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Collaborative, lean carriers win out for the IoT prize

The cloud and virtualisation have simplified enterprise technology and made businesses more agile. The monolithic IT stacks of the past have been replaced with infinite scale and configurability.But when we look at the big names in cloud – Amazon’s AWS and Microsoft’s Azure for infrastructure, or Oracle and SAP’s HANA platform for function-based platforms – mobile players are surprisingly absent. They have all too often been the “dumb pipe” around which other profitable enterprise services have developed.

But carriers and operators are on the cusp of a new opportunity: demand for M2M and IoT services is growing exponentially. How can carriers capitalise on this trend and reap the rewards of the next generation of interconnected services?

Tactically, it is clear that businesses in the mobile ecosystem must make careful technology choices. Traditional carriers have a legacy stack which is hard to augment, and it’s not worth tearing down because it’s still massively profitable and consumer-facing. And we have already seen in the MVNE space that thin-layer providers of technical services are in for a rough ride – squeezed into commoditised offerings by more agile builders and integrators, says Barry Dowd is SVP of MDS Managed Service.

A more useful approach is to navigate these technical decisions by thinking strategically from the enterprise end-user’s perspective – because M2M/IoT is transforming client businesses and entwining enterprises with their mobile service providers like never before.

The poster child for this transformation is Rolls Royce’s ‘servitised’ TotalCare aircraft engine programme, which has changed the company’s entire business model. Instead of paying outright for engines, airlines now buy engines-as-a-service – including IoT-enabled repairs in which engines report their status from anywhere in the world. IoT allows Rolls Royce and its customers to minimise repair costs while converting a major capital expenditure into an Opex component of the airline business model.

Production line management, healthcare monitoring, motoring and insurance, public sector services, logistics and eco-management are just some of the sectors being transformed, optimised and improved with M2M/IoT, and carriers need to start talking their language.

The currency of IoT is not talktime or gigabytes; it is business outcomes.

Just as with the last wave of social internet and content services, mobile carriers have already done much of the hard work. The infrastructure is in place. The international contractual relationships are there to support even global businesses with their M2M ambitions.

But to work more closely with their enterprise customers, carriers must become effective systems integrators, with a “business functions as a service” backbone. Analyst Ovum reported: “Telcos need to invest in agile IT systems before they can monetise IoT. Specifically, telcos must invest in highly scalable billing systems [and] advanced analytics solutions,” 1 tools which use rules and data to convert service usage into metrics that the end client can understand and use.

MGI Research calls these technologies “Agile Monetisation Platforms” (AMP) – tools with the financial flexibility of a real-time pricing engine but the reach of a complete ERP system: “Key growth drivers behind the adoption of AMP are the shift to new business models based on recurring or usage-based pricing schemes, together with the adoption of Internet of Things. Nearly every industry (99%) will be impacted by digital disruption and the adoption of cloud-based business resources.”

The good news is, in this integrated relationship, the same data that supports your billing will support management reporting for the client. In the most aligned cases, your real-time billed services translate directly into billable services to your client’s end customers (“billing on behalf of” – a process you will, of course, also be able to transparently handle).

To launch and monetise enterprise integration services at scale demands prioritisation and a product roadmap, because no carrier can be all things to all people. This market will certainly feature sector leaders e.g. platforms designed for healthcare or manufacturing. Other platforms will be built around specific business models, for example M2M for exception management (low traffic but ultra-high availability, for dealing with crises).

But to cater to their chosen markets, remain competitive and protect their legacy assets, carriers must take a lesson from the SaaS providers and assemble an agile platform of in-house, outsourced and managed-service functions aligned to customers’ business needs.

Basic connectivity and SIMs are commodities; and they will therefore inevitably get cheaper. Winners in this market will fully evolve into a software+services model, transcending commoditisation to bill for enterprise value. Telcos have been here before – and missed out to more agile OTTs, or BSS/OSS providers with deeper client relationships and customisations and leaner development cycles.

But in the connected ecosystem, those barriers are removed and there is room for carriers to stake their territory. But to succeed, they must practice what they preach: being as agile and collaborative in developing their stack as the services they intend to deliver.

The author of this blog is Barry Dowd is SVP of MDS Managed Service.

About the author:

Barry Dowd is SVP of MDS Managed Service, responsible for the overall commercial service relationship with customers. He has gained over 25 years’ experience delivering customer care and leading customer experience teams in the telecommunications and IT service provision industries.

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