As the volume of connected IoT devices increases, CSPs and enterprises both have a common goal: generate value from a vast amount of new IoT-enabled use cases. Combined with 5G’s enhanced speeds and low latency communications these two technologies will take center stage in the actualization of critical new applications in verticals such as manufacturing, robotics, utilities and automotive. As infrastructure becomes increasingly distributed, pushed out to the edge of the network, IoT has the potential to propel businesses into fully autonomous futures that at one time were merely imagined.
However, despite all of this promise, if there isn’t a certain mindset, accompanied by actual tools to execute these lofty IoT visions, CSPs’ IoT strategies will not take flight. And, in today’s landscape, it’s evident that CSPs’ IoT
leaders lack the knowledge, resources, and path to see their desired IoT opportunities come to fruition. This challenge is comprised of three parts: it’s an IoT Trilemma.
The first challenge: Going Beyond Connectivity
To navigate this first challenge, it’s imperative that CSPs see the need to be recognized for more purposes than just connectivity, especially if CSPs want to get a slice of new revenue streams that will be generated from IoT and 5G. According to the GSMA, the global IoT market represents a $1.1 trillion revenue opportunity, while connectivity pales in comparison at a mere 4% of that. Most of that value can be attributed to applications, solutions and data. It’s critical, therefore, that CSPs shake the notion that they are simply the dumb pipes, providing necessary network capacity and bandwidth.
CSPs inherently know that they need to grow beyond connectivity, but understanding that is not going to beget success without action. They need actionable knowledge and expertise in the technologies, potential use case scenarios along with an understanding of key buyer personas and its industry.
Enterprises themselves are still trying to find the right approach. CSPs can surmount the challenge and grow beyond connectivity by partnering with these enterprises on their IoT and 5G enabled projects while simultaneously facilitating continuous service experimentation within a broader ecosystem. Equally, CSPs can act as the lead partner to trial, test and rollout solutions that meet the unique needs of their enterprise customers. A mutual understanding and shared language between the enterprise and CSPs is key.
What CSPs need to grow with the right customers
Challenge number two is that CSPs are faced with a lack of organizational buy in. Their IoT leaders are experiencing inertia and are caught in an unchanging cycle of under investment based on current performance. IoT revenues are low; in fact, just 0.5% of CSP revenue is attributed to IoT, according to Analysys Mason. As a result, CSPs’ IoT leaders struggle to demonstrate ROI, thus hampering investment in R&D for the development of new IoT solutions.
Lacking key customer relationships
The third challenge carries the momentum of the previous two and reveals that CSPs lack the necessary customer relationships. The issue here is that traditionally CSPs’ customer relationships with large enterprises and SMEs sit with the individuals leading connectivity, demonstrating the struggle to be recognized for more than just connectivity continues.
Understanding buyer personas has to stem from the C-suite. IoT has become strategic and needs buy-in from the top down. Along with its capabilities to maximize operational capacity, increase revenues, reduce costs, and improve the customer experience, IoT solutions provide rich data on end users for more informed strategic decision making. Unfortunately, many CSPs don’t have the relationships with the C-level IT decision makers, nor the vertical industry understanding to discuss and demonstrate the value of IoT in informing business strategy. CSPs need the right avenues to reach and engage the right stakeholders which requires engaging with partner ecosystems not as a nice-to-have but a need-to-have.
The power of the partner ecosystem
Partner ecosystems have received some attention recently due to early 5G partnerships but they’re not getting enough attention from CSPs, and due to the trilemma, many are still focused on selling connectivity. Building a solution within an ecosystem means the CSP doesn’t need to be the expert in a particular industry or vertical. Rather, the CSP must model itself as the ecosystem enabler, a master of orchestration that combines all the pieces to derive the most value from the IoT solution for each partner involved.
CSPs can use different ecosystem plays to maximize their value in IoT. Collaboration and co-creation of joint IoT solutions within the ecosystem can help CSPs close innovation, technology and vertical knowledge gaps, lower upfront costs, accelerate time to market and expand customer reach. Each challenge of the trilemma can be mitigated through clever partnerships with partners that have complete solutions and skin in the game.
Ultimately, enterprise and SMB customers want to buy complete solutions to their problems from a single source. They are looking for solutions that are easy to try, buy and consume. In order to succeed, CSPs and Service Providers must build marketplaces within these partner ecosystems that connect telco assets, customer needs and partner capabilities.
The next 12-18 months will be a defining period for CSPs. Enterprise customers are tuned in to the benefits that IoT can provide, coupled with the enhanced network capabilities of 5G. The IoT trilemma is presenting a fork in the road to CSPs: whether they continue to go it alone or engage with the ecosystem. With IoT’s maturity will come an explosion of use cases and CSPs will need to rely on ecosystems for collaboration and shared expertise. Co-creation of joint IoT solutions through ecosystems of partners will be fundamental in CSPs cementing their position in the IoT value proposition and driving scalable revenue streams in the process.
Angus Ward is the CEO of Beyond by Bearing Point, a growing SaaS-based BSS and digital platform solution provider, owned by BearingPoint. He brings 30 years of consulting and solutions experience to his role, with extensive experience and knowledge over a range of fields. Ward is also a Chartered Accountant and has published research within the BearingPoint Institute.
