How to monetise IoT from a CSP perspective
In recent years, the Internet of Things (IoT) has proven itself to be a lucrative opportunity for communication service providers (CSPs); to the point that it’s projected to contribute between 20%-50% in annual increases through device connections, writes Ravi Palepu, the global head of telco solutions at Virtusa. It has also expanded the CSP’s remit well beyond connectivity; security, applications, analytics and cloud now all fall under the purview of CSPs. It is also estimated that 70% of the revenue and profitability of the IoT will come from application level services. To meet this opportunity, CSPs should realign their service strategy and operations – determining what capabilities they will drive themselves, and what they are going to rely on partners for when developing their IoT offerings.
Progressive CSPs have completed multiple IoT planning cycles, illustrating the scope of future IoT services while prioritising opportunities, running multiple customer trials and building IoT capabilities. However, a majority of large CSPs struggle to build or deliver on the following.
- A scalable, self-service platform providing an IoT ecosystem for trying and testing IoT devices
- A partnership ecosystem to purchase/develop services and connect with developer communities
- An interoperable IoT portfolio to develop wholesale, enterprise, B2B and B2C models
- Experimenting with legacy organisational structures when deciding on accountability for products, security, applications, analytics, and cloud computing
- Building ‘Data-as-a-Service’ as a business model while monetising it through analytics
- Making the most of supplier relationships to deliver on a joint go-to-market to common customers
- Best-in-class use cases that apply to similar businesses, facilitating cross-vertical integration
While these are specific business areas, the IoT is playing significant roles in application and system monitoring – automating order fallouts and jeopardies and working around remediation to failovers. Through the IoT, CSPs can improve operational efficiency while having a substantial reduction in both capex and opex.
A lucrative opportunity
As the IoT is gaining significant attention in the telco market, CSPs can focus on improving their customer experience and network efficiency. This can be a lucrative opportunity for CSPs to improve their topline revenue by ‘cross-integrating’ with other verticals so that they can offer additional products and services. This requires a major uplift of the existing business model, the overall IT/system estate, and even the mindset within CSPs, to make use of the platform. As custodians of the monitoring, measuring and data aggregation ecosystem, CSPs can play a pivotal role in enabling IoT solutions. There are three key business models CSPs can offer to improve their topline revenue include the following.
- IoT Technology Custodians: Apart from providing connectivity, CSPs can help enterprises build an IoT ecosystem. They can work very closely with technology providers to develop in-house skills and manage multiple technology platforms, as examples such as Swisscom’s low-power network to support the creation of smart cities demonstrate. The key highlights of this approach include:
- Finding the technology sweet spot
- Developing ‘deployment ready’ framework & platforms
- Infrastructure design
- Rapid deployment of IoT solutions across domains
- IoT as Managed Services: CSPs can offer IoT managed services to enterprises in specialised areas such as Application Services Management, Testing, Infrastructure and DevOps. These capabilities can be either built in-house or through working with partners, as Vodafone is doing with its M2M platform for connecting customers to IoT services. The key highlights of this approach are:
- Cost optimisation – e.g. Usage based billing
- Value added services – e.g. data back-up, network monitoring, systems management etc.
- Product Support & Maintenance
- Joint go to market programmes on IoT: Operators have an opportunity to work with partners, clients and system integrators to build industry specific IoT solutions which meet the future requirement of enterprise organisations, just as BT is doing with a Telehealth initiative to monitor individual’s vital signs. This approach has the following benefits:
- Create greater value for clients & prospects
- Fast & cost-effective way to build market awareness & sales interest
- Make best use of the strengths of partners (brand image and credibility)
- Market differentiation for the joint marketing partners by virtue of their collaboration
CSPs pivotal role – now and in the future
The writing is on the wall: by capturing the full potential of the IoT, operators have a huge opportunity to benefit from an emerging IoT revolution. Being a custodian of the monitoring, measuring and data aggregation ecosystem, CSPs play a pivotal role influencing other industry sectors. By making use of IoT business models, CSPs can tap into the growing market and improve their topline revenue. Operators can also choose to continue offering telecom-grade connectivity or they can evolve to become a fully-fledged IoT service provider targeting a larger slice of future IoT revenues. Innovation is required in order to survive, thrive and get ahead. While these opportunities are promising, there are still certain roadblocks such as limited wireless connectivity and protocol standardisation which hinder the IoT ecosystem. With these complexities, the digital economy also presents an opportunity for CIOs to drive large scale transformation and create the agility that their telecommunications operations need.