Small Business Trends

Should Your Small Business Invest in the Internet of Things?

Published by in Small Business Trends

Are you excited about the internet of things (IoT)? You should be—it’s possible for small and midsize businesses (SMBs) to gain value from it now.

What is the internet of things?

Gartner defines it as: The Internet of Things (IoT) is the network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment.

Those who are successful will outperform their peers:

SMBs must adopt new technologies within two to three years if they want to gain advantages over competitors.

But this comes with a catch:

Poor IoT implementation is worse than not implementing at all.

That’s because the technology itself has no inherent value. Like software, the IoT’s value lies in the benefits that your business gains from using it. And despite the IoT’s potential to drive value, it brings a host of technical challenges with it.


A cautionary IoT tale

Consider the cautionary tale of Emberlight: This Kickstarter success story shut down just three years after raising $300,000 to fund its “smart light sockets.” While the company cited increased competition, the problems ran much deeper than first thought.

According to Network World, “It turns out Emberlight’s technology architecture required a call to the company’s cloud service for commands to turn the lights on or off.”

As a result, the “smart socket” products no longer worked for customers when the company shut down.

This story reinforces that the IoT isn’t one single technology; it’s an interconnected ecosystem of data and devices. When one of those elements goes offline, it affects the full ecosystem.

SMBs that correctly assess the short-term risks and costs of IoT implementation will outperform their peers in the long run. They’ll make more informed decisions about IoT strategies, security, and business value before making an investment.

In this article, we’ll take a look at three IoT risks that SMBs should know in 2019, and three steps you can take in response.

Small businesses will struggle to build IoT strategies

 Your challenge:  Many businesses start trying to implement the IoT without clear objectives.

We often associate the IoT with consumer products that connect to your home’s wireless network. But Gartner research found that a high number of U.S. SMBs are using it too; 47% of leaders surveyed in 2018 are currently using the IoT.

woman talking next to a graphic of many different communication lines all connecting to a cloud with money signs in it

All percentages reflect the number of respondents in each industry currently using the IoT

Despite this high number, what we don’t know is how many of these use cases are successful. According to Gartner research, businesses have a harder time building business cases for the IoT than any other technology. This will continue into 2019 (full research available to Gartner clients):

“Enterprises will continue to struggle with IoT strategy development: More than any other type of innovation, organizations struggle to establish clear business and technical direction for IoT. Many IoT innovations are little more than proofs of the technologies, with little to no focus on business outcomes. This results in false starts that are discrediting to the IoT value proposition.”

 Recommended response:  Appoint a technical lead to own IT architecture and implementation of an IoT pilot project.

The IoT won’t add value to your SMB unless you understand its technical requirements. To do so, you must appoint a technical lead to assess if implementation at your business is possible. This can be your CTO, lead developer, or another similar role.

Regardless of who you choose, it’s essential that you don’t skip this part of the process, even if it means adding a full-time hire or consultant. The cost of hiring talent is far less than that of a bad IoT implementation.

If you do find that IoT implementation is an option at your SMB, start small by choosing one pilot project aimed at one specific use case.

Here’s an example: Gartner found that nearly one in six banking and financial service SMBs uses the IoT. Insurance underwriters could use the IoT for continuous claims assessment, with an end goal of recommending real-time pricing and policy adjustments for customers.

Software vendors won’t pass the IoT security test

 Your challenge:  IoT ecosystems are vulnerable to cyberattacks.

Worldwide cybercrime costs businesses an estimated $600 billion per year, and poorly protected IoT devices are a culprit.

That’s because the networks and software that these devices run on are increasingly vulnerable to attacks. This is due in part to the rise of cybercrime-as-a-service and other rogue industries, but your own colleagues threaten IoT security as well. Employees—not hackers—cause more than three out of four cybersecurity breaches.

This year, Gartner research found that most SMBs report using data and information security technology. But half of all U.S. SMBs fell prey to cyberattacks within the past year, and 60% of SMBs that suffer a cyberattack close within six months.

In 2019, Gartner predicts security concerns will no longer be the biggest impediment to IoT innovation (full research available to Gartner clients). Instead, the security supplier community won’t innovate quickly enough:

“Long the bane of IoT innovators, IoT security concerns continue to be the single largest impediment to IoT innovation, but this is changing. While the management of the large, heterogeneous, multisupplier reality of IoT isn’t easy, standards and practices are emerging to contain and manage these problems.”

 Recommended response:  Build enough IoT automation in-house to bridge the supplier gap.

IoT devices demand large, multisupplier IT requirements. Thus far, the supply community hasn’t addressed the network and security control automation needed for your IoT projects to work at scale.

To work around this, have your technical lead build the automation you’ll need to manage IoT network security at scale. In-house talent is a must to get this right: Purchasable vendors aren’t creating solutions quickly enough to address the amount of unplanned security work that the IoT triggers.

For example, retail storefronts and warehouses can use the IoT to connect shelves, store cameras, and sensors to track inventory in real time. According to Forbes, 70% of retailers plan to invest in the IoT.

But to achieve this connectivity, each retailer must build a system of computers, networks, and equipment that communicates and shares data in real time. And cross-platform IoT solutions don’t exist yet.

The good news is that just as security risks emerge in-house, security solutions are best served in-house as well. Your technical lead can use mice to create secure zones in data centers and deployments. This will help you isolate and protect each unique workload within an IoT ecosystem. In tandem, your technical lead should establish IoT security requirements.

Colleagues will find business value for the IoT

 Your challenge:  There are not enough data scientists to meet demand.

If Facebook’s scandal this year was any indication, there’s a huge shortage of data scientists. Job postings for the role on rose 75% from January 2015 to January 2018.

And don’t forget that 90% of all data is less than two years old, due in large part to a surge in IoT devices. A data scientist—someone who can analyze and interpret complex digital data (e.g., the number of people using a website)—plays a key role in utilizing IoT data.

But part of the reason data scientists are in such high demand is because they’re in such short supply. Data scientists with Ph.D.s can earn up to $300,000 per year at large consulting firms. This fierce competition for talent forces businesses to keep roles open for months and hire contractors in the short term.

As with hiring a technical lead, bringing the right data science talent into your SMB is a must to manage the IoT. But the dearth of talent, misconceptions about the role, and inability to match salaries will remain barriers in 2019.

 Recommended response:  Write your IoT strategy first.

Think of hiring a data scientist and implementing the IoT in three phases:

  1. Crawl
  2. Walk
  3. Run

Before you hire a data scientist (whether full-time or as a contractor), you must understand the key role they’ll play on your IoT team. If you’re unclear on that, then you’re still in the “crawl” stage of confirming how your team will use data science.

Now for the good news: Business strategy—not math or engineering—is the most crucial aspect of a data science roadmap for your IoT project. Designing it demands someone with strategic vision to see how the IoT will impact your business.

Although you’ll need a technical lead to keep your vision in check, you can (and should) lay the groundwork for a data science strategy in-house. Along with writing your IoT’s business strategy, you can empower your team leads across sales, HR, and other verticals to make decisions based on analytics that roll up to the business strategy.

This approach has two benefits: It encourages all leaders to make choices based on data and helps everyone see their goals as part of the same big picture—the same strategy that you’ll need to use for your IoT project.

Here’s an example: The IoT can power cold chain monitoring to keep temperature-sensitive goods correctly stored throughout the manufacturing process. This involves confirming that devices used during the creation, storage, and shipping processes for a temperature-sensitive product (like a vaccine) all share the right information with each other.

The end goal of the IoT project is the same (to keep vaccines stored at their correct temperatures throughout manufacturing), but each device contributes unique details. Likewise, encouraging all team leads to use data science will empower everyone to see the big picture of your IoT project. This is a crucial first step before you hire a data scientist to execute the IoT vision.

2019 is your year to invest in the internet of things

Because of their complexity, IoT projects have been historically slow to get off the ground. But 2019 looks poised to change that: Gartner predicts that the chances to drive value with the IoT will be greater than ever (full research available to Gartner clients).

“2019 will see a significant acceleration in IoT value generation, especially in industrial and commercial use cases. End-user consumer IoT innovations continue, with new products and services emerging and growing steadily, but 2019 will be a standout year for industrial and commercial value generation.”

When Gartner asked SMB leaders this year how crucial the IoT is to their businesses, many described it as critical. More than one in three (36%) manufacturing SMB leaders said this, as did more than four out of ten retail leaders (42%).

All percentages reflect the number of respondents in each industry who identified the IoT as critical

In the coming year, you’ll need to keep expectations in check, but that doesn’t mean you can’t start your roll out project/initiative today.

By appointing a technical lead for your project, automating where possible, and writing a strategy for the business problem you want IoT to solve, you’ll pull three full steps ahead of your competition.

Which technologies are small businesses using?

Read Capterra’s Report


Between July and September 2018, we surveyed 715 SMB leaders of U.S.-based businesses with between 2 and 249 employees and less than $100 million USD in enterprise-wide annual revenue. Respondents were required to be involved in purchasing technologies for their organizations and hold the role of manager or above within their companies. An industry needed at least 50 survey respondents to be included in this report.

Looking for Data Center Management software? Check out Capterra's list of the best Data Center Management software solutions.

About the Author

Lauren Maffeo

Lauren Maffeo

Lauren Maffeo leads business intelligence research at Capterra, which matches software shoppers with the right tools and technologies to grow their businesses. As an analyst, Lauren’s areas of interest include speech and natural language tools, data mining techniques, predictive analytics, and building a business case for data science. She has presented her research on bias in AI at Princeton and Columbia Universities, Twitter’s San Francisco headquarters, and Google DevFest DC, among others. She is also a member of the Association for Computing Machinery’s Distinguished Speakers Program.


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