“There are many players participating in the new IOT wave such as hardware providers, solution providers, system integrators, manufacturing organisations and telecom operators.”
The business opportunities stemming from smarter connected devices relate to five areas: reducing opera- tional costs, generating new revenue streams, enhancing the customer experience, improving operational performance, and ultimately delivering a differentiated service and competitive advantage for the business. As M2M moves closer to the IoT, the as- sociated business opportunities — which initially focused on cost and operational performance — have now broadened in scope to encompass all five areas. What emerges as unique to IoT as compared to M2M is that these IoT applications address both core industry operations and services (vertical) and general and cross-functional business support objec- tives (horizontal) in an enterprise.
Ultimately, enterprise IoT aims to transform traditional product-based industries into industries that are based on both products and services. Each product that is launched has an associated service, which not only leads to an improved customer experience but also creates an opportunity for the enterprise to extend customer engagement and provide additional services.
Servitisation opens up opportunities for new sources of revenue and a new range of business models to be explored.
Through connected products where real-time data is captured and man- aged, service providers have been able to create new business models, billing according to usage increments and more innovative trading, and restructuring intensive CAPEX models in favor of more compelling OPEX solutions.
IoT & Big Data
The Internet of Things, or IoT, is projected to undergo massive growth with 4.9 billion IoT-connected devices in 2015 and more than 25 billion predicted to be in use by 2020, according to Gartner.
The IoT appeals across a broad base of industry sectors and fields and can deliver a wide range of technological functions with opportunities in the cloud, security, capacity, growth, environmental and consumer-based device segments. Measurable gains from the IoT are being found across many sectors of business.
The IoT ties in with big data – through its flexibility, the IoT can fill in where mining difficulties exist. As the IoT spreads across almost all industries it will trigger a massive influx of big data and spawn new methods for harvesting, analyzing and using this information.
The intersection of the IoT and big data is a multi-disciplinary field, and specialized skills will be required if businesses are to extract maximum value from it. Two kinds of people will be in demand: business analysts who can frame appropriate questions to be asked of the available data and present the results to decision makers; and data scientists who can orchestrate the (rapidly evolving) cast of analytical tools and curate the veracity of the data entering the analysis pipeline. In rare cases, the business analyst and the data scientist may be one and the same (valuable) person.
There are a number of challenges that organizations must face in adopting IoT solutions, including external factors such as a very fragmented market and complex value chain; country regulation particularity; lack of standards and inter- operability; a rapidly changing market; rapidly changing customer experience;
high competition and lack of awareness about IoT benefits and cost effectiveness; along with internal factors such as a lack of internal expertise or vertical market knowledge and an unwelcoming environment for the development of products.
Telecom operators take the lead
There are many players participating
in the new IoT wave such as hardware providers, solution providers, system integrators, manufacturing organizations and telecom operators.
Nevertheless, we believe telecom operators have more leverage than oth- ers and really they are the heart of this upcoming promise.
The opportunity for IoT is extremely large with a global forecast of 50 billion connected devices by 2022, and the technology promises to touch every vertical market. Telecom operator’s strategies for IoT tend to be tactical and ad hoc, rather than developing a long-term sustainable position.
Telecoms operators have typically phased their involvement in M2M and IoT, starting with connectivity before add- ing more complete solutions. They have moved from selling connectivity only, to selling third-party products, then selling internal products, finally providing a broad menu of IoT services
Telecom operators position them- selves for long-term growth, they need to develop a more mature, sustainable positioning. We believe this can be achieved by bringing together existing capabilities (e.g. cellular connectivity, sales, sup- port, hosting, billing), adding some new ones (e.g. LPWA, application enablement platforms, and professional services) and providing a horizontal menu of capabilities for their own and partner solutions
One-Stop Shop IoT Solution
One-stop shop services, particularly from companies that offer IoT Solution Engines, are a good choice for customers where a single provider overcomes technology and supplier fragmentation barriers. Fundamentally, they drive solution efficiency, quality and reliability while simultaneously decreasing solution time to market.
The IoT Solution Engine is a concept that designates both completeness of one-stop shop services, and flexibility for solution customization. IoT Solution Engines are modularized, allowing plug and play hardware, software and services to address nearly all variations of customer IoT solution needs
The emerging need for interoperability across different industries and applications has necessitated a move away from an industry-specific approach to one that involves a common platform bringing together connected cars, connected buildings, connected industry, emergency services, local authority services and the many other stakeholders in the ecosystem.
GCC IoT Market
According to Machina research, the MENA’s IoT market will be worth $7.41 billion in 2019, up from $2.87 billion in 2015. Thirty percent will be generated
by the Saudi IoT market which will be worth $2.19 billion in 2019. Connected car, connected building, and connected industry will be the dominant IoT sectors in the next five years, accounting for 98% of KSA IoT revenue.
The UAE IoT market will be worth $600 million in 2019, up from $253 mil- lion in 2015; while the Kuwait IoT market will be worth $391 million in 2019, up from $160 million in 2015.
The connected car opportunity
Connected car represents the inter- section of a mature, well-established vehicle telematics industry — perhaps the oldest and most mature part of the overall M2M market — with a much broader and more dynamic connected car market, with a wide range of services aimed at fulfilling the needs of the driver, the passengers, and the automotive industry itself.
Machina Research estimates that there will be approximately 15.32 million IoT connected devices in the automotive sector in Saudi Arabia by 2024, creating a market worth $2.44 billion.
The connected building opportunity
The degree of intelligence incorporated into global building stock (residential, commercial and public buildings) is increasing as costs fall, capabilities increase and energy saving becomes
a higher priority. Advanced intelligent building deployments are serving to illustrate what can be achieved with sophisticated ICT utilizing various forms of IoT communication.
In Saudi Arabia there are estimated to be 28.72 million IoT connected de- vices in the connected building sector growing to 104.77 million by 2024. This will represent a revenue opportunity of $1.8 billion.
The connected industry opportunity
Operational efficiency is one of the key attractions of the IoT, and early adopters are focused on these benefits.
By introducing automation and more flexible production techniques, for instance, manufacturers could boost their productivity by as much as 30%.
For owners and operators of equipment, such as companies in a process industry, there is a real opportunity for increased revenues. The easy win is to avoid downtime and plant and facility shutdowns, thereby increasing production throughput.
Automate shipment and delivery by exactly predicting the time of arrival as well as quantity/quality monitoring of the product in-transit from manufacturer to retailers.
There are expected to be 1.3 million IoT connected industry devices in KSA by end of this year, growing to 3.02 million by 2024. In terms of revenue (service), at the end of 2016, the sector was worth $60.53 million in total. By 2024 this will have grown to $227 million.