American CEOs have Fallen Behind their European Peers in Adopting the Internet of Things

U.S. executives are significantly lagging their European peers in the adoption of Internet of Things technology, research shows, potentially placing their companies at a competitive disadvantage whether they sell autos, healthcare or financial services.

IoT, as it is commonly referred, connects ordinary devices, such as phones, household appliances, car parts and factory equipment through the Internet, essentially allowing them to communicate, also collecting data that companies can learn from. The implications for business are profound: such connectivity can streamline production and distribution operations, while making products “smarter”. Self-driving car technology, for instance, has a strong reliance on IoT applications.

A number of studies have indicated that CEOs recognize the importance of investing in IoT. Non-tech companies accounted for 23% of all deals in the tech sector last year, according to EY, with most acquisitions related to the growing business importance of data and the role of IoT in making sense of it.

Enthusiasm, though, appears to be greatly influenced by region.

“THESE NUMBERS SUGGEST EUROPEAN FIRMS ARE FURTHER ALONG IN THEIR JOURNEY FROM EXPERIMENTATION TO A REAL COMMITMENT TO INTEGRATE AND SCALE.”

A new Bain survey of 500 executives in the U.S and Europe found 27% of European respondents said they were implementing or have already implemented IoT and associated analytics technology, compared with 18% of U.S. executives.

A quarter of Europeans planned to implement IoT solutions in multiple cases and integrate them with their IT systems by 2020, compared with 16% of their U.S. peers.

“These numbers suggest European firms are further along in their journey from experimentation to a real commitment to integrate and scale, moving from pilots and trials to scale deployment,” Bain said.

Although the reason for the discrepancy isn’t entirely clear, Bain suggests it could have something to do with a greater tendency for European companies to trade on a reputation for superior quality and innovation. Germany’s auto sector, for example, is a stronghold of technological innovation, alongside European machinery and building companies.

Illustrating that focus, the survey found executives in Europe were more interested in applying IoT to making better products, while U.S. executives were far more focused on using it to reduce waste and and cut costs.

American CEOs need not despair: taking the lead on technology doesn’t necessarily equate to ultimate success, which also is built around superior marketing and commercialization capabilities. For example, Bain notes that while Nokia and Mercedes were the first to develop smartphone and electric car technology, respectively, they’ve been surpassed by Apple and Tesla.

To make the most out of IoT adoption, the consultancy recommends CEOs comprehensively screen their businesses for opportunities—then scale them rapidly. They’d also want to hire more talented tech people and get busy identifying the right partners to supply technology and deliver solutions.

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Ross Kelly
Ross Kelly is a London-based business journalist. He has been a staff correspondent or editor at The Wall Street Journal, Yahoo Finance and the Australian Associated Press.

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