HOW TO FIND THE RIGHT IoT PARTNER IT TAKES TWO TO TANGO

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1 HOW TO FIND THE RIGHT IoT PARTNER IT TAKES TWO TO TANGO SPONSORED BY AERIS

2 INTRODUCTION The Internet of Things is reliant on a complex mesh of companies to enable IoT services. This brings in the capabilities of connectivity providers, application developers, IoT platform providers and hardware and software vendors, to name a few. However, the IoT landscape is becoming so vast that it is now impractical to create partnerships for single deployments. What s needed is a rapid way to bring pre-integrated systems, technologies, software and services together to serve enterprises as they engage with IoT. The author, Suzanne Lancaster, is European marketing director at Aeris Forming partner programmes is an obvious move. Companies that get involved in these can form a deep understanding of each other s capabilities and strengths and share marketing and sales expenses to work more efficiently to the benefit of customers. Partners can work to align products, develop roadmaps and formulate go to market plans. However, with research firm Vision Mobile reporting that there are currently five million individuals active as IoT developers, the question of who to partner with is becoming more and more of a challenge. IoT partnership extends from tightly knit highly sector-specific arrangements that involve a handful of specialised companies that have come together to address the detailed needs of a particular vertical to giant alliance programmes that add up to little more than a web page with hundreds of member logos and occasional holding hands at trade shows. The big alliances are looking to create an IoT ecosystem and do some valuable work in promoting IoT to a wider market. The tighter, more targeted partnerships are more sales focused and use greater sector understanding to bring products to market that address clearly identified needs within a subset of IoT. 2 WHITE PAPER A middle ground is also emerging of partners that have come together to create an IoT platform. This term can mean many things to many people but at its heart an IoT platform comprises connectivity, hardware and software to enable an IoT service. It makes sense for partners that don t have all these assets to come together to create this platform and go to market with a consolidated offering. It is to be expected that

3 more of these partnerships will be established, although participants will be determined more by their access to market than the superiority of their offerings. There are no rules limiting who can partner with whom in the IoT arena. Almost daily we see fresh announcements of collaborators joining hands. Recent examples include HP Enterprise and General Electric, lift manufacturer Otis and AT&T, and SAP and Bosch. It s clear that the range of organisations willing to partner to accelerate their business in IoT is enormous but it is emerging that enterprises have preferences regarding which types of organisation they prefer to buy from. A recent survey published by the Telecommunications Industry Association (TIA), entitled the TIA Enterprise IoT Survey, 2016 found that enterprises in the US place highest value on implementation partners that can provide comprehensive, end-toend services and support. Partners that offer hands-on, comprehensive services such as system integrators and end-to-end service providers represent the top segment of IoT partner choices for 59% of respondents. That is symptomatic of the newness of the market with enterprises looking to mainstream IT brands to handle the IoT challenge for them. However, as the market matures, partner ecosystems expand and, in some instances, specialists have developed strong services integration teams, software platform companies are starting to become more recognised as suitable providers by enterprises. In fact the TIA survey uncovered that these types of organisation were selected by 16% of companies as a trusted IoT implementation partner. While companies report strong interest in taking the lead on IoT projects, the reality is that most enterprises will seek third-party partners to assist in the development and implementation of IoT solutions. Considering the high percentage of enterprise engagements with systems integrators (SIs), it is consistent that 28% of enterprises rank SIs as their top trusted choice of IoT partner. Despite this preference for SIs, enterprises are increasingly turning to comprehensive, end-to-end implementation players of the IoT vendor ecosystem as trusted IoT partners. As shown in Figure 1, the choices for trusted IoT partners focus on partners that have a broad set of expertise and tools to guide clients through the complexities of IoT project implementation and integration with legacy systems. Figure 1: Enterprises choose comprehensive solution partners for IoT What kind of organisation would you trust and approach to help with IoT implementation Systems integrator (e.g. Accenture, HPE, IBM, Wipro, Tech Mahindra, etc.) 28% IoT/M2M end-to-end provider using standardised cellular technologies (e.g. Sierra Wireless, Telit) Business software platform company (Salesforce.com, Oracle, SAP) IoT/M2M end-to-end solution providers that use low-cost proprietary networks and technology (e.g. Sigfox, Ingenu, LinkLabs, Freewave, Sonet) 16% 16% 15% IoT/M2M service provider (e.g. Aeris, Numerex, Kore, etc.) Mobile operator (e.g. AT&T, Verizon, Sprint, etc.) 8% 9% Engineering design firm IoT platform company (e.g. ThingWorx, Autodesk, Xlvelly, Jasper Wireless, etc.) 3% 3% Source: TIA Survey, 2016 We re building it in-house Not sure 2% 3% 0% 10% 20% 30% 3 WHITE PAPER

4 INGREDIENTS FOR SUCCESSFUL IoT PARTNERSHIPS At its heart, an IoT partnership should bring to each partner in the ecosystem some inherent value or capabilities that aren t in the other partners value proposition. It makes no sense for AT&T to partner with Verizon, nor would it make sense for JCB to partner with Doosan, for example because capabilities are replicated, not enhanced. A key question to ask is what additional value does a partner bring? At Aeris, for example, we re not a hardware manufacturer or OEM so when we look at identifying partners to join our ecosystem we assess what differentiates them and what value we can add to their offerings. An ideal partnership is one that has value for all the participants. It has to be bilateral. However, this is hard to establish and measure in some of the giant partnerships in the market. Everyone wants to be a part of enormous partnership programmes but those often don t help smaller companies because membership of such programmes doesn t differentiate them in the market place and its hard for a smaller company to demonstrate how it helps a larger player enhance its offering. If a large portion of the market is in a partnership programme, for customers it becomes hard to attach value to that membership because it becomes an expectation that a vendor should be a member. In essence it becomes table stakes for starting a conversation, not a reason to start the conversation because of the clear differentiated capabilities of the provider. WHAT MAKES A BAD PARTNER As IoT matures, partnership approaches continue to develop and bad partnerships still occur in which neither side derives sufficient value to merit the effort it puts in. There are two areas that pose tremendous risks for organisations: 1. Not targeting partnership activity carefully. Most companies don t have the resources to be a partner in any or all programmes they re asked to join so organisations need to be selective regarding what they agree to participate in. Successful partnership requires a partner to be able to focus resources on what the partnership should look like and what will drive the return on investment and greater opportunities. Managing many partnerships fragments that focus and entails lots of background work to set things up, often without reward. 2. Expecting short-term gains. It s understandable that a small vendor might view joining a partnership with a large enterprise as a means to access a whole new world of sales opportunities but this is unlikely to be the case. In order to gain attention within the partnership the vendor will have to invest in co-marketing, demonstrate commitment to the partnership and, for a small company, in a partner ecosystem of hundreds of companies, it will be costly and time consuming to get noticed at all. Long-term strategic work with a partner is a foundation for success so a strategic, rather than tactical, approach can be developed between the organisations. That means commitment to aligning marketing, services and offerings. In IoT there are very few opportunities for ventures focused on short-term gains. 4 WHITE PAPER

5 WHAT S MISSING FROM CURRENT PARTNERSHIPS One of the key elements missing from partnership programmes is the defining of core partners. A lot of partnerships have different tiers such as platinum, gold and silver but don t have a clear focus. For instance, a partner programme with clearly defined core partners would be a healthcare industry partnership composed of founding partners: Network operator A, IoT Platform Provider B and Systems Integrator C plus market leading pharmaceutical company D. That would give the partnership a clear focus and make it apparent to other organisations what the main aims of the partnership are. However, instead many partnerships are composed of logo exchanges involving hundreds of partners with a large company leading the effort. There s a lack of real focus and, in the very large partner organisations, the sales people don t have enough at the lead partner don t have the time to keep up with who s joined. This creates situation in which the company pursues a lead for an IoT transport related project without knowing that it has specialist providers of IoT transport technology within its portfolio. The whole point of having partnership is therefore diluted and the participants efforts turn out to be worthless. HOW STANDARDS HELP PARTNERING EFFORTS Standards across the board are a critical part of the IoT ecosystem and a vital enabler for the market to move forwards. The siloed approach becomes limiting in how vendors engage with enterprises and for going after the strategic, long-term initiatives. However, standards are still some time away from formulation and ratification and there is nothing to base a foundation on at the moment. For this reason small partnerships that are highly focused on pre-integrating products and services and that have a clearly defined go-to-market approach are essential. This isn t about small companies partnering with other small companies; it s about large companies partnering with small companies as well. The only important criterion is that a partnership delivers value to its customers and to all its participants. Standardisation at the moment is being led by two or three large partners coming together to go after markets and, in effect, setting internal standards within the partnership. These efforts in turn will drive mid-sized and small partners to strategically develop their offerings to integrate with these de facto standards. We see this pre- formal standardisation effort as a key driver for the IoT and also for partnership programmes among IoT-related suppliers. PARTNERING CHALLENGES The main challenges facing companies are the resources they have available to participate in and manage their partnering activities. This is a less acute issue for larger companies because of their greater resources but even they have to prove that partnering investment are generating some form of business value and return on investment. 5 WHITE PAPER

6 In essence, any partnership requires substantial resource commitment in the form of creating shared marketing collateral and messaging to set the partnership apart from other marketing approaches. Activities such as running joint webinars to show how the partnership works or attending events all cost marketing dollars and it is fundamental that such spend is directed where return in maximised. Another key challenge is to ensure that all partners understand the long-term focus. Partnering is not about enabling quick wins, although they re always welcome. The concept should be to create a partnership that can stimulate short-term success while keeping the long-term goals of all the partners in parallel. Some participants will experience early wins while others will have to wait for longer term strategic plans to bear fruit. Successful management involves ensuring that all players remain in step and understand that their activities may bear fruit at different points in the maturity path. Finally, the pace at which IoT is developing and the generalised immaturity of the market means that change is a constant. This means that a partner programme cannot be too tightly formulated and partners must accept that programmes will need continual customisation to respond to and shape market changes. THE AERIS APPROACH Aeris itself, in common with many specialised IoT companies, doesn t have an official partner programme but it is in the process of building the right ecosystem of partners to address the needs of customers more effectively. Partnering has not been a core focus for Aeris until recently but we do recognise the value partnerships offer. In addition, we understand the power of utilising the reach of other companies in our market place. We are now focusing intently on enabling our partners to enhance their solutions, utilising Aeris platforms as part of their foundational solution offerings to the market. We see partners working with us in three ways: A. Sell to: Partners can sell their product to us for packaging with other offerings to sell to our customers or vice versa where we sell our platforms to customers for them to package and sell to their customers. B. Sell through: Partners can sell their products through us, utilising us as a channel to our customers or vice versa. C. Sell with: Together we can sell our products as part of a joint go to market strategy that combines the strengths and value of all partners capabilities. We believe that our open, flexible approach will enable us and our partners to gain greater success as the IoT continues its development. FIVE TIPS FOR SUCCESSFUL IoT PARTNERING Keep an open mind regarding the direction of the partnership your partners may have identified opportunities you re unaware of. Stay focused ensure you keep a firm grip on what the partnership programme is doing for your business, it s no good having a great programme that doesn t deliver you business benefits. Be patient acknowledge that some partnership programmes will not result in immediate wins but instead have long-term strategic goals that will benefit you. Be selective just because a company wants you to join its partner programme doesn t mean it s the right fit for your organisation. 6 WHITE PAPER Ensure fairness a one-sided partnership that doesn t benefit all the players involved will end in failure so work to make sure all the partners are happy with the value they are receiving.

7 CONCLUSION The rapid pace of IoT development means that the current market is highly fragmented and no single vendor has all the answers to meet the market s needs. This, coupled with the lack of standardisation, has led to partnerships springing up to bring packages of functionality to market to make it simpler for enterprises to buy IoT solutions. That s important to enable organisations to get off the launchpad in what for many is still a very new area. However, there is a danger that excessive partnering or partnering for the sake of partnering ties up resources for little reward. Organisations should therefore be open to partnership as a means to grow the market and their business but cautious to ensure that the partnerships they engage in are a good technical, organisational and market fit for their business and that real business value exists. That value may not be immediately available for extraction but a successful partnership should have long-term strategic goals that are beneficial to all participants. 6 WHITE PAPER