The Internet of Things (IoT) presents a massive opportunity to the technology ecosystem that could

potentially transform the way we live and conduct business. With IoT being such a big influencer in
the digital transformation of the technology ecosystem as a whole, it pays to know who the biggest
players, the highest spenders, and the niche Service Providers are with whom Enterprises can partner
with to provide world-class solutions to customers.

A Bird’s eye view of the IoT Technology & Services Landscape

The IoT Technology & Services market presents a massive opportunity for Service Providers and
Enterprises alike. According to Zinnov Zones 2018 IoT Technology & Services report, the total
IoT Technology & Services spend will more than double in the next five years, from USD 201Bn
to USD 500Bn. This signifies a rapid growth of the IoT Technology & Services market at a CAGR of
20% by 2023.
So what’s driving this massive IoT spend?

It is a convergence of factors outlined below:

1. The convergence of disruptive technologies and rapidly evolving business models is

accelerating spend. The enterprise community is keen on exploring new uses cases to unlock
value from IoT and enable new business models that generate alternative revenue streams.
2. The increasing adoption of foundational infrastructure (edge, fog computing, LPWA, etc.) has
reduced costs associated with compute, network, and storage.
3. Maturing AI and ML technologies have enabled the management of exponential growth in data
generated by devices/sensors to provide real-time insights for IoT-enabled decision-making.

Of course, this roadmap is not without its challenges. It is no surprise that security and privacy remain
among top concerns of Enterprises and Service Providers alike, given that we live in the post-Snowden
and post-Wikileaks era. Further, lack of interoperability locks potential value from IoT systems.

Enterprises are mature when it comes to adoption of IoT for operations excellence. Further, customer
experience has successfully leveraged IoT to enable new products/services. Owing to unclear visibility
on RoI, coupled with the level of complexities involved in transforming existing business models, IoT
adoption to enable new revenue streams is not as mature yet. In fact, ~60% of IoT initiatives get
stalled after the PoC stage. Enterprises need to take an agile and iterative approach while
focusing on demonstrating value at each stage to internal and external stakeholders in order
to cross this IoT chasm.
In order to enable successful IoT adoption, Enterprises are undergoing internal transformation:

1. Organization Structures: Enterprises are creating unified data organizations to centralize

talent and enable innovation. IoT is driving Enterprises to enhance coordination across
different silos such as product design, cloud operations, service improvement, and CX.
2. People Skills: Enterprise hiring is focused around platform engineering, UI, UX, and data
science capabilities. In addition to hiring for specific skillsets, Enterprises are creating
leadership roles to design and oversee the IoT adoption roadmap.
3. Open Innovation Fabric: Enterprises are adopting an open innovation fabric permeating
beyond the walls of the organization to include Service Providers, peers, start-ups, and
universities to drive innovation.
4. Adoption of Transformative Business Models: Enterprises are adopting different business
models viz. As-a-Service, Data Monetization, and Platformization, based on multiple
parameters such as vertical play, customer engagement, and maturity.

Opportunities for IoT Service Providers

Service Providers are playing a key role in the IoT ecosystem and hand-holding Enterprises for
multiple IoT-based transformative initiatives. The Zinnov Zones IoT study analyzed the existing
business of IoT Service Providers, where the addressed market share currently stands at USD
4.9Bn. This shows a marked growth of 28% in the last one year. Further, the IoT services
marketplace is highly consolidated with the Top 25 Service Providers accounting for more than three-
fourths of the market.

Service Providers with end-to-end capabilities help enterprises manage the challenge of multiple
vendors, which is one of the biggest pain points for Enterprises. Service Providers with end-to-end
capabilities across the IoT stack with the ability to stitch together IoT solutions and services from a
multi-vendor environment have emerged on top.
The fact that the market addressed by Service Providers is growing at a faster rate than IoT spend
indicates that Enterprises need significant “hand-holding” for their IoT initiatives. Of the outsourced
IoT services market, engineering services account for the lion’s share. However, managed services &
support will witness strong growth as Enterprises look to SPs for IoT infrastructure enablement and
data science capabilities.

Traits of Service Providers Essential to Win in the IoT Space

Service Providers are taking a multi-pronged approach to drive enterprise transformation through IoT
and garner greater wallet share:

1. Focusing on organizational strategy: Setting up dedicated BUs with shadow P&Ls to enable
centralization and innovation
2. Hiring laterally: Leveraging external hires from non-traditional sources in addition to re-
skilling existing workforce
3. Leveraging new-age engagement models: Adopting outcome-based and risk/reward-based
engagement models to enable enterprises to hedge risks associated with IoT investments
4. Investing in specialized infrastructure: Investing in infrastructure to showcase PoCs (show
& tell approach) and also allowing for co-innovation with the enterprise community
5. Acquiring capabilities inorganically: Leveraging the inorganic route to build specific
capabilities around niche areas such as UX and data science
 6. Partnering with the ecosystem: Partnering with multiple players across the ecosystem (tech
companies, hardware companies, start-ups, etc.) to build end-to-end stack capabilities.

The Road Ahead

As Enterprises continue to explore newer use cases through IoT, adoption will continue to be on the
rise. The Service Provider community is building capabilities to help Enterprises cross the chasm. In
our next part of this series, we will highlight the adoption trends for specific use cases in Enterprises.
Stay tuned.