Four Services That Enable IoT for Organizations
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1 MARKET NOTE Four Services That Enable IoT for Organizations Gard Little Peter Marston Elaina Stergiades David Tapper Ali Zaidi EXECUTIVE SNAPSHOT FIGURE 1 Executive Snapshot: IT Services for the IoT Source: IDC, 2017 June 2017, IDC #US
2 IN THIS MARKET NOTE This IDC Market Note describes how various IT services, across the services life cycle, help build, implement, or run components of Internet of Things (IoT) solutions. IDC'S POINT OF VIEW IDC defines the Internet of Things as " a network of public or private networks of uniquely identifiable endpoints (or things) that communicate without human interaction (by either wired or wireless access) using IP connectivity whether it is locally or globally" (see IDC's Worldwide Services Taxonomy, 2017, IDC #US , March 2017). Enabling endpoints in the IoT infrastructure to communicate securely without human interaction requires a combination of IT and business services to plan, design, build, implement, operate, and support these endpoints as well as their integration into the rest of the infrastructure (network and datacenter). These services are depicted as the four phases of the outer ring as shown in Figure 2. Some examples of how specific IT services help enable the IoT are discussed in the sections that follow. FIGURE 2 The Life Cycle of Services That Enable Digital Transformation Source: IDC, 2017 IT Consulting and Systems Integration Services IT consulting and systems integration (ITC&SI) services are the tip of the spear in helping customers understand the IoT solutions available in the market and how they map to customers' needs (e.g., IDC's 2016 survey of 25 customers implementing IoT solutions indicates that their top business driver was strengthening/expanding customer experiences and relationships). Starting with the top-line strategy that includes needs assessment, consulting services help customers understand the benefits 2017 IDC #US
3 of IoT solutions and create their IoT adoption journey. Once the overall strategy is laid out, the discovery phase of consulting services plays an integral part in justifying an IoT undertaking by means of business case development and ROI analysis of specific solutions. This is one of the most critical parts of the adoption of an IoT solution, as it helps justify the spend on IoT initiatives to secure stakeholders' buy-in. Once the business case has been laid out, the planning phase helps create the IoT solution road map along with the selection of the underlying enabling technologies. Finally, once the strategy and planning foundations have been set up, the IoT solution moves into the design and build phases where ITC&SI services include the design/blueprinting of the solution and the implementation. Another key element of a successful IoT solution is the change it drives in existing business models. Customers can optimize and enhance existing business models to drive growth and operational efficiencies by utilizing the benefits of an IoT solution, and it is consulting services that help drive the required changes in business models. Custom Application Development Services Growing momentum for the IoT has caused organizations to revisit their application portfolios. IDC's application services research has found that more than 40% of organizations rate modifying the application portfolio to support IoT as a high or very high strategic priority today, with more than 60% of organizations rating it a high or very high priority in the next five years. Organizations are keen to explore how they can leverage their applications further by generating higher levels of productivity, obtaining better business intelligence, and executing operational efficiency from IoT. But while many organizations are aligned in wanting to augment the application portfolio to generate benefits and outcomes from IoT, the overall approaches organizations are expected to take are highly splintered. One approach is that organizations can leverage and augment their existing applications by building new custom functionality equipped with business rule logic within their applications to capture and process data generated from IoT-connected peripherals (i.e., machinery and equipment) and devices (i.e., smartphones, tablets, and handheld electronics) and use that data to help steer outcomes that stimulate business benefits. A separate option is that organizations can implement packaged solutions and customize them to capture data and process information generated from connected peripherals and devices. Regardless of the approach, however, organizations will be challenged with efficiently implementing IoT as part of the application portfolio and thus are leveraging service providers to ease workloads, outsource ownership, and mitigate risk to help accomplish application portfolio goals. Managed Services U.S. enterprises indicate that the top benefits of IoT are to lower costs; improve the quality of products, processes, assets, and/or facilities; and incorporate green and renewable energy capabilities. The top requirements to ensure success of IoT initiatives involve the need for investments in IT/network infrastructure (e.g., datacenter and network), meeting thresholds of ROI to justify investments, and enabling the creation of an internal champion for IoT (e.g., chief IoT officer). Success for providers of managed IoT services requires meeting these benefits and supporting these requirements. Areas of potential use of managed IoT services for enterprises span a broad set of environments. In the commercial space, firms indicate interest in these services for general facilities (e.g., warehouses and office buildings), general fixed assets (e.g., furniture and cabinetry), specialized facilities (e.g., distillation plant, biopharma facility, stadiums, and airports), and general mobile assets (e.g., autos and cars), whereas in the consumer space, enterprises indicate interest in these services for security (e.g., burglar/fire alarm systems), energy management automation (e.g., smart utility meters for electricity/power consumption), and transportation (e.g., cars, LRVs, boats, and private planes). While a majority of firms need support for 10,000 or fewer IoT-enabled assets, 22% of large enterprises (those with 10,000+ employees) need support for more than 100,000 IoT-enabled assets. Finally, 2017 IDC #US
4 enterprises expect providers of managed IoT services to show strength in areas involving industry expertise, the ability to drive down costs, providing a strong ROI, and having a reputation as a provider of IoT-enabled managed services. Software and Hardware Deploy and Support Services If ITC&SI services are the "tip of the spear" for understanding and implementing IoT solutions, software and hardware support services are where the "rubber meets the road" after deployment. Realizing the promised benefits of IoT can only occur after the solution is in place and performing as expected. The correct level of hardware and software support can be critical to the success of any IoT implementation and maximizing performance and reliability in ongoing operations. Fortunately, IoT solutions already feature advanced technologies that are easily incorporated into cutting-edge support capabilities. These key support elements include remote monitoring to ensure system performance, automated diagnosis and resolution when potential issues are detected, and remote access to IoT technologies to speed problem identification and resolution. Since many IoT deployments include machine learning and AI by default, support packages that include these features can be very helpful when automating problem resolution within the IoT solution. For many enterprises and IT organizations, security remains a primary concern when implementing an IoT solution that includes multiple devices, locations, and platforms. A robust hardware and software support services portfolio that can ensure all covered devices and related software are up to date and protected is becoming table stakes for IoT in many IT organizations. As IoT solutions grow in number and complexity across the enterprise, an automated and remote update schedule managed by the support provider can be the safest way to ensure that the systems are always in compliance. LEARN MORE Related Research Buyer Case Study: Suez Uses IoT to Increase Operational Efficiency with Help from EY (IDC #US , February 2017) IDC MarketScape: Worldwide Internet of Things Consulting and Systems Integration Services 2016 Vendor Assessment (IDC #US , November 2016) U.S. Buyer Outsourced-Managed Services Needs and Requirements for IoT-Enabled Assets (IDC #US , July 2016) Synopsis This IDC Market Note describes how various IT services, across the services life cycle, help build, implement, or run components of Internet of Things (IoT) solutions. While one result of a working IoT system is that endpoints, or "things," can communicate without human interaction, the IoT requires quite a bit of human effort in the form of services to enable this type of communication. Examples of various IT services are described to illustrate this point IDC #US
5 About IDC International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make factbased decisions on technology purchases and business strategy. More than 1,100 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. Global Headquarters 5 Speen Street Framingham, MA USA idc-community.com Copyright Notice This IDC research document was published as part of an IDC continuous intelligence service, providing written research, analyst interactions, telebriefings, and conferences. Visit to learn more about IDC subscription and consulting services. To view a list of IDC offices worldwide, visit Please contact the IDC Hotline at , ext (or ) or sales@idc.com for information on applying the price of this document toward the purchase of an IDC service or for information on additional copies or web rights. Copyright 2017 IDC. Reproduction is forbidden unless authorized. All rights reserved.
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