Internet of Things

Part
01
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Part
01

IoT and Small Business

In 2017, 29% of small businesses had adopted the use of IoT technology as part of their business operations according to a survey of more than 1000 SMEs and SMBs in the US and Europe. The use of IoT within small businesses is expected to rise from 2018 onwards due to the drop in price for devices such as software platforms and sensors, making the technology more affordable. Below we provide further insight into the use of IoT for small and small to medium businesses (SMEs) worldwide.

Methodology

After an extensive search, we found very limited information pertaining specifically to small business (less than 100 employees) use of IoT. Most reports provided figures on small to medium enterprises (SMEs) or businesses as a whole. So while we have attempted to provide the most relevant statistics possible, we have also included information relating to SMEs (business with less than 250 employees) and businesses of all sizes in order to paint a complete picture of the current and future market. We have also used the most relevant data publicly available which includes reports from 2017 to 2016.

Current employment of IoT

A 2017 report by Spiceworks states that 29% of small businesses have currently adopted the use of IoT according to a survey of more than 1000 SMEs and SMBs in the US and Europe. Furthermore, in 2017, 12% of SMEs used IoT operational solutions according to a survey of 1600 technology professionals worldwide.

Close to 20% of all businesses worldwide currently employ IoT technologies according to a survey of more than 3000 technology and business decision-makers from a range of countries including the UK, the US, Australia, Germany and China. Additionally, a 2017 global report by Vodafone found that 84% of businesses have increased their use of IoT technology within the past year.

By country, the US has the largest percentage of SME businesses employing IoT technologies in 2017 with 20%. In contrast, Western Europe reported just 12% of SMEs to be using IoT and only 6% of SMEs in China. With regard to businesses of any size in 2017, the US reports a 27% IoT adoption rate, European businesses similarly with 26% and Asia-Pacific, leading the way with 36%.

Perceptions & Intentions to use IoT

According to a 2017 survey of 1600 international telecommunications and IT professionals within the enterprise sector, 29% of SMEs have not even heard of IoT, let alone begun to implement such systems into their operations. Additionally, 23% of SMEs state that they are not even interested in this type of technology.

Despite the apparent lack of understanding and intention to adopt IoT technologies, according to a survey of small businesses by AVG, around 57% believe that IoT will have a major effect on their bottom line operations in the future. Additionally, a global survey by Forrester in 2016 found that smaller businesses are more open to the idea of IoT than medium and larger businesses. Further information on this is available through a paid report which we unfortunately cannot access.

With regard to locations worldwide, businesses in India and China appear to be the most open to adopting IoT with 72% of respondents stating they do or will use the technology in the future. In the US, a 2016 survey found that only 18% of small businesses identified the adoption of IoT as a top-three priority.

Additionally, the use of IoT within small businesses is expected to rise from 2018 onwards with the drop in price for devices such as software platforms and sensors, making the technology more affordable. IoT will also enable small businesses to make use of more data and help them to interact more positively and productively with their customers.

Conclusion

According to data from a 2017 report, 29% of small businesses had adopted the use of IoT technology, resulting from a survey of more than 1000 SMEs and SMBs in the US and Europe. From 2018 onwards, the use of IoT within small businesses is expected to rise due to the drop in price for devices such as software platforms and sensors.
Part
02
of four
Part
02

IoT and Small Business - Attitudes

The majority of small businesses that are aware of the Internet of Things (IoT) believe it will produce new opportunities and therefore have planned budgets for IoT solutions. Research, however, indicates that there is still work to be done to increase the awareness and understanding of the IoT among small businesses. These conclusions are based on findings from the most recent comprehensive and widely referenced study of small businesses with respect to the IoT which was conducted in 2014.

Avg Technologies Internet of Things Research

In 2014, AVG Technologies, online IoT security specialists, commissioned Vanson Bourne, technology research specialists, to undertake a study of the level of knowledge of the IoT among small businesses and its "likely impact on their operations." AVG Technologies wanted to specifically address the lack of IoT research that focused on small businesses. 2,000 small businesses with 100 employees or less from Australia, Canada, United Kingdom and the United States of America were interviewed.

Results of the AVG study showed that more than 80% of the small businesses who understood the IoT were optimistic about the opportunities it presents for their operations. To that end, 62% of the small businesses indicated they had budgets to develop IoT solutions over the "next 12 months" with 49% of them allocating a "moderate or substantial budget." Furthermore, 46% of the small businesses were planning significant product/service portfolio expansions because the IoT makes it easier to do so. 63% of Canadian and British small businesses had expansion plans, which were nearly double the number of US small businesses at 33%.

AVG's study also revealed that IoT understanding levels among small businesses sat at around 58% indicating that more needs to be done to improve small business knowledge of the IoT. A more recent study of small businesses by Analysys Mason conducted in 8 countries, including the UK, revealed a more grim scenario. According to Analysys Mason's findings, 51% of small businesses were either "unsure or unaware" of the IoT, 23% had no interest in the IoT and only 12% had "some sort of IoT solution."

The top 3 concerns small businesses have about the IoT are risk, complexity, and cost. 54% of small businesses felt the IoT will expose their operations to hacking but 65% indicated IoT security software would allay these fears. 48% of small businesses believed that the IoT would make data security more complicated and 34% expressed similar sentiments about data backups. Finally, 44% of small businesses cited cost as a reason for not investing in IoT solutions. Small businesses indicated that the "hidden cost of mobile devices" is $4,300 in the US and in excess of $5,000 in Canada.

Cases of Internet of Things solutions in small businesses

The IoT has the potential to make small business operations more competitive by reducing costs, improving productivity and opening up new markets. A small vineyard adopted a simple temperature monitoring system from a startup called Valarm that "detects freezes and cold temperatures" which spoil grapes. The system automatically "activates sprinklers" when it gets cold and covers the grapes in ice to protect them. This simple IoT solution has given the small vineyard a competitive edge against larger vineyards with "more sophisticated systems."

In New Bedford, Massachusetts, IoT specialists Inex Advisors have worked with small businesses to introduce IoT innovations. Using "simple networks of sensors and cameras," their solutions have enabled local fishermen to "reduce paperwork while meeting compliance regulations." They have also introduced IoT solutions that allow "local vintners to tap into tiny weather stations" enabling them to monitor their vines more effectively.

The IoT has created opportunities for technology startups. In New York, Bigbelly produces "solar-powered stations" that resemble garbage cans externally but have "trash compactors and sensors" inside. These sensors monitor trash levels in the can and "send notifications" to trash collectors when the cans are full thereby improving "efficiency and reducing costs" for trash collectors.

In the UK, online event stationery company Dotty About Paper plans to invest in IoT solutions in 2018. The company wants IoT solutions that will reduce their operational costs and "create a systematic office." The company is looking to invest in "smart lights, temperature monitoring, and door locking/unlocking" IoT solutions. This example is indicative of the "decreasing cost of sensors and software platforms" for IoT solutions. According to Matt Hunter, former chief designer at the UK Design Council, small business IoT adoption will only accelerate with the introduction of "more straightforward products." Small businesses further need to be confident that IoT solutions will be reliable and secure so IoT solution providers need to "test through all stages of development" and continue to monitor their solutions.

Conclusion

Over 80% of small businesses that know about the IoT have planned IoT budgets because they believe the IoT will create new opportunities. IoT knowledge and understanding among small businesses, however, needs to be improved. Risk, complexity, and cost are the main concerns for small business regarding the IoT.

Part
03
of four
Part
03

IoT and Small Business - Regions

According to a report by Forrester, 14% of small and medium-sized businesses are likely to use IoT technology, compared to 23% of global enterprises. Using triangulation and by making a few assumptions, we have formulated a handful of educated guesses for where small business interest in and adoption of IoT is likely to the highest across Latin America, Europe, Africa, and the APAC.

Latin America:
Of all countries in LatAm, Mexico likely has the highest level of interest in IoT for small business, specifically in the regions around the City of Tequila and Mexico City. Columbia and Chile are also likely to have high rates of IoT interest among small business, especially near the cities of Santiago and Medellin.

Europe:
Germany is likely to have the highest level of small business interest in IoT in Western Europe, along with the U.K. and France. Additionally, Eastern Europe is showing high levels of interest in IoT overall, and the Czech Republic specifically has a very high number of small businesses, which could indicate significant small business IoT interest in this country as well.

Africa:
Small businesses across Africa are showing a lot of interest in IoT technology, as this technology is known to be incredibly beneficial to the overall lives and businesses of African people. Specifically, South Africa and Kenya are likely to have the highest rates of interest in IoT among small businesses.

APAC:
Within the APAC region, Singapore is known as the IoT hub currently. India is also likely to have a significantly high level of small business interest in IoT in the near future, as the country is undergoing massive numbers of IoT infrastructure projects, the country has an incredibly high number of small businesses, and programs are being set up to help support internet penetration among these small businesses.

methodology

After searching exhaustively though industry and market reports, government databases, and trusted media sites, we did not find a significant amount of direct, quantitative data pertaining to where small business IoT demand and adoption is highest. However, we have used any available information and related information to triangulate some educated guesses. In doing so, we have looked at this topic through several lenses: regions where there are the highest concentrations of small businesses, regions where IoT technology is expected to make the most significant impacts, regions and cities that are considered to be IoT hubs for development and innovation (including smart cities), and regions where IoT use is already high according to market share. While there is a lot of information pertaining to IoT in general, the main challenge came in locating direct findings which quantitatively outline rates of awareness, interest and adoption among small businesses specifically. Therefore, we have triangulated our findings regarding small business concentration overall, against our findings regarding IoT awareness/adoption concentration overall, and have identified areas of overlap in order to determine the regions in which we believe small businesses are likely to be showing the most interest. We have also used any helpful qualitative insights to support these findings.

Overall, we have aimed to provide information no older than two years, and have done so for the majority of instances. We did include a couple of older sources, however these sources were used more as supporting data to help understand the concentrations of small businesses. In these cases, we have used the most recent insights available as published by the most reputable sources we could find, for instance the World Bank. All information we provided pertaining to IoT specifically is from the past two years, minus one or two insights located that are from 2015.

Below, you will find a breakdown of our findings by region. We have not included analysis on the North American region as we felt this information may be redundant, given that North America is the IoT market leader by far, and has a 44% share of the IIoT market specifically. However, some interesting insights on small business IoT adoption in the U.S. can be found here for further reading.

Latin America

With regard to IIoT specifically, LatAm is expected to have well below a 9% market share through 2022, considering that North America, Europe, and APAC make up the largest shares the market, and the rest of the world falls within the remaining 9% share.

Despite this, we believe that small business general IoT interest in the LatAm region could be quite promising given that Latin America is expected to see the fastest growth of all regions in IoT spending at a rate of 21.7% CAGR through 2021, and around 85% of all businesses in LatAm fall into the small business category. Around 33% of small businesses are in the manufacturing sector, which we believe is promising for IIoT small business interest specifically.

Of all regions located within LatAm, Mexico likely has the highest level of small business IoT interest, given that Mexico has a large agricultural industry which makes up 3.71% of Mexico's total GDP, and the agriculture segment makes up 4% of the IoT market. Mexico is also the "sixth largest auto part producer in the world," and given that the IoT manufacturing segment makes up 16% of the global IoT market, it is likely that these technologies are peeking the interest of small businesses operating within this space. Within Mexico, the City of Tequila is a hub of smart city innovation, therefore we assume it is likely that small businesses within this region have a high level of IoT awareness.

Overall, the smart city market in LatAm is looking very promising, with expected growth of 19.4% per year through 2020, landing at a market size of $758 billion. Santiago (Chile), Mexico City (Mexico), and Medellin (Columbia) are all rising smart cities in the LatAm region, and given the high number of small businesses in LatAm overall, we would assume small businesses located near these regions are likely becoming interested in and beginning to adopt IoT technology.

Paraguay and Ecuador are also likely to show high concentrations of small business IoT interests, as they have the third and fifth highest concentrations of MSMEs per capita, respectively, out of every other country in the world. Paraguay has 95 MSMEs per 1,000 people, and Ecuador has 84 MSMEs per 1,000 people.

EUROPE

With regard to IIoT, Europe currently holds a 29% share of the market, with 34% of small businesses in Eastern Europe operating in the manufacturing sector, which could indicate some significant IIoT small business interest in Europe's eastern region. The Czech Republic has the fourth highest concentration of MSMEs per capita, at 85 MSME per 1,000 people.

In looking specifically at Western Europe, 99% of businesses fall into the small-medium category, and Europe is definitely a hotbed of IoT activity as shown by this map. Therefore, we would expect to see a highly significant rate of IoT interest among small business in Western Europe. This is further compounded by the fact that Western Europe is expected to reign in $247 billion in IoT spending through 2021.

Within Western Europe, Germany is perhaps the region likely to show the overall highest level of interest among small business, as IoT awareness in general was posted at 88%, as of 2015. By 2020, the U.K., Germany, and France "are expected to have the largest market size for IoT in Europe."

AFRICA

Overall, our research findings show a very high level of IoT interest among small businesses, as IoT technology is understood to be able to make very significant positive impacts on small businesses in this region. Furthermore, around 95% of businesses in Sub-Saharan Africa fall into the small business category, with 35% of these small businesses operating in manufacturing.

South Africa likely has the highest level of IoT interest among small businesses, as "African Analysis forecasts that the IoT installed base in South Africa will reach 35 million by 2020." We believe Kenya to be another African country where small business interest in IoT is likely to be high, as "Kenya has been putting a lot of effort and resources into growing ICT related businesses to foster innovation and develop a dynamic and sustainable ICT sector," and Nairobi, Kenya recently hosted the 2017 IoT Africa conference.

Overall, the Middle East and Africa are expected to see a growth of 21.6% CAGR in IoT spending through 2021.

ASIA-PACIFIC

The APAC region has an 18% share of the IIOT market specifically, a very high number of small businesses, especially in the manufacturing sector. Of all business in East Asia-Pacific, 95% are in the small business category. The same holds true for 85% of businesses in central Asia, and 83% for South Asia. Percentage of manufacturing small business in these regions are 33%, 34% and 50% respectively. Brunei Darussalam and Indonesia have the first and second highest concentration of small business per capita out of every country in the world, with 122 and 100 small business per 1,000 people, respectively.

Overall small business interest in IoT would likely be significantly high in this region given the high number of small businesses tied together with the fact that "Asia/Pacific (excluding Japan) will be the IoT investment leader [between 2017 and 2021] with spending expected to reach $455 billion in 2021."

Within the region, Singapore is currently known as the IoT hub, however India is currently undertaking a rather impressive smart city project, the full scope of which can be seen here. According to this map, the highest concentrations of smart cities will be located on India's southern tip, as well as in the central-northern region of the country. The first 20 smart city developments are planned for Bhubaneswar, Pune, Jaipur, Surat, Kochi, Ahmedabad, Jabalpur, Vishakhapatnam, Solapur, Davangere, Indore, New Delhi, Coimbatore, Kakinada, Belgaum, Udaipur, Guwahati, Chennai, Ludhiana, and Bhopal. Additionally, as of 2017, India has 52 million small businesses, up from 48 million in 2015 (which was twice as many as the number of small businesses in the U.S. at the time). It is important to note that only 32% of these businesses have an online presence, which might indicate low internet penetration, however we believe the development of a large number of smart cities in the country would signal growing awareness and adoption of internet and IoT technologies in this country. For instance, Google has recently launched a series of free training programs to help these businesses get online.


conclusion

In closing, we have provided a triangulated analysis of the global regions in which we believe small business interest and adoption in IoT is likely the highest. We have conducted in depth analysis across Latin America, Europe, Africa, and the APAC regions.




Part
04
of four
Part
04

IoT and Small Business - Advantages

The opportunities for small businesses to utilize the IoT in their competition with larger enterprises are both numerous and sundry.
The IoT can open up new business opportunities/revenue streams, improve customer service, enhance productivity, reduce labor costs, increase workspace efficiency, and even garner market insight, for small businesses with much less investment, as compared to large operations.

METHODOLOGY
We searched through news coverage and industry reports on the topic of the IoT and small businesses, focusing on the US and focusing on sources published within the last 12 months. In some cases we have used sources that were published within the last 24 months. This is because the opportunities that they are discussing are still relevant.

OPPORTUNITIES
According to a recent AVG study, "57% of small business think the IoT will have a significant effect on their bottom line". This shows us that the IoT will play a significant role for small businesses in the US in the coming years. In fact, the adoption of the IoT by SMBs (small and mid size businesses) presents a $9 billion opportunity in the US.

1. IoT Opens up new Business Opportunities:
Bigbelly is an example of a small business who used the IoT to create an entirely new and innovative business. Bigbelly created a device which acts as a "sophisticated trash compactor with sensors that monitor how full the cans are". The device then "sends notifications to the appropriate officials through the cloud when the cans need to be full." Bigbelly's solution successfully reduced the number of trash collections that needed to take place in New York City. This example shows how small businesses can use IoT to solve a problem in an industry and create something new that larger companies may not be addressing. It shows how the IoT opens up numerous businesses opportunities for small business.

2. Leveling the Playing Field:
The IoT can be used in order to automate simple tasks and minimize administration. For a small business this can improve the productivity of the company. For example the IoT can be used to save time tracking stock levels or monitoring time sheets, and this "could be the difference between developing a new product or never managing to find the time." This means that, through use of the IoT, small businesses have the chance to put their time towards producing new products that may help them to compete with larger enterprises.

3. Improving Customer Service:
In implementing IoT solutions small businesses have the opportunity to observe consumer behavior through the data that they are collecting. This opens up the ability for these small companies to analyze feedback and react in a timely fashion in order to make improvements. Using the IoT to improve customer service will result in higher customer loyalty to small businesses, helping them to get the edge over large businesses.

4. Productivity Enhancement:
Quansett Nurseries (a small Massachusetts based company, with only 2-10 employees) used the IoT to help to monitor and streamline processes involved in growing and caring for their produce. They implemented software to "control growing conditions automatically, triggering the watering system when the greens needed hydration". This enabled them to grow tiny edible vegetables and herbs to sell to restaurants. The IoT addressed their single weakness as a business, that "different micro greens require different weather conditions for optimal growth and yield." Using the IoT enabled them to successfully and reliably produce a unique product that was in great demand, helping them to get ahead of their larger competitors.

5. Reduce Labor Costs:
A Houston bike shop (the small company of Bike Lane) began using electronic tags to digitally manage inventory, streamlining their business and reducing labor costs." Bike Lane began tracking their bicycles with radio frequency identification (RFID), and since its implementation they have reported boosted sales and reduced labor. They have linked these effects as being related to saving employees time searching for inventory. Small companies can take advantage of affordable and easily manageable IoT solutions, such as RFID technology, in order to save money on labor.

8. Increasing Workspace Efficiency:
IoT connected products can now make working spaces more efficient for a small business. Products such as the Nest thermostat, Amazon Dash button device, and smart light bulbs can help cut overheads for small businesses.

7. Gaining Market Insight:
Finally, we found that small businesses can take advantage of the data that they may be collecting through the IoT in order to analyze it and gain a competitive advantage. "Marketers, for example, can gather valuable insight into how their products are used and which demographic is utilizing them the most. This information can then inform future marketing efforts and give businesses more direction on how to improve their products and services for their customers." This is something that larger companies are already doing, so small companies can keep up with them by using the IoT in this way.

CONCLUSION
Overall, we have found a total of seven opportunities the IoT presents to small businesses as they compete with large enterprises. These are: opening up new business opportunities, leveling the playing field, improving customer service, productivity enhancement, reducing labor costs, increasing workspace efficiency, and gaining market insight. We have been able to illustrate these opportunities with case studies from small US companies Bigbelly, Quansett Nurseries and Bike Lane.
Sources
Sources