industry M2M success stories: Introduction. Figure 1 Enterprise Adoption of M2M
Across the World, Source: Wipro Analysis, Ovum. Ideal Life uses M2M to track ...
Online M2M Marketplace An Entry Strategy for CSPs to Drive M2M Adoption
www.wipro.com
Srinivas G.R. Rahul Shyam Avinav Trigunait Roopa Nambiar
Table of contents 02 ............................................................................................................................ Introduction 03 ............................................................................................................................ Adoption Inhibitors for M2M Services 03 ............................................................................................................................ An Online M2M Marketplace to Catalyze Adoption 04 ............................................................................................................................ The CSP Online M2M Marketplace Opportunity 06 ............................................................................................................................ Recommendations for CSPs 07 ............................................................................................................................ Conclusion
Introduction Over the past several years, there has been a surge of interest in Machine-to-Machine (M2M) solutions in the telecommunications industry and beyond. M2M programs are increasingly being evaluated for their potential to deliver top-line results within the enterprise – extending their utility beyond simple operational efficiency initiatives. Figure 1 depicts some of the early, crossindustry M2M success stories: Ideal Life uses M2M to track symptomatic indications for CHF
Caterpillar uses M2M to track assests and improve utilization
APC uses machine data to reduce the service cost and predictive maintenance
Hydo Quebec uses Rogers’ M2M Sim for connecting 3.8 million smart meters
Progressive Insurance uses machines to determine usage based insurance premiums
British Gas is using smart meters to create new revenue services
Amsccreen is deploying digital signage services across Europe with Vodafone
Miele is using machine data to improve after sales service Emirates transports uses vechicle tracking system to track and locate fleet in UAE
Port Seguro has launched vehicle telematics in brazil
A leading coal company utilizes M2M for tracking trucks and their optimal dispatch
A construction equipment company embarks on asset monitoring and predictive monitoring
Figure 1 Enterprise Adoption of M2M Across the World, Source: Wipro Analysis, Ovum 03
Analysts are unabashedly enthusiastic about the potential of the M2M market.
must extend beyond device and data acquisition, to data transport and
Consider a recent report from Pyramid Research that projected M2M
more importantly data analytics that generate meaningful business
connections will treble between 2012 and 2017 growing from 143.7 million to
insights. The IT systems of enterprises are uniquely tuned to support
478.1 million[1].
existing business, operational and customer requirements. An M2M
Recognizing the potential of the M2M market, Communication Services
application can be successful, only when it is seamlessly integrated with
Providers (CSPs) have begun actively investing. While most CSPs today are
these proprietary systems to ultimately deliver actionable intelligence.
still positioned as wholesale providers of connectivity to M2M applications,
Regulatory Compliance: A key aspect of the way in which M2M
some are poised to move up the value chain. These operators have clearly
solutions create value for the enterprise is by enhancing the visibility of
defined their M2M strategies, and have identified priority industrial verticals
information flows. But, businesses are often governed by strict regulatory
and sectors. A few of these have even set up dedicated M2M units and are
requirements on how data is transported, stored and shared – and often,
focusing on partnerships to create an ecosystem. However, low average
these regulations vary widely by geographical region. As a result, devices,
revenue per connection (ARPC) for M2M and market growth that has not
sensors and the M2M applications themselves must conform to an
kept pace with expectations has posed some serious questions on the CSP
overwhelming range of legislative requirements. For many enterprises,
M2M business opportunity.
the perceived complexity of addressing these regulatory requirements outweighs the potential value of M2M applications.
Adoption Inhibitors for M2M Services Technologists and analysts alike are excited about a wide range of M2M applications such as connected homes, connected cars, smart grids and many more, but enterprises are not yet completely convinced. Having been burned in the past by promising technologies that were not quite ‘ready for prime-time’ many enterprises have embraced a wait and see approach with
Procurement Challenges: With an array of choices for physical components like sensors, devices, SIMs, application components and even more difficult issues associated with enterprise IT integration – the M2M solution sales cycle is long and complex. The lengthy adoption cycle and lack of established quality standards has held back many potential M2M investments.
A Fragmented Ecosystem: M2M solutions are typically an aggregation of
An Online M2M Marketplace to Catalyze Adoption
devices, applications and connectivity which includes different stakehold-
To address these challenges Wipro envisions the creation of an online M2M
ers and a complex ecosystem. This fragmentation introduces challenges
marketplace that will bring together suppliers and buyers creating a solutions
such as integration complexity, service assurance issues and support
development and procurement ecosystem to catalyze M2M adoption.
complications.
The M2M marketplace will connect buyers from different industry verticals
Lack of Business Case: Although enterprises are warming up to the
with suppliers of not only physical components, but also professional services,
potential that M2M offers, many still feel that a clear business case falls
system integrators, software components and CSPs. As Figure 2 illustrates, the
short of their expectations. The M2M solutions available in the market
marketplace will serve as a platform to aggregate all components of the value
today serve only basic operations and automation needs. Due to the
chain offering buyers affordable, industry specific solutions at agreed upon
absence of clearly articulated business benefits and a clear path to higher
SLAs. The M2M marketplace would not only build one-to-one relationships,
value services, enterprises are holding back their investments in M2M.
but also many-to-many relationships between traders of M2M solution
Lack of Actionable Intelligence: To maximize value, M2M applications
components and buyers.
M2M. We believe that the key issues inhibiting M2M adoption are:
04 1
http://www.telecomengine.com/article/cellular-m2m-connections-more-treble-between-2012-and-2017-pyramid
Developer Toolkits Creation Environment
Application Developers
Library of Plug & Play
System Integrators
Components
Applications
Application Vendors
Integration Adaptors
Device Vendors
Connectivity
Behavior Analysis Tools
System Integrators
with Suppliers Fulfillment, Distribution
Troubleshooting Tools
Management Tools
and ROI Calculators
Revenue Share Models
OEMs
Network & Device
Subscription
Business Case Modeling
Models with Enterprises
Certification Tools
Administration Tools
Business Models
Pay-as-you-Grow
Test Bed Device Testing &
Devices
Ecosystem Partners
Enterprises
and Support Models
SMBs
Figure 2: The M2M Marketplace, Source: Wipro Analysis
To draw an analogy, consider the success of online B2B marketplaces which
scale and direct billing relationships. This skillset provides CSPs with inherent
have successfully connected suppliers and buyers. According to Forrester, the
advantages to leverage the online M2M marketplace opportunity.
B2B eCommerce market in the US is expected to reach $559 billion by the
CSPs will have to invest initially to create online M2M marketplace but we
end 2013, excluding Electronic Data Interchange (EDI) based transactions.[2]
envision that they will become self-sustainable in 3 years timeframe.[3]. In fact,
Taking a cue from the success of B2B e-commerce platforms like Alibaba.com
if executed well, the marketplace has the potential to become a net-revenue
or indiaMART.com, we believe that online M2M marketplaces can become a
generator for CSPs. The CSP M2M marketplace opportunity will depend upon
unique platform independent of manufactures, suppliers and with global reach.
the structure and richness of offerings presented in Figure 3.
The CSP Online M2M Marketplace Opportunity CSPs have the potential to play a key role in the M2M value chain. They have unparalleled experience managing complex networks, transactional volume at
Help Application & Device Vendors Monetize
Enablement
Merchandizing & Retailing
Engagement & Facilitation
Help Enterprises Build Business Case and ROI Models
Choice
Customization
Assurance
Consultancy & Market Tips
Build Standardization
Leverage Brand
Enrich Ecosystem
Figure 3: Responsibilities of a Marketplace Convener, Wipro Analysis 05 http://blogs.forrester.com/andy_hoar/12-10-18-us_b2b_ecommerce_sales_to_reach_559_billion_by_the_end_of_2013 3 Wipro Analysis 2
Recommendations for CSPs
for each transaction. An additional payoff for the CSP is the connectivity that
Wipro proposes three different types of online M2M marketplace business models for CSPs. The ideal path will depend upon the CSP’s long term M2M strategy and risk-appetite. These models are discussed in detail below.
will be sold along with the solution. The marketplace also enforces quality standards for the listings, distribution SLAs and standard purchase and returns policies. With sales commission, the marketplace has an incentive to nurture and execute deals.
Information Exchange Model
Full-Service Exchange Model
This is the simplest form of marketplace and acts like a yellow pages directory for M2M. The online platform brings together various device vendors, applications and software suppliers. Through this online portal buyers can easily identify and select M2M solutions of interest. The marketplace facilitates the information exchange and charges a listing fee for registration. In this model, while the payoffs will be lower, the risks for CSPs are lower too as there are no development, integration, billing or distribution costs involved.
In this model, CSPs in association with other industry players aggregate the devices, software, and applications and also participate in solution development, deployment and support. The online M2M marketplace assumes a brand identity, providing end-to-end solutions including consulting, devices, software, system integration and support and maintenance services. In this model, the CSPs own the solutions and earn profits based on sales. CSPs may also choose to charge for onboarding and product and solution certification.
Transaction Exchange Model
The operations are more complex and the focus is on creating an ecosystem,
In this model, the CSP bundles the solution with its own connectivity and facilitates billing and distribution. The online portal displays the solutions, facilitates solution discovery, billing and the CSP receives a sales commission
quality assurance, solution innovation and value protection. Figure 4 provides a summary of the monetization levers and strategic benefits of each of these solutions:
Marketplace Type
Monetization Levers
Information Exchange
Listing Fee
Revenue
Profit
Lifetime Value
Telco Role
Advertisements
Listing Fee M2M Marketplace
Transaction Exchange
Advertisements Network Sales Commission - Products
Listing Fee Advertisements Services Exchange
Network Sales Commission - Products Other Telco Offerings
Figure 4: Different Business Models for M2M Marketplaces, Source: Wipro Analysis 06
In addition to the models discussed above, an online M2M marketplace will provide CSPs with a real-world view of M2M market demand providing them with additional solution up-sell and cross-sell opportunities.
Conclusion While many CSPs have launched M2M solutions in partnership with other ecosystem players – and a few are even selling these solutions online – a dedicated effort to develop innovative M2M solutions and a platform to bring together buyers and suppliers is missing. To drive adoption CSPs should consider investing in M2M marketplaces that sell industry specific solutions. The approach would be similar to the Apple App Store by connecting an ecosystem of solutions developers with a community of buyers. An online M2M marketplace is a cost effective concept as upfront investments are minimal and it will help reduce the search costs for buyers and sellers alike. A marketplace can be viewed like a call option, where a telco can minimize their exposure to risks associated with the uncertainties of the M2M business. The option price can be picked up based on the comfort and strategic intent of a telco. When playing the role of a managed connectivity provider, the CSP can consider forming an information exchange. When playing the role of an aggregator, the CSP can opt for a transaction exchange model. And if they want to capture a larger share of the M2M revenue pie, the CSP can invest in a full service exchange.
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About The Author Srinivas G.R. heads Business Solutions Group for Communication & Media vertical globally. In this role, Srini has a charter to drive Wipro’s thought leadership and productized solutions in strategic focus areas including M2M, OSS/BSS, Service Assurance and Cable Broadband. Specific to M2M, Srini is responsible for setting vision, defining solution strategy, conceptualizing and building best of breed solution including forging partnerships with ecosystem players and finally advising customers globally in their M2M journey. Srini has more than 18 years of IT and Consulting experience in Media, Cable, Satellite & Telco industries and has worked with customers globally.
Rahul Shyam is a senior business consultant with Wipro. He has been working in the domain of wireless products for over 13 years. In his current role, he is responsible for evangelizing new revenue themes for Telcos, especially on mobility and smart systems products.
Avinav Trigunait is assistant manager in Wipro’s Global Media and Telecom business unit, leading thought leadership initiatives for the SBU. His research interests and project experiences span diverse areas such as MVAS, fixed and wireless networks and digital media. Prior to this, he was working as a consultant, strategy labs for Capgemini Consulting’s Telecom, Media and Entertainment practice. In the past he has also worked for IDC as a telecom sector analyst.
Roopa Nambiar is part of the marketing team in the Global Media and Telecom business unit at Wipro. She is involved in driving thought leadership initiatives and developing marketing content for the business unit. Prior to her current role, Roopa was a consultant with Wipro Consulting’s Product Strategy and Innovation Group, where she helped hi-tech companies identify new market opportunities and develop business strategies.
About Wipro Council for Industry Research The Wipro Council for Industry Research, comprised of domain and technology experts from the organization, aims to address the needs of customers by specifically looking at innovative strategies that will help them gain competitive advantage in the market. The Council, in collaboration with leading academic institutions and industry bodies, studies market trends to equip organizations with insights that facilitate their IT and business strategies. For more information please visit http://www.wipro.com/insights/business-research/
About Wipro Technologies Wipro Technologies, the global IT business of Wipro Limited (NYSE:WIT) is a leading Information Technology, Consulting and Outsourcing company,that delivers solutions to enable its clients do business better. Wipro Technologies delivers winning business outcomes through its deep industry experience and a 360 degree view of “Business through Technology” – helping clients create successful and adaptive businesses. A company recognized globally for its comprehensive portfolio of services, a practitioner’s approach to delivering innovation and an organization wide commitment to sustainability, Wipro Technologies has 135,000 employees and clients across 54 countries. For more information, please visit www.wipro.com
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