Should Your Small Business Invest In The Internet of Things?

Investing in the internet of things (IoT) offers many benefits to SMBs, as well as risks. Here are some things you should consider when deciding whether to invest in IoT for your SMB.

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.

If you are a business owner or manager looking to outperform your peers, pay attention to successful IoT implementations. Poor IoT implementation is worse than not implementing at all.

That’s because the IoT device itself has no inherent value. Like software, the IoT platform’s value lies in the benefits that your business gains from using it. And despite the IoT’s potential to drive value, it can bring a host of technical challenges with it if you’re not careful.

Think of IoT as a digital ecosystem

Consider the 2017 cautionary tale of Emberlight, the company that sold technology that could make any light into a smart light.  The company quickly gained support and success from Kickstarter, but 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.

“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.”^[1]

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, but rather an interconnected ecosystem of data and devices. When one of those elements goes offline, it affects the entire digital ecosystem.

While IoT technology offers many opportunities for SMBs, such as improved efficiency and reduced costs,  it also comes with risks.

SMBs that correctly assess the short-term risks and costs of IoT adoption 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 examine IoT in the context of SMBs, risks SMB leaders such as yourself should be aware of, and how you can mitigate these risks.

Building IoT strategies can be challenging

We often associate the IoT with consumer products that connect to your home’s wireless network, but businesses use them too. Sixty-one percent of companies globally implemented IoT applications in 2019^[2].

Despite this high number, what we don’t know is how many of these use cases of IoT connectivity are successful.

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 chief technology officer (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, which could make your company vulnerable to a cyberattack.

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

Software vendors won’t pass the IoT security test

In 2021, people living in the United States lost an estimated $6.9 billion from cybercrimes, such as extortion, identity theft, and phishing schemes^[3]. Poorly protected IoT devices could be a culprit.

More than one billion attacks occurred in 2021, and more than 900 million of those were IoT-related^[4].

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.

You probably wouldn’t let just anyone into your home and give them the code or key to your safe. Similarly, you shouldn’t let just any technology into your business’s digital ecosystem. As you’re shopping for IoT technologies, pay attention to the technology’s overall security, including the cybersecurity certificates they have and the cybersecurity mitigation strategies they’ve implemented.

As you develop a business strategy for the new IoT technology, consider how you will audit the new technology, test for security vulnerabilities on connected IoT devices, respond to breaches, and stay up-to-date on trending threats. Incorporate this new IoT into future cybersecurity workshops for employees to make sure they know what to do to keep themselves and the company safe.

Colleagues will find business value for the IoT

A heat map tracking the data scientist shortage reveals that 714,548 data science jobs remained unfilled and indicates that the supply of professionals to fill these positions is low^[5]. This shortage is projected to continue plaguing businesses seeking data scientists.

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 using IoT data.

But part of the reason data scientists are in such high demand is because they’re in such short supply. This is partly because the skills of a data scientist are difficult to obtain: They have to know mathematics, statistics, programming, and other big data technologies, while also possessing “soft” skills such as teamwork, communication, and intuition.

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 remain some of the top barriers.

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 need to focus on 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.

For example, IoT tech 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.

Invest in the internet of things only if you can mitigate security risks

Because of their complexity, IoT projects have been historically slow to get off the ground. You’ll need to keep expectations in check, but that doesn’t mean you can’t start your initiative today.

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