IoT; Where are the Integrators? Perhaps more importantly who are the Integrators!
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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It’s reasonable to suppose that Service Companies that provide ‘Integration’ of technology to deliver Business valuable capabilities from Technology Products should be facing a boom. IoT adds new devices, data, and services all requiring their own integration as well as connecting to the existing complicated IT systems. Throw in defining and building business wining competitive Smart Services driven by the new IoT data streams as well and….
Customers are finding it remarkably difficult to find ‘integrators’ that will build a solution that delivers business valuable outcomes from the combination of technologies and product elements.
The use of the term ‘Integrator’ and not ‘System Integrator’ is a deliberate choice to separate IT centric System Integrators from Industrial Automation, or Operational Technology centric Integrators. Both sides of the Integration market place are finding integrating Enterprise wide IoT driven Smart Services doesn’t match their current capabilities, as it requires a mix of both skill sets. The result is some smaller, and more flexible; IoT/Smart Services Integration Specialists are entering the market to fill the skills gap. Interestingly given the high business values created this is very margin rich work, albeit delivered in a stream of small rapid engagements.
A previous post ‘Too much IoT and not enough Business Value’ pointed out the lack of definition in where, and how, to apply IoT to create business value. Why is this problem arising? Because it’s necessary to understand exactly what, and how, IoT delivers Enterprise level business valuable Smart Services activities in order to define a requirement to an Integrator. Previously, Integrators on both sides have provided the ability with existing technology deployments to be able to advise their customers in producing their project definitions.
Examining the challenge in more detail then applying sensors in Machine to Machine, M2M Industrial Automation has been an established market for years, but as an internal niche activity in an Enterprise. There are specialist ‘integrators’ whose skills in Factory Floor automation have produced huge benefits to Operational Technology, however they don’t have the skills for integration with complex Enterprise IT that is necessary to create the ‘real time’ read and react responsive Enterprise.
What they do understand is a technology environment that uses different network topologies, protocols, data libraries, time scales, and most of all, exactly what can be achieved by adding sensing. The new generation of Enterprise IoT solutions is necessarily understandable to them, any more than their Real Time’ environment is understood by IT Systems integrators.
If the mismatch in skills between Operational Technology and Information Technology were limited to the technologies alone then a period of intensive training by Integration Services companies from both camps would solve the issue. Unfortunately the fatal mismatch is in understanding and communicating the Enterprise Business value of integrating both environments.
The value of an integrated Enterprise as long been recognized by the global adoption of ERP, standing for Enterprise Resource Planning. Ironically ERP was developed from Manufacturing Requirement Planning, or MRP, and it helps to understand this background when considering the current challenge with IoT. At the heart of this twenty-year development curve of MRP/ERP lies the ongoing drive for efficiency and effectiveness in operating an enterprise in the face of changing demands.
The difference between the Manufacturing Requirement Planning and Enterprise Resource Planning, (MRP to ERP), era of transformation through Enterprise integration, and today’s requirement for using IoT to integrate Operational Technology and Information Technology, (OT to IT), technology is the time frame.
MRP to ERP is, as the terms suggests, about theoretical planning for efficient operations followed by a reporting analysis to see what happen when real world conditions were encountered. IoT driven OT to IT integration adds the capability to detect, or Read, real time conditions and events in order to React in an optimal manner.
The Internet of Things adds a further flow of Real Time data to that of Social CRM which could be thought of as the Internet of People in terms of its similar impact on changing market competiveness.
Its difficult to see how the agile, flexible, Digital Business model is possible with out the capabilities provided by integrating IoT + OT + IT, (supported by Cloud based services), into an Enterprise. Technology vendors know this and are introducing new Apps and Services that depend on real time IoT data flows, but strangely so do Management Consultants too.
Actually it isn’t strange that Management Consultants do understand this, as they were the people who created the market for ERP by creating and driving the business cases. For IoT driven real time business once again Management Consultants are leading the way with real Business Cases, and examples. McKinsey in their August 2015 report ‘An Executive’s Guide to the Internet of Things’ defined three different core business areas from more than 150 case studies. There are plenty of similar quality reports and articles from other well-known Management Consultancies and Audit partnerships too.
Looking back on the history of ERP shows that the System Integrators entered the market relatively late, taking advantage of business requirements being understood, and the arrival of ERP Packages from SAP etc. Will the market for Smart Services based on real time IoT and Clouds go the same way, do we again need the Management Consultants to integrate the first generation of solutions?
Currently in Spring 2016 with Board level Executives engaged with Industrial Internet / Internet 4.0 initiatives and Top CEOs such as GE’s Jeff Immelt endorsing strategic and transforming shifts in Business in their Enterprises its very much a business led market. In a remarkable online presentation GE presents their history of growth through constantly innovating in respect of technology capabilities and the resulting impact on markets. The purpose Marketing purpose of this timeline story is to establish the background for the GE transformation into a provider of IoT powered Smart Services to be competitive in the Digital Business era.
CIOs and Systems Integrators seem to be too far out of this Boardroom Management discussion on addressing market transformation towards Digital Markets and Services. Their current partnership and operating model seemingly unable to bridge the gap between piloting ‘screen based’ solutions presenting IoT graphics and the need for real Enterprise wide integrated deployments.
Is this because the shift in sizes of projects, and the use of small Cloud Services is uncomfortable for the System Integration Industry whose business model has been built around large projects? Is it a lack of skills issue? Or, is it that their client can’t write a business a strategic business requirement as with an ERP project that they can engage with?
Most likely its all of these factors, but as GE so clearly showed in their time line of technology driven Business market transformation this is one more step in a Technology timeline running from Mainframe Service Bureaus; through Mainframe Data Centers; Mini Computer based Departmental Applications; Client Server Solutions including ERP and Enterprise Architecture; to Cloud based Big Data. During each transformation some players disappeared and others flourished. Right now the customers are searching for the leaders in the new generation …. Somewhat desperately.
Appendum;
The IoT World Forum highlighted the following needs and opportunities for customers and vendors alike:
1. Now is the time for IT vendors and Industry (OT) vendors to establish a strong eco-system partnership to create and deliver integrated solutions. This will be a necessary evil for their P&Ls as they try to work out how and where they add value into the solution and therefore claim their share of wallet from their customers.
2. The time has come for Systems Integrators (Sis). After waiting for 3 long years, customers will be looking to them to help sort the complexities of an IoT solution (of which there are many). However, it will be very important for the SI’s to recruit local partners who understand the needs and requirements of every customer in this very broad market opportunity.
3. IT and OT vendors need to aggressively recruit and train their channel and alliance partners. Customers will also need to be comfortable with the fact that the IoT will pull in new channel partners for them to trust and learn, while at the same time move on from those that simply can’t make the leap to supporting IoT in digital transformation.
New C-Suite
