When an enterprise decides to start its IoT journey, it has two broad choices. One is to take the help of one of its existing service providers, and the other choice is to work with a new service provider.
Our study of 150 IoT projects as part of IoT Blueprint shows that enterprises rely on their existing service providers in 82% of the cases and go for new service providers in only 18% of the cases. There are regional differences in enterprise choices as Asian enterprises are relying on new service providers more than North American and European enterprises.
We believe enterprises are missing out if they solely rely on their existing service providers for IoT. Seven reasons why enterprises should look outside their existing service provider base –
- Expertise: IoT is a complex system of sensors, devices, gateways, network, platform, cloud, applications, data and requires expertise across different layers of IoT stack. The heterogeneity and scale of sensors and devices add to the complexity. Enterprise’s existing service providers might not have deep expertise across the IoT stack. For example, there are more than 300+ IoT platforms, and it is likely that existing service provider will not have deep expertise in the specific IoT platform suitable for the enterprise requirement.
- Experience: IoT is a business solution and industry, or vertical expertise of service provider can help the enterprise in building the right IoT solutions. Many of the existing service providers are horizontal technology specialist instead of vertical or industry specialist. Enterprise should ask whether their existing service providers are learning or developing IoT expertise at their cost or do they bring in experience and learning of similar projects in their industry.
- Agility: IoT is evolving area and requires active collaboration of different horizontals such as consulting, engineering, infrastructure, applications, tech support, and analytics in an agile manner. In most large service providers these are separate horizontal practices and collaboration could be an issue especially for small size engagements in initial IoT stages. Some of the specialist service providers can bring required agility in IoT projects.
- Business Model: One value proposition of IoT is a change in business model for enterprises where enterprises start charging on outcomes instead of products. For example in the manufacturing industry, the enterprise can start charging for the actual equipment usage instead of the fixed equipment cost. For change in business model, the enterprise should also work with service providers on the outcome-based model. Will existing service providers who are comfortable in either T&M or fixed price for existing projects, be the right choice for outcome based IoT projects?
- Time to Insight: IoT is all about data and insights. The central value premise of IoT is insight generated out of connected devices and action taken by enterprises based on these insights. So time to insight is crucial in IoT, and experienced service providers can reduce time to insight with their tools, accelerators, and IPs. Will existing service providers have required expertise to reduce time to insight?
- Vendor Lock-in: IoT is in the initial phase and will enterprise like to have vendor lock-in with their existing service providers in IoT too or take this opportunity to relook at their service provider base. The changing service provider at a later stage will be more difficult and require more change management.
- Security: Security is one of the biggest challenges in IoT. From any device, intrusion can be done, and whole network and IoT operations can be impacted. IoT Operations need to be secure from all possible threats to perform. As threats keep changing, security needs to be constantly reviewed and updated. Will existing service providers have required expertise to tackle IoT security in future?
One enterprise we spoke to said that it is looking for a new service provider for IoT as it felt that its existing service provider didn’t have enough IoT expertise and trying to do the hard selling for IoT to get more business. Also in the enterprise opinion, this was the opportunity to test a new service provider.
Bottom Line – Though enterprises are more comfortable with their existing service providers for IoT now, enterprises should look at IoT specialists too. Enterprises should revisit their IoT service provider strategy and choose their IoT service provider carefully based on criteria discussed above.
Whatever enterprise clients choose, they shouldn’t fell into the trap of free or cheap PoCs, which will be difficult to scale-up (Read Why Don’t IoT PoCs Scale Up? ).
