Why 75% of IoT Projects Still Fail – and How to Beat the Odds

The Internet of Things (IoT) is finally delivering on its promise. As of 2025, 85% of organizations are running IoT projects, and 88% consider IoT critical to their business success⁷. With global IoT spending heading toward $1 trillion¹⁵, enthusiasm is high. But success isn’t guaranteed. Many projects stall or collapse before reaching production.

Only 1 in 4 projects are deemed to be successful.

TL;DR: Despite rising adoption, most IoT projects still fail due to unclear goals, poor integration, and scalability issues. This post outlines the latest failure stats and what businesses can do to improve outcomes.

Latest IoT Project Statistics

Recent industry surveys reveal that the majority of IoT projects do not achieve their intended outcomes. Estimates of IoT project failure rates typically range from 60% up to 80%. In other words, only roughly 1 in 4 IoT initiatives is ultimately considered successful.³⁹

• High Failure Rates: A 2024 analysis notes: “surveys consistently find that 80% of IoT projects don’t reach successful deployment.”⁹ Likewise, IoT experts estimate around 75% of IoT projects fail to achieve their desired results⁴. Many projects get stuck in proof-of-concept mode or are abandoned before they can scale. In fact, about 72% of IoT initiatives never progress beyond the pilot (PoC) phase into full production¹⁵.

• Low Full-Success Rates: Conversely, only a 20–30% minority of IoT projects are deemed fully successful. Cisco’s oft-cited survey found just 26% of IoT projects were completed successfully (with the rest stalled or failing)³. Microsoft’s IoT Signals report similarly observed roughly 30% of IoT projects fail at the PoC stage, usually due to high implementation costs or unclear business benefits⁷. Even when projects do launch, many underperform – an IDC study of industrial firms found 31% of IoT/IIoT projects yielded only “minimal payback,” failing to meet their expected ROI¹².

• Signs of Improvement: On a positive note, there are indications that IoT success rates are slowly improving as organizations gain experience. One 2023 research study (Beecham Research) reports a “28% improvement” in IoT project success metrics compared to 2020¹⁰. This suggests companies are learning from past failures and adopting better practices.

Nonetheless, IoT projects remain risky – success is far from guaranteed, and partial or outright failures are still common across industries.

• 📉 75% of IoT projects fail to meet expectations.
• 🔐 40% of companies cite security as the #1 challenge.
• 💸 75% of projects take twice as long and run 45% over budget.

Top Reasons for IoT Project Failures

Why do so many IoT initiatives struggle or fail? Recent surveys and expert analyses point to several recurring problem areas that derail IoT projects:

• Unclear Objectives: A leading cause of failure is starting an IoT project without well-defined business goals or success criteria. IoT projects are inherently complex, and without clear objectives, they are destined to fail¹³. Many organizations dive into IoT for the technology’s sake rather than to solve a specific business problem. This leads to stakeholder misalignment and unclear ROI. Only the few companies that set specific, measurable goals and KPIs for IoT from the outset tend to “enjoy fruitful results”¹³. In contrast, vague goals or an undefined value proposition will almost guarantee project failure.

• Integration: IoT deployments often falter due to integration challenges – connecting diverse devices, platforms, and data streams is difficult. Enterprises struggle to merge IoT data with existing IT systems and analytics tools. Studies show that less than half of IoT data (structured) gets actively used in decision-making, and under 1% of unstructured IoT data is ever analyzed¹³. This means many projects collect data but cannot integrate or utilize it effectively, yielding limited insights. Poor data integration and siloed systems thus lead to disappointing outcomes. Ensuring seamless device, data, and software integration is crucial for IoT success, and failure to do so is a top reason projects under-deliver.

• Scalability: Moving an IoT proof-of-concept to a reliable, scaled deployment is a major hurdle. Many projects work in the lab but struggle with real-world scalability. A Gartner study found about 30% of IoT projects fail due to scalability problems – solutions that worked with dozens of devices cannot handle thousands¹³. IoT systems must be designed to handle growth in device count, data volume, and users, but companies often underestimate this. Complexities multiply when scaling (network strain, data overload, device management issues), resulting in stalled rollouts. Without a scalable architecture and plan for growth, IoT pilots can collapse when facing real-world scale.

• Security and Data Governance: Security vulnerabilities are a frequent IoT project killer. IoT expands the cyber attack surface, and many projects fail to implement adequate security controls for devices and data. In a recent industry survey, 40% of organizations cited security concerns as the #1 challenge holding back IoT initiatives⁶. Weak security can lead to breaches or compliance issues that halt a project. Security is a major hurdle in successfully launching and managing IoT projects, and must be addressed end-to-end (device, network, cloud)¹³. Projects that treat security as an afterthought often face disaster – for instance, unresolved data privacy risks can prevent an IoT solution from ever going live. Robust security and privacy measures are therefore prerequisite for IoT success, and their absence is a top reason for failure.

• Timeline Delays and Budget Overruns: IoT implementations frequently take far longer and cost more than planned, leading to stakeholder fatigue or funding cuts. One study estimates 75% of IoT projects take twice as long as initially scheduled¹³. Extended development and testing cycles can cause loss of momentum and executive support. Moreover, large IoT projects often run ~45% over budget while delivering 56% less value than anticipated¹³. Such cost overruns and lower-than-expected ROI make it hard to justify continuing. These timeline and budget issues are often linked to the factors above (underestimated complexity, integration woes, etc.). If the project’s costs spiral or value remains unproven, it may be deemed a failure. Careful planning, agile execution, and controlling scope are needed to avoid this fate.

• Skill Gaps and Organizational Challenges: IoT initiatives demand a mix of IT, engineering, data science, and business domain expertise – a combination many organizations lack. Talent shortages in IoT are widely reported; for example, half of IoT adopters say they don’t have enough skilled workers or training in IoT⁷. Lacking in-house IoT skills often leads to design mistakes, integration errors, or reliance on misaligned third parties. Additionally, IoT projects cut across departments (IT, operations, R&D), so poor internal coordination or leadership support can doom projects. A survey by IoT World Today found lack of skilled personnel was the most-cited IoT challenge, and issues like insufficient management buy-in also impede progress⁸. In short, organizations that don’t address the human and organizational factors – skills, alignment, change management – often see their IoT projects falter even if the technology pieces are in place.

Ensuring Success

Despite the challenges, a growing body of experience and research highlights how organizations can improve IoT project success rates. Several key success factors and emerging trends are making a difference in 2025.

Clarifying Objectives

One of the most cited reasons for failure is unclear goals. But what does success look like? Successful IoT programs start with a clear strategy and often use an agile, phased rollout. Rather than attempting a “big bang” deployment, leading adopters pilot their IoT solutions in stages, learn, and iterate.

IoT business decision makers may not be fully aware of the technological capabilities and limitations of IoT and their chosen IoT platform — so committing up front to absolute requirements, scope and architecture can be difficult. A vital tool to help answer the unknowns is the ability to quickly prototype the entire solution, expose key design concepts to reduce risk and then evolve the concept.

An incremental approach greatly increases the odds of success – a recent survey found companies using phased IoT rollouts experience ~40% higher success rates than those going for full-scale launches at once¹¹.

To address this, EmbedThis Ioto provides a rapid prototyping environment that helps business stakeholders quickly visualize and refine their IoT strategy — long before committing to large-scale implementation.

With Ioto, developers can instantiate device clouds in minutes, emulate target hardware, and create custom apps rapidly — all before committing to a particular architectural implementation.

Easing Integration

Creating and integrating all the necessary components for an IoT solution is challenging. It typically involves designing, creating and integrating device hardware, firmware, device clouds, networking, cloud services, data modeling, analytics and device apps.

A trend among successful IoT deployments is the use of modular, scalable products and services to simplify development. Rather than reinventing the wheel, companies are leveraging proven IoT platforms such as AWS IoT and frameworks like EmbedThis Ioto. These handle the heavy lifting of connectivity, security, data ingestion, storage, integration, analytics and visualization. This can drastically cut time-to-market and avoid integration pitfalls. Gartner research indicates organizations using standardized IoT communication protocols lower their integration costs by up to 30% and improve deployment time by 25%¹¹.

EmbedThis Ioto is an end-to-end solution encompassing device agent, device cloud, device builder service and device apps. All components are designed to work together and to fully integrate with the underlying AWS IoT service. This reduces — and often eliminates — the need for lengthy integration cycles and greatly reduces development cost and integration risk.

Ensuring Scalability

Scalability issues often surface late in an IoT project when design and architectural decisions are well “baked in”. Fixing these issues by changing design is costly in both time and budget.

Ioto has been designed from the beginning to scale to the very largest installations. Device populations up to and beyond 10 million devices are fully supported. By using the huge scale of the underlying AWS IoT platform and by utilizing built-for-scale technologies such as AWS DynamoDB and serverless Lambda compute, the Ioto framework can scale to support the largest IoT workloads.

Designing for Security

Given security is a make-or-break factor, successful IoT initiatives now take a “secure by design” approach. This means building in encryption, authentication, network security, and continuous monitoring from the start, rather than bolting security on later. Companies that achieve IoT success tend to proactively address security and privacy – e.g. using end-to-end encryption, robust identity management for devices, and thorough testing for vulnerabilities^{13 14}. This reduces the risk of costly breaches or compliance failures down the road. Similarly, designing for reliable connectivity and device management is crucial.

Unfortunately, the typical IoT attack surface is quite large, spanning from device hardware, software, networking, and cloud services to end-user device apps. Consequently, the effort and skill-set required to fully and comprehensively design a secure IoT solution is a significant obstacle.

Ioto addresses this gap by providing a tested, end-to-end solution and has employed proven secure design patterns throughout in the device agent, device communications, cloud service, device data storage and end-user apps.

Bridging the Skills Gap

The human element is a decisive factor. Successful IoT initiatives invest in building the right team and partnerships. The necessary expertise to create an IoT project is often not available in-house and not easily acquired. Reducing the scope of custom components by leveraging existing proven solutions can drastically accelerate your project and mitigate the impact of skill gaps.

Conclusion and Outlook

In 2025, IoT projects are gradually improving as industries learn from early missteps, but the failure rate remains unacceptably high. Only about a quarter of IoT projects today can be counted as unqualified successes, with the rest either falling short of goals or never fully launching³⁹. The top pitfalls – unclear purpose, integration woes, scalability, security, cost overruns, and skill gaps – have become well recognized.

IoT project outcomes can be significantly improved by applying the lessons of recent failures. Organizations that adopt end-to-end solutions like Ioto dramatically reduce complexity, risk, and time-to-market. The path to a successful IoT deployment starts with choosing the right foundation.

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