The IoT Market in 2017 – Identifying changes in the role of the Buyer and the Implementer resulting in changes in Propositions, Sales and Marketing
Vice President and Principal Analyst, Constellation Research
Constellation Research
Andy Mulholland is Vice President and Principal Analyst focusing on cloud business models. Formerly the Global Chief Technology Officer for the Capgemini Group from 2001 to 2011, Mulholland successfully led the organization through a period of mass disruption. Mulholland brings this experience to Constellation’s clients seeking to understand how Digital Business models will be built and deployed in conjunction with existing IT systems.
Coverage Areas
Consumerization of IT & The New C-Suite: BYOD,
Internet of Things, IoT, technology and business use
Previous experience:
Mulholland co authored four major books that chronicled the change and its impact on Enterprises starting in 2006 with the well-recognised book ‘Mashup Corporations’ with Chris Thomas of Intel. This was followed in…...
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When briefing Analysts Microsoft illustrate their potential IoT market with a slide showing four major Industry sectors with up to fifteen different Line of Business Management roles in each. Every role is regarded as an actual, or potential, buyer of IoT solutions. Whilst this is undoubtedly true, for reasons covered later, it does imply having to be able to position and sell fifteen different IoT business solutions in any single Enterprise.
This may sound impossible yet almost identical slides have been shown in the past to illustrate how all roles across the Enterprise could benefit from Enterprise eMail adoption. Then some years later it become Internet /Web connectivity and functionality. In both cases, as with IoT, the initial argument for adoption was difficult due to a lack of individual benefit cases.
Think of it in terms of the difficult to sell early phones when numbers of connections were limited. In time Enterprises could not participate in business markets with out their employees having access to a phone. A similar path was followed with Internet connectivity and web adoption.
Traditional Enterprise business cases require a specific activity to be improved and see no specific Enterprise wide technology based capability adoption, such as email or Web connectivity as an increase in overheads. Recent history shows that adoption time frames are shortening for each technology wave. Though initially slow, the trigger point to Enterprise Business capability transformation is occurring sooner, and then the period to widespread adoption is very short.
The relentless spread in the number of Internet connected Devices capable of providing Business Intelligence renders it inevitably that every Enterprise will ultimately be driven to adopting IoT as a necessity to remain in business.
The current phase of selecting individual business deployments focused on a specific issue are merely commercially justifiable starting point for gaining experience. However at Enterprise Management level there should be involvement to ensure that these early individual Line of Business Managers deployment decisions will not become medium term issues due to a lack of strategic foresight.
There is strong evidence from numerous sources, ranging from Social Sources to larger scale surveys that the cohesive management of IoT projects across the Enterprise has already become an issue. A good example of a detailed report comes from the magazine Computing survey in May 2016 whose sample of responses of those who had carried out IoT projects was across multiple Industry sectors, and Enterprise sizes.
The following are two key points abstracted from the published report, but there are many significant direct quotes providing valuable insights that make reading the full report desirable.
To the question of the background of an IoT Project leader being better to be from IT Strategy (linked to Business strategy), or Data Analytics and Development, the split was respectively 53% for IT/Business Strategy versus 39% for the more Technology based skills. The remaining 8% rejected both options, or were undecided.
A similar question relating to a desirable background for the Project Leader being either Business, or Technology management produced a total lack of consensus! The respective split being 36% to Business versus 33% to Technology, but with an astonishing 31% feeling unable to answer the question!
Whilst those delivering an IoT project may not be totally reflective of those who are the initiators, or buyers, a reasonable conclusion is that there is a remarkable diversity in where, and for what, IoT is being deployed. For IoT vendors this is a huge challenge to the traditional sales process built on marketable ‘propositions’ directly aligned to readily identifiable Business Buyers and their requirements.
If the evidence is correct then it would seem that a shift from IT driven issues to IoT Line of Business buyers could turn the accepted IT sales process around case studies and outcomes on its head!
In the traditional Enterprise Application sales process the expectation is that the IT vendor better understands the balance between best business practice and most effective technology implication. This is particularly true in ERP where, over two decades implementation, the purchase moved from heavy customization of the ERP Applications in order to fit an Enterprises current practices; To the Enterprise adopting industry sector best practice as defined in the ERP Application and modifying their own procedures to make the alignment.
A core element in the role of IT has been to assist the Enterprise to centralization and standardize to reduce cost, yet Digital Business models all stress a reversal of this move towards various degrees of de-centralization to access more opportunities in the market. The philosophy to capture more of the Long Tail is to improve revenue creation by the use Digital Technology. Continuous innovation is stressed as a necessity, and emphasis is laid on the ‘Intrapreneurship’ of Line of Business managers.
For those new to the term the shortest definition of an Intrepreneur from Dictionary.com states; ‘an employee of a large corporation who is given freedom and financial support to create new products, services, systems, etc., and does not have to follow the corporation's usual routines or protocols’. There is an increasing amount of discussion on the topic including a useful article in Forbes defining the four essential qualities of an Intrapreneur.
The facts seem to point towards a link between the diversity of IoT buyers and deployments and innovative Digital Business initiatives. Line of Business managers are individually innovating around their deep personal experience to introduce competitively differentiated outcomes. If this is truly the case then the well developed IT sales methodology of packaging and selling complete solutions supported by case studies looks unworkable, as it would require the development of too many small solution offers.
It will require either the market to mature around a contained number of Business requirements, or a different approach.
So what could be an alternative? Inbuilt into the traditional sales offerings is a reduction in the risk of adoption, both for the buyer and seller, through implementing a known solution. In an IoT deployment the risk factor becomes higher as the new technology is still in the early adopter phase, offerings that reduce risk will always be popular. The ever-growing move towards using ‘Services’ certainly reduces the buyer’s risk. Conversely it increases the pressure on the vendor to determine flexible enough Service packages to ensure enough sales revenues to cover their commercial investment in building and operating Services.
Both vendor and buyer need common IoT solution frameworks that support standard architecture elements onto which individual unique and innovative requirements can be readily mapped. This is not ‘news’ to the IT vendors who are already introducing ‘templates’; unsurprisingly these are largely based on the IT business solution principle.
Is there a case for a bolder move that will accept that the Digital Economy built on IoT, Clouds, and soon including AI, calls for a different approach? If so what could the basic architecture propositions be based upon?
At the most basic level there are four readily identifiable business activities where IoT can add value by increasing the data available. In no particular order;
People in relationship to their Activities; Service Engineers, Merchandisers, Sales and similar Activities.
Machines monitoring their operations for reliability, operating efficiencies, etc.
Process to gain near real time data to optimize and improve further process steps
Ecosystems for the interconnection of any and all of the above in Smart Services.
Using these four definitions it is noticeable that a high number of IoT market success reports f are grouped around these headings; Salesforce concentrates on People; GE on Machines; SAP on Process but who is the leader in the final category of Ecosystems? Microsoft, AWS and Google could all claim their presence in this sector. But is it really that simple?
Careful analytics of the reported wins suggests that either focus, or volume succeeds; The People, Machines and Process category case studies all show the in depth focus and inherent knowledge of the vendor in the Business activity.
Summary;
There are two distinct different markets with different Buyers, whose projects are different, and whose selection of a supplier and solution is therefore equally distinctly different. Vendors will need to make a substantial effort to identify and verify exact where their products and in house skills will serve them best.
Line of Business Managers require a Vendor with strong sector specialism/experience to act as a partner in developing an innovative idea. Engagements may be driven by revenue creation activities in respect of the Digital Economy and Smart Services, or internal Operational Improvement, though in Utilities as an example, this is likely to mean external deployments. A strong factor will be the ability to provide ‘the final mile’ sensors/sensing and connectivity element, once again favoring the specialized vendor.
Individual Projects may be small, but the decision making, budgetary approval cycles will be fast, with an expected high business value outcome.
Initial engagements should form the basis for an ongoing team partnership with the development of methods and architecture that could form the basis for becoming an Enterprise level partnership embracing other Line of Business Managers.
IT Managers expect their existing IT Vendors, particular their Cloud Services providers, to be able to demonstrate how IoT will be an extension of the existing Enterprise IT strategy. The IT driven project is likely to be driven from the perspective of ‘Big Data’ and ‘Analytics’ with in-house IT expertise in these areas playing an important role. An existing Cloud Partner offering ‘template’ solutions, and able to introduce preferred partners for ‘the Final Mile’, or for integration, is the ideal.
Projects will have full Enterprise support and will go through the traditional sales/buying cycle required for this level of significant investment using cost justification as the major factor.
Cloud based partnerships are driven by cost and Service levels, but IoT brings a new set of dynamics to the existing IT use, and charging models, of Clouds. Both sellers and buyers will need to carefully their on going commercial relationship.
Enterprise Hybrid Adoption Models combining both types are the most likely outcome as the boundaries between both fluctuate in different sectors and Enterprise cultures. However both sellers and buyers will need to make clear decisions on exactly where, and how, they intend to develop in the 2017 IoT market, or they are likely to end the year with conflicting outcomes and a poor enterprise level success.
New C-Suite
Data to Decisions
Future of Work
Innovation & Product-led Growth
Tech Optimization
