In recent years, I have heard my fill about the importance of ecosystems to making the promises of IoT come true from analysts who have flooded me with their optimistic predictions. All, or at least most of those who read my articles, know that there is no company in the world, no matter how great it is, that can do everything in IoT — ecosystems are the key to success in this business. An ecosystem allows organizations to achieve the multiplier effect and a trusted environment.
An IoT ecosystem can be either horizontal (technology) or vertical (industry), and requires a lot of talent alliance managers to able to maintain win-win transactions over the time. But selecting an IoT ecosystem is not an easy task. In IoT ecosystems there are fights between partners, and sometimes abuses from big partners to little ones. There are also conflicts with companies that are in several ecosystems, sometimes over contradictory interests. It is very common to have partners collide with the objectives of the ecosystem — and you can imagine betrayals and back stabs. For instance, with IBM’s acquisition of Red Hat, will the IoT open source architecture designed by the Red Hat , Eurotech and Cloudera ecosystem be a good decision?
In a 2015 post, I presented several successful cases of collaboration among members of IoT ecosystems. But let’s be honest, there have been few references and examples since. The fragility of alliances in IoT is a challenge to accelerating IoT ecosystem adoption.
In a 2013 Harbor Research article, the analyst firm wrote that no significant ecosystem or network of collaborators had emerged in the IoT arena despite early and interesting efforts being made by several players. In 2013, these ecosystems were emerging alliance developments that had not attained the scale, scope and momentum required to drive the opportunity to its intended and expected state. Most attempts thus far to drive an ecosystem advantage have failed to scale and reach critical mass. This underscores how challenging building a high-velocity network of partners can be.
In this article, I will focus my analysis on four examples of IoT ecosystems that represent a big portion of the value chain in the multiple IoT submarkets: IoT connectivity providers, IoT cloud platform vendors, IoT professional services and IoT solution aggregators.
Telefonica: IoT connectivity ecosystem
One of my first attempts to monetize IoT services was through the Telefonica IoT solution partners program four years ago. At the beginning, I received a couple of calls from the operator to help me create my account and describe my services. There were many partners, and although the partners search portal left a lot to be desired, I did not see much competition to my services and thought that it would be the perfect accelerator. I was wrong. Since I registered, I have not received any invitation to participate in any event for partners, nor has anyone contacted me to request my services, nor have I needed the portal to contact any partners.
How are you going to find me as IoT solution partner if Telefonica’s IoT webpage does not offer a link to the partner search page? The use of this non-updated page is frustrating with duplicates names, closed companies and so forth.
Telefonica identifies three types of partners:
- Operator alliances: Telefonica is partners with other Tier-1 telecom operators, including the IoT World Alliance, China Unicom, Sunrise and Avea, in order to provide IoT customers with seamless services worldwide and lower costs.
- Channel partners: Telefonica allows partners to drive growth and differentiate their business by reselling their global managed IoT services. It helps increase their capabilities, enabling deployment on a global scale, in particular in regions such as Europe and Latin America.
- Solutions partners: Telefonica’s solutions partners ecosystem consists of a global network of IoT providers with functional or industrial expertise, including IoT device providers, IoT system integrators and IoT industrial experts.
I never liked the idea of Telefonica orienting to quantity (around 1,000 partners, including duplicate names and a non-updated list) instead of quality in partners, and I think the results have been and are very poor — clearly a point to improve if companies want IoT to take off within the operator.
Talking with Telefonica IoT, you will quickly recognize that if you are not Microsoft, AWS or a similar company and unless you bring business to it, you will never get business from it. Telefonica does not lead any IoT ecosystem, neither geographically, industrially nor technologically. It is just one more logo (important of course) in many presentations of IoT vendors.
I cannot understand its win-win strategy and go to market regarding IoT platforms. In addition to its own platform, Telefonica appears as a partner of Microsoft Azure, PTC ThingWorx, Sofware AG Cumulocity, AWS IoT, Cisco Jasper, Libelium and more. Maybe it should select partners around share of outcome rather than share of investment if it wants to lead an ecosystem. Pecking is good for the birds. Telefonica needs an open-minded company culture to become comfortable with an ecosystem structure.
Microsoft: IoT cloud platform vendor ecosystem
Having worked at Microsoft, I have had the temptation of becoming an IoT partner. Because my business model is based on vendor independence, my decision is to help other companies enter in the Microsoft IoT ecosystem. This year, I was convinced that I needed to change my approach. Instead of becoming a partner, I decided to convince two other Microsoft partners strong in complementary disciplines (business intelligence and cloud) to create a specific area for IoT. I have not succeeded, which makes me think that despite the efforts and investments planned by Microsoft, partners do not see IoT business clearly yet.
The list of IoT trusted partners certified in Microsoft Azure is impressive, and I recognize the effort of Microsoft building an IoT ecosystem that fuels business transformation. Its largest partnership is with GE Predix, and its partnership with PTC will help industry customers accelerate their digital transformations by adopting IoT.
In this case, finding a partner of Microsoft Azure IoT is easier than with Telefonica. The categories of IoT partners for Microsoft include devices, gateways, security, independent software vendors, network, telecommunication and system integrators. By the way, there are no partners in Spain according to the site — maybe it’s the right time to invest.
Microsoft is an expert in identifying, nurturing and managing partners, and Azure IoT is a great opportunity to lead IoT ecosystems.
EY: IoT professional services ecosystem
EY is a leader in the IoT space. Not involved in the construction of devices themselves, EY instead helps organizations navigate the largely unchartered waters of IoT.
While working in an engagement with EY IoT, I read a report developed by Forrester Research that segmented the landscape of IoT professional services firms based on functional capabilities to help enterprises deploy IoT-enabled processes, vertical market focus and geographic reach. Based on the service offerings, vertical capabilities and characteristics of a broad array of professional services firms, Forrester identified eight categories. The major players in the consulting firm segment included Deloitte, EY, KPMG and PricewaterhouseCoopers. These strategic consulting firms combine strong business strategy capabilities with the ability to execute on digital transformation initiatives. The report clearly showed EY had strong IoT capabilities across the globe. EY was also recognized as an IoT services leader by HFS Research.
Initiatives like launching a global IoT/OT Security Lab to help clients stay ahead of emerging threats and launching EY wavespace, a global network of growth and innovation centers to help clients achieve radical breakthroughs, has helped EY demonstrate its strategic alliances with SAP, GE Digital, Microsoft, IBM and Cisco. These technology vendors rely on EY to implement IoT systems in large customers with business-driven approaches.
Do not expect EY or any of the consulting firms to lead an IoT ecosystem. Its role is to use its business strengths and client relationships to empower the ecosystems to which they belong.
Tech Data: IoT solution aggregator ecosystem
Perhaps the most complex task I have done while advising about IoT ecosystems was with one of the largest IT distributors in the world, Tech Data. The challenge of balancing players like Microsoft, Dell, Cisco, IBM, Schneider and Vodafone with innovative startups in several industry verticals and different use cases without anyone feeling careless was very exciting. But to find the right place for Tech Data in the IoT value proposition schema was another challenge. It was great helping the company define its role as an IoT solution aggregator and define which partners should be included.
Tech Data has been able to demonstrate how to become useful to IT and OT vendors, and how provide value to existing and new IIoT system integrators worldwide. I always have believed this approach could make it easy for small and medium-sized clients to adopt IoT quickly.
I did not have time during my engagement with Tech Data to analyze and support the launch of its new business model, but I am sure it will use its position to offer new services based on data aggregation.
Education, the latest products, support services and firm footing in the B2B world puts IoT solution integrators at the center of the IoT craze.
The IoT market is still in early stages. Enterprises face many different options for IoT partners and suppliers. Choosing the right ecosystem is critical not only for a successful IoT project implementation, but for the digital transformation journey. IoT ecosystems need to understand that most industries thrive on coopetition — it’s important to become cognizant and respectful of competitors, as they may also be your potential partners.
Just like with people, when it comes to IoT businesses, no two ecosystems are alike. I have been helping different types of companies build or enter the most suitable ecosystem, and I have no doubt that only the best ecosystems will survive; the challenge is to rank among so many. It is really a nightmare.
The topic of ecosystems is hardly new, but is rapidly evolving. If ecosystems are able to use shared data and information from intelligent sensors, machines and assets, radical new models of value creation will emerge.
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