Mobile network operators (MNOs) would appear ideally placed to lead the charge in what will arguably be the next phase of the digital revolution -- the great proliferation of digitally connected objects and devices that the Internet of Things (IoT) promises. After all, MNOs have the network -- a mechanism for carrying data -- and a business model that has sustained the growth of a substantial industry serving millions of subscribers.
It's true that the IoT depends on robust data transfer -- if a business comes to depend on a daily, if not minute-by-minute, feed of data from devices that are geographically spread, network technology is a critical component. However, enabling or benefiting from the IoT requires a different focus. Operators need to realize it all hinges on the data.
In fact, the terms "machine to machine" and IoT are unhelpful in that respect. Rather, the opportunity should be viewed as the "digitization of business" being the integration of people, processes, data and things in a digital way with enterprises applying this digitization to benefit their business propositions and operations.
The potential benefits to business are compelling:
Efficiency: By sharing data between devices and feeding it into management information systems, manufacturers can streamline their operations, taking rapid action to minimize time and wastage between inputs and outputs in their supply chain. The Japanese automotive industry is a case in point where within hours of a steel order an engine block can roll off the production line.
Adaptability: Real-time data visibility equips businesses to adapt pricing on a needs basis. Take the example of shipping ports, selling berth time by the minute. Many already have a dynamic form of pricing, but up-to-the-minute data on supply and demand (which is heavily influenced by weather and congestion levels) can enable ports to fully capitalize on peak moments, and carriers to make informed decisions, for example, to hold back from berthing if demand has caused prices to rise.
Localization: For national and global enterprises, digitization enables localization of supply to better match demand. For example, retailers with inventory to stock outlets all over the country can adjust their supply chain to meet changes in local demand or fashion. Pricing can also be adjusted locally according to demand. It's the movement towards a more personalized, tailored approach -- a "market of one."
Five layers: Business digitization requires five layers in a virtual "technology stack." And they're all about data:
- Data access: getting at the data requires sensors at physical devices or probes
- Data management: moving the data from its point of origin over a network
- Data repository: where the data is collated
- Data analytics: providers who are specialists in their field, be it automotive, manufacturing, insurance and so on analyze the data
- Data consumption: presenting the data in a usable format to the enterprise so that it can be put to best use, guiding business decisions
All layers need to be defined, procured, configured and integrated for a successful result. As the connectivity component is by far the most commoditized part of the value proposition, MNOs have rightly identified a need to migrate along the value chain. Buying in capabilities -- a not atypical approach -- will not necessarily give confidence to enterprise customers. Specialist data analytics providers are better placed to provide specific industry expertise.
Attempting to own all the components in the technology stack also leaves network operators vulnerable to the rapid pace of change that will impact IoT providers. Innovation in data analytics continues apace and for network operators to become specialists in that arena is broadening their scope way beyond their core business.
MNOs are uniquely placed to connect remote devices to applications on a back-end infrastructure and have long-standing expertise in service delivery. Rather than buying in capabilities, they are strongly placed to take advantage of the opportunities presented by the IoT to build on their capability in servicing the end user and collecting and processing the data. From there, MNOs can market this capability to vertical service providers.
— Richard Cornish, Head of Internet of Things, Xchanging