ISG Provider Lens™ IoT - Transformational Services, Technology, Solutions, Platforms and Industries - Global 2019 - Manufacturing
The IoT market has evolved over the years and touches a variety of technologies, services and activities, from big data analytics, platform selection and adoption, agile implementations, scalability and flexibility to 5G and cybersecurity. Technology is driving continued evolution every day with new additions and use cases. The IoT has been an integral part of the digital transformation journey that some enterprise clients are taking to improve operational efficiencies and business optimization. Creating value for businesses and enhancing customer experience have been the highlights of results IoT providers are achieving across industries and geographies.
The Internet of Things market evolution extends to providers, where we see changes in technology, services and pricing, which are all influenced by the digital transformation wave. The key trends in the current market scenario are summarized below.
Enterprise clients are looking for industry expertise from their service providers. Service providers are expected to work on more real-time use cases across industries to support clients on their transformation journeys. Clients also expect cost reduction, positive return on investment, reduced risk and easy data transfer from their legacy systems. Enterprise clients are interested in partnership-based engagements with service providers where collaboration would enable technology integration and more business-focused outcomes.
Acquisitions, mergers and partnerships are key to the IoT market. Providers understand the need to strengthen their existing digital portfolios with the right partners. Companies are evaluating the capabilities they need to be more competitive, and as a result they are exploring partnerships, mergers and acquisitions in the IoT space. Most of the M&A volume happens within software or application services while the larger deals occur on the hardware side.
IoT convergence with blockchain, AI and edge computing is the future. Enterprise clients have been investing in at least one of these technologies as part of their IoT investments. AI provides the intelligence from IoT-derived data while blockchain offers secure data transactions through its decentralized framework, and edge analytics enables real-time data visualization and predictive maintenance for IoT devices.
Cybersecurity is gaining importance but still lacks a comprehensive framework for IoT adoption. The lack of a suitable security framework is a barrier in deployments. Ensuring secure data transfer and payment transactions are the major challenges in the IoT ecosystem. By combining an IoT solution with blockchain and edge processing technologies, instances of such vulnerabilities can be minimized. However, the risk remains high in IoT systems that have a large number of devices or huge data volume.
Investments in the IoT market have been growing. Big names like Microsoft, Google, Cisco, Intel, Qualcomm and others have been making investments to fund startups that are unique in their niches in platform software, applications, hardware, sensors, services, etc. Microsoft recently announced it will invest $5 billion in IoT technologies over the next four years.
Service providers are looking at developing their own customized IoT platforms. Providers are doing this as part of evolving their IoT deployment portfolios for delivering at high speed and agility. The platforms are often specific to an industry or limited group industries, such as DXC’s I4P (Industry 4.0 Platform), Birlasoft’s IntelliAsset and Flutura’s CEREBRA, or are use-case specific, such as Mindtree’s Gladius and Wipro’s Looking Glass. But, with the plethora of platforms already in the market, clients look first at the already available platforms for their IoT deployments.
Co-innovation is helping drive next-gen solutions across industries. The IoT has been evolving over the past few years and is being widely adopted by organizations in different industries as a business game-changer. There is a trend of service providers collaborating with other solution providers to deliver a go-to-market solution more quickly. The joint expertise of different providers also leads to innovation in next-gen solutions.
The IoT market is shifting from consumer-focused offerings to enterprise. The enterprise focus and solutions are enabling companies to streamline their business processes, increase productivity and develop cutting-edge products. Enterprises are using IoT in manufacturing and other operations to raise efficiency. Enterprise IoT is gaining importance over consumer IoT as the cost efficiency, returns and outcomes are aligned and proportionate to the investments being made in the connected ecosystem implementations.
Narrowband Internet of Things (NB-IoT) is becoming more important. NB-IOT is affordable technology designed to transmit a small amount of data from multiple devices. All the leading telecoms are speeding their NB-IoT deployments. They like the technology because it consumes little power and thereby can give devices a long battery life, and can address various connectivity needs.
Pricing models have been evolving. IoT engagements are shifting towards outcome based, risk-reward and hybrid models. Clients favor a model that best suits their business requirements and fits into their ecosystem. The hybrid model is a mix of traditional and new approaches or a blend of different pricing options. A connected ecosystem deployment should be measured by its cost efficiency and ROI; the pricing model needs to best fit the need.
The managed services market has been evolving. Managed services are covering more and more IoT implementations across industries and geographies. Both clients and service providers understand the importance of managing the deployed connected ecosystem. The key area where the clients require expertise to manage the ecosystem after implementation is infrastructure management that covers devices, data, applications, networks, cloud, security, platforms and more.
Enterprise clients have understood the value of IoT ecosystems and have been taking steps for adopting them in their working modules. The challenges that come along with IoT adoption include the fit into a traditional or existing operational and business framework. The service providers in this space are helping clients on their digital transformation journeys by developing an understanding of the areas where IoT could help them, and helping them gauge potential benefits for better returns and efficiency. IoT implementation outcomes vary depending on the industry vertical, the functions and technology, and thus providers and clients need to work together on use cases to derive the best results.
IoT Platforms
The IoT platform market is dominated by different players that provide cloud solutions, enterprise applications, hardware and telecommunications services. They each build their platform around their capabilities. The leading IoT platform vendors can offer a complete solution that is suitable for industry-wide adoption.
Some IT industry leaders predict the overall IoT platform market will grow by 35 percent annually. Enterprises may adopt multiple platforms depending on their need to scale their operations.
- Functionality is diverse and evolving: There are multiple IoT platforms available in the market that differ by their technological offerings and focused industrial segments. IoT platforms offer various functionality besides the basic connectivity and data storage. The next-gen IoT platforms offer device management, data management, application development resources, edge processing, asset optimization, secure communication and more.
- U.S. market leads as global adoption increases: North America is the largest IoT platform market due to increased connected devices adoption there, and is followed by Europe. Asia Pacific is expected to grow faster and account for a larger share of the global market.
- IIoT platforms need to become more intelligent: It will become more crucial to combine industrial IoT (IIoT) platforms with artificial intelligence (AI) offerings within the next five years to enhance operational efficiency, reduce downtime and improve process stability. The IIoT platform segment is expected to grow 20 to 30 percent annually to 2022.
- Digital twin capabilities becoming more important: Digital twins are the key trend of Industry 4.0, and thus should be supported in IIoT platforms. Digital twin programs increasingly will move from the proof of concept (PoC) stage to more pilot deployments by next year.