5 Reasons Why Businesses Leave the Home Automation Industry
…And what you can do to avoid that fate.
In May 2017 Cisco held another Internet of Things World Forum in London where it was revealed that 64% of IoT businesses have progressed after learning from failed attempts in the industry.
It looks like learning from other’s mistakes rather than successes is especially important in the IoT industry, where almost three-fourth of all initiatives fail.
After all, we should also remember about the concept of survivorship bias coined by statistician Abraham Wald. During World War II, Abraham Wald cited research from the Center for Naval Analyses that in order to improve aircraft armor, they must reinforce the undamaged areas of the returning airplanes, since those were the areas that, if hit, would cause the plane to be lost.
So here are the top 5 most mentioned and discussed reasons IoT projects fail.
1. Failed proof of concept
60% of respondents noted that IoT products often look good in imagination, but turn out to be much more difficult and complex in reality.
When expectations don’t meet the reality, it may mean, the idea author (stakeholder) may not have enough experience or industry expertise and/or doesn’t have enough advisors to consult with to work out the kinks in the system.
Thus, make sure you are surrounded with such experts.
It is also interesting that while 35% of IT executives consider their project a success, only 15% of business executives think the same. So failing on the proof-of-concept stage may also point to imperfect communication between a CEO and a CTO.
In the end, 54% of decision-makers reported that the main factor of success is proper collaboration between IT and business side.
2. Inability to get the product launched in time
This may happen due to a lot of different reasons: under planning, lack of integration across teams, mistakes caused by lack of expertise, budget limitations and so on.
There’s no universal recipe on how to fix this pervasive and complex problem, but knowing that deadlines are extremely hard to follow in the IoT industry, you might want to improve your planning and team management approaches.
3. Too much focus on technology
Many businesses today are tempted to begin a business with the idea that a brilliant new technology will automatically translate to a useful product.
Sometimes, new technology or methodology may appear to be ready to topple established products or practices in the industry, after all, if you can launch an e-store with Shopify within hours, why not build an IoT business centered around that rather than invest in current, and cumbersome looking IoT platforms from IBM?
Even worse iis when founders are driven by a specific technology when developing their product and feel married to it. But with the speed of developing technology, who knows when the industry will take a turn. A few years ago, people were talking about microservices. Then there was big data. Now it’s blockchain. So, why not couple up IoT and blockchain? Wouldn’t that be revolutionary?
In theory maybe it could be justified, but in reality the main focus of a great CEO should be the value their product or service brings to people, not the technologies that make it possible.
4. Failing at logistics
Unlike the Software-as-a-service model, physical devices require perfectly tuned assembly, inventory management, delivery and provisioning processes. It may seem that logistics is simple, especially with the help of third-party partners, but due to its unpredictable nature it actually is a difficult process.
Here’s how Yodit Santon, CEO of OpenSensors.io, put in on the annual ThingMonk IoT developer conference in London in September 2017:
“We have supply chains, we manage complex supply chains. We have an inventory management system, because we have to manage hardware. We have distribution networks, I have to figure out how to get sensors from the UK to other countries. This stuff takes up 40% of our time and money and this stuff should take up 40% of your time and money, at least.”
5. Not learning from failures
This may sound pretty self-explanatory, but it relates to the IoT industry in a special manner.
For instance, we’ve been hearing about lack the of security in IoT solutions for the past few years now. What has changed? In 2017 Bluetooth Low Energy, an energy-efficient yet very vulnerable and insecure technology is still our most used option for device connectivity. Smart home businesses do not hesitate to continue releasing BLE-enabled solutions adding more devices to this already vulnerable category. Rather than adapting the technology from the wealth of data already available, businesses continue to rely on faulty or lacking solutions, rather than learning from past mistakes and developing new ones.
Keeping these 5 common reasons for home automation business failure may not guarantee the success of your venture, but it will certainly give you leverage, perhaps time, to adapt, develop, and ultimately learn, so that current projects or future endeavors do not suffer the same failed fate of other projects that never saw the light of day.
