Can the IoT Help Small Businesses?

Abstract

The IoT (Internet of Things) can transform businesses by automating processes ranging from inventory management to robotics to automation, saving time, and money. However, can small businesses benefit from the IoT? This article explores the emerging role of the IoT in small businesses, the impact on their ability to compete in a rapidly changing digital environment, and their awareness, attitudes, perceptions, and willingness to adopt it. The research utilizes an initial exploratory approach based on a review of case studies in the literature, interviews with several economic development personnel and a few small and medium-size business managers. Benefits from the use of the IoT include increased efficiency in operations and reduced costs in businesses. The medium-size businesses interviewed have verified these benefits. However, the majority of economic development personnel and small businesses interviewed did not have much or any awareness of what IoT technologies were or their potential benefits.

Keywords

Internet of Things IoT small business technology innovation competitive advantage

Introduction

The Internet of Things (IoT) is a system of interconnected devices, usually using sensors to collect and share information. “It can be described as an extension of the Internet and other network connections to different sensors and devices—or ‘things’—affording even simple objects, such as lightbulbs, locks, and vents, a higher degree of computing and analytical capabilities” (Trend Micro, 2019). Smart (2017) further defined the IoT, stating that “The Internet of Things is the network of physical objects containing the embedded capability to interact, communicate, and otherwise, exchange data with one another and the external environment over a network without human intervention.”

The IoT can provide significant benefits to small businesses by automating basic tasks like inventory management or procurement (An, 2018; Goodman, 2018). Incorporating RFID (radio frequency identification) tags into inventory allows it to be tracked from production, packaging, shipment, to retail sale in real time. This provides retailers information where their merchandise is at any moment as well as preventing loss of goods, while automating accounting and replenishment. Another example would be small farmers, who can use it to monitor soil moisture or temperature and automatically activate irrigation if needed. Any office can use smart monitors for temperature and lighting control to save on energy costs. Medical providers are using wearable technologies to monitor patient health remotely with automatic tracking and alerts if patients exhibit warning signs like heart problems or low blood pressure (MacKay, 2019). Small restaurants can use sensors to monitor food temperature and expiration dates to improve food safety.

However, there are few studies that show whether small businesses understand what these technologies are, how they are beneficial, and the impact on their business if they do adopt them. This article explores these factors and presents a summary of the current state of small business perceptions, adoption and implementation of IoT technologies, and the potential to impact performance or competitive advantage.

Literature Review

The Role and Benefits of the IoT in Business

Large businesses are using the IoT to help them collect, manage, analyze, and use massive amounts of data to automate processes, understand customer behaviors, monitor inventory, equipment, and other systems for optimal efficiency and cost reductions, giving them a competitive advantage. The question is whether SMEs (small and medium enterprises) can adopt these technologies to gain some degree of parity with the large businesses.

How Are Large Businesses Using the IoT?

According to Dotzler (2018),

The number of connected devices is expected to reach 25 billion by the year 2020, according to research firm Gartner, and this surge in technology will go far beyond personal devices. Investment in the IoT by businesses is expected to grow to $832 billion by 2020.

He suggests several important ways that the IoT can affect business including using robots to fill the labor shortage in manufacturing, sensors that can be attached to machines to measure and monitor temperature, vibration, pressure, and so on; and automatically notify technicians for problems or maintenance. These sensors can also be used to track inventory in a much more efficient, cost-effective way. Most large companies now use RFID tags. These are small electronic devices that can be embedded in products and can store and transmit data. For example, Walmart has been using RFID technology to maximize their inventory and logistics efficiencies since about 2003 (Kaplan, 2019). By 2013, most major retailers had adopted it to improve inventory management and most manufacturers had adopted it to automate processes and improve inventory accuracy.

RFID sensors are used in warehouses and retailers where they are placed on products and can then create real-time visibility into product locations in the warehouse, in transit or at the retailer (Maffeo, 2019). According to Horowitz (2019),

Stores are getting smarter than ever, with RFID tags providing key insights on product inventory. Smart lighting can also tell stores how long customers linger in a certain aisle or interact with products on the shelves. After analyzing the data from store video and Wi-Fi-enabled foot traffic-monitoring software, retailers can make adjustments to merchandise amounts or store layouts.

Sensors are also being used to improve worker safety via wearables that can track vital signs, environmental factors, air quality in unsafe environments and more. Similarly, sensors in wearables are being used effectively in telehealth to monitor patients and can also integrate with Artificial Intelligence software to learn patient trends, predict health issues, and improve patient health.

Other benefits include the ability to manage scheduling, monitor energy usage, or even manage office supplies with machine learning that tracks the data, learns patterns, and provides models to improve efficiencies and reduce costs. A recent article (Iyengar, 2018) provided several additional benefits including saving energy and providing security in homes and businesses via smart sensors, using digital assistants like Siri to monitor scheduling of appointments or bills and pay them automatically using integrated software, or sensors in cars to improve safety. Remote sensing in manufacturing provides real-time monitoring of equipment and even correction in some cases. For example, Harley Davidson was able to install sensors to track equipment specifications and “automatically adjust the equipment if and when a measurement had deviated from an acceptable range.” Furthermore, in a smart IoT factory, a worker could review the status of all equipment in real time. This data would also be available to supply chain partners, quality control, and managers (Smart, 2017).

How Can Small Businesses Adopt and Use the IoT?

Brown (2019) suggests that small businesses must adopt these technologies to be competitive. It would enable them to automate tedious, time-intensive processes, and interact with customers more effectively via personalized interactions. He recommends several ways that small businesses can cost-effectively use IoT technologies. One easy adoption would be using a virtual assistant like Google Assistant.

It saves time looking things up—from a payroll question to fact-checking—as well as helps with scheduling meetings, changing appointments and reordering office supplies. This can be a better way to control inventory because the virtual assistant (paywall) can always be tracking what’s available and immediately reorder when necessary. (Agrawal, 2019)

Adding sensors to manufacturing equipment can save time by alerting a small manufacturer about equipment failures before they occur and preventing production downtime. Incorporating IoT devices similar to Nest to monitor temperature, lights, or when equipment is on can potentially have large energy cost savings.

Higginbotham (2018) had a few additional suggestions on how small businesses can use IoT devices effectively. For example, small retailers, restaurants or wholesalers can improve efficiencies greatly by incorporating RFID tags on merchandise for inventory tracking. This could greatly reduce the time needed to scan the merchandise coming or going and increase the accuracy of the inventory. Using traditional barcode technology, each item must be scanned individually. In contrast, thousands of RFID-embedded items can be scanned at once when the carton they are in goes through the scanner. Perishable goods can be scanned in transit to see their perishable and sell-by dates to ensure that they arrive in time and are good to sell and use (Sears, 2017). Similarly, RFID tags allow businesses to track all products throughout the supply chain from initial procurement through processing and delivery to intermediaries.

Maffeo (2019) cited Gartner research, which indicated that many U.S. small businesses are using sensors/IoT and see it as critical to success as shown in the graphs below.

Percentage of U.S. small businesses using IoT technologies by industry.

Note. All percentages reflect the number of respondents in each industry currently using the Internet of Things (IoT).

Percentage of U.S. small businesses answering how necessary in IoT technologies by industry.

Note. All percentages reflect the number of respondents in each industry who identified the Internet of Things (IoT) as critical.

Small Business Economic Importance and Technology Acceptance

SMEs play a significant role in the economic and social development of a community (Dragnić, 2014). According to the SBA (small business administration), they account for 44% of U.S. economic activity (Office of Advocacy, 2019). The SBA also reports that “Small businesses accounted for 61.8% of net new jobs from the first quarter of 1993 until the third quarter of 2016” and that small businesses represent a huge force in continuing innovation (Office of Advocacy, 2019). For example, “Small businesses represent about 96% of employer firms in high-patenting manufacturing industries, a percentage that remained constant from 2007 to 2012” and they are much more likely than large firms to develop emerging technologies (SBE Council, 2018). Colgan (2006) reported that Maine, like much of the United States, is dependent upon many small businesses to support its economy. Given the economic and social importance of small businesses in Maine, it is imperative that SMEs know what technologies are available to help them succeed. To reinforce this point, Jones et al. (2015) found that SMEs benefit greatly from the use of websites and social media. Websites and social media helped increase awareness and inquires to SMEs from customers, enhanced relationships with customers, increased the number of new customers, enhanced the ability of SMEs to reach customers globally, and provided opportunities for copromotion of local businesses that enhanced the public image of SMEs in Maine.

SMEs globally use Internet and e-business technologies to support business processes. However, according to a recent Organisation for Economic Co-operation and Development (2019) report, “SMEs lag in digitalisation. Digital diffusion tends to be lower in smaller firms. These firms also face more difficulties in undertaking the complementary investments in skills and organizational changes that are needed to adopt and benefit from technology.” They are also less likely to have the awareness and skills to proactively manage a digital transformation, which includes adoption of IoT technologies. On the other hand, some SMEs do recognize the benefits of emerging technologies. Widyastuti and Irwansyah (2018) found that top management of several SMEs in India chose to adopt new cloud computing technologies for cost savings due to reduced need for capital expenditures on high-performing computers and costs related to managing their own servers. These same SMEs reported that additional benefits of cloud computing included accelerated decision-making capabilities, growing market reach, and speeding up communication with customers. We can infer that these same factors would apply to the adoption of IoT technologies since they are integrated with cloud computing.

Therefore, why haven’t more SMEs adopted IoT technologies?

Barriers to IoT Adoption in SMEs

A “build it and they will come” (Gordon & Gordon, 1989) approach to IoT adoption is probably not recommended. While we have shown the potential benefits, small businesses should recognize the complexity and challenges of this technology. A study examining the attitudes of small businesses toward IoT adoption showed that “most respondents (69 percent) believe leveraging IP-based building automation within the next three years is very important for their organizations. Unfortunately, half cite network infrastructure and management limitations as the primary deterrent to making progress in that arena” (Linksys, 2019).

According to Maffeo (2019), Gartner research found that small businesses have greater difficulty understanding and adopting IoT than any other technology. For example, in retail, they must develop a system of computers, RFID-embedded sensors, networks, and the software and equipment that will scan, save, track, communicate and share data in real time. Another example in medicine would be using sensors to track temperature-sensitive medicine like vaccines. This requires that the integration of all devices involved in the creation, storage, and shipping have the ability to read and share the correct information with each other. There are currently no standards to ensure interoperability among IoT devices (Bawab, 2017; Pal et al., 2018). Pal et al. (2018) suggests,

Alliances have been formed by many domestic and multinational companies to agree on common standards and technology for the IoT. However, no universal body has been formed yet. While organizations such as IEEE, Internet Engineering Task Force (IETF), ITU-T, OneM2M, 3GPP, etc., are active at international level, Telecommunication Standards Development Society, India (TSDSI), Global ICT Standardization Forum for India (GISFI), Bureau of Indian Standards (BIS), Korean Agency for Technology and Standards (KATS), and so on, are active at national level and European Telecommunications Standards Institute (ETSI) in the regional level for standardization.

Small businesses must also invest in the infrastructure to use IoT technology. This involves RFID readers and the software to capture, analyze, and share the data (Kaplan, 2019). Another serious challenge is the vulnerability of IoT devices to hacking. Gartner research (Maffeo, 2019) predicts that IoT security concerns will be the biggest challenge to innovation.

Realistic planning and implementation also represent barriers. Gartner research showed that 75% of IoT development projects took twice as long as planned, usually with a 2- to 5-year rollout. In addition, lack of knowledge about IoT and lack of internal IT expertise remains a major hurdle since many small businesses do not understand the potential benefits (Charara, 2018). Coupled with the cost, security concerns, and long implementation, adoption and implementation in small businesses will probably remain low until the technologies reach greater maturity with lower costs and greater ease of use. Some of these barriers can be mitigated however. A study by Warrian and Southin (2017) found that collaboration between SMEs and suppliers and/or trade associations provided the needed expertise to overcome some of the technical challenges of adopting IoT technologies.

What types of small businesses are more likely to adopt IoT? According to Cook (2019) and Varaniūtė et al. (2018) manufacturing and industrial sectors are early and fast adopters of IoT technology. This is also known as Industry 4.0. Industrial Internet of Things. With the emphasis on robotics, sensors, and automation, it helps improve productivity and efficiency immensely. Cook (2019) found that “IoT and other digital technologies to improve efficiency by 12 percent. . . . Manufacturing IoT grew 84 percent between 2016 and 2017, the highest of any industry.” Agriculture represents another field that can greatly benefit from IoT where

The “Smart agriculture” or “smart farming” market is predicted to be worth $13.5 billion by 2023 or $23 billion by 2022 (depending on the source) as farmers worldwide seek to utilize RFID, GPS, drones, sensors, and more to gather actionable data and to automate every part of the process. (Cook, 2019)

However, as mentioned earlier, almost all small businesses can potentially benefit from IoT devices such as virtual assistants (like Siri), smart thermostats, and similar.

Small Business Perceptions of the IoT

Smart (2017) surveyed 53 owners or executives of SMEs to assess their awareness and understanding of IoT technologies. Indeed, 78% of the respondents worked with small companies, 41% were owners and 39% of the businesses were in manufacturing.

She provided the owners and managers with a list of IoT technologies and asked whether they were using them, had interest in them or not, and whether they were relevant to their company.

83.6% of respondents listed at least one IoT technology that was being used in their organization, and nearly 91% indicated interest or use in at least one technology. 65.4% of respondents listed at least one IOT application that was being used in their organization, and 80.7% indicated that would like to use at least one application. Nearly 91% indicated interest or existing use of at least one application. The top IoT applications being used by the respondents were smart lighting, waste management solutions, intrusion detection systems, and temperature moni-toring systems. Other than the top applications being used, the top applications that respondents were interested in were smart product management, energy use, shipment monitoring, and remote control of appliances. (Smart, 2017)

Most of the respondents who were not using RFID were interested in adopting it. The major benefit cited for using IoT was cost savings from operational efficiencies as well as the ability to collect and analyze data for improved decision making. In terms of perceptions, 34% of these respondents said that the IoT would definitely provide value to the firm. Interestingly, it appeared that owners were more positive about IoT solutions than managers. In terms of barriers to adoption, Smart (2017) found that “The top barriers indicated were return on investment (46.3%), lack of internal IT expertise (37%), integrating IoT solutions with current systems (29.6%), and security risks (25.9%).” However, she suggested that negative perceptions could be correlated with lack of awareness of the technologies and their benefits.

Jaafreh (2018) explored the classic technology acceptance model in association with the adoption of IoT technologies’ by SMEs. His research supported the model that technology adoption is based on two major factors: perceived usefulness of the technology and perceived ease of use, which appears to be consistent with Varaniute’s finding about adoption primarily by manufacturing companies.

Methodology

Research on SMEs perceptions and understanding of IoT for improving business processes and competitive advantage to date is limited. This article represents an attempt to contribute to that literature. To address this gap, we searched the literature to find case studies and talked with several small and medium businesses to understand the following questions:

Is there an awareness of IoT, what is it and what it does?

Does this business use IoT’s? If, so what is being used and in what capacity?

Did the business notice a difference in efficiencies, cost or other?

Why did the business NOT adopt IoT technologies?

We used an initial exploratory approach. According to Duignan (2016), exploratory research is “Research design aimed at studying existing relationships and differences between variables with a view to better understanding the processes at work, especially where there is initially an absence of a well-identified research question or problem.” Based on the literature, we learned that a major reason for not adopting IoT technologies in small businesses included lack of awareness, cost, complexity, and required expertise. We were interested in exploring perceptions of these factors in Maine small businesses because of the historical culture of resistance to change. While not focused on technologies, this was exemplified by a debate in the Maine State legislature when trying to define the correct definition of the Maine state bird, “‘If it ain’t broke, don’t fix it.’ Mainers are a stubborn lot, resistant to change. Treating the chickadee ambiguously is such a Maine thing to do, because ‘we’ve always done it that way.’” (Duchesne, 2019) Therefore, this research represented a new stream due to the unique nature of the culture, warranting this exploratory approach.

The data collection had three phases. In Phase 1, we searched the literature to find case studies across the world that could potentially answer our research questions. In Phase 2, we contacted the economic development agencies or chambers of commerce in the larger towns and cities in Maine. The rationale was that the greatest concentration of small businesses would be in these areas and that the economic development officers and chambers of commerce would have the greatest knowledge of these businesses. This represented 14 towns/cities. An e-mail was sent to the top officials or the most appropriate people in each agency. For example, in Bangor, Maine, we contacted the top economic development person for the city. In the e-mail, we asked whether any SMBs in their geographic location were using IoT and if so, whether it helped their business. Again, our rationale was that these economic development and chamber of commerce people would work closely with the small businesses in their areas and have some knowledge of their processes. We also asked them for contact information on any small businesses in their areas who they thought might potentially use IoT technologies even if they did not know whether they actually used them.

Based on this information received, from the economic development/chamber of commerce people in Phase 3, we contacted those businesses to ask about their use of the IoT. Because this was the first phase in an exploratory study, we simply asked the small businesses whether they were using IoT technologies. If so, what were they using it for, and if not, why not?

Results

1. Case Studies in the Literature: The Impact of the IoT in Several Different Sectors

The literature review suggested that many small businesses were aware of the IoT and the potential benefits of cost savings, improved efficiency and quality. The case studies found in the literature appear to support this statement.

(a) Morrison (2019) described “Custom Cupboards, a company with a large production facility making (you guessed it) custom cabinets and cupboards. By slapping tags onto individual components as they’re produced in its workshop, Custom Cupboards pulls off a complex orchestration of thousands of moving parts, resulting in an impressive 10 percent increase in throughput.”

(b) An article by Advanced Mobile Group (2016) showed this example, “Our legal system is not digital and depends on paper filed in folders. When the law office of Fish & Richardson P.C. realized the number of non-billable hours that went into looking for the files, they turned to RFID for a solution. They started with the part of their business with the most consistent material and created an RFID track system. The initial results showed locating the files accurately climbed from 35% to 98%”

(c) Warrian and Southin (2017) explored a case study with a small medical wearable sensor product. The “10 employee, Alberta-based firm was originally founded in 2010 out of research conducted in the founder’s medical school residency. The first-of-its kind product uses printed electronic pressure sensors to measure pressure at the bottom of the foot. The goal of this product is preventing the development of diabetic foot ulcers for people who are neuropathic. Over the course the disease, about 50% of Diabetics will develop neuropathy. Consequences of diabetic foot ulcers can be amputation of limbs, and it is the number one cause of hospitalization of Diabetics. The product utilizes PE in order to create a pressure sensor that is thin enough to work in conjunction with patient’s existing orthotics. Once the sensor detects a build-up of pressure, the user gets a notification to a paired device which alerts them to relieve the pressure on their feet in order to prevent the formation of an ulcer.”

2. Responses From Economic Development Agencies of Chambers of Commerce

We contacted about 14 economic development offices and chambers of commerce from the major towns and cities in Maine. If a town did not have an economic development office, we contacted the Chamber of Commerce instead. We asked if they knew of any small-medium businesses in their town who were using IoT technologies as well as whether any of those businesses had experienced improvements from using them.

The response rate was about 43% with six town personnel responding to our e-mails. We found it interesting that of those six respondents, about half said that they did not think that any of the small-medium businesses they worked with used sensors (IoT) in any way. However, this response was puzzling since many homes and businesses probably use IoT sensors. For example, many businesses use smart thermostats like Nest to help regulate temperatures and save money in energy costs. The three economic development people who did know of businesses using sensors contacted them on our behalf. The business responses are shown in the next section.

3. Small-Medium Business Responses

Most of the responses from small or medium businesses were short and via e-mail, resulting from requests from the economic development people discussed in the prior section. However, we were invited on a tour of a medium-sized manufacturing facility, which provided a wealth of information about using sensors and the IoT to improve productivity, efficiency, quality, and reduce costs. We will save that one for the last in this section.

(a) Construction business: While this business is large for northern New England, with about 1,500 employees, it would be considered medium-sized in the United States in general. It has sophisticated technologies and IT capabilities. According to the CIO, “The construction industry continues to make progress in many technical areas. Sensors have been around for some time and are also advancing in capability and use cases. Out company is evaluating different modern sensors to track small tools, equipment and to track Team Members on job sites. Software used to collect and analyze data from sensors remains the weak link, in that standards are not consistent and each vendor offers a product/solution. That said, SMEs do see the value of using sensors to monitor equipment location, maintenance of equipment (vibration variances), pipelines (pressure sensors), or geo-location for people. The challenge is determining appropriate use cases, determining payback for the investment and changing behaviors and attitudes towards technologies like this.”

(b) The Bangor Public Library uses RFID to check out books, which also alerts them if someone tries to take one without checking it out.

(c) Small nursery: “We don’t use sensors extensively for growing. Mostly temperature sensors are used that help with ventilation.”

(d) Small Veterinary Clinic: One of the employees who is in charge of inventory said that he had done a lot of research on RFID tags, but that it could not work for their clinic. His perception was that RFID tags would not provide the information needed on inventory so that employees would have to track inventory manually since they could not trust the RFID information to be accurate. Clearly, this represents an incorrect perception of what RFID is, how it works, and its capabilities. This is telling and we can infer that many small business owners and employees simply do not have any idea what RFID is, what it does, and its potential to improve efficiencies, reduce costs, and increase quality of inventory data.

(e) Small environmental consulting company: This small business, with about 32 employees, provides environmental services. Most of the employees have PhDs or masters degrees in complex topics like analytics or biology. They do sophisticated research on crops, water and similar and must meet EPA requirements to collect specific data in specific ways. For example, they will use meteorological station sensors that commonly include ambient temperature, solar radiation, wind speed and direction, soil moisture and temperature and relative humidity. There are also automated sensors that detect water run-off from a plot and capture the time and duration as well as the volume of water that passed through the gate, which would be very time consuming to monitor by hand. Data can be logged and sent directly to the home server, so it does not have to be manually downloaded from the field.

(f) Medium-size parts manufacturer for the automotive industry employing about 100 people: We were given a tour of their manufacturing facility by the plant manager. This is what we learned. This business is driven by a philosophy of continuous improvement, “to be better tomorrow than we are today.” The industry itself drove this transformation; innovate or die. In that spirit, they discovered early that technology can play a huge role in continuous improvement, increased productivity and quality, and reduced costs in the manufacturing process. Therefore, as they continually sought ways to achieve that, they researched and incorporated many robotics and sensors into the plant.

For example, a piece of aluminum will be machined as part of the assembly process to make a suspension part. In the past, people would manually load each piece on a conveyor to go into a drilling machine. By using an automatic loader that can load these piece hundreds of times faster, it provides huge efficiency gains. A sensor on the loading machine sends a signal to a robot to pick up the part. The robot then picks up the part and uses another sensor to let the drilling machine know that it is ready to provide it with this part to work on. This signal opens the door to the drilling machine that allows the robot to place it in the correct location. Another signal tells the drill that the part is ready to be processed. This is done in seconds, allowing rapid manufacturing and increased productivity and efficiency, which provides competitive advantage for the business.

This is just one small example among thousands of sensors and robots in the facility. Another interesting focus on continual improvement involves a philosophy of transparency, communication, and shared mission and vision. They say, “What is important and how do you see it?” This means that everyone is engaged in the process of continual improvement. All ideas are shared publicly and rewarded. Associates see changes and progress in processes via large “Gemba” boards that show the processes, results, quality levels, areas for improvement and who is responsible for specific tasks.

Discussion

This article explored the emerging role of the IoT in small businesses, the impact on their ability to compete in the rapidly changing digital environment, and their awareness, attitudes, perceptions, and willingness to adopt it.

We researched the literature to find case studies and talked with several small and medium businesses to understand the following questions:

Is there an awareness of IoT what is it and what it does?

Does this business use IoTs? If, so what is being used and in what capacity?

Did the business notice a difference in efficiencies, cost or other?

Why did the business NOT adopt IoT technologies?

What Did We Learn?

1. Is There an Awareness of IoT What Is It and What It Does?

Large companies have discovered that using sensors and the IoT can significantly improve efficiencies, reduce costs, and improve quality. Medium-size companies appear to be adopting these technologies as well. However, there appears to be a significant disconnect between small businesses and their awareness and adoption of IoT technologies. There is a famous expression that it is dangerous when we do not know what we do not know. This appears to be the case with many small businesses. We infer this because of the lack of case studies in the literature in this area as well as the responses from the economic development people we contacted. Most said that they were not aware of any or most of the small businesses they work with having an awareness of or using sensors and the IoT.

However, as Brown (2019) suggested, one easy adoption would be using a virtual assistant like Google Assistant. “It saves time looking things up—from a payroll question to fact-checking—as well as helps with scheduling meetings, changing appointments and reordering office supplies.” Another easy adoption would be a relatively small investment in “IoT devices similar to Nest to monitor temperature, lights, or when equipment is on can potentially have large energy cost savings.” The major problem with small businesses therefore appears to be a lack of awareness of sensors; what they are and how they could help their business.

2. and 3. Do Businesses Use IoT’s? If, so What Is Being Used and in What Capacity? Did These Businesses Notice a Difference in Efficiencies, Cost, or Other?

The two medium-size companies we interviewed were in the construction/manufacturing sector. They both used sensors, but the manufacturing company used them extensively. As the plant manager said, the manufacturing industry drives innovation and thus, there is an absolute requirement to adopt these IoT technologies to remain competitive and survive. We assume that the same is true for the construction company. For the environmental company, they also needed to adopt and use the different weather and soil sensors in order to run their business efficiently to remain profitable and analyze data in the required period. One of the economic development people reported that a construction company in their area used sensors “to track all their equipment and gear.” This again infers that adoption is driven by an awareness of the value that it brings to the company in terms of productivity, quality, transparency, and efficiency. This is consistent with the literature that showed the greatest adoption of IoT technologies in the construction industry as well as the agricultural industry.

Similarly, “the Bangor Public Library uses RFID to check out books which also alerts them if someone tries to take one without checking it out.” We speculate that some associates were proactive in searching for more effective and efficient solutions to increase the quality and productivity of their work processes.

The case studies from the literature also showed increases in efficiencies. The custom cupboard company found a “10% increase in throughput” from using the IoT. The law firm’s use of RFID had “initial results that showed locating the files accurately climbed from 35% to 98%.”

4. Why Did the Business Not Adopt IoT Technologies?

This is an interesting question. The small Veterinary clinic’s associate claimed that they did not invest in RFID sensors because the sensors did not have the ability to store and share data. This clearly demonstrated a lack of knowledge about what RFID sensors are and what they can do. We speculate that this lack of awareness is probably pervasive in small businesses who are often time-starved and do not have the time or expertise to learn about them.

Looking at the literature, Maffeo (2019) found,

the Gartner research found that small businesses have greater difficulty understanding and adopting IoT than any other technology. For example, in retail, they must develop a system of computers, RFID-embedded sensors, networks, and the software and equipment that will scan, save, track, communicate and share data in real time.

In addition, Cook (2019) and Varaniūtė et al. (2018) found that manufacturing and industrial sectors are the early and fast adopters of IoT technology. Based on classic models of adoption of innovations, it makes sense that IoT sensors can provide significant efficiency gains with robotics, sensors, and automation. Again, Cook (2019) found that “IoT and other digital technologies can improve efficiency by 12%.”

Therefore, other sectors such as retail, the Veterinary clinic mentioned, restaurants, and others may not understand the potential benefits afforded by this technology.

Cost is another huge factor for small businesses that often do not have discretionary funds available and balance the use of their scarce resources with competing needs such as marketing, additional inventory or other needs.

Conclusions

The literature shows that IoT technologies can significantly improve efficiencies and quality while reducing costs. While most large businesses and many medium-size ones have adopted them and seen significant benefits, small businesses do not appear to be aware of them or the benefits they could realize. The case studies support the findings that manufacturing and construction companies recognize their value more than other industry sectors. However, we recognize that education level and expertise also play a role in awareness and adoption. It should be also noted that when asking the plant manager of the medium-size parts business for the automotive industry why else he thinks SMEs are not adopting IoT technologies, his response was short and to the point: It can be a major capital expenditure. Therefore, we conclude that there is potential for small businesses to improve their competitive position in most sectors by adopting these IoT sensor technologies and suggest that the economic development agencies or similar in most towns could help with awareness, education, adoption, and implementation.

Limitations

We only found three case studies in the literature and communicated with six small-medium businesses. Therefore, while the results provide some indication of perceptions, adoption, and significance of using sensors and perhaps the IoT, the results are not generalizable to all small-medium businesses. In addition, two of the case studies in the literature were manufacturing-based and one was from a legal firm. The cases we researched involved one construction Company, one manufacturing facility, one library, one nursery, one veterinary office, and one environmental company. Therefore, we do not have enough data on any specific industry to be generalizable.

Future Research

This was an initial exploratory study. Future research will expand our initial study to examine more small businesses in different industries. More in-depth interviews can reveal challenges faced, especially by small and micro businesses. In addition, research on the role of economic development agencies and similar in educating small businesses can provide information on feasible ways to improve adoption.

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

ORCID iD

Nory B. Jones

Author Biographies

Nory B. Jones, PhD, Murphy chair of Business, professor, Business Information Systems, University of Maine Business School. Dr. Jones received her PhD from the University of Missouri with a focus on knowledge management, collaborative technologies, and diffusion of innovations. Her research and teaching include knowledge management, e-business, and technology innovation.

C. Matt Graham, PhD, assistant professor, Business Information Systems, University of Maine Business School. Dr. Graham received his PhD in Information Systems from Nova Southeastern University’s College of Computing and Engineering. His research interests revolve around discovering best practices in managing virtual teams using collaboration technologies including social media, instant messaging, and electronic virtual assistants (EVAs).

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