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The IoT Challenge: How Can Service Providers Own the Ecosystem?

Dinesh's article first appeared inConnect-World.

Machine-to-machine communications (M2M) and the Internet of Things (IoT) are completely changing business and consumer relationships in virtually every industry. Today's era of connected devices allow businesses to reduce expenses via automation and virtualization, and create new revenue streams using product innovation, personalized offerings, and an optimized customer experience.

Our coffee machines, washing machines and printers now have the ability to sense when we are running low on supplies – and automatically re-order our favorite products. Business giants like Coca-Cola are capitalizing on real-time data analytics with smart vending machines, built to find optimal selling times and to schedule maintenance for each of their thousands of locations. Health companies and automotive companies are forming partnerships with technology juggernauts to create prototypes for smart contact lenses that can track blood sugar levels and enable self-driving cars.

This is only the beginning. Within the next five years, M2M communications and IoT solutions technology will advance exponentially - with IDC predicting a worldwide market value of US$7.1 trillion dollars by 2020. New business models and offerings will translate into new revenue streams across all industry types.

Opportunities for Communications and Media Providers

With M2M and IoT capabilities and technology, communications and media providers can gain an advantage in every segment of their business—residential, small business and enterprise:

• Transportation and fleet management. Telematics systems can help track deliveries, automatically and accurately construct an estimated arrival time available for both the business and the consumer, and help map the quickest routes – increasing productivity, decreasing operations cost (e.g., saving money on gas) and heightening the customer experience.
• Retail and Finance/Kiosk applications. M2M can provide both point of sale and vending solutions for the small business and enterprises.
• Manufacturing. Remote monitoring solutions can help manage assets and containers, and track cargo to give the company complete transparency and allow ample time to solve any issues before they affect business.
• Utilities. Smart meters and smart grid networks can help provide transparent and accurate energy usage for both the consumer and the business.

• Healthcare and health monitoring. EKG body sensors, pedometers and more can sync and analyze traceable health information from mobile devices to a consumer's computer as well as healthcare providers.
• Security. Video surveillance and alarm system monitoring can help improve physical security for both the business and the consumer in real time.
• Consumer services and appliance control. Smart appliances can help secure, send, receive and track consumer information and service difficulties in real time. Alerts in suspicious financial transactions or data usage can be automatically sent to the consumer – maximizing both safety and the customer experience.

While the benefits of M2M and IoT technology will, without a doubt, evolve the current communications and media industry, there are challenges that may prevent a smooth transition into the connected era. Managing a fragmented market, outdated legacy billing systems, unstandardized transactions and outdated support processes for M2M service delivery can impede progress and delay revenue opportunities if not dealt with in a cost-efficient manner. A controlled, phased approach will ensure a successful shift into this expanding market.

Challenge 1: The Fragmented Marketplace

For M2M and IoT to truly evolve our businesses and ultimately our way of life, these technologies must support and interact with each other. If a self-driving car will one day be able to place phone and video calls directly from the vehicle, how will communications and media providers work to support these features? If smart TVs begin to fully incorporate interactive advertisements – allowing for consumers to buy products directly from their TV sets – what partnerships and regulations will support these purchases? If all these connected devices continue to automatically collect more and more information about the consumer 24/7, how much of this data can be stored and shared with other connected companies?

The current M2M and IoT market is disjointed and borderline chaotic; thousands of different companies are doing thousands of different things in thousands of different ways. Current research suggests that IoT will remain fragmented until at least 2018, as there will be no dominant ecosystem, and as a result, there will be a lack of industry standards for providers.

Today, we are in the "trial and error" phase of creating a unified connected device ecosystem, where errors are many times more probable. While networks within the ecosystem are still beginning to form, vendor, technology producer and service provider co-dependency may falter during the day-to-day operations of large IoT/M2M projects. For M2M and IoT initiatives to reach full potential, integrators must develop a plan to ensure the longevity of their products and connections.

Challenge 2: Outdated Legacy Billing Systems

With greater information and analytic capabilities comes a greater inefficiency to support and organize older billing systems. In legacy systems, information on purchases and customer preferences lagged, and Big Data was not supported.

But in today's world of Big Data, the vast amounts of information being pushed through may not be able to support this structure. In addition, the amount of data utilized by emerging IoT technology is increasing at an exponential rate, and legacy billing models may not work in the future.

In addition to expanding billing systems on the business side, the systems must also be optimized from a technological standpoint. IoT is made up of billions of micro-transactions, which legacy billing systems are not equipped to handle in real time. Analytics of data patterns, consumer information and usage patterns needed to make crucial billing decisions must be automated.

Challenge 3: Unstandardized Transactions

While IoT and M2M technology is continuing to push for personalized and usage-based billing systems, a solely individual approach may be difficult to achieve. Currently, transactions are not standard in how they measure usage, so customization is generally needed for each customer. Data from IoT and M2M can occur from thousands of different channels and avenues, and properly capitalizing on usage individually is unsustainable. As with managing a fragmented marketplace, standardization is needed without completely erasing customization and stifling the growth of an optimized customer experience.

Challenge 4: Outdated Support Processes for M2M Service Delivery

The technological infrastructure needed to support IoT and M2M connections is greatly underprepared, and existing processing models, service catalogues and operation support processes are not optimized for efficient M2M service delivery. The new network and backend systems for connected devices must be able to process large amounts of information and deliver predictive analytics.

In addition, removing all legacy technology, reconfiguring information in formats specific to only legacy machines, and then purchasing and installing new technology is both time and cost extensive—and unrealistic. To maximize the return on M2M service delivery, new modular-type hardware and software must be integrated with the existing legacy technology.

Solutions: Next Steps for M2M and IoT Integration

To conquer the business, technological and operational challenges at hand, industries must devise a strategy to ensure longevity for both their networks and products.

• In terms of unifying the fragmented market, companies must continue to join forces, test and administer hardware, software and processes that allow M2M and IoT technologies to get to market quicker and foster extended compatibility.
• For tackling the outdated billing systems, legacy technology should be gradually updated through automation initiatives and adding specific required modules (not via full replacement), and by increasing data storage capacity with virtualization and cloud services – allowing for more effective data analysis.
• For the business side, new combination models including both subscription and usage-based packages should be offered to allow for standardization, customization and future growth. Examples include personalized data plans with premium options, or "build your own package" options.
• The balance for standardizing transactions while still maintaining customization is crucial in the communications and media industry. In this saturated market, differentiation is key and it's important for providers to rely on predictive analytics to determine the most beneficial options for different groups of consumers.
• Lastly, businesses must invest in upgrading existing processing models, service catalogues and operational support processes for M2M service delivery.

We're already seeing this play out in at least one forward-thinking, top tier service provider in the North American market. This provider has created an integrated IoT lab and made it available to technology entrepreneurs, with space for storage, workstations, 3D printing and conference rooms. Internally, the provider has a dedicated IoT/M2M team that is committed to innovation and developing the company's IoT and M2M business and technology strategy.

M2M and IoT are quickly becoming agents of innovation in today's business practices, technological development, and in our everyday lives. While connected devices and networks have the potential to turn huge profits for industries in the next few years, a long-term strategy must be in place to support the changes happening now and prepare for the unknown revenue opportunities that the future still holds. For more information on how Excelacom can help you own the ecosystem and overcome the challenges of IoT and M2M, contact us at marketing@excelacom.com.