Hilton: Enterprises turn to operators for 'Internet of Things' services

Steve Hilton - MachNation

Most enterprises plan to keep their IoT services for five or more years, and this means they place a lot of emphasis on choosing the right operator with which to do business.

There are four reasons why enterprises purchase Internet of Things (IoT) services from communications operators, all of which hinge on the fact that IoT systems are complex to design, test, implement and run.

Existing relationship with an operator
An enterprise is more willing to expand a long term relationship with an operator by considering the latter's IoT services. While many operators have done a great job creating awareness of their IoT and machine to machine (M2M) skills, they are hampered in using their existing enterprise sales teams to sell new IoT services. However, these internal sales teams are some of the best channels-to-market for an operator, especially when the operator has existing business units squarely focused on industry sectors. Good examples are Orange and KPN, which are leveraging current relationships with enterprises in the health and wellness vertical to create new IoT opportunities through dedicated healthcare business units.

Positive customer satisfaction and experience
Operators that have invested time and money into creating refined customer experience management processes for all customer interactions will certainly fare better in the IoT world. Enterprises expect enterprise-grade IoT solutions with appropriate service level agreements (SLAs). In very recent conversations we have found that some operators - like TeliaSonera Global M2M Services - have done an excellent job understanding the unique satisfaction needs of IoT enterprise customers. These operators are leveraging techniques already used in other operational areas including consumer mobile broadband and enterprise cloud services, to better understand and improve customer experience management for IoT enterprise customers.

Knowledge and recommendations about IoT services
Enterprises value the input they receive from operators about the end-to-end IoT service. Operators invest a lot of time in, and have great understanding of, the technical issues associated with an IoT deployment. This covers aspects of communications, platforms, applications, hardware and services. In many cases an enterprise will not use a single operator for the end-to-end IoT service. However, companies that choose a multi-vendor approach to IoT realise that a thorough knowledge of the entire solution by all vendors is critical for a successful implementation. Operators including Vodafone in the automotive and transport sectors, and Telenor Connexion in the industrial (remote asset) market, are good examples that convey understanding of the complete solution. Telenor Connexion's work in the industrial sector is a good example of the industrial internet – an area that is likely to be one of the top trends in 2014.

Relative total cost of ownership
Enterprises compare the costs of IoT services, but it is the complete long term cost that bears the most importance. The cost of the data connectivity alone is rarely the most important factor in picking an IoT operator. Depending on the component parts selected by an enterprise, costs can include core connectivity; platform and device management; service desk management; application development, testing, and management; IT personnel; infrastructure and application hosting; hardware and device procurement; and integration expenses. Enterprises routinely make trade-offs between in-house and outsourcing arrangements, and these decisions are similar in the IoT world. Operators that provide enterprises with flexible deployment options are more likely to find success in winning deals.

People often ask me about the importance of communications footprint or coverage in enterprise IoT decision-making. No doubt coverage is important, as an IoT service is nothing unless it is connected to a network somewhere. However, coverage is not as important to enterprises as one might be led to believe.

Enterprises have quickly recognized three things about communications coverage. First, it is very difficult to determine which operator has the better, deeper, faster network without intensive and extremely expensive field-based studies.

Second, IoT services adopted today will change over time. Such changes will necessitate new communications techniques, and make old network quality assumptions moot. In addition, operators improve their networks continually by adding new infrastructure and software.

Third, roaming and other communications relationships are increasingly reducing the importance of coverage from the equation. Enterprises know that they can have deep market coverage in a specific geography, breadth of coverage across the globe, or anything in-between.

The IoT ecosystem continues to mature, and our research shows that maturity goes hand in hand with increasing sophistication in the part of enterprise IoT buyers.

Steve Hilton has 20 years experience in the technology and communications sector, and has specialized in IoT for 7 years. For more information, visit: www.machnation.com

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