The Internet of Things (IoT) market is immature and it should come as no surprise that the management systems (sometimes called OSS/BSS) associated with IoT have yet to develop fully. It’s almost impossible for one vendor to supply all the systems management requirements in the IoT value chain. Furthermore, the threshold for scalability has not been tested in real-world deployments.

We discussed the differences between IoT and M2M in a prior blog posting. In summary M2M has generally been a customized solution with minimal sophistication at the applications layer. IoT is the evolution of M2M where applications, platforms, data aggregation and analysis drive process improvement and service innovation through connectivity-enhanced solutions. We are in the midst of the transition from an M2M to an IoT world.

M2M management market

Analysys Mason forecasts that the total worldwide M2M management market will grow from USD397 million in 2011 to USD1.1 billion in 2016 at 23% CAGR (compound annual growth rate): See Figure 1. This M2M systems management market will support an M2M market with billions of device connections. See my first blog entitled, “Progression from M2M to Internet of things: an introductory blog”.

Figure 1: M2M management revenue, worldwide, 2011–2016 [Source: Analysys Mason, 2012]

Figure 1: M2M management revenue, worldwide, 2011-2016
[Source: Analysys Mason, 2012]

The M2M management market is large and growing, but today is highly fragmented. So Analysys Mason decided to undertake some research to see what we’d find in this M2M management market. First, let me describe what we did. Then I’ll describe what we found. All this information is based on Analysys Mason’s “M2M management software: supplier and product review”.

The five areas of IoT/M2M systems management: our research process

We defined the five important areas of systems management in this IoT/M2M world. They are:

  1. Authentication and security – Solutions in this category ensure that data transferred between devices, modules, the underlying connectivity network and applications are verified, authenticated and protected from any number of security threats including viruses and worms.
  2. Managed connectivity – Solutions in this category ensure that M2M devices can be detected, monitored and managed across various mobile and fixed-line networks and across various network operators (mobile network and fixed-line operators). Solutions in this category also ensure that interconnection and coordination can occur between various operators’ networks.
  3. Device data aggregation and analysis – Solutions in this category ensure that the myriad information (e.g., temperature, geo-location, barometric pressure, velocity, acceleration, oxygen levels, usage data, etc.) collected from IoT/M2M devices is aggregated and stored. These solutions allow analysis of these data and actions to be taken based on various data criteria.
  4. Device management – Solutions in this category ensure that M2M devices can be tracked, remotely monitored and updated over-the-air as required. These solutions will provide management and reporting of M2M devices on a given network.
  5. Rating and pricing – Solutions in this category ensure that overall rating and pricing of M2M usage can be completed to enable the overall customer billing process

Figure 2: Five areas of M2M management applied to the three layers of the simplified supply chain [Source: Analysys Mason, 2012]

Figure 2: Five areas of M2M management applied to the three layers of the simplified supply chain
[Source: Analysys Mason, 2012]

 If we refer back to my first blog, you’ll remember I described an IoT simplified supply chain with three layers: hardware, communication and application. The five important areas of systems management correspond to these three layers, but have some overlap: See Figure 2. Aspects of authentication and security can and should occur at the hardware, connectivity and application layers; managed connectivity and rating and pricing occur at the connectivity layer; device data aggregation and analysis are associated with the application slayer; and device management apply to both the connectivity and applications layers.

Analysys Mason interviewed 19 established independent communications software and niche IoT/M2M suppliers and evaluated their solutions according to the five IoT/M2M systems management categories. We list the vendors in Figure 3.

Figure 3: IoT/M2M systems management vendors profiled in research [Source: Analysys Mason, 2012]

Figure 3: IoT/M2M systems management vendors profiled in research
[Source: Analysys Mason, 2012]

Our research findings summarized

There is no all-in-one vendor today.
Not surprisingly we concluded that none of the suppliers evaluated can satisfy all five of the management requirements needed to effectively support the IoT/M2M value chain today. Some independent software vendors (ISVs) have broad product portfolios and strong M2M domain knowledge to quickly adapt to evolving business requirements. There are also niche suppliers that will appeal to industry participants that want to target specific sectors such as transportation and security or want to supplement particular pieces of their existing systems management software.

Solution customization needed.
Commercial ‘off-the-shelf’ software to manage the value chain is not as mature as other operational systems that support more traditional fixed or mobile communications services. Therefore, IoT/M2M management products still require some degree of customization and integration with other software components. In the future ISVs must provide scalable, pre-integrated commercial off-the-shelf software to enable industry participants – including communication carriers — to bring IoT/M2M services to market quickly. Highly customised solutions delay deployments and increase integration cost.

Applications layer critically important to deliver IoT value.
With myriad application vendors in the market, it is important to approach data aggregation and analysis with rules-based models. At the end of the day, removing human interactions from key business processes is one of the ways that enterprises recognize overall cost savings from IoT/M2M deployments. Applications and application platforms can provide a graphical user interface to allow data to be filtered, aggregated and matched to certain key businesses processes. This matching of data with a rules-based approach allows enterprises to more fully automate business processes thereby lowering costs.

It’s a nascent industry today.
We do not expect all the big, established communications software suppliers will enter the IoT/M2M market until demand is stronger. Most niche suppliers are generating less than USD15 million in licensed software and product-related integration services for IoT/M2M software management.

Technology and sales channels bring a winning partnership combination.
Systems management vendors must bring technology and sales channel resources to their partnerships. Good technology is necessary, but not sufficient. Industry participants – communication service providers, equipment vendors, system integrator, application vendors and platform vendors — are looking for viable sales and support channels. Most industry participants – especially communication carriers — do not have sufficient sales channel capacity or depth of global resources to offer their complement of services. Systems management vendors that bring sales channel resources are a precious commodity in today’s IoT/M2M world.

Some vendors can sell IoT solutions directly to enterprises.
Systems management vendors should assess their abilities to sell IoT/M2M solutions directly to enterprises. Some IT and communications vendors have relevant IoT contacts in enterprise organisations – both in IT departments and business units. These vendors should consider selling directly to enterprises and taking a leading role in the implementation and integration of IoT solutions, particularly in the utility and energy, healthcare and government sectors.

As the number of M2M device connections increases from 100 million in 2011 to 2.1 billion by 2021, all industry participants have an opportunity to expand their existing offerings and create new ones. We anticipate cloud services, platform-as-a-service and software-as-a-service will facilitate new business models. And data service delivery platforms will enable rapid, end-to-end management in large-scale networks for IoT/M2M devices.

It is clear that service enablement – SIM activation, monitoring, data aggregation, analysis, billing and rating – are systems management challenges requiring the immediate attention of industry participants in both developed and emerging markets. Participants in developed markets have generally solved or begun to solve this challenge by either contracting with a third-party vendor or building solutions in-house. However, participants in emerging markets have only just begun the process of choosing service enablement platforms. The opportunity is tremendous in all markets.

Share your thoughts about IoT/M2M systems management. If you’re an enterprise that has provisioned IoT solutions, which pieces of systems management are most important for you? If you’re a service provider, which pieces of systems management do you have in place and which still are in the works? If you’re a vendor, which pieces of systems management are most critical for your success?

Thanks and stay tuned for next month’s posting of my series here on Bosch´s IoT blog.

About The Author

Steve Hilton

Steve Hilton is the founder and Managing Director of MachNation, an insight services firm covering the future of the Internet of things (IoT). Prior to founding MachNation, Steve has worked as lead analyst for Analysys Mason's Enterprise research program until December 2013. He has also held senior positions at Yankee Group, Lucent Technologies, TDS and Cambridge Strategic Management Group (CSMG). Steve’s primary areas of specialization, which focus on large and small enterprises, include IoT, fixed and mobile communications services, M2M, cloud services, and sales channels. He has 20 years' experience in technology and communications marketing, with an IoT specialization for 7 years. Steve holds a degree in economics from the University of Chicago and a Master's degree in marketing from Northwestern University’s Kellogg School of Management. Steve is a guest author for the Bosch ConnectedWorld Blog.

10 Responses

  1. Mike Mills

    Another great article Steve! Keep them coming.

    I’m glad you included Rating and Pricing. Pricing will be an interesting challenge. A good IoT platform should allow for a user to mash, not just devices they own and control, but devices that other groups control or possibly own such as a utility meter. Also, what if another group wants to provide free IoT services for devices they sell a user? For example, an automobile manufacturer might build in a system that pushes real-time automobile metrics into a user’s IoT platform account so that a user can view information about their automobile. The manufacturer would like to provide that service for free. Now, the IoT platform has to determine who’s paying for what for that user account. Now imagine many more devices being managed in an IoT account from many other sources being paid for by many different entities. There are many billing and pricing solutions for this example, but trying to keep it simple for the owner of the IoT account to understand will be the challenge.

    Reply
  2. Steve Hilton

    @ Mike Mills – Thanks for the comment, Mike. You’re right about rating and pricing. It’s an important piece of the M2M systems management solution. Many enterprises, service providers, vendors, and systems integrators have rating and pricing platforms, but many haven’t been fine-tuned to the needs of the M2M world. You point to a really good example where there are multiple parties responsible for various parts of commercial relationship.

    I also agree with you that the power of IoT multiples if we allow mashups of data from devices from many platforms. It’s the same power we see in the world of traditional mobile applications today where we can mash-up geo-location, advertising information, demographics, usage characteristics, etc.

    Don’t you think the concept of “smart cities” is all about this type of mash-up?

    Reply
  3. Mike Mills

    @ Steve – Yes, I believe a large part of “smart cities” is the mashing of data from many different sources and reacting to the mashup analysis. A lot of the mashups you mention occurring today are typically powered by free services (usually revenue is generated from advertising) so pricing isn’t an issue. I do believe the most successful IoT platform, one that will be used by most of the populating, will be the one that is free. But, the free-via-advertising model probably won’t work for many business IoT solutions since those solutions might not be seen by many people and sometimes might only be used by other machines.

    Reply
  4. Steve Hilton

    @ Mike — I’m guessing I consumer-centric applications model where everything is “free” but supported by advertising will have some relevance in the IoT world. But hopefully that’s not the only model. Machines won’t be very motivated by advertising — you are certainly correct!

    I’d like to think that these mash-ups will be sponsored by enterprises and the public sector, because the data provided help streamline operational processes, encourage innovation and/or increase overall public safety and services. Maybe smart cities is a case where both enterprises and the public sector would be involved. Maybe the “connected home” is a case where free mash-ups, enterprises and the public sector have interests.

    Reply
  5. Mike Mills

    @ Steve – I agree. If hardware prices keep dropping, then we’ll see a lot of what you’re suggesting. And there probably will be a day when we are advertising to devices – those would be very interesting adds :)

    Reply
  6. Steve Hilton

    @ Mike — Very interesting ads, indeed! Maybe that’s a new industry we could start-up: advertisements for non-sentient beings!

    I often wonder whether the high device prices are really the issue holding back adoption of some of these solutions. I wonder if it has more to do with closed enterprise application environments, issues of data security/privacy, compliance-related issues and just the general difficulty of integrating the “stack” from device, connectivity, platform and application.

    Reply
  7. Mike Mills

    @Steve – I think all of what you listed is correct, but the expense of each will depend on the individual IoT solution. For hardware costs, I was referring more to server solutions vs the cost for the actual device. For example, if the IoT solution provides the capability to perform real-time device analytics across many devices with very low sample rates, then a lot of servers are required to manage a high volume of data, transactions and computations. If the solution only provides direct connectivity to a device for command and control and to view some simple metrics, then server costs will be much lower. Software costs are high as they always are, but imagine the costs of a 30,000+ server data center which large companies such as Facebook manage today. I predict there will be IoT solutions that will easily exceed the need for over 100,000 servers given the number of devices that will be managed – billions to trillions.

    An IoT business model around rates and pricing will be something the industry will have to shake out, as you suggest in your article, if IoT solutions are going to be robust.

    Reply
  8. Steve Hilton

    @ Mike — the idea of having massive server farms (even if at “green” data centers) is a painful thought. I think its imperative that we quickly move to an IoT world where only the relevant data are analyzed. Data are only useful if they help us make better or faster decisions. Data for the sake of data is a mess — similar to the problems we (used to) have storing reams of data in data warehouses only to find limited applicability and ever increasing costs.

    Hopefully we can craft adequate systems that will strip away the superfluous data or at least have a rules-based approach where all the superfluous data are simply stored for designated periods of time.

    Reply
  9. Mike Mills

    @Steve – I wish you were correct. Before IoT, my background was in Business Intelligence solutions at IBM. BI customers are always asking for solutions to manage and analyze huge amounts of data – and they usually need to preserve it. Big Data BI solutions are hot right now. I believe there will be a need for Big Data IoT platforms too since IMOO BI is just a subset of IoT. I think the question is where it will be stored and who pays for it. To put this into perspective, just to store 1 billion device IDs (assuming 28 bytes each) will require roughly 26 GBs (ignoring indexing, backups and compression)! Now imagine an IoT system storing data for each device or one that is storing images from devices. It’s a lot of data. Oh, there’s going to be some large IoT server farms…

    On the bright side, IoT should make everything more efficient so there should be a +green effect.

    Reply
  10. Steve Hilton

    @ Mike — Big data is hot. No doubt. My wife tells me often that I live in a dreamworld where everything is simple :-)

    There are solutions where superfluous data can be stripped from systems before being processed and analyzed, but you’re right. Most enterprises don’t like deleting any data. They like to keep all data forever whether it really makes business sense or not.

    I also think about IoT solutions which run over cellular/mobile networks. Those networks (2G, 3G) aren’t built for large quantities of data sent simultaneously. Fortunately we can do things to optimize how and when the data are sent, plus minimize the impacts on network signalling to prevent network degradation.

    Big data, IoT, BI, cloud services, virtualization, green data centers — that sounds like a red-hot research agenda for any self-respecting industry analyst!

    Reply

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