Press release

25 Feb 2020 London, GB

5G investment set to soar, yet more than half of enterprises lack confidence to implement, finds EY study

LONDON, 25 FEBRUARY 2020. Fifteen percent of enterprises are currently investing in 5G, rising steeply to 69% within three years.

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  • 15% of enterprises are currently investing in 5G, rising to 69% within three years
  • 52% are not confident in their organization’s ability to implement 5G-based IoT
  • US set to lead 5G investment over the next 12 months and beyond

Fifteen percent of enterprises are currently investing in 5G, rising steeply to 69% within three years. Yet, less than half (48%) are confident they can transition to 5G-based Internet of Things (IoT), with 74% indicating that they need to overhaul the operating model to realize implementation. That is according to a new EY study, Maximizing the 5G opportunity for enterprise (Japanese / English), which surveyed more than 1,000 enterprises globally on the 5G opportunity.

The study finds that most enterprises (74%) believe 5G will enter the fabric of their business over the next five years. However, of those investing in 5G today, 67% are either engaging in trials or are in discussion with suppliers, rather than moving to the operational phase.

This caution is driven by several key factors, including knowledge gaps around use cases (75%) and a perception of 5G as an incremental progression on 4G (69%). In addition, respondents cite integration with existing technologies as the biggest internal barrier to 5G adoption (37%), while the perceived immaturity of 5G technology tops the list of external challenges (35%).

Tom Loozen, EY Global Telecommunications Sector Leader, says:

“Enterprises are aware that 5G can fundamentally reshape their organizations. To succeed, they need to develop a road map that is aligned to the broader landscape of technology transformation, but anxieties persist around technology integration, maturity and cybersecurity. To overcome this inertia, 5G vendors need to articulate a more compelling vision of the opportunity, while enterprises need to educate themselves on the game-changing possibilities that go beyond efficiencies alone.”

The study reveals that forming the right partnerships could be the key to unlocking 5G potential. Seventy-nine percent of respondents believe they require external support to generate robust 5G use cases, while 77% say they will prioritize vendors that can deliver 5G business outcomes as partners – rather than offering pure cost benefits. Notably, 60% indicate that their organization is currently struggling to identify the right 5G vendor, and 67% say their vendor interactions to date have largely been transactional and tactical.

Adrian Baschnonga, EY Global Telecommunications Lead Analyst, says:

“It’s clear that enterprises now want consultative dialogue that delivers business outcomes through end-to-end solutions. 5G providers need to reinvent themselves as trusted partners, prioritizing access to an ecosystem of competencies that can deliver 5G capabilities at scale. Delivering actionable solutions that encompass the full spectrum of enterprise needs – from use case creation to cybersecurity – will be critical in the long-term.”

Geographically, US enterprises lead the 5G adoption curve according to the study, with 19% currently investing compared with 13% in Europe. Just 10% of Asia-Pacific enterprises are currently investing, despite representing the highest level of planned expenditure over the coming year. Overall, US enterprises are set to remain ahead, with almost half (48%) planning to invest within the next 12 months, compared with 43% in Asia-Pacific and 38% in Europe.

The energy (23%) and technology (22%) industries are currently 5G investment leaders, with health care (61%) and financial services (58%) organizations projected to emerge as the biggest investors within three years.

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About the study

EY surveyed 1,012 enterprises in September and October 2019. Respondents were drawn from multiple industry verticals and geographies. Themes explored include: emerging technology spending intentions; enterprise IoT and 5G-IoT use cases; IoT and 5G organizational priorities; and the challenges facing enterprises in relation to 5G. Additional insights on the status of 5G-IoT adoption among enterprises and their evolving relationship with 5G-IoT providers have been contributed by EY teams. To read the study in full, and for the latest insights from across EY Technology, Media & Entertainment and Telecommunications, visit ey.com/tmt