- Platform. Successful IoT implementations require a comprehensive business and technical architecture – the IoT Platform – to provide the building blocks of the underlying infrastructure. This platform is comprised of 3 broad areas: 1) Technical – cloud storage and compute, security, etc.; 2) Data Management – capture, management, analytics, etc.; and 3) Management – policy, device, API and application framework. These platforms are horizontal plays that can be leveraged across multiple industry verticals, allowing suppliers to reap the benefits of economies of scope and scale.
- Solutions. Implementing effective IoT systems is complicated and often requires considerable customization. Providers who can provide end-to-end solutions (hardware, software, data insights, implementation and services) will be clear winners. Successful solutions will have an industry vertical wrapper to make them relevant to the customer’s particular needs. These solution providers will create new business models to deliver “IoT as-a-service” and outcomes-based financial models. For example, IoT-enabled machinery as a service, or payments based on energy savings will be new models that will reduce the risk to businesses and ensure successful IoT implementations. Providers who can successfully deliver solutions, vertical expertise and new business models will create deep and enduring relationships with their customers.
- Business Integration. IoT is only as good as its successful implementation and adoption by the business. As we saw in the Internet revolution, there is a big need for outside providers to help companies to make this transition and to realize the promised benefits of the new technology. Key business integration needs include: 1) Business Consulting –identifying opportunities, creating the business case, re-engineering the business and change management; 2) Systems Integration – integrating IoT systems with existing systems, data and processes; 3) Management – program management, ongoing operations and outsourcing of key operation
Tuesday, August 11, 2015
Every new technology revolution creates new technology company powerhouses and relegates others to the ashes of history. The PC revolution gave us the likes of Microsoft and Intel, the Internet revolution created companies like Cisco, Google, and Amazon, and lately the mobile revolution has created market giants like Apple, Samsung and Facebook.
We are in the early days of another transformative technology revolution – The Internet of Things. Connected everything to everything in a smart, data-rich world will fundamentally transform businesses, generate enormous economic wealth and create immeasurable social value. There is immense opportunity for suppliers to help businesses to achieve these tantalizing new benefits. But, who will be the winning suppliers in the IoT revolution?
Despite the Internet (connectivity) and Things (devices) being the key terms in the title of the next technology revolution, this is not where the money will be made. It is estimated that there could be up to 50 billion connected devices in the next five years. But, these will be largely low cost, low power devices with long replacement cycles. We have all seen what happens in the device and hardware business – a steep declining price curve. For example, the cost of semiconductors on a per-transistor has plummeted 50 percent in the last 3 years. Effectively, lots of volume but a low margin business.
Service providers are salivating at the thought of connecting the estimated 50 billion inanimate objects to the Internet. However, the vast majority of these devices will require very low bandwidth as opposed to the demands of chatty and data hungry mobile users. Equally, most of these connections will be over unlicensed networks, like Wi-Fi, rather the lucrative cellular networks. Chasing value from connectivity effectively becomes a game of “trading mobile dollars for IoT pennies.”
While there might not be huge value from chasing catchy IoT term itself, there are good opportunities to generate good money from supplying the IoT revolution. Success will result in the creation of the next tech giants of this new era. There are three key areas for value creation:
Helping to deliver the IoT revolution presents huge opportunities for business and technology suppliers. The winners will be those companies that bring distinctive technologies, innovation, new business models and deep industry knowledge to the three key areas of IoT value creation.