By Rich Becker, VP IoT Strategy & Solutions at Zuora
This year’s IoT World found a new venue, in a better location and, with that, larger crowds. And I was thrilled to be a part of a lively panel discussion on Defining Your IoT Strategy: Executives as IoT Adoption Influencers.
Here’s my take on this year’s event:
What was the hottest topic?
As expected the infrastructure and connectivity solutions were front and center. The combination of hardware, connectivity, bandwidth, and similar core pieces on connected solutions were easy to come by and to understand where they fit. For any attendee seeking to build and deploy a platform, options were plentiful. In comparison to previous years, this year featured many more “solutions,”including more robust tools aligned to connectivity and applications that will make connected products smarter.
As an example of this prevalence of solutions, you need to look no further than three of the four Diamond sponsors. These three — Ericsson, ST, and Analog Devices — up to a few years ago were just product companies: Ericsson a manufacturer of telecom equipment, ST and Analog Devices manufacturers of semiconductors. Today, each outlines “solutions” as part of their key offering. The abundance of these types of examples clearly demonstrates that there are many alternatives for those seeking a complete platform.
What was interesting?
What I found of particular interest was the continual discussion about security. It seems as though many companies have created their own IoT stack from various sensors, collection devices, data storage, applications, etc. and, having created these stacks, there is now discussion about vulnerability. It appeared that many businesses may have created a stack with limited involvement from IT. And when IT was included, the security and planning required different types of thinking.
Closely aligned to this was a focus on valid uses of data: How can it be stored, shared, analyzed, and secured in complex networks? I am not an expert on security for IoT solutions, but I was surprised by the underlying assumption that this had all been figured out…even as attendees had so many questions.
What was missing?
As in previous years, the discussion about the digital transformation of companies was presented in limited supply. The marketplace seems to continue to define IoT solutions as everything from sensors, communication networks, and data, to applications used to makes sense of it all.
What continues to be missed is the disruption that is happening in nearly every market where “Smart Connected Products” are in high demand. The core is moving from product-centric marketing and sales to services. Take a popular example, the connected car. What is more important today, the car or the applications that manage the car? Is this creating a new series of services that can be monetized? Yes!
The growth in services by former product companies is happening. How does that drive market disruption? The key monetizing the products and services. The future winners are already planning for charge models that maximize the value of the software, data services, and integrated service programs. The winners will design systems today that maximize revenue and profits for services and accept lower margins on physical products.
There is one more step that market leaders are keenly aware of: making all services based on “recurring” revenue models. This could be a straightforward subscription or perhaps some type of usage based charge model. Why do this? The math is so simple but so often overlooked. Apply this simple logic. If you sell a $100 product today, what is the value of reducing the cost of that product to $70 in exchange for a recurring revenue stream of say $10 to $20 per year. How would this impact the market cap of a given company? Does this make for a more customer-centric business? Scale this example to billions and you now know what future market leaders are planning for.
These conversations are at the heart of IoT…but were in short supply at IoT World. Are you addressing your transformation?
Download our on-demand webinar Monetizing the Internet of Things with Rich Becker and Chris Kuntz, VP, Partner EcoSystem from ThingWorx for more information about creating and monetizing connected customer experiences.