IoT Analytics Predicts More Applications with 47% AI Infusion in 2027

Emma Okonji

IoT Analytics, a leading global provider of market insights and strategic business intelligence for the Internet of Things (IoT), Artificial Intelligence (AI), Cloud, Edge, and Industry 4.0, has predicted that there will be more IoT applications developed globally with the infusion of 47 per cent AI element in all developed IoT applications by 2027. 

In its latest report, which focused on new IoT market evaluation, spending outlook, and strategies, IoT disclosed that its enterprise spending reached $201 billion in 2022, significantly lower than many had previously predicted and that IoT adopters would focus on building the IoT software backbone in the next five years.

Analysing the report, the CEO at IoT Analytics, Knud Lasse Lueth, said: “The IoT is evolving. Software for example is becoming a more important part of the IoT stack, more specifically IoT applications. AI is also starting to play a bigger role. We are observing that IoT vendors deploy five distinct strategies for winning in this changing IoT market. The partner ecosystem for example is becoming a crucial element in any IoT vendors’ go-to-market and IoT delivery.”

Evaluating the IoT market, the report cited its January 2023 IoT market update, which stated that IoT enterprise spending reached $201 billion in 2022, up from below $100 billion in 2018.

The report further explained that the number of global active IoT connections grew by 18 per cent in 2022 to 14.4 billion active IoT endpoints. “In 2023, IoT Analytics expects the global number of connected IoT devices to grow another 16 per cent to 16.7 billion. While 2023 growth is forecasted to be slightly lower than it was in 2022, IoT device connections are expected to continue to grow for many years to come,” the report added.

Giving insight into the IoT market in 2023 and beyond, the report said: “IoT technology in 2023 adds value to organisations in all verticals, from manufacturing to retail and transport. In 2023, 87 per cent of all IoT projects met or exceeded expectations, based on a 2023 survey of 300 IoT decision-makers that will be published in an upcoming IoT Analytics adoption report. Some companies have connected millions of connected IoT devices and are looking to expand with more sophisticated software tools. Despite several key challenges related to interoperability, skills and know-how, and chipset supply, companies do not question if they should do IoT but rather how it will be scaling for them.”

Speaking about the IoT technology maturity framework, Lueth said: “To understand how the IoT tech stack is changing and where the growth opportunities in IoT are going forward, one needs to consider a typical technology-focused maturity curve that an IoT adopter goes through.”

He listed five curve indices to include: Enabling the asset, Establishing connectivity, Creating the software backbone, Building value adding IoT applications and Infusing AI into IoT.      

According to Lueth, in the first stage, whether it is a smart washing machine, a heavy asset in a factory, or a ship at sea, companies need to invest in sensors and local controllers/gateways to be able to process IoT data.

In the second stage, Lueth said enterprise end users must establish and simplify the connectivity to their IoT hardware, while in the third stage, companies must invest in the software backbone that allow them to access various IoT data sources and build valuable services.

Lueth further said in the fourth stage of IoT maturity, IoT end users must build cloud native or edge-based applications that make use of IoT data at scale, while enabling business with AI in the fifth stage of IoT maturity. This is where companies explore ways to augment existing applications and build new applications by embedding AI, Lueth said, adding that machine vision and predictive maintenance are two of the most common AI-enabled IoT use cases today.

By 2027, nearly half of all Industrial Internet of Things (IIoT) applications will have some AI element with the share of AI-augmented applications tripling in that time frame from 11 per cent to 34 per cent, as many software vendors are currently undergoing large internal exercises on how they can augment their existing software offerings with the use of AI, the report added. In May 2023, for example, SAP announced 15 new business AI capabilities across the existing Enterprise Resource Planning (ERP) product portfolio, including nine new generative AI scenarios, the report further said.