Internet of Things (IoT) technologies are set to see a major increase in investment over the next five years, led by projects in inventory and supply chain management, according to a study released today.
Companies will spend $434.9 billion annually to design, plan, build, and run IoT solutions by 2023, up from $186.1 billion in 2017, according to the study from the Cambridge, Mass.-based consulting and advisory firm Forrester Research. Forrester broke that spending out into six sectors, including IoT-specific security software, platform software, service provider connectivity, application software, hardware, and professional services.
Working together, those sectors combine to build an IoT system that connects the physical world to the digital world by networking devices to monitor, collect, and analyze data while driving valuable insights, according to Forrester's report, "Internet-Of-Things Spending Forecast, 2017 To 2023 (Global)."
The largest use case for IoT applications will be inventory and supply chain management, which is forecast to grow at a fast 20.2 percent compound annual growth rate (CAGR), reaching $113.5 billion by 2023—more than a quarter of the total investment for that year. Supply chain operators are looking to IoT solutions for help in managing supply chain relationships, tracking inventory levels, and managing warehouse operations, Forrester said.
Other hot sectors for IoT growth will be:* smart products—set to reach $50.3 billion by 2023 thanks to initiatives on platforms from cars to speakers to refrigerators.* smart buildings—set to reach $49.6 billion by 2023 in an effort to increase energy efficiency and worker productivity, and* fleet management—set to reach $10.4 billion by 2023 as companies strive to meet safety and environmental goals for fuel efficiency and preventive maintenance.
Growth in this area is being fueled by rapid advances in software, hardware, and sensors that are continuing to revolutionize IoT offerings, the firm said.
To date, that trend has made the U.S. the largest consumer of IoT devices, but European markets are growing steadily, and Asia and China are on track to post the fastest growth rates of IoT spending on the globe, Forrester found. Geographically, IoT spending for these regions is set to reach 2023 levels of $164.0 billion for the U.S., $120.9 billion for Europe, and $92.8 billion for Asia and China.