Step aside consumer devices and wearables. The enterprise and industrial segments are poised to become the biggest Internet of Things (IoT) battlegrounds, with $300 billion in anticipated revenues – twice that of the consumer segment – by 2020.
Industrial executives who want a piece of the lucrative IoT pie must mobilize today to focus their organization’s resources on identifying the right IoT platform, based on their starting point, ambition and capabilities.
A new report from Bain & Company, Choosing the Right Platform for the Industrial IoT, reveals that industrial company executives often struggle to determine where and how to invest in IoT – decisions that are complicated by fragmentation in industry sub-sectors and the mission-critical requirements of the technology.
In its global survey of more than 500 industrial customers and 150 IoT vendors, Bain found that among companies considering adopting IoT solutions, about 60 percent are still at the planning/discussion stage.
“Industrial uses promise to be among the largest markets for IoT devices and services in the coming years,” said Michael Schallehn, a partner in Bain’s Technology Practice and an IoT expert.
“That translates to a lot of opportunity and requires thoughtful allocation of resources to ensure the right solutions are in place. Now is the time for industrial companies to make investment decisions and choose the right partners as they define their IoT ambitions and transition from proof-of-concept to scaling their IoT solution.”
According to the research, platforms will play an essential role in the development of the industrial and enterprise IoT as they provide an integrated suite of services for participants, including: connecting and authenticating devices and sensors; ensuring security; and aggregating data and running analytics.
Providing access to internal and external developers
However, organizing a company’s resources around an IoT platform poses several challenges. Industrial companies are still hindered by concerns about how technology will integrate with their existing environment, how they will manage security, and whether or how their investments in IoT will drive tangible, bottom line results.
As a result, delivering an IoT solution can be quite difficult, even for some of the larger industrial firms that have already invested billions in developing their IoT platforms.
According to Bain, partnerships with software-capable companies are essential to delivering an end-to-end solution. This often includes start-ups that may be below the radar for typical enterprise relationships.
“Everyone seems to be announcing their brand of IoT platform, but when you look at the traction they each have in the ecosystem, the disparity is rather large,” said Peter Bowen, a partner in Bain’s Technology Practice. “Perhaps surprisingly, it’s the smaller platforms that often have better footing in this space, especially when it comes to addressing specialized use cases and niche applications.”
Despite these challenges, industrial incumbents are well positioned to win in this space. Bain’s survey identified industrial device and equipment makers and their potential partners such as cloud service providers, network companies, analytics vendors as the companies that customers trust most.
However, they have to act aggressively, prioritize their efforts and execute well to rise to the top.