IoT 101

Internet of Things (IoT) is a popular buzz word around town. What is IoT? Why now? What are the growth elements?  How do I even segment these IoT devices?

Too many questions and too many ‘things’ to answer.

Let’s start IoT 101.

Definition:

Internet of Things refers to the networking of physical objects using embedded sensors, actuators, and other devices that can collect or transmit information about these objects (excluding smartphones and computers). As humans directly interact with the device for information exchange, therefore smartphones and computers are not considered IoT.

Tesla’s self-driving car is considered a partial IoT device as it has thousands of sensors and motors which can move without human intervention and take people from one place to the next.

IoT Market:

Murphy’s Law can be helpful to describe the IoT concept with a little tweak: Whatever can be connected, will be connected.

  • By a recent estimate there are over 20 billion devices connected to the internet as of 2017 and that number is forecasted to reach over 75 billion devices by 2025.
  • According to AMI’s Global Forecast Model, small, medium and large businesses spend on IoT technology reached over $800 billion worldwide in 2017.
  • There is a huge potential for IoT in developing economies in terms of adoption. Also, nearly half of the value is expected to be generated from developing countries.

Growth Elements:

Technology, being the root of all development, is at the center of every new breakthrough. The driving factors behind the development and adoption of IoT is the widespread availability of all the technical components and infrastructure.

  • Hardware: Many IoT devices rely on multiple sensors to monitor the environment around them. The cost of these sensors has dropped 30-70% in the past decade and prices are expected to drop further leading to more cost-effective sensors.
  • Internet: The expansion of the internet is another major growth element of IoT. Approximately 45% of the global population is connected to the internet. This increase in connectivity is paving the way for higher IoT adoption worldwide.
  • Smartphones: Smartphones can be a major driver for this segment despite not being an IoT device. IoT relies heavily on “remotes” to monitor and manage IoT devices. Today smartphones account for over 65% of mobile phones sold globally. These can be used as remotes to control IoT devices. According to AMI’s Global Forecast Model, businesses have installed over 4 million smartphones and over 1.3 million tablets as of last year.

IoT Segmentation:

IoT is very tricky in terms of segmentation because of various components involved and there are many gray areas between just being another tech product and an IoT product. Also, in terms of market adoption, it is difficult to identify IoT penetration in businesses and hence difficult to track spending. Here at AMI, we have identified 3 distinct segments for IoT to simplify tracking.

IoT Hardware:

Hardware is considered a building block in the IoT ecosystem. IoT Hardware includes spending on standalone components as well as those installed in devices, sensors, appliances, vehicles, machinery and many more. According to AMI’s Global Forecast Model, hardware components within IoT accounts for 50% of overall spending within the IoT segment. As we are in the initial phase of IoT growth, companies are setting up the necessary infrastructure for IoT thus increasing hardware spend.

IoT Software:

Some areas included in IoT software spend are IoT OSs, platforms, end user applications and cloud services (which is still in the early development phase). Software provides an integrated set of capabilities including mobile application libraries, analytics, security and device/services management.

IoT platforms include Cisco Jasper, Windows 10 IoT, Azure IoT Suite, Uptake, and Ayala.

IoT Services:

IoT services include solution design consulting, implementation, deployment, and management services as provided by service providers of all sizes such as Datatrend Technologies, Softweb Solutions, Accenture, IBM, AT&T and Verizon.

The IoT services market has wide reaching potential for one simple reason: IoT in business is well connected with other disciplines like security, data management and other vertical specific elements. No company can do everything alone and that’s where IoT service providers can help these companies achieve efficient results.

Finally, IoT will give birth to all new business models based on technology. Remember the Tesla car? Now imagine, Tesla selling just car service and not the actual cars. Anything-as-a-Service, selling transportation service rather than automobiles.

In a nutshell, companies are spending more on infrastructure set up and deployment. This is due to the initial growth phase of IoT being hardware centric. In the next few years, the market will experience an incredible growth in the IoT Software and Services industry. We will see companies spending more on platforms, security and analytics because of IoT expansion.

~ Ankit Mehta, Associate

Leave the Security Nightmare to your Trusted Managed Security Service Provider

Adoption of new technologies like mobile, analytics and cloud are resulting in a diverse and complex IT environment unlike anything we have seen, spanning multiple delivery models, vendors, processes and data. Both the business and technological drivers are responsible for this level of complexities. The business drivers increase the communication and transaction, whereas the technological drivers represent the fast-paced growth. At the same time, vulnerabilities are growing fast, whereas the budget for the security group is flat and faces resource crunches. Managing such a complex environment can be challenging. As a result, organizations cannot do it alone and need to look for a trusted IT services provider to help them quickly respond to business demands, manage ICT complexities, support desired levels of availability and adopt technology innovation. Managed services span a range of capabilities, creating options for organizations looking to benefit from externally provided services that allow them to focus on more business-critical issues and strategic functions and activities.

As per AMI’s Global Market Model, 24% of the global small, medium and large businesses (SMLBs) ICT spending will be driven through Managed Service Providers (MSPs), during 2021 with a 17% CAGR growth over 5 years. The scenario is even more promising when it comes to APAC SMLB organizations with a CAGR growth of 20% on MSP business contributions by 2021. Be it small companies, mid-sized or large businesses, look to trusted managed services providers to address a range of the issues around cost, complexity, service quality and risk. With the increase of hybrid IT environments based on the workloads, cloud is the new normal and has become the mainstream for managed services delivery. Around 55% MSPs in APAC countries interviewed for AMI’s WW Managed Service Provider study, indicates using a Hybrid Cloud model to run their business.

With these increased complexities in the enterprise ICT infrastructure, security has become a much deeper executive discussion because of the modern diversity of channels through which businesses can be attacked. Mobility, bring your own device, virtualisation, the cloud, and social media have all opened new doors into the organization. Adding pressure to organizations is the fact that technologies, business models, regulatory environments, and the threat landscape are evolving continuously. So, security has become a broad discipline that affects the entire organization and calls for a range of highly specialized and dynamic skills and technologies that most businesses don’t currently have. Organizations need enough highly qualified engineers and security specialists to run the security systems 24/7, analyse the information continuously, and be able to respond immediately. This also needs continuous technology updates and the cumulative experience, insight, and knowledge of thousands of independent security experts globally to pre-empt attacks. This almost impossible mission must be achieved. Thus, giving thrust of managed security services adopted by businesses globally. Providing security services as part of the broader managed service offering was always a key offering from the leading managed service providers and will continue to be so. Around 80% of the MSPs interviewed in APAC highlighted managed security services as one of their key offering which is expected to contribute over a quarter of their overall managed service revenue annually.

The opportunity for partners offering managed security services will not go away any time soon. Driving that trend is the shortage of security talent to deliver the right service in-house. There is no shortage of tools to help secure networks and data. However, tools alone can’t prevent security breaches. Managed Security Services typically offer the security solutions like Managed Firewall, Managed Intrusion Detection and Prevention, Managed Email Gateway, Managed Web Gateway, Managed Web Application Firewall (WAF) and Monitored & managed integrated security appliance service. These services, for the most part, include 24/7 technical phone support, on-site consulting, around-the-clock security monitoring and maintenance, access to the client security portal and comprehensive reporting.

To maintain the SLA clauses in the managed services environment, it is critical for the organization and the services provider both to have a clear picture about the performance metrics, security tools and policies and resiliency level the organization requires. Balancing the performance and service-level requirements with the right cost is an important exercise. Nearly 35% of MSPs in the APAC region believe customers are likely to move to a lower-priced competitor, hence they look for better support from their respective partners to remain competitive in the market. MSPs in APAC budget roughly 7% of revenues to promote their managed services which indeed needs to get a boost, as the overall market potential for Managed Service business grows in this region.

~ Surjyadeb Goswami,  Regional VP APAC

Black Friday for Small Businesses? Why Not?

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Quick Trivia: A company in NYC with less than 10 employees is out of paper for printing. What would they do?

Contact a service provider sitting 5000 miles away who provides managed print services.

Walk across the street and buy a bundle from Staples.

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According to AMI’s Global Model, 30% of IT hardware procured by small businesses in the United States is through a retail channel such as Best Buy or directly from a vendor.

(Click here for an interactive demo of AMI’s Global Model)

Due to the lack of simple procurement solutions and the proliferation of e-commerce, small businesses continue to buy IT hardware through consumer-focused channels. The trend is likely to continue until we see a ground up change in the way Channel Partners target small businesses.

As the buying behavior of small businesses continue to align with consumers, companies can target small businesses using marketing strategies that are developed for consumer holiday seasons

Would it work for me?

Dell Inc. appears to have identified a market. The company has been putting out black Friday and holiday season ads specifically targeting small businesses.

Is Black Friday the only time?

For businesses, there could be many buying seasons like budgetary or quarterly cycles, conference seasons, industry events such as Google IO, Worldwide Developer Conference. But most companies attending industry events have small businesses at the tail end of their priority list. They generally market solutions for medium or large businesses.

Consumer focused events like Black Friday or Cyber Monday, provide an opportunity to tap into small businesses that have similar buying patterns to individual shoppers. Such businesses typically do not have the resources to contract with Channel Partners or sign long term agreements.

In Conclusion

A sale to small business is not always via a lengthy sales pitch and long-term contract. There is still quite a lot of interest in “Buy It Now” products, it’s only a matter of identifying these businesses.

Learn more

Ask us about small business buying patterns and behaviors. Find out the most preferred purchase channel for your product category. Email us at ask_ami@ami-partners.com

~Karthik Pannala, Associate

Got MSP?

Managed Service Providers (MSPs) are upping the stakes in the current cloud land grab. By rapidly expanding their portfolio of service offerings they expect to capture larger share of wallet. Their customers are aligned with this approach as they seek out full-service providers able to meet all their technology needs.

A Growing Market

By 2021 MSPs will deliver close to 25% of all technology products and services globally, up from 18% today. This is an impressive business transformation story – thousands of IT resellers and systems integrators (most of them small companies with less than $10M in revenues) have displayed a clear vision and competent leadership in enhancing their organizations’ capabilities and infrastructure to keep revenues growing in this challenging business climate.

The number of MSPs worldwide will grow from 50,000 to 75,000 between 2016-2021, with the total IT products/services they deliver growing from $500 billion to over $1 trillion during the same time.

Their services portfolios, which initially included pure infrastructure services such as storage, security essentials, compute power, web hosting, and application hosting, have now grown to include value add and higher margin services such as disaster recover/business continuity, e-discovery, vulnerability assessment, compliance management, application management, SaaS, and mobile device management among others.

Business Challenges

Despite being in a high growth business, MSPs face tough challenges which require constant attention and fine tuning of their business models. Some of the top challenges are:

  • Differentiating their services from those of other MSPs is a top priority to counter margin erosion and hyper-competition.
  • Absorbing newer technologies, tools, and solutions, packaging them for client consumption, and providing follow up services requires a constant learning and training.
  • Investing in datacenters is yet another critical challenge, which is often detrimental to smaller MSPs.

How Technology Vendors Can Help

Technology solution vendors that are supplying to MSPs can often play a big role in helping MSPs address these challenges. By fully understanding the nature of MSPs operational and business needs, vendors can design their products and programs to enable their MSP customers to win in the market-place.

Key features can be built into products and programs to make them a nuts-to-bolts solution, or packaged to work with other third-party solutions typically used by MSPs. Examples of the types of features that MSPs would like vendors to include in their solutions are:

  • Automation of overall solutions architecture.
  • Automation of customer on-boarding and migration processes.
  • Dynamic and predictive throughput/capability scaling.
  • Performance monitoring and predictive dashboards and controls.
  • Vertical industry-specific sales, marketing, and technical know how.
  • Vertical industry-specific compliance and reporting features.
  • Online university – modular online training videos and certification.

These are some of the insights we have uncovered in our tracking of the worldwide MSP segment. For additional insights and a detailed description of our MSP tracking service and various deliverables click here.

Alternatively, please email John Rezac (jrezac@ami-partners.com) for more details or to schedule a webinar that will walk you through our MSP coverage and insights.

~Deepinder Sahni, SVP

Global Model 2017

Your intrepid blogger wanted to take some time out to give you an update on the Global Forecast Model that AMI uses to track everything from small business spending on IoT hardware in the UK to shipments of smartphones in Brazil. For brevity, we simply refer to it as the GM. Each year, the GM is updated to give actionable insights on the Information and Communications Technology (ICT) space.

Highlights

Aside from the SMB space, which is our primary focus, the GM also provides insights across the entire commercial spectrum as well as the public sector. Home Based Business (HBB), large enterprises (1,000+ employees), and the government and education sectors are analyzed to provide granular insights into the industry. As long as a person is involved, AMI tracks the business. Granted, once Skynet finally goes online, Continue reading “Global Model 2017”

Layered Security Solutions

Earlier this week, AMI-Partners joined a call hosted by Trend Micro Inc. that discussed the firm’s collective capabilities in security, covered in three categories titled Hybrid Cloud Security, Network Defense, and User Protection. With security threats becoming more sophisticated, targeted, and frequent, having a layered security solution can prove beneficial in the SMB space. Yearly subscription prices per user range from $38 – $62 for this layered approach to security, which does not put it out of reach for the SMB market. These security solutions (Standard and Advanced packages) are available for both on-premise and hosted delivery.

Competition & Worldwide Spending

Trend Micro, a global security software company that develops products for servers and the cloud computing environment for consumers, governments, and the SMB market, competes in a crowded field with such well know names like McAfee, Microsoft, and Symantec. With an eye toward increased market share and profitability, the company is working to provide business customers with multiple solutions for cybersecurity. The firm is ranked as the top worldwide content security provider for small business (4 years running) by Canalys and claims to block 250M threats each day.

According to AMI’s Global Forecast Model, total worldwide SMB security spending Continue reading “Layered Security Solutions”

SMBs at risk of a Distributed Denial of Service attack?

Last week, Dyn, a cloud-based interest performance management company, was the target of a series of distributed denial of service (DDoS) attacks. These attacks interrupted service on more than 80 popular websites including CNN, The New York Times, Twitter, Electronic Arts, Airbnb, PayPal, Visa, Slack, Yammer, and Pixlr. The variety of the aforementioned sites illustrates the central role a traffic manager can play in the critical infrastructure of the internet. The company released a statement concerning the attack. The SMB market is vulnerable to such attacks, although on a smaller scale to the Dyn attack, and it pays to safeguard against such incidents.

 What is a DDos?

A DDoS is an attempt to make an online service unavailable by overwhelming it with traffic from multiple sources. In the case of Dyn, the attacks were coordinated via numerous Internet of Things (IoT) enabled devices such as cameras, routers, and even baby monitors. They were infected with malware that allowed for the IoT devices to be controlled remotely and send millions of malicious requests to Dyn. An analogy would be to the single toll booth that needs to collect fares from every car in several queues, converging from all lanes at the same time. The system becomes inundated and traffic grinds to a halt. A DDoS attack can be targeted at a small business that relies heavily (perhaps solely) on web traffic to generate revenue. If customers cannot reach a website due to heavy traffic, they cannot engage in commerce and a business loses out on revenue.

SMB Security spending (US)

 According to AMI’s Global Forecast Model, total security spending by the SMB market in the US is heavily directed toward Continue reading “SMBs at risk of a Distributed Denial of Service attack?”

Cisco: Enhancing Growth Opportunities through Consulting Services

AMI analysts had the opportunity to attend an APAC-level analyst update on Cisco Consulting Services (CCS) recently. Martin McPhee, SVP Cisco Consulting Services and Caspar Herzberg, VP APJ & GC Cisco Consulting Services were some of the key Cisco personnel who played an active role in briefing Analysts at this telepresence session.

As technology trends move ahead from a device-centric to solution-centric architecture, there’s an increased focus on following a consulting approach with customers. This gains greater importance with Cisco’s emphasis on Internet of Things / Internet of Everything (IoT/ IoE) where a huge Value at Stake has been estimated over the next decade. Increasing digitization will drive disruption and Cisco needs to collaborate closely with customers to implement the same successfully. IoE connects people, process, data and things – thus creating new opportunities for forward-thinking firms. The latter are on their way to align their strategies and practices to leverage IoE effectively. Almost 99.4% of the physical world is unconnected today and the number of connected entities is multiplying rapidly; at a rate of around 200,000 connections per hour. This has opened up a virtual storehouse of opportunities for Cisco and CCS acts as a backbone of the same.

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Cisco Consulting Services focuses on business and technology innovation and developing strategic solutions with the objective of enabling customers identify the hidden value in business and escalate growth. It also emphasizes on achieving optimum cost efficiencies for firms with the ultimate aim of reaching the pinnacle in term of business and technology performance. A key cornerstone of CCS is the thought leadership that has the capability of future forecasting to anticipate vital technology transitions and disseminate the same to customers.

In a nutshell, CCS helps CXOs manage a digital business transformation and capture their Internet Value at Stake. CCS branches into various arenas – e.g. IoE, Process & Application Automation, BI & Analytics, Collaboration, Video & Mobility, Cloud / IT Transformation and Security.

Let us focus on an interesting aspect of Cisco customer collaboration – through Cisco Hyper Innovation Living Labs (CHILL). Here – Cisco brings together end-customers from specific verticals. The latter meet with Cisco Specialists to jointly discuss, innovate and develop prototypes / solutions that can develop millions of dollars of value to the vertical. Cisco is planning on making “CHILL” part of selected Cisco IoE Innovation Centers around the world. A recent collaboration with the objective of “re-inventing retail” resulted in the development of four solutions with a combined market potential of $4B in just 48 hours!

Consulting with customers to truly understand their business problems is indeed a painstaking and stepwise exercise. Few key steps include – developing a Business Case Model for Revenue and Cost, developing Real Time Insights and Analytics, Brainstorming/ Idea creation, Prototyping, Capability development, building Business Insight Modules and finally – displaying Measurable Outcomes.

In terms of Potential IoE Value, High-tech, telecom and financial services verticals are ranked higher – as per a past Cisco IoE Value Index Study. However – Retail, energy and manufacturing possess higher future growth potential. In fact, manufacturers have a great potential for improving profits by enhancing M2M (Machine-To-Machine) and in the future M2P (Machine-To-Person) connections.

Some areas that need attention. . .

It is our belief that Cisco has indeed taken a positive step in increasing its emphasis on the Consulting and Services front. This was a foregone conclusion given the fact that its traditional products business is displaying a somewhat sluggish growth. Nonetheless, we feel there are indeed some areas that need attention . . . . :

There is some ambiguity in terms of the costing for the solutions which are developed collaboratively by Cisco and its customers through innovations. However – Cisco has mentioned that in the longer term, further work is being done in developing a monetizing approach for these joint consulting methods.

Another area that requires fine-tuning is building a suitable Partner ecosystem for the CCS team who can work alongside Cisco personnel and arrive at innovative business solutions for customers. Currently, Cisco is focusing on working more with its Tier-I managed partners like Deloitte, Accenture, McKinsey, etc. for the same. In the longer run, it also needs to include its Tier-II partners for capturing a greater share of the customer pie and reaching the bottom of the pyramid.

Considering the present adoption levels of IoT/ IoE and similar technologies, we estimate that Large Enterprises will remain the focused business segment for CCS for some time to come. It is likely to take some time for Cisco to penetrate the SMB segment since the latter may not reach the level of their enterprise counterparts in the near future vis-a-vis technology acceptance & mindset. A somewhat similar sentiment also prevails about firms in emerging nations. They significantly lag their more advanced counterparts in terms of IT and corresponding IoT/ IoE adoption. Cisco should put in an extra effort to win over the same. However – Cisco feels that there is indeed a bright spot; firms in emerging countries are aggressive and tend to be fast-movers; also they carry no legacy burdens – a key driver for adoption of new technologies. Thus, the opportunity for CCS within this segment is considerable.

CCS – a bright Future looms ahead. . .

 There is no doubt that despite some of the above niggling doubts, CCS is likely to march ahead, riding on the bright growth prospects of IoT/ IoE. The latter is sometimes termed by experts as being the largest market transition since the birth of the Internet driving business transformations more than ever before. CCS fosters innovation, serves as the creator of new business models and acts as a facilitator of business growth in the era of digital disruption, enabling cost efficiencies and fuelling business performance. Hence – CCS is anticipated to grow much faster and is likely to contribute a much higher proportion of Cisco’s global revenues.

~Dev Chakravarty, Manager – Research

Run Simple . . . and Flexible

Notes from SAPPHIRE 2015

SAP’s product portfolio has expanded over the last two years to address the growth in big data, analytics, digital marketing and the consumerization of technology. The product lineup includes (to name a notable few):

  • IoT (three new business applications announced in 2014, SAP HANA Cloud Platform for the Internet of Things and collaboration with Siemens, Intel, Jasper, Accenture and T-Systems announced in 2015)
  • Analytics (various tools such as Lumira for data preparation to visualization and predictive analytics)
  • Consumer Insight 365 (mobile data crunching for consumer insights and digital marketing)
  • HANA Cloud Platform (announced 2014)
  • SAP Digital (various tools targeted at individuals/small groups within businesses; easy to buy; low price points—announced May 2015)

These developments are driving topline growth in the cloud as announced April 21st, 2015—new cloud revenues were up by 121% while overall cloud and software revenues were up 24% for the January to March quarter, Y/Y. Of course, profitability took a hit because of the rapid revenue shift to the cloud. Separately, the SAP Store is starting to gather more product on its shelves as well, and is presenting an easier way to purchase both on-prem and cloud applications.

The above clearly shows SAP making strides in line with market evolution and not lagging behind the competition by any means. Margins on cloud are expected to take a hit for any player transitioning from on-prem to cloud, and eventually stabilize at a certain level as the transition is complete. Continue reading “Run Simple . . . and Flexible”