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Today, there is an increasing realization amongst IoT adopters and vendors that the various constituent elements of an IoT solution must be delivered as a managed service or series of managed services. In June 2023, Transforma Insights published a white paper in collaboration with Telit Cinterion entitled, “The Internet of Things can only be delivered as a managed service,” which looked at why enterprises should be more selective about demanding a more personalized service and picking their IoT connectivity partners. Let’s take a look at some of the key highlights in the white paper.
8 Key Highlights
#: Managed Service is the Best Way
In February 2023, Transforma Insights published its annual Communications Service Provider IoT Peer Benchmarking report, looking at the capabilities and strategies of CSPs in delivering IoT connectivity and other associated services. One notable trend, which has also been manifested in other areas of IoT, has been the greater requirement to provide more customer support, whether it be a full systems integration project, enriched post-sales support, or something in between.
It has become well-recognized that enterprises need some handholding to deploy their IoT projects. This is even more pronounced for mass market deployments in which adopters have little to no direct expertise in IoT. Simply throwing an increasingly complex array of hardware, middleware platforms, connectivity options, and cloud architectures at an enterprise and expecting them to piece together their own IoT solution is, at best, fanciful. IoT is a non-core area for almost every adopter, so some element of handholding is critical.
#2: Infinitely Scalable IoT Is Gone
One major implication of the customization requirement is that there is a diminishing opportunity for any company to exist as an infinitely scalable IoT platform. Such elements are increasingly commoditized and demanding of a service layer on top of them. Middleware companies are differentiating on vertical sector expertise, and recent years have seen some major technology vendors mothball or close their IoT platform play, including Google IoT Core and IBM Watson IoT.
IoT is a service rather than a product business; such is the necessity for customization to meet clients’ requirements. This means fewer unicorn platform companies and more service-oriented companies resolving real-world client requirements.
#3: Cross-Optimization is Critical
In August 2021, Transforma Insights published a report, “What is the ‘Thin IoT’ stack and why do I need it?” which describes an emerging norm within the development of IoT applications to make use of specific off-the-shelf technologies that have been created explicitly to be optimized for use in constrained environments, such as limited access to power, low bandwidth connectivity, and limited processing and memory.
As well as making use of these IoT-specific technologies, there is a greater requirement for all the constituent elements of an application to be optimized with each other. Technological and commercial developments mean that support for enterprises deploying IoT will be increasingly multi-disciplinary, involving the cross-optimization of many different solution elements, including devices, device management, connectivity (including multi-bearer), application enablement, cloud integration, edge computing, protocols, and application logic.
#4: Cross-Optimization Leads to Better Fault Resolution
One positive result of the increasing cross-optimization of IoT is that it will help with one of the greatest headaches of deploying IoT: fault resolution. With disparate elements that aren’t optimized together, it’s often hard to avoid a blame game between vendors in the event of faults. An optimized solution and, ideally, a single point of contact (i.e., the vendor that acts as the “optimizer”) should reduce issues and result in swifter resolution. Having one point of accountability is becoming more important, particularly when resolving faults in critically interconnected elements.
The organization responsible for ensuring the different elements of IoT applications work together is also well placed to iron out one of the main challenges of IoT: fault resolution in a multi-vendor environment, avoiding the blame game that dogs many IoT deployments.
#5: Not All Vendors Are Equal
One of the main questions that enterprise IoT adopters ask Transforma Insights is, “Which vendor should I select and why?” The answer will inevitably come down to the buyer’s specific deployment parameters and sensitivities. However, we can offer a few pointers on selecting a vendor in the newly evolved IoT taxonomy, with growing capabilities in managed services and the need for cross-optimization and bundling.
The degree of pre-sales and post-sales support is a critical differentiator between vendors. On paper, many offerings might look identical, but there is a world of difference between best-in-class and run-of-the-mill despite having the same offering. The best vendors realize that the guidance they provide is as important as the products.
#6: Context(ualizsation) is King
With the growing requirement to hold the hand of the customer as they deploy IoT and provide a richer set of pre-sales and post-sales support comes an increased verticalization of any offering. Vendors must understand the vertical into which they are selling and provide support that is contextualized for it. This doesn’t mean that the suppliers necessarily need vertical solutions themselves; moving “up the stack” is fraught with challenges. But it is in their interests to build knowledge and expertise in contextualizing horizontal offerings for the vertical they are addressing. And that’s great news for the buyer too.
There is a strong tendency amongst IoT vendors to say that they can deliver almost any functionality. Adopters should look for those with experience in their particular circumstances.
#7: Managed Connections to Exceed 70 Percent in 2023
The future of IoT vendors is in delivering expert, personalized support to enterprises based on the particulars of their deployment. Vendors will continue to use horizontal capabilities as their building blocks to gain some scale, but when interacting with enterprises, customization is key.
In total, we estimate that a little under one-third of all cellular IoT connections are truly managed today. This figure will increase significantly over the coming decade to around 73 percent in 2032.
#8: Hardware & Connectivity Bundles to Grow to 100 Million
One of the ways in which the requirement for cross-optimization is likely to manifest itself is in the increased bundling of cellular connectivity subscriptions with hardware in the form of modules and gateways. We expect such bundled offerings to more than triple between 2022 (30 million shipments) and 2025 (100 million).
About the White Paper
The White Paper starts by exploring why there is greater demand amongst IoT buyers for more managed services, and then examines the growing demand for cross-optimization of the elements of the IoT stack, before examining the reasons why hardware/connectivity bundling is on the rise. It finishes by summarizing changes in the supplier ecosystem with the emergence of a new IoT Taxonomy and identifying how all these evolutions might affect an enterprise’s decision-making process in vendor selection.
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