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5 Reasons Industrial IoT Projects Fail and How to Move Past Proof of Concept

Posted by Ian Uriarte

October 5, 2020

Let’s talk about Industrial IoT projects (IIoT).

First you’re like: 

“The IIoT market is expected to grow from USD 77.3 billion in 2020 to USD 110.6 billion by 2025”


But then you’re like: 

 “30% of IoT projects were stalling at proof of concept.”

-Microsoft, 2019


Industrial Internet of Things. IIoT. This is the technology that is currently changing our world.

…But not without a few challenges. 

Before we can talk about the reasons Industrial IoT (IIoT) projects fail, we need to make sure we all know what kinds of projects we’re talking about. Therefore, briefly… 


Cityscape from a distance


What is considered IoT? 

We’re talking about projects that: 

  • Connect “things” (machines, objects, animals, people, processes, or environments, etc.) to the internet. 
  • Involve sending and receiving data to a data center or the Cloud from the connected “things”
  • Act on the data, whether to automate a process or compare to historical data to predict performance, etc. 
  • Eliminate or minimize the need for human-to-human or human-to-computer interaction in order to send/receive that data


Examples of Industrial IoT Projects 

  1. Automating patient onboarding at a hospital via electronic forms, sensors, buttons, and switches in an integrated and automated flow of data and actions. We cut down from dozens of human-made and filled-in forms and steps (and months of work) to one fluid computerized process. 
  2. Placing overflow sensors on out-of-the-way water treatment equipment that’s connected to a mobile application and alert system. We enabled managers to know immediately when there’s a wastewater spill. 
  3. Placing diagnostic sensors on individual refrigerated containers with real time data on the temperatures of each container. We automated sending alerts when the temperature rises or lowers when outside a specified range. That way it can be fixed, whether it’s in a shipping yard or a cargo ship, or somewhere in between. 

If you’re like us, you probably think these projects sound pretty cool. So why isn’t everyone doing it? What’s stopping the Internet of Things from connecting everything? 

Disclaimer: IoT is, by definition, ridiculously broad and abstract. The following speculations into reasons IoT projects fail are based on our experience over years of automation, telematics, telerobotics, and enterprise IoT. We definitely know what we’re talking about…there’s just so much to talk about, that we don’t pretend to include everything here. 


Therefore, in our experience, what are the main reasons Industrial IoT projects fail? 

And what can you do to mitigate those failures and take advantage of the full potential of IoT? 


View of the city from street level

1- Industrial IoT projects can be really big

That’s an understatement. Industrial IoT projects can be gigantic. They usually require many different skill sets and often span multiple departments, if not the entire organization. And even the IIoT projects that aren’t so large in scope, are still usually quite complex to execute.  In order for these projects to get past proof of concept and deliver value, you NEED everyone to play nice. For an extended period of time. Like years.

You need people from operations, from business, from IT, field operational technology, working together towards a goal to bring value to their customers and end consumers. They’re probably working together for the first time. Most likely most of them have never worked on an IIoT project before.

How do you move forward? 

You establish clear goals for your organization. This might seem like a no-brainer, but it is absolutely worth repeating. You need a strategy. According to Microsoft, 25% of IIoT projects stalled at Proof of Concept due to the lack of a good strategy. 

Know what you want to achieve, who it is going to need, and who it is going to affect. Once you know what you want out of the project, take a small slice of that and go after it. Break it down into achievable pieces. Don’t look at the forest and get overwhelmed.  Focus on the individual trees that will bring the forest to life.


City at sunset from a distance

2- There’s no common governance 

Since industrial IoT projects span so many different disciplines, it’s challenging to identify a single project leader who can handle it. Not everyone can understand all the nuances associated with an IoT project. And when there’s not a clear person with the final word who really gets it, the project doesn’t move forward.

We’ve seen this play out first-hand. Back in the days of telematics, we were on an oil & gas project. The lack of communication and collaborative leadership between the OTs (operational technicians) on the drilling rigs and the ITs on shore was preventing the company from automating processes in a way that would realistically work. 


A bit about IT versus OT

Operation Technology (OT) and Information Technology (IT) are completely different worlds. IT knows technology, but they usually aren’t ever in the field to see it work in real life. OT doesn’t care what the technology is. They just want it to work right and work now.

In our case, IT on the “beach” was creating processes for workers in the field based on theoretical knowledge. In the field, or on the open sea rather, OT was changing these processes based on what they knew about their operation. And in the end, nothing was advancing the way it was supposed to. 

So, to summarize, you need someone who speaks both languages to manage the project.

What characteristics do IIoT project leaders need to have?

IIoT projects require leadership who can navigate the worlds of OT, IT, and business. We can throw networks, wireless communications, data integration, application integration, data management lifecycle, and front-end application management with analytics into the mix too. Those are real handy to know.

Decision-makers don’t have to be technical experts. But they do need to know the extent of the capabilities of the technologies.


Big Picture Versus Details

The person in charge of your IIoT project needs to have the ability to lead teams by listening to the experts and relying on their judgment. They should understand each part of the value chain. They also need to maintain a broader vision of the implementation process, in order to make all-encompassing decisions that move the project forward and produce value.

What did we do on our oil & gas project above? Under the guidance of a great product manager who had both software product knowledge and extensive experience in the field, we brought IT and OT out of their comfort zone into collaboration. Extended trips between the beach and the open sea for people who would have never stepped into each other’s workspaces otherwise proved to bridge the gap.

This solution was only able to be successful once the company directors and VPs were able to understand the issues between the departments. Acknowledging the value of the project manager’s experience by granting him authority of the project and empowering him to make the necessary decisions was key.


View of skyscrapers from the street

3- Without Industrial IoT experience, the value to be had is not always clear 

Companies don’t always understand the potential value of the IIoT project. In fact, Microsoft also reported that 28% of organizations attributed their failed IIoT projects to lack of clear value or ROI.


Value is dependent on on priorities

Often this arises because the IIoT project is being headed by people and departments with different priorities. 

We were working on a POC with the maintenance department of an international ice cream company. They were storing millions of dollars of ice cream in their distribution centers and dealing with debilitating storms. Whenever a storm would hit and take out the electrical grid, they would need to rush in with generators to keep the warehouses at -20 Fahrenheit so the millions of dollars worth of ice cream wouldn’t melt. (And I thought dropping my ice cream cone on the sidewalk was tragic…) 

The catch was that they didn’t have as many spare generators as warehouses. They had a limited number mounted on semi trucks, ready to do the “rushing”. However, it was a constant gamble for maintenance to know where to have the trucks ready and waiting to be close enough to the right warehouse to catch the problem on time. 

Since the project was with maintenance and their priorities were very operation-based, they shot down the proposed cost as being out of their budget. But when proposed to the business side of operations, they declared it as definitely worthwhile, considering the potential losses. They had the big picture in mind and therefore the value to be had.


How can you evaluate value to be had with Industrial IoT?

The right leader can see through the haze and estimate the value to be had. We’ve worked with project directors who knew exactly how much money per day they were losing by having downed equipment. For one client, they were losing half a million dollars a day. If they did absolutely nothing, they would continue losing nearly $13 million a year. 

Industrial IoT projects are expensive. Millions of dollars potentially. But if you are losing $13 million a year, it becomes easier to calculate how much you are willing to spend to cut down your losses. 

People who’ve done automation, telematics, or telerobotics have a better idea of what the value could be. 


A city silhouette near sunset with the sun in the background

4- Making asset data accessible is an investment 

You can’t analyze data you don’t have access to. And you do want access to your data. That’s how you make decisions and predictions based on historical performance. 

Connecting sensors to objects, people, and processes isn’t enough. You have to get that locally stored data from the historian into the data center or the cloud. From the field to the internet. Hint: That’s why it’s called “internet of things”. 

One of our clients had been collecting data for years. However, the vast majority of that data had never left the field. By the time data would be manually collected to analyze, any issues had been going on for far too long. That translated into tens of thousands of dollars of penalties. One of the main issues here was the inaccessibility of the data. They couldn’t analyze data they didn’t have access to. 


Data lets us make predictions

It’s an investment, building the highway to get data from local storage to cloud storage. But it’s an investment that’s necessary in order to be able to make predictions, analysis, and automation based on that data. By using IoT to make their data accessible instantly, our client was able to not only know when problems arose, as soon as it happened, but predict when equipment was going to fail. 

At the end of the day, the data highway itself won’t give you value right away. It’s the value in the future that makes it worth it. It’s the ability to analyze and assess in real time in order to predict future performance and issues. Reacting the problems as soon as they happen is critical, but predicting them before they happen is kind of like magic. Achievable magic with the right tech.


View of the city at night with car lights

5- Data and device integration is a constantly evolving challenge 

IoT integration is a whole new level of complexity. It’s also one of the main reasons IoT projects fail. Specifically because: 

There is just SO MUCH DATA that you’re going to be dealing with

And, according to Harvard Business Review, less than half of all structured data is actively used in decision making and less than 1% of unstructured data is even used at all.  

No data leads to no decisions. Incomplete data leads to bad decisions. The right data leads to: 

  • Current operation visibility
  • Future performance and issues predictions 
  • Process automation
  • Etc.

There is potentially A TON of connected devices as well 

Around 30 billion, to be more or less exact. 41.6 billion by 2025

The number of devices is one challenge. Types of devices is another. Integration of different types of devices with different types of “things” affects how each device will communicate with the data center/cloud. Once in the data center, it affects how that information will be translated into actionable information. 

Remember, things: assets, equipment, processes, and people, etc.

Once you have your things connected and communicating correctly, it’s just a matter of analyzing the data, establishing protocols, and automating processes. More or less…


How can we make data integration smoother?

As we mention in more detail in a previous article on data integration

  • Take time to plan ahead. 
  • Work with people in IT, operations, and IoT partners with knowledge of data integration and data lifecycle management
  • Use accepted IoT standards 
  • Employ a middleware solution 
  • Insist on secure communication 


View from a car of skyscrapers

Is Industrial IoT Worth It? 

IoT is daunting. You might be asking yourself if IIoT is really beneficial enough to make it worth it to embark on this journey of business disruption. With all these reasons why IoT projects fail, is there value to be had in IoT? 

Simply put: Yes. 


Examples of how Industrial IoT brings tangible value to your business and operations:

  • Sense warning signs when equipment is failing or underperforming in real-time
  • Address equipment failures or underperformance before problems occur
  • Know immediately what equipment needs maintenance and create more accurate maintenance schedules, avoiding unnecessary labor and equipment downtime
  • Maintenance work is planned while equipment and systems remain online and workers on the floor/in the field, rather than as an emergency reaction to failure
  • Cost savings based on preventative maintenance and efficient use of energy 
  • Track location of physical assets and human assets in real time 
  • Monitor temperature of individual containers in real-time and prevent loss of product
  • Automate inventory visibility and enable smarter inventory management 
  • Improve supply chain management


There are things on this list that we simply cannot do without Industrial IoT. There are things we can do, but only with manual or semi-automated procedures, which are slow and subject to human error. Industrial IoT enables us to do the above with minimum or no human intervention and based on more accurate, real-time data. 

So yes. The potential value to be gained with Industrial IoT projects is worth it.

Industrial IoT project success can transform your company and prepare you for the future. Make sure your IIoT project is managed by someone that knows IT, OT, and business. Staff it with people who have vision and commitment to learn the skills needed to make it work. And always keep the potential value in mind so you don’t get lost in the details. 

Industrial IoT projects aren’t easy, but successfully implemented, they can bring so much value to your company. We’re just here to help you see your project performing the way it should, so you can reap the rewards and achieve success.