The Internet of Things (IoT) as a new business offering has opened the door for the service provider community to embrace the upsides new innovative consumer and enterprise service opportunities. However, let’s face the honest truth … are service providers actually providing any true value on top of the connectivity? For most, says Paul Hughes, director of Strategy at Netcracker Technology, the answer is currently no.
Connectivity is certainly an essential part of IoT, but the value chain extends well beyond just a simple binary on and off action of a sensor or the data collection and management of a smart city. With millions of customers already consuming traditional voice, video and data services, service providers have always been uniquely positioned in the ecosystem due to their existing customer relationships, expertise in providing end-to-end services to meet customers’ ever-changing needs and having all the necessary infrastructure to enable, orchestrate, provision, delivery and bill for services.
One of the biggest challenges to date for IoT is the creation of an effective business model that ensures that IoT services are in fact revenue generating services. Take a close look at smart cities, connected cars, e-Health services and other “cool and sexy” service areas and one things stands out … each vertically oriented service area is complex enough it itself that the service provider community likely will not have the resources, nor the domain expertise to support the complexities of each area.
Each IoT market will have unique characteristics around usage behaviour, service value, service evolution and roadmap, and long term market impacts. Thus, the traditional B2B and B2C models for IoT must be expanded to include a dedicated service centric partner that can provide management and expertise to ensure the services are effective.
Thus, the partner centric B2B2X model for IoT represents a more optimal fit because:
- It ensures domain expertise at the heart of the most complex areas of service management
- Partners with vertical IoT domain expertise will likely be much more nimble, can take on a distributed and shared risk, and in turn shared upside for service success
- The service provider can leverage its existing OSS/BSS infrastructure to support pricing and monetising opportunities.
In the era of digitalisation, it is increasingly rare to find a single company that can provide a holistic solution to meet customer demands. Automobile manufacturers excel in manufacturing and delivering a vehicle that can get you from A to B but need a host of partners to extend beyond and deliver a connected car experience.
Cable providers excel in laying fibre/copper to the home/premise and delivering customer experience but see over the top providers as providers of higher value services that extend beyond their existing offerings, and satisfy their customers demand.
As for telecommunications providers? Their issues are exactly the same. They excel in network operations, customer management and the ability to orchestrate, provision, deliver and bill for their existing services. IoT to the telecom provider is like a telematics company to the automotive manufacturer….an outsourced high value components of a broader solution that extends beyond the internal offerings, and can create new revenue generating services, either as a standalone or part of a larger bundle.
What does it all mean?
It means IoT services thus should be treated are like any other communications- related services, and therefore must effectively be orchestrated, provisioned, managed and monetised effectively properly and profitably to be economically successful. IoT service and business management assets must be aligned with a partner management process that ensures that the new IoT value chain and its end-to-end offerings can generate revenue from day one.
It means the service provider should use efficient BSS/OSS processes that can integrate seamlessly with in-field devices and gateways, network connectivity infrastructure, data collection, storage and analytics tools, application development and testing environments, as well as applications for various verticals.
It also means the service provider and partner must together have the ability to enable and disable services in real time, price and bill for services accurately and ensure that any market shifts are addressed without limitations from back-office infrastructure.
IoT extends the service provider’s reach into a new world of business and consumer- related products and services, and the potential of both new customers and new service revenues is only limited by the levels of creativity and technology capability. Service and business enablement functions must become the primary assets that will allow service providers to extend their presence in the IoT beyond connectivity services, and actually enabling new partner enabled business models for B2B, B2C and B2BX.
Investing in a flexible IoT monetisation strategy helps to guarantee financial success of IoT as a business model, with enabling faster time- to- market and time to revenue, revenue upside for the provider and partners, and enough flexibility to ensure every service providers can generate revenue from the IoT business model can generate revenue from Day One.
The author of this blog is Paul Hughes, director of Strategy at Netcracker Technology