This blog post presents insight from the Central and Eastern Europe, Middle East, and Africa (CEMA) manufacturing markets; it explains how the Internet of Things (IoT) will help to overcome barriers to the adoption of cloud technologies and how it will drive investments in the 3rd Platform.
IT vendors' 2015 plans for sales of cloud services and solutions in CEMA remain bold. Although CEMA manufacturers recognize the general benefits of cloud technologies and may also believe that cloud is an inevitable IT delivery model for them, nothing is currently motivating them to adopt it. Clear barriers to cloud exist here in CEMA. We have witnessed initiatives fail due to discussions of cloud adoption, revealing the complicated nature of the adoption process, or simply due to security concerns. Also, we have learned in discussions with local manufacturers that some vendors’ current cloud pricing models for CEMA are unfavorable for them. IT vendors and distributors still have limited tools to convince local manufacturers to invest massively in cloud.
The situation involving the IoT is somewhat different. IDC research shows that, unlike the adoption of cloud, IoT development has been no weaker in emerging markets than in developed economies. The IoT is clearly boosting productivity, creating new business opportunities, and opening new sources of revenue. According to the IDC Manufacturing Insights End-User Survey, conducted in CEMA in June 2014, 38% of the manufacturing companies based in the region reported awareness of the IoT (i.e., investigating, evaluating, piloting, or using it), and this awareness was estimated to grow to 54% in three to five years. IDC's new IoT spending analysis tool forecasts a compound annual growth rate of 20.8% for manufacturing use cases in the 2013–2018 period. These numbers indicate that the IoT ecosystem in the manufacturing vertical will emerge very dynamically and will have a strong impact in CEMA markets in the upcoming years.
For manufacturers developing IoT use cases, 3rd-Platform technologies will become a higher priority — especially mobility and big data analytics. IoT systems consist of numerous sensors, connected devices, applications, and networks, which can overwhelm many companies' current IT resources and infrastructure. This is where cloud services and solutions providers will have the opportunity to seize significant share of manufacturers' upcoming IoT investments. With the current low level of usage of cloud technologies in CEMA manufacturing, most manufacturers would have to delay the development of IoT use cases. Due to the strong pressure on increasing productivity in CEMA, many will not want to allow this. In the next three to five years, dynamic development of the IoT will drive the adoption of 3rd-Platform technologies, especially cloud, as IoT benefits will have a positive influence on manufacturers' perceptions about cloud's potential.