Is 2016 the tipping point for M2M?

August 27, 2014

Is 2016 the tipping point for M2M?

With the Internet of Things set to grow from 4.4 billion connected devices this year to 10.3 billion by 2018 (according to Machina Research), every bu...

With the Internet of Things set to grow from 4.4 billion connected devices this year to 10.3 billion by 2018 (according to Machina Research), every business and industry will inevitably feel its impact. And while the adoption of machine-to-machine (M2M) strategies is on the rise, many businesses have yet to act, leaving them at a crossroads in which they must choose to embrace this burgeoning opportunity or risk being left behind.

Last week, Vodafone unveiled its findings for the Americas from the second annual M2M Adoption Barometer, a global survey of the M2M market. The study finds that more than half of companies expect to implement M2M by 2016, and on a global basis, M2M adoption has increased by more than 80 percent in the last year. Over half of companies close to implementing an M2M project expect to see a return on investment within a year, and 89 percent within two years.

Three sectors have also emerged as front runners, according to the survey results: automotive, consumer electronics, and energy and utilities. Automotive is the most mature, where M2M is now seen as an enabler for additional services, including remote maintenance and infotainment. Adoption in energy and utilities is also growing rapidly as smart home and office services, like intelligent heating and connected security, gain popularity.

Meanwhile, the consumer electronics sector is at the forefront of a dramatic shift from the warehouse to the living room, fueled by the use of M2M in connected devices, such as smart televisions and game consoles. The research shows that nearly three quarters of consumer electronics companies will have adopted some form of M2M by 2016, whether it be for new products, logistics, or production. 96 percent of organizations in the Americas implementing M2M strategies have already reaped the benefits of greater competitive advantage, cost savings, and productivity. When considering your own M2M strategy, what can be learned from these early adopters?

To be a leader and not a follower in this space, companies must first be willing to adapt their processes and their culture, leverage the data gathered more widely, and drive it hard from the very beginning. For these organizations, M2M ties into leveraging big data, mobility, and the cloud to usher in a new age of automation, agility, and competitive edge.

Although barriers for adoption do remain, as many face concerns over security and challenges of global deployment, often this is just a sign of cultural resistance to change. Businesses encountered a similar response to cloud computing just a few years ago. Cost savings was the primary driver for investigating the cloud, and security concerns were the main reason for delaying adoption. But as the technology – and the understanding of it – evolved, concerns subsided and now there are very few companies that don’t use the cloud in some manner.

M2M has already begun to evolve, and companies are looking beyond cost-cutting to how it can drive innovation and enable new business initiatives. Adapting the course of an entire business may seem ambitious, but by taking a step-by-step approach, change can come quickly, followed by immediate ROI.

Companies should not only consider how to use M2M from an internal business perspective, but how it can transform customer-facing processes, delivering better, more consistent service and increasing differentiation to create a competitive edge. Leveraging more mature M2M applications, such as fleet and inventory management, where possible and utilizing partners who understand the sector and can ensure solutions are well integrated will also help companies drive more value from M2M projects.

Lastly, it’s crucial to actively pursue C-level support, as well as embrace the cultural, technological and process changes. Consider M2M within the context of other major technology transformations, particularly big data, as M2M and analytics go hand-in-hand.

Maturity of M2M technologies, combined with and an ever-growing interest in driving cost savings and capitalizing on Internet of Things business opportunities, makes now the prime time to dive head first into M2M projects, or risk being left behind. Considering these factors, we anticipate the remainder of 2014 and 2015 to be a critical period for M2M adoption, with more widespread adoption underway by 2016.

Andrew Morawski is Head of Machine to Machine in the Americas for Vodafone. His key area of focus for the region is the application of M2M technologies that enable creative new business models to drive growth in both established and emerging markets.

Andrew Morawski, Vodafone