Global companies are keen on IoT integration but wary of cyber risk

09 July 2018 4 min. read

The permeation of Internet of Things into various business sectors has been slower than some might have imagined, and a new report from management consultancy Bain & Company has found that the primary barrier is that of the risk involved in implementing the technology, rather than the high costs that are widely perceived to be the problem.

Be it nuclear energy or x-rays, any advanced technology has equally powerful positive and negative applications. For Internet of Things (IoT), the positive applications have captured the global imagination as people realise the extent to which technology can permeate daily life and make it substantially more efficient.

The world of business has received the IoT paradigm with just as much enthusiasm, albeit with a hint of caution. IoT can transform operations in almost every sector, ranging from software-intensive sectors to the more physically intensive industries such as mining and energy where mapping, measuring and construction can all be optimised using data-recording tools.

However, developments in recent years have also alerted the world to the risks involved in adopting the technology. Bain & Company highlights some of these alarm bells in a new report, the most prominent of which is the Mirai malware attack that affected firms across the world in 2016.

Security remains the leading barrier for IoT adoption

In essence, the malware hacked into thousands of standard IoT tools such as sensors and cameras, creating a vast botnet. According to the report, its then used the botnet to forge “denial-of-service” attacks on some of the world’s most popular and influential websites, including Netflix, Twitter, and Airbnb.

Just this year, a new variety of the Mirai malware by the name of Okiru hacked into the most commonly employed ARC processors, which are deployed in billions of IoT tools across the world. Other known threats via IoT applications include click fraud against advertising companies and the illegal mining of cryptocurrencies.

As a result, Bain’s research has revealed that companies across the globe are tentative about their entry into the IoT paradigm, caused by the susceptibility to attacks. The consulting firm surveyed senior executives from enterprises across the world, 45% of whom said that security concerns were the biggest barrier to IoT adoption.

Companies would invest more if IoT devices were secure

The report also revealed a number of other interesting causes for concern with respect to IoT. 34% of the executives, for instance, felt that the process of integrating IoT into existing operational technology is a long, tedious and expensive one, and 30% are unsure of what returns such an investment would generate, if any. 

A number of organisations are also concerned that they lack the internal expertise to successfully implement IoT applications. Legal and regulatory concerns act as a barrier for 23% of the organisations, which is exacerbated by the newly enforced General Data Protection Regulation (GDPR).

The implementation of GDPR means that organisations that are breached will have to contend with hefty fines in addition to the costs incurred from the breach itself, putting the security of IoT devices at a premium, which is perhaps the reason why most companies are willing to deploy substantial funds towards secure applications.

Bain’s research found that the assurance of security in IoT devices would encourage them to spend at least 22% more on the applications, and purchase an imposing average of 70% more devices, indicating a broad recognition of the technology’s benefits. Based on this willingness to invest in security, Bain estimates that the specialised IoT cybersecurity market could grow from its current value of $9 billion to a value of $11 billion.