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IoT Sophistication Index - where do you stand?

Stefano Gastaut

Stefano Gastaut

Chief Executive Officer, Vodafone IoT

We’ve now assessed nearly 3,000 companies on our IoT Sophistication Index and it’s clear that there’s a strong correlation between sophistication and the benefits seen from using IoT

What is IoT sophistication?

In February, we published our sixth IoT Barometer, which showed that adoption of the Internet of Things (IoT) had grown to 34% — up from 29% in the previous edition. Furthermore, 81% of those using IoT said their reliance on it had increased in the past 12 months, and 72% reported that digital transformation was now impossible without it. However, not all IoT adopters were seeing the same scale of benefits, so we decided to find out what set the most successful companies apart.

We’ve helped many companies progress from IoT pilots to widely deployed solutions. While working with these companies — of all sizes and across many industries — we noticed that those achieving the best results excelled at both strategy and implementation. But that was just anecdotal, and we wanted to test our hypothesis. That’s why we created the IoT Sophistication Index, which assesses how advanced organisations are, precisely in terms of strategy and implementation.

Strategy, as the name suggests, measures how developed each company’s IoT plan is. It takes into account how reliant the business is on IoT and whether IoT projects are integrated with core business systems and wider objectives. Because data is important for getting the most strategic value from IoT, it also considers whether IoT is being used in conjunction with analytics platforms.

Implementation measures each company’s progress with deploying IoT — even if their projects haven’t gone live yet. It looks at how long organisations have been using IoT, whether they’re at pilot stage or already have multiple full-scale live projects, as well as their future plans. It also takes into account what business objectives they are using, or planning to use, IoT to meet.

Based on their scores for strategy and implementation, companies are plotted on a grid. This shows which of five levels they fall into: from “most sophisticated” (A), through “very sophisticated”, “intermediate” and “beginners” to those that aren’t actively considering IoT (E).

Sophistication improves ROI

Once we’d assessed our pool of companies using the Sophistication Index, we looked at the advantages they were actually seeing from their use of IoT. We took into account the breadth of benefits as well as quantitative measures, like percentage increase in revenue and cost savings. This proved that IoT sophistication has a strong correlation with ROI.


For example, many companies said that IoT had helped them reduce costs. We found that this benefit increased significantly with sophistication. For “beginners” reporting a reduction in costs, the average saving was 13%, while the “most sophisticated” saved an average of 26%.

The same was true where IoT had delivered an increase in revenue. For “beginners” reporting an increase in revenue, the average amount was 16% — that grew to 22% for the “most sophisticated”.

This means that, if you’re using IoT, there’s a huge incentive for you to improve your sophistication; but first you need to know where you stand.

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