August 10, 2015

Another Five Things I Hate About IoT�and Five Things We Need for IoT to be Successful

Last quarter, I did a rant about the growing bubble in IoT. And since then, we’ve seen hardware vendors acquiring their service provider customers, acquisitions of non-revenue generating companies, and venture capital seemingly being dumped into overhyped concepts with business models that don’t make sense.

So I sat down and decided to jot down a few things that are driving me crazy about the space. Coming in at No. 5 on my list, startups with little or no revenue fetching astronomical valuations. Why? Why in the world do we continue to throw good money after bad? Why hasn’t anyone figured out that bootstrappers create products while VC chasers create hype and bubbles? Sure, it takes money to create products. But it does not take several hundred million to become self-sufficient.

Next, at No. 4, large enterprise software companies purchasing smaller bit players to create a platform for IoT. At last count, our team had identified more than 200 IoT platforms. And when we look at large enterprise software companies, most (if not all) already have app platforms. But is anyone going to create the ultimate platform, or do applications, platforms, and information service organizations need to be tied together through the concept of a data services exchange? Could a clearinghouse be the answer?

I hate it when service providers try to become system integrators and even more when SIs try to make hardware. But one of my least favorite things comes in at No. 3 on my list, and that is when hardware companies purchase software and services organizations to create full stack solutions. Doesn’t anyone remember that Ma Bell split?

In that light, let’s look at No. 2 on my all-time worst ideas list: MVNOs making claims of being global end-to-end solution providers. First of all, you’re not end-to-end silly, you don’t own the network. Second, you’re not global because you don’t own the network.

But coming in at No. 1 on my list is – drum roll please – POPO! Please excuse the language if you speak Spanish, but in this case POPO stands for partnerships on paper only. The market is absolutely rank with announced partnerships, yet most of them smell like, well, popo!

A few years ago, a tier-1 network operator in Europe had a list of more than 980 announced partners on its M2M partners page. But that same service provider had very few actual customers. And recently while visiting a customer, I happened to walk into an ongoing training session where its partner made the statement: “Just get logos. We need logos. We don’t really need customers. We need logos right now.”

So what do we need for IoT to be successful?

First, we need a common taxonomy. Once we get the language together, companies need to focus on their own businesses so they’re not making knee-jerk reactions to what their competitors are doing. While oftentimes companies need to make course corrections, acquisitions and partnerships should be (for the most part) obvious. They should make sense and should not leave the industry wondering why a deal was done.

Also, we need IoT talent. People coding for mobile applications for the iPhone do not have the same skill sets necessary to develop real-time, mission critical applications for time-series databases. Where is the talent for the 50 billion going to come from?

And I as long as we’re on that subject, when are the systems integrators going to show up? Over the past three months, I’ve had the opportunity to speak at length with executives from three major systems integrators and a handful of what I would call regional SIs. The big SIs – names you would all recognize – all speak openly about how they are enabling IoT project after IoT project.

Yet behind closed doors they ask us the question: How can we capitalize on the opportunity that IoT affords? But perhaps most importantly we need case studies with hard ROI. Why is it so bloody hard to get a company to show a return on investment for its IoT or M2M investments?

Well, in cases where an M2M solution was deployed to achieve a compliance mandate, there may be no ROI. In cases where the reason for deploying the solution was to save money, oftentimes companies aren’t equipped to measure quantitative results. And in instances where deploying the solution was to make money, companies do not want to share their competitive advantage. But for enterprises to move down this path, an easy to understand ROI is mandatory.

James Brehm is founder of James Brehm & Associates LLC.

Edited by Ken Briodagh

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