Rethinking IT and business strategy to conquer enterprise IoT
Thu 27 Oct 2016
Veli-Pekka Luoma, IoT specialist at Comptel, considers why telcos will be at the heart of the enterprise IoT revolution…
Though many of the most cited Internet of Things (IoT) use cases serve consumers, such as concepts like the connected car or home, the enterprise might be where we will see the greatest evidence of the IoT’s potential.
The IoT’s prospective business and industrial use cases show great potential for changing how companies both manage operations and serve customers. In factories, sensors can be used to monitor supply chain productivity, or even provide ongoing status information on the efficiency of finished products. In healthcare, personal health devices could feed patient information back to a physician for post-treatment recovery monitoring. In the average business, a greater use of sensors could help companies optimize the use of their physical office space, as well as the utility consumption.
A number of telco operators are providing the blueprint for IoT business and service models
Ultimately, the IoT figures to make a major difference to the efficiency, productivity and financial health of businesses in a variety of sectors, including manufacturing, healthcare, transportation and high-tech, among others. The market potential for enterprise IoT will soon be so large, in fact, that by 2019 it will eclipse the entire smartphone and tablet markets combined, according to BI Intelligence.
Telcos will be central to the enterprise IoT ecosystem, supporting how businesses process, analyze and act on data from their connected devices. Data is the lifeblood of the IoT, as it informs the value-driving actions that make it a transformative frontier. To best serve the enterprise IoT market, operators must closely consider both their business strategy and technology capabilities.
Enterprise IoT business models
A number of telco operators are providing the blueprint for IoT business and service models, and those strategies involve data.
T-Systems, the corporate customer unit of Deutsche Telekom, provides the data analytics function in a connected vehicle service solution in which on-board data is gathered by a dongle (manufactured by a third-party hardware provider), and analyzed in real-time by T-Systems. Their analysis could keep auto insurance providers informed on real-time driver behavior to influence insurance coverage and premiums.
Partnerships are often the best route into this market for IoT service providers. Most telco operators won’t build their proprietary IoT hardware and devices because a massive number of established companies already have a head-start. Instead, telcos are creating partnerships with those IoT manufacturers – as well as vertical experts or content providers – to develop an ecosystem of partners with which to build an enterprise IoT solution.
Developing a standardized IoT platform
An additional benefit to working with partners as part of an enterprise IoT service strategy is that it enables the creation of a standardized IoT technology platform, through which a service provider could explore opportunities in both B2B and B2C sectors.
Telcos are uniquely positioned to support higher IoT device volumes
Dr. Stefan Bungart, Vice President Strategy and Partnerships for the Digital Division at T-Systems, explained this concept in the Comptel book Nexterday: Volume II. As he wrote, a standardized underlying IoT platform allows providers to efficiently support a high number of B2B and B2C IoT devices, lowering the cost-per-unit of each and solving the issue of price competitiveness. So, whether your IoT service supports smart cars or smart factories (which inherently must be priced differently), you can offer an appropriate and attractive price every time.
This model also reveals the elastic way telcos can support the administrative costs of IoT, in a way enterprises cannot on their own. Deploying enterprise IoT, after all, involves much more than the initial investment. In fact, the cost of ongoing administration for an IoT network is much higher than its CAPEX, so it’s unreasonable to expect an enterprise to manage even just mission-critical IoT networks on their own. Instead, businesses will have to overcome their initial reluctance to outsource certain operations and trust in a IoT service provider for support.
Telcos are uniquely positioned to support higher IoT device volumes, lowering the individual unit cost and making IoT network management a cost-effective service. They can standardize their infrastructure to achieve better efficiency in delivering core IoT management services, and then deliver additional value through add-on service upsell opportunities.
Analyzing a storm of data
The data processing challenge is consistent across all IoT use cases, whether it’s for consumer or business applications: there’s just a lot of data out there, from a wider variety of sources and moving faster than ever. In the enterprise, inefficiency in processing that data increases the cost of supporting IoT applications and limits how quickly businesses can realize value.
Consider how quickly the average business can take a morsel of information it’s learned from an IoT-enabled device – perhaps a sensor on a building’s heating and cooling system – and turn that information into an action that yields positive value. If the answer is anything other than “immediately,” then it’s already taking too long. That’s because the whole point of IoT, in any context, is that it provides real-time information with which users can do something practical, right there in the moment.
Latency also factors in. Enterprise networks will be pressured to distribute a higher volume of data from many different IoT devices, so if those networks aren’t equipped to transmit that information quickly and cost effectively, it could delay the point at which businesses realize operational or financial benefits from IoT data.
From a technology perspective, telcos are uniquely positioned to support enterprises with both software that enables immediate real-time data analysis and actions, as well as network capabilities that ensure the best possible environment for IoT data capture and processing.
That’s a big reason why telcos will be at the center of the enterprise IoT movement. Its transformative impact could very likely result in the creation of separate divisions with unique business models, much in the way mobile forced telcos to create standalone companies to support that opportunity years ago.
Data certainly figures to play an important role no matter how service providers choose to approach the IoT, and it bears considering how to adapt existing business models and technology capabilities to maximize that data.