While IT spending in Europe, the Middle East and Africa (EMEA) will show an average annual growth rate of 2.2 percent through 2017, the Internet of things will create new markets and a new economy, according to a report from IT research firm Gartner.
The Internet of things encompasses hardware, embedded software, connectivity and communications services, and information services associated with the hardware, including services based on analysis of usage patterns and sensor data.
In 2009, there were 2.5 billion connected devices and most of these were mobile phones, PCs and tablets, but in 2020, there will be more than 30 billion devices connected, of far greater variety, the report noted.
"The traditional IT market is not going to grow at a faster rate any time soon, if ever. Increased growth will come from the non-traditional IT market," Peter Sondergaard, senior vice president at Gartner and global head of research, said in a statement. "While in 2015 the combined IT and telecom market will hit nearly $4 trillion, the incremental revenue generated by the Internet of things’ suppliers is estimated to reach $309 billion per year by 2020. The Internet of things is a strategically important market. It will accelerate fast and will drive both revenue and cost efficiencies."
Gartner predicts that the total economic value add for the Internet of things will be $1.9 trillion in 2020, seen across a number of industries. The verticals that are leading its adoption are manufacturing (15 percent), health care (15 percent) and insurance (11 percent).
For example, the manufacturing sector will benefit from producing billions of devices and from more efficient tracking of materials and components leading to cost efficiencies. The Internet of everything and the Nexus of Forces, which combine the physical world and the virtual, will drive organizations and their CIOs toward an all-embracing digital future, the report said.
Gartner analysis said The Internet of everything would re-invent industries at three levels, including business process, business model and business moment.
"At the first level, digital technology is improving our products, services and processes, our customer and constituent experiences, and the way we work in our organizations and within our partnerships," Hung Le Hong, research vice president and Gartner Fellow, said in a statement. "We do what we normally do, but digitalization allows us to do it better or develop better products within our industry."
In addition, the report cautions businesses will require digital leadership that can recognize the opportunities in shifting business models. Specifically, Gartner said leadership must create the freedom and agility to capture business moments, and extends itself beyond company boundaries to guide and shape the ecosystem.
"Now that digital is embedded in everything we do, every business needs its own flavor of digital strategy. Vanilla is off the menu," Dave Aron, research vice president and Gartner Fellow, said in a statement. "Digital is not an option, not an add-on and not an afterthought; it is the new reality that requires a comprehensive digital leadership."