IoT Adoption Barriers: Evidence from Data Collection

Methodology

Instrument development

The survey was developed using the Qualtrics web tool. Qualtrics is a web-based platform for developing surveys, collecting and storing data and conducting other data collection activities. Two versions of the questionnaire were developed. The first one consisted of an introductory page informing respondents about the project, the purpose of the survey and providing the confidentiality statement. The second part of the questionnaire included questions which aimed at gathering the profile of the respondents (i.e. their position within the company and contact details), to validate the company details, which were already publicly available, and identify the relation/involvement of organisations in IoT. The third section was aimed at measuring the degree to which organisations face the challenges identified in the literature (academic literature, industry reports, experts’ insights, web articles etc.). 83 factors referring to legal, technological, financial, human, knowledge-gap and organisational groups of barriers were converted into a question format with seven-point Likert scales with “disagree” – “agree” anchors to measure the degree to which those barriers apply to companies. The fourth section of the questionnaire was aimed at identifying the type of support that would help companies overcome barriers. For collecting feedback on the initial questionnaire, the pilot survey was filled in by the participants of the Tech Tuesday event (the event organised by Newcastle University School of Computing, Newcastle University Business School, Institute of Coding at Newcastle University and the Sphere Network) - the representatives of IoT-specific companies in the North-East. They accessed the online version of the questionnaire through a URL. Only two questionnaires were returned, with the recommendation to simplify the questionnaire.

To address the comments from piloting the data collection tool, a second version of the survey was designed. The survey was shortened and simplified by removing the questions for validating company details as well as the level of cooperation with other companies from the IoT sector. The questions relating to barriers and support were simplified in such a way that the need for ranking specific issues related to each sub-group of legal, technological, financial, human, knowledge-gap and organisational barriers was eliminated. The shortened list of barriers was fitted onto one page of the questionnaire to ensure convenience when filling it in. The final list of barriers consisted of 19 closed-choice questions and 6 questions requesting respodents to specify other types of barriers for each category, if they exist. The respondents had to indicate the strength to which the company faces each type of barrier on a 7-point Likert scale between “strongly disagree” to “strongly agree”. The final list of barriers provided to respondents for ranking and their sources is presented in table 1.

Table 1: The list of barriers included in the questionnaire

Barriers	Source
Please answer the questions below based on your experience with the challenges and issues that your organisation has been facing, while developing and/or deploying IoT technologies. The following barriers have been significant...
Legal Barriers
Regulatory issues (e.g. lack of security standards, lack of liability for failures, lack of legal obligations)	(Forum, 2019, Daube, 2019)
Issues with legislative mechanisms (e.g. partial implementation of IoT related policies, variance in mechanisms, standards and policies)	(Singh et al., 2015, Meddeb, 2016)
Technological Barriers
Standardisation and operability issues (e.g. data formats, protocols, interoperability issues, lack of unified security standards)	(Calvillo et al., 2016, IEEE, 1990, Fan et al., 2014, Harris et al., 2015, Blackstock and Lea, 2012, Brous and Janssen, 2015)
Service quality issues	(Gerber, 2018, 2019)
Interdependence issues (e.g. difficulty to integrate technology, dependence of IoT system on other devices)	(Baños, 2018)
Infrastructure issues (e.g. internet, electricity)	(Perera et al., 2014, Luthra et al., 2018)
Security and privacy issues	(Carcary et al., 2018, Xing et al., 2013, Lee and Lee, 2015, Riggins and Wamba, 2015, Haddud et al., 2017, Sahraoui and Bilami, 2015, Xu et al., 2016, Hedge, 2018)
Scalability issues (e.g. difficulties in adding new machines, nodes and servers, difficulty in increasing the capacity of existing software and hardware)	(Gupta et al., 2017, Borgia, 2014, H. Dutton, 2014, Da Xu et al., 2014, Miorandi et al., 2012)
Issues related to variance in IoT architectures	(Gardašević et al., 2017, Haddud et al., 2017, Bughin et al., 2015)
Financial Barriers
Financial Costs (e.g. high energy usage, long and costly implementation, maintenance and repair costs)	(Sethi and Sarangi, 2017, Pang et al., 2015, Decker et al., 2008, Lee and Lee, 2015, Haddud et al., 2017, EnterpriseManagement360, 2019, Schroeder et al., 2019)
Financial risks (e.g. potential project failure, long implementation, disruptions in enterprise operations)	(Reynolds et al., 2018, Joshi, 2018, Charara, 2018)
Human Barriers
Need to recruit installation specialists	(Talavera et al., 2017, Hussain, 2017)
Lack of expertise (e.g. technical and analytical skills)	(Brous and Janssen, 2015, EnterpriseManagement360, 2019, Bughin et al., 2015, Yazici, 2014, Harris et al., 2015)
Issues with workforce structure and workflow (e.g. need for restructuring collaboration units of organisations, lack of clear workflow)	(SoftwareAG, 2019, Buntz, 2016).
Knowledge Gap
lack of validation and value uncertainty	(Schroeder et al., 2019, Harris et al., 2015, DataFlair, 2018, Hedge, 2018, Lee and Lee, 2015, Riggins and Wamba, 2015, Haddud et al., 2017, Talavera et al., 2017)
Lack of information on operational solutions	(Schroeder et al., 2019, Harris et al., 2015, DataFlair, 2018, Hedge, 2018, Lee and Lee, 2015, Riggins and Wamba, 2015, Haddud et al., 2017, Talavera et al., 2017)
Organisational Barriers
Platform management issues	(Su et al., 2011, Djahel et al., 2014, Perera et al., 2014, Kamble et al., 2018)
Strategy development issues (e.g. lack of clear goals and objectives, lack of strategic insights, organisational reluctance to change strategy and develop a profit model)	(SoftwareAG, 2019, Haddud et al., 2017).
Lack of appropriate mechanisms to facilitate collaboration (e.g. regarding sharing data and building wider collaborations between institutions)	(Moore, 2018, SoftwareAG, 2019)

Data Collection and Analysis

Following the pilot study, the second version of the questionnaire was distributed to the companies with available email addresses from the updated database of IoT-related companies. The companies were contacted through emails and requested to fill in either the questionnaire embedded in the email or the Qualtrics survey accessible through the link. Additionally, the survey was promoted among the participants of the IoT North Meetup. IoT North (UK) is a community uniting people who are interested and involved in the development and the implementation of IoT in the private and public sectors. The period of data collection was between February and September 2020. Out of 577 companies, 36 responses were returned.

The analysis of the collected data was conducted using SPSS v.25 software, which made it possible to produce descriptive statistics of the responses. The software was utilised to generate mean and mode values for each question and histograms, which illustrate the distribution of scores for responses along the continuum from negative (strongly disagree) to positive (strongly agree) ranking. Prior to the analysis of the barriers, organisations’ profiles were drawn in terms of companies’ locations, the type of services/products they provide and the level of involvement in IoT. The latter characteristic was measured by the percentage of staff and income related to IoT projects. Second, the degree to which companies experience legal, technological, financial, human, knowledge-gap and organisational barriers was analysed using cumulative scores for each group and scores for separate indicative factors within each group. Third, the average score of the level of support required for companies to address the challenges in IoT implementation was calculated.

Results and Analysis

Profile of Companies

The companies are located in 6 regions of the UK, the South West, South East, West Midlands, North East, North West, Scotland and Wales (Table 2). The companies offer various types of services and products, such as: a) software and hardware, b) smart devices (wearable, indoor, outdoor) c) robotic equipment, d) app and website development, e) IoT market assessment, f) cloud platforms, g) data analytics and machine learning, h) IoT network and infrastructure, i) connectivity and communication devices, j) security-ensuring devices.

Table 2: The location of companies

Region	Towns
South West	Bath, Cricklade,
South East of England	London, Milton Keynes, Newbury, Reading, Woking
West Midlands	Birmingham, Telford, Leamington Spa
North East of England	Blyth, Durham, North Shields, Sheffield, Newcastle, Wakefield, Washington
North West of England	Manchester
Scotland	Glasgow
Wales	Saint Asaph

The percentage of employees involved in IoT-related projects and the percentage of income from IoT-related projects are clustered around the lowest and highest values of the percentage scale (Figure 1). 18 companies (51.4%) reported that 81-100% of income comes from IoT-related projects, engaging more than 80% of employees. 17 companies (48,6%) have on average between 1-20 % of income generated by IoT projects, involving on average between 11 and 20% of company staff.

Figure 1: The involvement in IoT projects

Barriers

Figure 2 presents the cumulative scores for each group of barriers. The histogram demonstrates that on average companies tend neither to agree nor disagree with the existence of the barriers. Mean scores suggest that 8 companies do not provide a definitive answer, 12 companies disagree and 16 companies agree that technological factors challenge the implementation of IoT. While 10 companies are not certain as to whether the development of IoT is hindered by the legal framework, 15 companies are inclined to think that there are no legal challenges. A slightly lower number of companies (11) reported the negative role of legal factors in IoT projects implementation. Most of the scores for financial barriers range between “neither agree nor disagree” to “agree”. The surveyed companies have similar views in relation to the knowledge-gap, whereby 17 respondents acknowledged the challenges attributed to the low awareness of IoT benefits, 10 companies reported a lack of barriers and 9 companies are uncertain about the role of the factor. Without taking into account the responses indicating uncertainty, there are 16 compared to 10 companies that face organisational management issues hindering IoT project implementation. As for human barriers, the average score is skewed towards the positive scale, meaning that most of the surveyed companies do not have adequate human resources to successfully implement projects.

Figure 2: The frequency distribution of barriers.

The analysis of each factor attributed to the group of barriers provides a more detailed insight and makes it possible to interpret the scores. For example, the measurement of legal barriers is made up of three dimensions, as presented in figure 3. The distribution of scores around the “neither agree nor disagree” scale is explained by the responses about the existence of other legal barriers. The majority of respondents are not certain whether other legal factors slow down the adoption of IoT. Other factors include cross-country standards about data adequacy and GDPR standards, which make the wider adoption of IoT technology challenging for organisations. The issues with the regulatory framework, such as lack of security standards, lack of liability for failures and lack of legal obligations, concern the least part of companies. There is a proportional number of responses about the existence vs lack of legal barriers attributed to legislative mechanisms (e.g. partial implementation of IoT related policies, variance in mechanisms, standards and policies).

Figure 3: Legal Barriers

Figure 4 demonstrates that technological barriers are comprised of 6 pre-defined factors. In the group of “other” factors, respondents indicated the challenges with understanding the longevity of designs, vendors’ reliability and data science predictive capabilities. Mostly, the companies are not certain which these factors act as obstacles in IoT implementation. The results suggest that standardisation and operability (e.g. data formats, protocols, interoperability issues, lack of unified security standards), security and privacy, variance in IoT infrastructures, interdependence and service quality issues negatively affect adoption. In contrast, scalability issues, namely, difficulties in adding new machines, nodes and servers, difficulty in increasing the capacity of existing software and hardware, concern fewer companies in the sample.

Figure 4: Technological Barriers

In the financial group of barriers, respondents distinguished additional factors, which are the lack of funding for start-ups and market demand for mass low cost solutions cutting the reliance on dedicated devices. The scores attributed to these factors explain the companies' concerns, although no association between them and IoT implementation is observed (Figure 5). 18 against 10 companies confirmed that high energy usage, long and costly implementation, maintenance and repair costs act as obstacles slowing down the adoption of IoT. Potential project failure, long implementation, disruptions in enterprise operations make the implementation even more challenging, as expressed by 20 respondents compared to 8 responses indicating no correlation between incurred financial risks and IoT adoption.

Figure 5: Financial Barriers

Figure 6 presents the distribution of responses in relation to four specific issues contributing to the human barrier group. Companies highlighted that technophobia, mind-set, inertial and risk-aversive behaviour may potentially challenge the development and adoption of IoT. 15 against 11 companies believe that the need for restructuring collaboration units of organisations and workflow are unlikely to be a barrier in IoT implementation. However, company representatives are inclined to think that IoT adoption is hindered by a shortage of skills and the need to recruit a specialised workforce to fill the gap in technical and analytical expertise.

Figure 6: Human Barriers

The knowledge gap group of barriers is measured by the uncertainty of IoT implementation value, the limited knowledge of operational solutions and other factors, such as the lack of understanding between hardware and software engineers, lack of understanding of terminology and jargon (Figure 7). Compared to other groups of barriers, the difficulty in implementing projects due to a limited awareness of benefits and functionality is more common among IoT companies. However, most respondents are uncertain or reject the negative role of “other” barriers, which affects the cumulative mean for the knowledge-gap factors.

Figure 7: Knowledge-Gap Barriers

Organisational barriers concern platform management, strategy, mechanisms of collaboration and other factors, such as weak management, client businesses working in silos, bureaucracy and trust in security policies. Figure 8 demonstrates a similar pattern of attributing either the lowest (“strongly disagree”) or middle (“neither disagree nor agree”) scores to the “other” factors. The analysis of the remaining organisational factors shows that the distribution curve is not well-defined, with slightly higher frequency on the right-hand side of the scale.

Figure 8: Organisational Barriers

Need for Support

Figure 9 demonstrates the strength of the need for support in addressing legal, technological, financial, human, knowledge-gap and organisational barriers. Overall, companies do not express a strong need for support to overcome challenges. As regards legal barriers, the common answer was that either a little support or no support at all is needed. The companies specified that while core business does not need to be supported, there should be opportunities to grow and innovative product offerings. The SME framework needs to be developed for the companies in the North East to facilitate IoT implementation in the region. Against the backdrop of challenges attributed to technological factors, the companies expressed some interest in support to overcome technological barriers. Particularly, they need help in finding good hardware suppliers to work with when developing applications that require IoT elements. There is a need to develop interfaces and functionality in devices to strengthen the level of privacy. Also, the companies need a better infrastructure in terms of the security and reliability of Internet integration. For scalability purposes, the companies would benefit from full information and guidance on different technologies, the standardisation of protocols and functionality in the IIoT space. 25 companies need from a little to a great deal of investment to reduce the financial burden and eliminate potential risks. Similarly, the majority of companies need skilled staff and tools to manage human resources to overcome IoT implementation barriers. Apart from the expressed need for engineers (e.g. hardware, firmware, data and AI) and workforce having wider skills and experience to maintain the progress in the field, the companies require support in conducting special training for existing staff. There is a need for an independent party to discuss case studies that would facilitate the cooperation/collaboration between specialised and non-technical employees and help establish a common language between them. The knowledge gap is a major concern for companies, which is why 31 out of 36 respondents believe that by increasing the awareness among corporate customers, the informed decisions would fuel the implementation of IoT in their organisations. The respondents believe that local governments need to be educated about the benefits of IoT. The support would help understand the outcomes of IoT adoption through the wider explanation of use cases, infrastructural solutions and regulatory frameworks for major sectors, including Electricity, Oil and Gas, Medicine, Manufacturing and Retail. A third of the companies responded that they do not need any type of support to address organisational barriers. However, the companies needing support would benefit from strengthening their stakeholders’ network.

Figure 9: Need for support

Discussion

The results of the survey mostly confirm the factors drawn from the review of the literature. Technical issues are associated with three aspects of the technological environment. First, the barriers concern the deviation of formats, standards protocols, architectures and service platforms, which result in the reduction of efficiency (EuropeanCommission, 2019, Calvillo et al., 2016). Companies resort to the replacement of other technology as a remedy to increase the efficiency and interoperability of devices (Baños, 2018). Second, the technicality of IoT devices compromise security and privacy, which undermine the IoT value proposition (Lee and Lee, 2015, Weinberg et al., 2015, Sahraoui and Bilami, 2015, Xu and Helal, 2016). Third, the quality of service enabled by IoT still needs improvement, which is partially rooted in the quality of infrastructure, such as internet connectivity and a stable electricity supply (Luthra et al., 2018, Gerber, 2018).

Financial barriers are manifested by the costs of energy and implementation, potential costs incurred by the long project implementation and payback, and the lack of investment. Although IoT technologies are power-efficient (Borgia, 2014), the adoption of devices usually leads to their increased usage and an increase in electricity consumption accordingly (Sethi and Sarangi, 2017). Secondly, IoT implementation usually takes longer than the deployment of traditional devices (Charara, 2018). While companies can be willing to allocate a longer time and investment into IoT projects, it is not uncommon for the payback to be delayed or projects not to break even at all (Reynolds et al., 2018, Luthra et al., 2018).

Within the human barriers group, the shortage of skills and specialised workforce scored high, meaning that the lack of IoT installation and maintenance specialists challenge the deployment and operation of new technological infrastructure. A successful IoT deployment does not guarantee value for the company, though, as the potential of the technology can hardly be realised if employees do not have the skills to operate it (Brous and Janssen, 2015, EnterpriseManagement360, 2019). The skills gap can be accounted to salient beliefs, such as limited awareness of the benefits and functionality, technophobia, inertial and risk-aversive behaviour.

Organisational barriers stem from the limited capabilities of firms to manage technological resources and build a business case. For example, poor data management is associated with the inability to manage multiple platforms supporting IoT devices, which trigger additional investment of time and money and a decrease of trust towards technology (Wenge et al., 2014). Also, companies can use poor analysis, strategies and plans on how to monitor and capture value from IoT projects (SoftwareAG, 2019). Management barriers can be explained by organisational culture, resistance to new approaches and technologies, as well as scarce knowledge of benefits and risks (Ferretti and Schiavone, 2016, Valmohammadi, 2016, H. Dutton, 2014).

While there are some concerns in relation to GDPR standards across countries, the companies tended to disagree with the statement that a regulatory framework is not adequate to encourage the development of IoT projects. This can be explained by the measures that the Government undertook in 2018 by introducing the Code of Practice for IoT security (Daube, 2019). Previously, security mechanisms were voluntarily embedded in IoT products. Recently, the Government started enforcing the requirement that all manufacturers must ensure security in three ways: 1) the provision of unique IoT device passwords, 2) the compliance of manufacturers with vulnerability disclosure policy and 3) the provision of explicit information about the minimum length of time required for security updates (Gov.uk, 2020).

Conclusion

The survey was conducted to give an empirical insight into the factors challenging the implementation of IoT projects in the UK. The most frequent answer reflects neither disagreement nor agreement with the statement that legal, technological, financial, human, knowledge gap and organisational barriers challenge the adoption of IoT. Other responses suggest that technological, financial, knowledge gap, human and organisational barriers exist. Only legal factors were found to be of a lesser concern for the surveyed sample of organisations. The degree of support needed to overcome barriers correlates with the degree to which companies experience a particular type of barrier. From moderate to a great deal of support is required for companies to cut down the financial costs/risks, fill in the skills and knowledge gap and amend workforce structures.

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