see a clear return on investment (ROI) and a solid business case for IIoT, at least at this early stage of the IIoT movement. These concerns all contribute to creating a difficult environment to encourage investment and support for IIoT adoption.

 Sarat Pediredla, CEO of global app developer and tech consultancy Hedgehog Lab, explains: “I have two to three conversations a week with brands and our customers on the potential of IoT and wearables but there is little appetite in investing budgets.

“I think this stems from the fact that while customers understand the benefits of the platforms and technology, there is concern about tangible immediate results,” continues Pediredla. “Everybody is waiting for someone else to come out with a credible case study but without serious investment and R&D efforts, it’s difficult to build something that has a real impact.”

These same concerns are also reflected in the UK’s public sector, which is often faced with bureaucracy and therefore much more averse to new and risky ROI strategies such as IIoT adoption. “There’s a real lack of successful IoT use cases in both the public and private sectors, so risk averse public sector officials are not likely to invest in new, unproven IoT technologies,” says Charlie Clark, CEO of Rosslyn Analytics.

The UK’s Chancellor of the Exchequer, George Osborne, announced in the 2015 budget that £40m would be set-aside for R&D around the IIoT, which many would argue is far too little. Charles King, Head of IIoT at Challenge Advisory, welcomes the proposed investment but doubts it will have substantial impact. “When you consider that even conservative estimates put revenue generated by IIoT services at between £600bn to £1.5tn, £40million seems like a relative drop in the ocean. The UK government is better off providing tax breaks for early IIoT adopters to lessen the risk aversion in both the public and private sectors.”

How Does The United Kingdom Catch Up?

Although IIoT adoption and confidence remain low, according to the TEKsystems survey, businesses agree that IIoT initiatives will have a long-term impact on their businesses. 42 percent said that it would have a “significant impact”, with 64 percent of respondents saying that their main objective for IIoT in the long term is to help improve user and customer experiences. 56 percent of business leaders also expect the IIoT “to spark innovation” in their industry, while other objectives include creating more efficient business processes (52 percent) and extending new revenue streams (50 percent).

“What the study ultimately reveals is that businesses understand the inevitable impact of IIoT and that, implemented correctly, it can hugely benefit their business once the early challenges and teething problems of IIoT adoption are overcome.

Progress is being made in the UK especially in the healthcare sector and the military. The NHS has invested millions into virtually monitoring patients with the Telehealth Project, which enables the home monitoring of patients. “Figures provided by the NHS showed that using Telehealth reduces mortality by 45%, A&E attendances by 15% and emergency admissions by 20%,” explains Alistair Smit, CEO of IIoT solutions company Blueberry Home Solutions. The UK military have made progress in ‘network-centric warfare’ and the ‘digital battles space’, with semi-autonomous drones and wearable devices.

Milton Keynes, Bristol, Glasgow and Manchester are already leading the way by developing smart city initiatives. Taking inspiration from foreign IIoT pioneers such as Germany, the US, Denmark and South Korea, UK firms are slowly adopting and benefiting from IIoT technologies.

The United Kingdom can also look across the English Channel for IIoT inspiration. At the Consumer Electronics Show (CES) in January, there were 200 companies exhibiting from France – traditionally slow to warm to disruptive technology (look at the Uber riots over the past year) – making it the largest exhibitor after the US. They already have

 So what has created this innovative environment in France? “France has everything that is needed: we have great universities and research institutes, excellent engineers and strong support from the government,” explains Frederic Josue, an advisor at French marketing firm Havas.

 And that final aspect – government support – will be vital to sparking IIoT investment in the United Kingdom. At the forefront of France’s government support for technological innovation is Emmanuel Macron, minister of the Economy, Industry and Digital Affairs. “Macron shakes things up. He comes from a pragmatic background linked to business and understands that failure is not a bad thing, which is why he has the potential to help create such an ecosystem in France,” says Josue.

 “Dell is excited to be working with Utilitywise, and we believe they have the infrastructure, industry knowledge and market reach to introduce innovative IoT solutions.”

The UK government have already made welcomed efforts to increase support for IIoT but there is more to be desired when compared to the $100mn+ investment the French government have pledged. The results of these investments are easy to see when you look at France’s burgeoning tech industry.

 Digital infrastructure is another significant challenge facing the United Kingdom. And, again, the UK government have made positive efforts to address it by committing to faster broadband speeds of at least 100Mbps for “almost all” homes in the United Kingdom. Connectivity is vital to IIoT innovation as the industry relies on the customers’ ability to connect their devices to the internet.

Government Intervention May Be Required

But could the government be doing more? Greg Mesch, CEO of CityFibre, believes so: “The target of 100 megabits per second is too low. As the British economy becomes more digitally based, it is vital that even faster Gigabit speeds are achieved.

 “In infrastructure terms, the UK communications markets is under performing, with one of the lowest shares of fibre-connected buildings in Europe, a result of a decade of underinvestment by BT. Investment in fibre infrastructure is critical for sustainable economic growth and future prosperity. Therefore, it is vital that the government does all it can to encourage a competitive environment for fibre investment.”

 And yet despite these issues, experts predict that IIoT adoption in Great Britain will rise by half in 2016. According to a Gartner survey, 43% of all organisations will have some kind of connected technology in place. The research firm found 29 percent of firms are currently IIoT adopters, although an additional 14 percent said that they planned to do so over the year, with another 21 percent planning to do so after 2016.

 As Chet Geschickter, research director at industry analyst Gartner, explains: “2016 will be a very big year for IoT adoption. We are starting to see a wide range of IoT use cases across virtually all industries. But the big challenge now is demonstrating return on investment. Executives need to validate the contribution that IoT can make in order to justify large-scale rollouts.”

But as it is, the United Kingdom is currently still too slow to adopt IIoT technology. But more and more businesses are realising the potential of IIoT, and more importantly for start-ups, so too is the UK government. IIoT is the future of industry and its expansion is imminent and inevitable. The United Kingdom needs to act now to ensure its competitiveness and establish Great Britain as world leaders in IIoT technology.

 “Digitisation and heightened connectivity of people, processes, data and things has the potential to generate value in excess of £33bn for the UK economy,” according to Phil Smith, CEO at Cisco UK & Ireland, and the UK government can significantly help realise this potential. Budgetary support can help lower the risk for IIoT start-ups with funding and tax reliefs – mindful of the security concerns – as well as facilitating the improvement of digital infrastructure, which aids innovators in successfully implementing the technology.

 As TechUK’s Julian David explains, “The smart use of tech is fundamental for balancing the books, increasing productivity, creating new jobs and including empowering people across the UK. By investing in infrastructure, innovation and entrepreneurship the government is driving growth, not just in tech, but across the whole UK economy.”