May 21, 2015

Roadmap for IoT strategy

Over the past few weeks, there have been several industry conferences, magazine articles and webinars dealing with the IoT market opportunity and the role of different companies across the eco-system. The topics addressed in these events have generally highlighted M2M use cases (vertical-specific applications) and the promising role for telecoms operators.

In many respects, the subjects under discussion have been disappointing. They indicate that many parts of the industry are still coming up the M2M learning curve and some way off dealing with the commercial implications of the IoT market. In terms of the competitive landscape that is forming around the IoT, company executives who are coming to terms with M2M are not yet in a position to plan sustainable IoT strategies.

So, how do you tell if your organization is working with an M2M mind-set and whether it has embarked on the transition from M2M to IoT?

It helps to think of the transition as a journey. This is where is becomes important to have a road map to plot a company’s strategy and progress. Road maps can be complicated so here is a simple version I have been using in my IoT strategy projects. The left hand side of the diagram below illustrates today’s M2M market. Two dimensions define this map. One dimension deals with the mix of local- and wide area connected devices while the blend of silo- and cross-silo applications corresponds to the second dimension. Most M2M applications connect a remote or mobile asset (e.g. point-of-sale terminal, vending machine, vehicle etc.) to a software application (e.g. payments handling, inventory management, fleet tracking etc.) over a wide-area connection (fixed, mobile, satellite). In some cases, a local gateway might act as a hub to consolidate data from proximate sensors and connected devices, as in the case of a home security application.
The future IoT scenario on the right had side of the diagram highlights two important dynamics in the market landscape. Firstly, the addressable market is significantly larger, as measured by the growth in number of connected devices, many of which belong in the short-range category. Some analyst reports put the ratio of short-range devices to wide-area connections at almost 10:1. Recognizing this change, does your organization have a plan to span the wide- and local-area connectivity mix? Will it work with partners if a core operating principle is to remain a specialist connectivity provider? One answer to this challenge is to abstract connectivity and focus on activities higher up the value chain as described in this post [1].

The second important market dynamic in the IoT world is the growing potential of cross-silo applications. This manifests itself in several different ways. The most obvious is through device and data interoperability across application silos. An example of this is to allow connected appliances in a smart home to feed data into an assisted-living application; in other words, if refrigerator, microwave-oven and bathroom appliances are in regular use this suggests that the (elderly) householder is alive and well.

Another way of thinking about cross-silo applications is in the form of platforms that offer a common set of functions to support multiple applications. An example of this is an in-car or in-home platform that provides connectivity and data communication services to devices from multiple vendors. The use of a common platform opens up the opportunity for cross-application innovation. An example could be the combination of insurance telematics data with predictive maintenance applications and safe-driving overrides of in-car devices.

Much like the contour lines on a traditional map, the IoT ‘map’ is also useful for tracing application concentration points. As examples, take the Allseen Alliance and the Open Interconnect Consortium (OIC), both of which are addressing IoT interoperability opportunities in the home environment (i.e. short-range connectivity). Their respective member rosters point to slightly different areas of focus in the smart home although their ultimate aim is interoperability across different types of connected device in the home environment. Over time, their efforts should coalesce, to ensure true interoperability. Both groups should also extend their efforts into the wide-area connectivity domain. The two arrowed opportunities in the IoT market map illustrate these avenues of development.

Strategy and product-development journeys across the IoT map have deep implications for companies in the eco-system. For example, telecommunications operators have to decide whether their traditional wide-area, operational footprint will extend into the home. If so, will it be limited to Wi-Fi connectivity or extend further into much shorter-range technologies?

Device suppliers have to consider how their choice of connectivity will fit into applications that use multiple technologies. Their devices need to be discoverable. They will also have to be capable of handling standardized data exchange protocols to minimize activation and auto-configuration functions if they are going to deliver user friendly services. In addition, what commercial arrangements will be appropriate to monetize the connectivity and data-sharing benefits that their connected devices support?

Issues such as these will not be on the agendas of companies that operate with an M2M mind-set.

[1] Telenor and Vodafone show ways ‘beyond connectivity’

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