The Internet of Things, five years later: IT Services
April 19 2021
by Katy Ring
Although still relatively immature, the enterprise IoT market is evolving and shedding many of the less-useful approaches it took at the outset of market development because more aspects of the technology are now proven. For example, industrial and transportation endpoints are now being manufactured with IoT in mind, and new approaches are coming to market for robust data acquisition and control of legacy equipment. Edge analytics is becoming commonplace, if not yet standardized across vendors, and use cases are mature enough to demonstrate real ROI.
IT professional services players – the technology consultants and systems integrators – are working on IoT-centric digital transformation projects with enterprise clients that include connected devices and assets yielding data that can be analyzed. In 2021, their offerings are designed with the broad requirements of digital transformation projects in mind, and such vendors now rarely refer to 'the Internet of Things' as they would have done five years ago when it was an unproven new technology area. Today they prefer to talk about, for example, smart places and things or connected services. As such, IoT expertise for these players sits within broader digital technology practices alongside cloud, data and AI areas of expertise that are used in combination to deliver digital transformation outcomes for their clients.
IT service providers are now widely accepted as a critical part of the vendor ecosystem needed to achieve successful IoT initiatives and deployments. A 451 Research survey shows that 73% of buyers are using systems integrators and consultants to assist with projects, and spending with this type of provider is expected to increase in 2021/2 among nearly 70% of survey respondents. One of the drivers for this is the significant influence the enterprise IT department has in vendor selection for such projects, where half of survey respondents said that IT takes the lead on IoT vendor decisions with OT and line-of-business influence, while less than a third reported OT or line-of-business managers taking the lead in IoT vendor selection. Far from being seen as ill-equipped newcomers in the broad industrial space, IoT is opening up new market opportunities for IT service providers.
The IoT ecosystem
Most IoT market participants agree that no single vendor can claim to deliver a complete solution by itself. Figure 1 below reflects on the delivery of reasonably generic, horizontal use cases, such as predictive maintenance, that cross industry sectors and involve technology vendors from multiple segments – the partner ecosystem.
Figure 1: It Takes a Village to Deliver an IoT-centric Transformation Project
2020 S&P Global Market Intelligence
Each technology market segment in the ecosystem has an important role to play. The manufacturers of the edge devices and industrial equipment are significant protagonists, including companies such as ABB, Siemens, Schneider Electric, Mitsubishi, Hitachi, GE, Honeywell and National Instruments. Each has its own professional services arm and is rapidly developing as-a-service management and maintenance of its products. These are the huge incumbents within IoT-centric digital transformation.
Next, the network service providers are an important community in the ecosystem, since they provide the wide and local area networks (WAN/LAN) that IoT services depend on and will also be instrumental in providing 5G technology. Operators such as Verizon, AT&T, Telefonica, KPN, NTT, Huawei and Vodafone are each building professional service capabilities around IoT-centric digital transformation from the network infrastructure perspective.
In the past five years, hundreds of IoT platforms have come to market – the advantage of a packaged platform compared with bespoke code/development is that it speeds delivery time and has been tested across multiple customer environments, and therefore has a higher likelihood of having been 'security-hardened.' IoT platform vendors include Amazon Web Services (AWS), Microsoft, Google, IBM, Cisco, Ericsson, GE, Hewlett Packard Enterprise, Hitachi, Siemens, Bosch, Verizon, Nokia, PTC and Schneider.
Although IoT is not simply a cloud opportunity because of data gravity at the edge, cloud is a catalyst in enabling the analysis of huge amounts of data gathered at the edge. Consequently, cloud service providers such as Microsoft, AWS, Google, IBM and Oracle are now also a key community within the ecosystem (and indeed have created their own IoT platforms to sit on their respective clouds).
For IoT projects to deliver on the promise of smart devices, they must be able to make sense of the data gathered from physical assets, which is why the denizens of big data and advanced analytics tooling are also crucial members of the ecosystem, including vendors such as IBM, SAP, Microsoft, Google, Spark, MapR, SAS, Informatica, Tableau and Qlik.
Because of its complexity, the provision of professional services for IoT-centric digital transformation projects is an opportunity characterized by dynamic relationships operating within a flexibly scoped project roadmap. Consultancies are involved to define the strategic roadmap for the client, with the next phase being to work with systems integrators to define key use cases for the application of the technologies to create a practical route to transformation. In the meantime, another part of the ecosystem will typically already be providing product management services for edge assets and devices. Meanwhile, the IT department will be considering how best to install and configure sensors on devices and assets using network technology and cloud services to enable the data to securely reach the data lake. To get the value from an IoT-centric project, the data analysis piece then has to be set up so that insights can be presented to the business stakeholders.
Given the number of moving parts in an IoT-centric digital transformation project, there is a clear opportunity for professional technology service players to help design, build and integrate systems, manage and analyze data and orchestrate the ecosystem of vendors required for the continuous delivery of service. The consultants and systems integrators competing to be prime partners/suppliers for such projects are emerging from the IT services market and from among the OT incumbents. They include service providers such as Accenture, Atos, Cognizant, DXC Luxoft, EY, Fujitsu, HCL, Hitachi Vantara, HPE Pointnext, IBM Global Services, Infostretch, Infosys, Logicalis, TCS, Tech Mahindra, Unisys and Wipro.
'IoT' is a broad label that describes a suite of technologies employed in a broader digital transformation of a product, process or organization as shown in Figure 2 below. Some technologies originated in the realm of industrial operations (operational technology), some from the IT world and others from the new technology space of IoT. This includes the digitization of devices by incorporating embedded computation capability, attaching LAN or WAN connectivity, local or remote analytics and integration with other business systems, as well as the application of these capabilities into existing or new processes.
Figure 2: You Say OT, I Say IT...
2020 S&P Global Market Intelligence
The key to IT/OT convergence for IT service providers lies with the application of advanced analytics to generate insights from the vast amounts of data that can be collected from IoT devices once tags, sensors, embedded computers and actuators are integrated into physical things or assets.
To achieve this, it becomes crucial for consultants and systems integrators from the IT services market to be able to partner with the big industrial technology brands. The necessity of such partnerships comes from the position these industrial incumbents have in the world of OT. They provide the IT consultant/system integrator with ecosystem team members who know and can communicate easily with, for example, product plant managers, R&D teams and business operations managers in the OT buying environment
Since IT system integrators and consultancies own neither the industrial assets nor the sensors that provide the data necessary for IoT, they are heavily dependent on the OT vendors to work with them as they develop and operate the machine learning and data analytics layer that sits on the OT environment.
Professional IT services invest in IoT-enabled digital transformation
For professional IT services players, the commercial potential of IoT builds on the OT/IT infrastructure convergence that underpins the ability to collect, analyze and manage data between the two environments. The data and analytics layer offers professional services vendors the most commercial opportunity and positions them to work at a more strategic business level with the client organization. By collecting asset data for remote monitoring, asset management or fleet management, their aspiration is to work at the digital and corporate level to create connected products that are potentially game-changing for their clients. For this reason, all the global IT service providers see connected smart asset projects as a consulting-led go-to-market opportunity, and each one offers some form of up-front engagement service to scope the transformation envisioned within the project that spans technology, people, processes and tools. Many of these service providers also work with an up-front methodology that captures requirements, closely aligned with the business-case ROI, illustrated by a prototype project that then transitions into production delivery at scale.
From an IoT adoption perspective, the past year of the pandemic has created an accelerated pivot to cloud infrastructure and the remote management of operations to collect data from different sites, locations and assets that are connected to an integrated management layer via SaaS platforms.
As the cost of sensor-equipped parts decreases and more data becomes readily available for predictive maintenance, the lagging adoption factor lies with the investment in human capital and technology that supports a different business model focused on maximizing product uptime. For while many manufacturers are collecting data from sensor-equipped products in the field, few have yet to actually use it to reinvent their service operations. The maneuver to the as-a-service economy is to abandon the known world of selling an asset with a maintenance contract while moving toward a model where the manufacturer continually generates value-added services for the installed users of the asset base.
This development of new products and services, or the enhancement of existing products and services using IoT sensors and advanced analytics to create an as-a-service capability – which we refer to as 'servitization' – is emerging among enterprises in the industrial sector, predominantly following investment in predictive maintenance projects. This transition from deploying IoT tooling for predictive maintenance to using it as the basis for service-led consumption-based business models opens the next chapter for IT service providers in the digital transformation opportunity.
Other reports in this IoT market series will cover specific industry sectors.