Executive Summary: ISG Provider Lens™ Internet of Things (IoT) - Services and Solutions - U.S. 2022
14 Jul 2022
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ISG Provider Lens™ Internet of Things - Services and Solutions - Managed Services - U.S. 2022
ISG Provider Lens™ Internet of Things - Services and Solutions - Strategy Consulting - U.S. 2022
Clients demand quick ROI and long-term transformation
Internet of Things (IoT) agendas are becoming increasingly ambitious. Clients demand strategic roadmaps with a compelling vision and scalable implementations that yield measurable ROI. The ability to optimize operations, address security threats and leverage data analytics are top priorities. Emerging technologies such as intelligent automation, 5G, AI and machine learning identify new opportunities to create value.
Partnerships and Acquisitions
A robust partner ecosystem is key to success in this dynamic environment. At a foundational level, alliances with platform providers integrate connected devices with cloud resources, global teams and external networks and systems. Key players include: hyperscalers such as AWS, Google and Microsoft; product lifecycle management (PLM) providers such as Aras, Dassault, PTC and Siemens; and smart IoT platform providers such as IBM Watson and ThingWorx. Interoperability and plug-and-play functionalities are imperative, as clients seek flexibility to address new, unanticipated requirements and avoid vendor lock-in.
Partnerships also enable industry focus and end-to-end security. While many providers invest in building in-house vertical expertise, alliances with niche providers can fill gaps and address specific last-mile criteria around regulatory standards and user and customer requirements. In terms of security, providers must combine traditional models with expertise in zero trust architectures, software-defined perimeters and secure e-SIMs. Industry- and region specific regulatory requirements around practices and certifications pose an additional challenge. A complement of organic and third-party resources is often essential to a comprehensive approach.
Sustainability
IoT technology creates unique opportunities to address sustainability. Data from smart energy and water meters can, for example, reduce energy and water usage. IoT-enhanced logistics can optimize trucking routes to reduce fuel consumption. Enterprises, moreover, are discovering that a focus on waste reduction and environmental sustainability yields positive business results. However, sustainability maturity levels vary among IoT service providers. Some have committed to net zero goals or ambitious improvement targets for their own operations and have proactively integrated sustainability objectives into their customer strategies. In other cases, provider initiatives are limited to responding to client requests.
Talent
Attrition poses a major challenge for providers aiming to support IoT growth. Clients and providers are working to derisk their footprints in India by opening delivery centers in Eastern Europe, Latin America and Asia Pacific. Domestic talent strategies include expanded internship programs to engage with prospective employees while they are still in school. Such initiatives build relationships and reduce ramp-up times and learning curves. Some India-based providers are looking beyond tier 1 engineering universities and targeting quality programs in less heavily recruited areas. Retention efforts increasingly include career journey plans that chart goals and measure progress, along with cross-training sabbatical initiatives to expose employees to new skills and different parts of the business.
The Competitive Landscape
Major players continue to dominate the IoT landscape and Leader quadrants of this year’s IoT study. However, recent shifts in market dynamics could be disruptive. One development is the formation of Kyndryl – the spin-off of IBM’s managed infrastructure services company – in late 2021. In addition to a comprehensive managed services portfolio, Kyndryl offers advisory and implementation services on digital technology and integration. While creating new options and opportunities, the move is stirring confusion among customers.
Another notable development is the recent merger between Larsen & Toubro Infotech (LTI) and Mindtree. Employing more than 80,000 people, LTI Mindtree will become India’s fifth-largest IT services provider and create a significantly expanded U.S. presence. Advantages include minimal overlap in areas of expertise and opportunities to compete for large deals, particularly in the financial services and communications sectors. Meanwhile, risks include the potential of increased employee attrition at a time of peak demand for skills.
Cyient’s recent acquisition of Finnishbased Citec, a product engineering services company focused on the energy, process, oil and gas and manufacturing industries, also is an important development. Although primarily targeted to expand Cyient’s European and Nordic footprints, the integration of new capabilities across geographies could create opportunities for the U.S. market.
Methodology: This year’s study assesses Strategy Consulting and Implementation and Integration as separate quadrants. The intent is to focus specifically on providers’ ability to define IoT roadmaps and vision on the one hand, and to drive successful executions on the other. By contrast, the 2021 study examined IoT strategy capabilities in conjunction with implementation services. In addition, last year’s Connected Mobility quadrant focused primarily on connected vehicles. Meanwhile, this year’s Mobile Asset Tracking and Management quadrant considers the use of connected sensors to monitor products, equipment and people in transit and in remote environments. Finally, this year’s study assesses Data Management and AI on the Edge as a U.S. quadrant, while the 2021 study was global in scope.
Strategy Consulting
Effective IoT strategies combine a highlevel vision of future possibilities with concrete short-term results. Involving clients in strategy formulation is key. Many providers deploy co-innovation and ideation labs and workshops that bring clients, providers and partners together in a collaborative environment. The application of design thinking principles is common to support a clean slate approach that identifies new business models and approaches. End-to-end capabilities that integrate strategy with deployment ensure a seamless transition from abstract ideation to specific timelines and concrete results. Security and sustainability criteria are a core consideration throughout.
Implementation and Integration
IoT implementations are shifting from discrete proofs of concept (PoCs) to scalable initiatives that create new opportunities to improve business operations and strategic value. Horizontal technology expertise, along with industry specific insight into customer and regulatory requirements, is essential. Compatibility and interoperability ensure that IoT ecosystems continue to expand. Innovations such as AI, advanced analytics and image recognition enhance functionality. Digital twin virtual representation models accelerate time to market. Security capabilities address network, device and endpoint requirements, and meet regulatory standards.
Managed Services
Managed IoT service models focus on optimizing performance and driving continuous improvement. Intelligent tools and analytics identify root causes of problems, define new sources of and reveal continually evolving security threats. Remote monitoring and OTA capabilities optimize efficiency and scale resources across multiple geographies – a critical capability in a tight labor market. Managed services play a key role in sustainability by leveraging analytics from day-to-day operations to minimize carbon impact, reduce energy consumption and increase user device efficiency. Effective talent strategies ensure that resources keep pace with growing demand.
Mobile Asset Tracking and Management
The ability to accurately locate, identify and monitor a wide range of assets is creating opportunities to solve a wide range of critical business problems. Solutions leverage smart sensors and analytical platforms to improve operations, enhance personal and product safety, align with regulatory standards and provide insights into customer activity and preferences. Use cases include helping fleet managers track the location of trucks and goods in transit; support for emergency room nurses that need to quickly identify and locate equipment to care for patients; and visibility for pharmacies that must ensure cold chain viability of medicines as they move from the factory to the store.
Data Management and AI on the Edge
Edge computing applications are being driven by innovations in two areas: the ability to capture, store and process massive volumes of visual data directly at the source of critical activity; and the application of AI and machine learning techniques to analyze that data and draw actionable conclusions. As an example, consider an autonomous vehicle approaching a crosswalk where a pedestrian waits at the curb. The vehicle’s video analytics system must assess the situation in real time, determine who has the right of way and proceed accordingly. Industrial applications include smart manufacturing, where edge solutions monitor equipment for quality control and predictive maintenance.
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