July 19, 2016
Crossing the chasm is hard for start-ups which Geoffrey A. Moore explained so well already 1991. It is also a well-known fact that going from a consulting business model to a product model is really difficult. There are practical challenges like cash flow sales and marketing but the mind-set related ones are the most difficult ones. In essence a consulting sales person always tries to sell at least what a customer is asking for while a product sales person have to manage customer expectations to release dates, price and features. Still companies are trying since the ability to scale faster and more profitable is seducing and the ones who succeed can end up in a much more interesting situation. No risk no glory! There are also examples of bets where companies separate the platform they use as consultants from the consulting and SAP is a great example of that.
In the IoT space I believe we have an additional strong argument for going from consulting to product. All IoT solutions include hardware, connectivity, data collection, data analysis and distribution of information. Customers want to leverage these systems to improve their business why most IoT solutions are customer, application or industry specific. The traditional way to develop an IoT company is to “get hold of” a platform to develop customer applications on. So most IoT companies come with a technical asset which they try to turn into a solution for a specific customer need. The challenge is to learn enough about an industry or application to make customers impressed and eager to buy. Wherever I go today I meet IoT startups with solid but quite generic platforms and some customers, often in different industries to make it even more complicated. They might have invested a couple of million dollars to develop and maintain the platform most often using external money. The combination of IoT rapidly becoming an international business and quite local and not really specialised IoT platform companies will unfortunately create problems in many IoT startups.
I have now seen a couple of IoT startups successfully going from consulting to product and believe it is a great way to go. By taking the de-tour as consultants they can finance their company themselves as long as they need. In the consulting stage they might test different potential markets for their product, they build relationships with customers, partners and potential recruits in the target market and they can develop their product back home in stealth mode if they like.
The most dangerous point in the development of a company like this is when they decide to jump from consulting to product. A clean-cut is required to make sure all resources are focusing on the product from day one and to manage legal, ethical and practical issues. It has to be well planned to secure cash flow and a fair chance to have paying customers. Marketing and sales have to be ready to roll right away. The end result is a well focused, prepared and customer centric IoT company which founders still own. If it fails, it is still painful but clean and quick.
It is still challenging to go from consulting to product like this but if this is the plan already from start one can mitigate risks by hiring product people and structure the company as a product company. And again, no risk no glory!
December 5, 2013
Data is the gold of M2M! This remains the most important thing to keep in mind when trying to understand where the industry is going. When collecting the data from sensors and sub-systems of all sorts, we need to understand the context in order to turn the data into useful information. Data analysis without understanding the context opens up for poor conclusions and decision-making down the road. No news here! The value of the information created appears when the information is properly integrated into business systems, decision-making systems, etc. No news here either!
The good news is that the need to understand the context for the data collected and the fact that value materialize when the information is integrated into ERP systems, processes and decision-making systems clearly points towards a fragmented market with successful players focused on industries or functions. Good news is that this is how the software industry has been structured for years. And efficiency is achieved by generic platforms, tools and API:s which specialized applications can utilize.
Since M2M will have to become an international business to benefit from scale this brings us a “glocal” value chain like this: customized or specific software provided to customers by local integrators, resellers or consultants working with specialized international M2M Service Enablers. Software used is based on generic platforms, tools and API:s – this is where Oracle, IBM, Microsoft, SAP and others come in. And the M2M Service Enablers are agnostic to devices and connectivity. And sensors are provided by a variety of specialized companies.
So which conclusions could we draw? The three most important conclusions to me are that:
- M2M Service Enablers need to be agnostic to connectivity and device
- there are many M2M Service Enablers in each country today and only the ones who are really specialized, context aware, will survive when it becomes an international market
- generic software companies as well as connectivity providers need to figure out how to work with the best M2M Service Enablers
June 29, 2013
What more does it take to make M2M aka Internet of Things – everything or some things – happen big way? Let’s revisit the key components again. Data is the gold of M2M and the winners will be those who best utilize the data captured. Integration of data in existing business systems and processes is key to maximizing the value. Distribution of information through relevant channels and to terminals of users choice, using open api’s and gorgeous human-machine interaction is required for the applications to be used. Generic Device Control platforms on top of service providers networks together with Specialist Service Enablers are required to make it affordable to develop and maintain applications for clients of all types. The winners in Service Enablement will be the ones who understand the data they are dealing with and due to the huge amounts of industries and functions to be served Service Enablement will be a very fragmented part of our industry.
I see most of this happening now and our industry is definitely developing fast. We are in the teenage stage already with clients moving from thinking and talking to doing. From Powerpoint to pilots. There is absolutely no better way to understand what happens if one connects things than actually connecting some things to play around with. And there is no better way to go for that than to contact a Specialist Service Enabler who has most things ready. Connecting things and collecting the data in the cloud was good enough 1-2 years ago when technology was the key challenge. But today the challenges are mainly business centric why understanding the context of the data is key to succeed. This is why Specialist Service Enablers is the right choice when it is time for a pilot or proof of concept project.
But there is one major thing missing: Internet is global, ICT is a global business and Internet of Things will have to be global as well to prosper. Vendors and operators are working quite hard to make this happen which is great but it will take long time and they can’t make it themselves. Most organizations in the world are small to medium-sized and the software they use are mostly local or localized. Law, policies, culture, language, taxonomy, habits, taxation, religion, alphabet and friendship are examples of things that make people use local software. And it will continue to be like this for many many years. Since the data captured in M2M solutions should end up in business applications, maybe blended with data from public or commercial sources, we need what I call a glocal value chain. The global component is needed to drive economies of scale and enable international business etc. The local part is there to cope with the local requirements, to ensure proper integration in business systems and to engage integrators, consultants and developers locally bringing their clients with them.
Glocal value chains are always difficult to make work. But in our case, whatever we call our industry, I find it quite straight forward. The global part consists of operators (like Telenor Connexion) and their alliances (like GMA), Telecommunication vendors (like Ericsson and Telit) and international ICT vendors (like Cisco, SAP and Oracle who all have started to move now). Ever since Ericsson’s 50 Billion Devices statement this inside-out effort has been coming along quite well. The local part, i.e. developers, integrators, resellers and consultants, has in most parts not got going yet and therefore the small to medium businesses in general are in waiting mode or not even aware. Specialist Service Enablers constitute the missing link. Due to missing operator device connectivity services they have had to learn to deal with the connectivity layer directly. And the services they provide to customers in the industry they target is to a large degree useful across boarders. To me it’s clear: operator networks with device connectivity services together with Specialist Service Enablers interfacing to local developers and integrators is the way forward. The challenges are primarily commercial and practical, not technical. I am working with members of Swedish M2M Service Enablers in several projects along those lines and it looks very promising.