2020 IoT: The Top Challenges Facing Product Leaders

In 2020, product leaders identified three core obstacles that continue to hinder the growth and profitability of IoT initiatives. This post summarizes the findings of a 2020 survey of 73 product leaders, alongside key insights gleaned from the responses.

Although the sample size is modest, the survey offers a valuable qualitative snapshot of the challenges that product managers and executives face across startups, mid‑size firms, and large enterprises. Roughly 55% of respondents were managers and 45% were directors or above, with an even distribution across company sizes.

Top Three IoT Challenges Identified in 2020

The following chart illustrates the average response to the question, “What is your biggest IoT challenge today?”

Across all demographics, the three most pressing challenges are:

1. Scaling the IoT solution
2. Monetizing IoT offerings
3. Securing product‑market fit

Notably, the perception that “understanding how the IoT technology building blocks fit together” ranks lowest suggests that foundational knowledge is no longer the primary bottleneck. Instead, business‑related hurdles dominate the landscape.

Below we delve deeper into each of the top challenges.

1. Scaling the IoT Solution

Scalability emerged as the #1 concern, reflecting a shift from early‑stage product development to expansion and market penetration. While many respondents cited product‑market fit as a prerequisite for scaling, over half of those reporting scalability issues did not list product‑market fit as a challenge, indicating distinct pain points.

Common reasons for scalability roadblocks include:

• Absence of a dedicated enterprise sales team
• Misalignment with marketing on value communication
• Long deployment timelines for industrial IoT deployments
• High custom‑ization demands for each customer
• Security requirements that slow rollout
• Lack of global connectivity standards, leading to extra engineering effort

“My biggest challenge is convincing large enterprise customers to try and start the PoC quickly.” – Director at a startup

“The fact that every customer seems to be a snowflake.” – VP at a startup

2. Monetizing IoT

Profitability remains a critical concern, especially for startups with limited runway. Large enterprises also face this challenge, albeit with less urgency, which could leave them vulnerable to disruption.

Key barriers to revenue generation include:

• Inability to scale and achieve economies of scale
• High upfront cost of building an IoT solution
• Uncertain or unsuitable business models
• Customer willingness to pay falls short of solution cost
• Protracted and expensive proof‑of‑concept pilots

“The customer is usually sold on a dream and disappointed in the execution without being realistic.” – Manager at a large company

3. Securing Product‑Market Fit

Finding product‑market fit remains the core mandate for product leaders. Many respondents treat IoT as a horizontal capability across industries rather than tailoring solutions to specific verticals, a mindset that hinders deeper adoption.

Challenges cited include:

• Need for deep customization per customer
• Difficulty articulating value to the customer
• Complexity in mapping partner ecosystems

Additional Challenges Highlighted in the Survey

IoT Security

Security concerns persist, with many leaders citing cost or lack of expertise as obstacles that erode customer trust and slow adoption. While progress has been made, the industry still has work to do.

Read more: How to Protect Your IoT Product from Hackers

IoT Standards

Clear technology standards are essential for global deployment, yet many companies struggle with fragmented connectivity standards, power discrepancies, and rapidly evolving specifications.

Our IoT Decision Framework offers a structured approach to evaluate the impact of standards and regulations on your product strategy.

“A big challenge is navigating international standards and cellular agreements.” – Director at a mid‑size company

Gaining Executive Support

Without executive buy‑in, IoT initiatives often stall. Survey respondents identified several barriers:

• Insufficient budget for sales and engineering talent
• Difficulty aligning cross‑functional teams
• Challenges sustaining long‑term support for the initiative

“My biggest challenge is moving my slow organization forward, which is still in the mindset of the 80s.” – Manager at a large company

“Enlarging the Digital Team with Sales/Business Development for better market penetration.” – Manager at a mid‑size company

Building Sustainable IoT Products

Sustainability is increasingly important. The majority of respondents view eco‑friendly solutions as both a moral imperative and a business differentiator. The next step is translating this intent into concrete design and business practices.

Conclusion

Despite significant technological advances, the IoT sector still struggles to deliver the promised value. The primary hurdles—scaling, monetization, and product‑market fit—underscore the need for focused strategy, cross‑functional alignment, and clear revenue models. Product leaders must navigate these challenges with informed decision‑making and innovative execution to unlock the full potential of IoT.

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