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November 2016 | www.tmforum.org
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THE ROADMAPOF OPTIONS: MONETIZINGAND MANAGINGIoE SERVICES
EXECUTIVE SUMMARY
Report author:Phil BullIndependent [email protected]
Senior Director, Editorial:Annie [email protected]
Managing Editor:Dawn [email protected]
Editor, Digital Content:Sarah [email protected]
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Senior Director, Research & Content:Aaron Richard Earl [email protected]
Advisors:Craig Bachmann, Senior Director, Open Digital Progam, TM ForumRob Rich, Managing Director, Insights Research, TM Forum
Report Design:Intuitive Design UK [email protected]
Published by:TM Forum240 Headquarters PlazaEast Tower, 10th FloorMorristown, NJ 07960-6628USAwww.tmforum.orgPhone: +1 973-944-5100Fax: +1 973-944-5110
ISBN: 978-1-94522-0-13-5
The big picture
Section 1A world of limitless applications
Section 2Service providers speak: Opportunities for monetization
Section 3Building a vision and tackling the challenges
Section 4Partnering to give customers what they want
Section 5The impact of emerging technologies
Section 6Make it happen – strategies for implementing IoE services
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THE ROADMAP OF OPTIONS: MONETIZING AND MANAGING IoE SERVICES
This report is free for all employees of TM Forum member organizations to download by registering on our website.To purchase this report, non-members should contact [email protected]
INSIGHTS RESEARCH
The roadmap of options: Monetizing and managing IoE services2
THE BIG PICTUREWelcome to our second Insights Research report onmanaging Internet of Everything services end to end.
www.tmforum.org 3
INSIGHTS RESEARCH
But with its exciting new possibilities, the IoE is also hugelycomplex and a minefield of risks and challenges for theunprepared service provider. Not least because of the need tomanage and monetize diverse new services across multi-tenant platforms, with multiple partner ecosystems using allkinds of emerging technologies. Some of the biggest challengesservice providers face include the need to improve networksecurity and change the culture and mindset of theirorganizations both internally and externally to embrace IoE.
INNOVATION DRIVES NEW FRONTIERS
Digital platform providers like Airbnb, Alibaba and Uber areturning traditional business on its head with innovative modelsthat enable seemingly unlimited ways for users of theirplatforms to interact with each other. Communications serviceproviders need to do this as well, by turning their networksinside out to become platform providers.
To do this, they must embrace virtualization and cloudtechnologies throughout their environments to become moreagile, including in their business and operations supportsystems (BSS/OSS). In managing IoE services there is no longertime for human intervention. Automation is the name of thegame for service creation, delivery, monetization and customerexperience management.
The sheer number of connected devices means serviceproviders cannot treat connections in the same way astraditional networks. They will have a touchpoint fabric ofdensely woven interconnected devices, servers and platforms– all of which need to be autonomously managed to deliverseamless services end to end.
In this, our second annual report on managing IoE services, wepresent the results of our survey of 40 communicationsservice providers. We asked them about how and where theyare deploying IoE services, how they’re monetizing servicesand what their biggest challenges are in managing the servicesend to end.
The Internet of Everything (IoE) has almost limitless potential to improve quality of life and createunimaginable wealth. By intelligently harnessing the huge amounts of data exchanged between billions ofconnected devices on a daily basis, the IoE will give rise to a market of applications that we haven’t evendreamed of yet. Within a few short years it’s safe to say there will be tens of billions of interconnected devices,with market projections ranging from 20 billion to more than 50 billion by 2020.
IoE OR IoT?
Occasionally in this report, we refer to the Internet ofThings (IoT) as well as the Internet of Everything (IoE).While IoT relates to the enablement and management ofinterconnected devices logically associated with physicalthings, IoE extends this concept beyond things to includepeople, processes and the data supporting them.
READ THIS REPORT TO UNDERSTAND:
Which IoE verticals have the most potential
How communications service providers aremonetizing or plan to monetize IoE services
Why a platform business model makes sense
Why orchestration and open APIs are necessary
What the challenges are for monetizing andmanaging IoE services end to end
Why security is so important
How to partner to deliver services
What customers expect from the IoE
Which emerging technologies will help with IoEdeployment
Steps to take to develop a successful IoE strategy
INSIGHTS RESEARCH
The roadmap of options: Monetizing and managing IoE services4
INSIGHTS RESEARCH
The roadmap of options: Monetizing and managing IoE services5
MANAGING AND MONETIZING IOEWe asked 40 service providers about their approaches, challenges and successes
with managing and monetizing Internet of Everything services.
The trillion-dollar IoE opportunity
27 Billion IoT Devices
2 Zettabytes of data generated
$3 Trillion revenue opportunity overall
$1.7 Trillion revenue opportunityfor app development, systems integration,hosting and data monetization
$2.2 Billion cellular connections,45% of which will be in the connectedcar sector
Source: Machina Research IoT Global Forecast & Analysis 2015-2025
TheInternet ofEverything
Industrial
Consumer
Smart City
Retail
Digital Health
Connected Vehicle
Connected Home
Gaming
Public Services
Home Security
Wearables
Smart Agriculture
Insurance Telematics
Manufacturing
Transportation
Smart Energy
Source: TM Forum, 2016
Promising verticals
INSIGHTS RESEARCH
The roadmap of options: Monetizing and managing IoE services6
Tackling the IoE challenges
Process and operational changes
Culture and mindset
Security and privacy
Defining a digital services strategy
Monetization
50%
45%
36%
35%
33%
5
Source: TM Forum, 2016
27 BILLION
CELLULAR CONNECTIONS,45% OF WHICH WILL BE IN THECONNECTED CAR SECTOR
REVENUE OPPORTUNITYFOR APP DEVELOPMENT,SYSTEMS INTEGRATION,HOSTING AND DATA MONETIZATION
$1.7 TRILLION
Markets and customers Business Technology
$2.2 BILLION
Business vocabulary(communications)
Communicating trust(security and privacy)
Mindsets and culture
Brand management inan IoE world
Enabling IoE monetization
Delivering the IoE network
Architecting IoE
Standardization andinterprobablilty
Legacy systems andprocesses
End-to-end automationand managementBusiness model innovation
Business transformation
Partnering
Scaling proven solutions
Discovering ecosystems
Unlocking the value in data
Data ownership
Real time business systems
Skills gap
93% Connectivity
82% Charging and billing
73% Security
59% Platform as a service
56% End-to-end applications
56% Network as a service
53% Self-service
50% Device management
18%already implemented
12%in the process
29%seriously considering
29%considering
12%not considering right now
Custom
erM
anagement
BusinessManagement
ServiceM
anagement
ResourceM
anagement
PartneringAPIs
Product CatalogueAPIs
CustomerManagement APIs
Customer LoyaltyAPIs
Customer OrderAPIs
Billing & PaymentAPIs
Customer ServiceAPIs
MarketingAPIs
AnalyticsAPIs
EnterpriseAPIs
CommonAPIs
ServiceManagemnet APIs
Charging APIs Service InventoryAPIs
Service OrderAPIs
Service CatalogueAPIs
ResourceManagemnet APIs
ResourceInventory APIs
Resource OrderAPIs
ResourceCatalogue APIs
Process and operational changes
Culture and mindset
Security and privacy
Defining a digital services strategy
Monetization
50%
45%
36%
35%
33%
44%Security managementand assurance
27.5%Fewer than 5 million
CUSTOMERS PAY AFIXED CHARGE TO USE THE PLATFORM
15.0%5 million to 25 million
27.5%More than 25 million
to 50 million
15.0%More than 50 million
to 100 million
0.0%More than 100 million
to 150 million
15.0%More than 150 million
41%Customer experiencemanagement
36%Cost
31%Product andservice delivery
31%Defining a technologystrategy for digitalservices
Communicating IoE(selling the IoE vision)
20%
5%
7.5%
10%
37.5%20%
Europe and/or Russia
Asia/Pacific
Middle East and/or Africa
Global
Latin America/CaribbeanNorth
America
50%End-to-end visibility
40%Security
35%Performance and QoS
33%Customer care
31%Orchestration
FIXED FEE
THE PLATFORM PROVIDER CHARGESTHE CUSTOMER A FEE FOR EVERYTRANSACTION CARRIED OUT OVER THE PLATFORM
TRANSACTION FEE
CUSTOMERS PAY A SHARE OF THEIR REVENUESTO THE PLATFORM PROVIDER IN RETURN FORTHE USE OF THE PLATFORM SERVICES
REVENUESHARING
68%CENTRALIZE PRODUCT MANAGEMENT TO CREATE AN END-TO-END PRODUCT
65%CREATE A NEW OR SEPARATE BUSINESS UNIT RESPONSIBLE FOR END-TO- END DIGITAL SERVICES
60%DEVELOP A GLOBAL PARTNER STRATEGY FOR CONTENT
Service providers are already making these business changes or are seriously considering them:
Security50% Identifying the
right partners
50%
Performancemanagement
38% Integration intoCRM, sales andcustomer care
30%
Cost21% Contract
management
18%
Security (device vulnerability, network breaches, database hacking, data theft, DDOS attacks)
Technology failure
Platform or application abuse
Breakdown in trust between partners
Financial risk (failing to meet business objectives)
Project risk (breakdown in communications, roles and responsibilities)
of network performance and location based on customer experience
ANALYSIS
unmet needs of the customer FORECASTING
of consumption data to devise better offers USE
pricingDYNAMIC
tracking and managementASSET
replenishment of goodsPROACTIVE
maintenance and upgrading customers’ devicesPREDICTIVE
5. Big data and analytics
4. Wi-Fi
3. LPWAN
2. Network virtualization
1. 5GEVOLUTION5G is intended to enable network operators to evolve their current business models to support a wide variety of relationships with partners and customers in the IoE
ELASTICITY5G will dynamically support user and application requirements based on context and behavior, and will support dynamic partnering and business models. A good example of this is network slicing
CAPACITYspecifications are for 5G to connect up to 500 billion devices
SPEEDdownload speeds will increase from 100-1000 Mbps on 4G to 10-100 Gbps on 5G, and latency will be guaranteed at 1-10 milliseconds
AGILITY5G takes advantage of virtualization andsoftware-defined networking to increase programmability and agility
WHAT’S THE BIGGEST OPERATIONAL CHALLENGE?WHAT’S THE BIGGEST IoE BUSINESS CHALLENGE?
Source: TM Forum, 2016
Security50% Identifying the
right partners
50%
Performancemanagement
38% Integration intoCRM, sales andcustomer care
30%
Cost21% Contract
management
18%
Process and operational changes
Culture and mindset
Security and privacy
Defining a digital services strategy
Monetization
50%
45%
36%
35%
33%
5G Networkvirtualization LPWAN
Blockchain Big dataand analytics Wi-Fi
Identify thevalue proposition
Keep itsimple
Define amonetization
strategy
Use open APIs
Addresssecurity first
Ensure customerexperience
Implementend-to-end
orchestration
Plan for emergingtechnologies
Build a trustedpartner ecosystem
WHAT ARE THE BIGGEST PARTNERSHIPCHALLENGES?
Source: TM Forum, 2016
TheInternet ofEverything
Industrial
Consumer
Smart City
Retail
Digital Health
Connected Vehicle
Connected Home
Gaming
Public Services
Home Security
Wearables
Smart Agriculture
Insurance Telematics
Manufacturing
Transportation
Smart Energy
REVENUE OPPORTUNITY
OVERALL$3 TRILLION
OF DATA GENERATED2 ZETTABYTES
IoT DEVICES27 BILLION
CELLULAR CONNECTIONS,45% OF WHICH WILL BE IN THECONNECTED CAR SECTOR
REVENUE OPPORTUNITYFOR APP DEVELOPMENT,SYSTEMS INTEGRATION,HOSTING AND DATA MONETIZATION
$1.7 TRILLION
Markets and customers Business Technology
$2.2 BILLION
Business vocabulary(communications)
Communicating trust(security and privacy)
Mindsets and culture
Brand management inan IoE world
Enabling IoE monetization
Delivering the IoE network
Architecting IoE
Standardization andinterprobablilty
Legacy systems andprocesses
End-to-end automationand managementBusiness model innovation
Business transformation
Partnering
Scaling proven solutions
Discovering ecosystems
Unlocking the value in data
Data ownership
Real time business systems
Skills gap
93% Connectivity
82% Charging and billing
73% Security
59% Platform as a service
56% End-to-end applications
56% Network as a service
53% Self-service
50% Device management
18%already implemented
12%in the process
29%seriously considering
29%considering
12%not considering right now
Custom
erM
anagement
BusinessManagement
ServiceM
anagement
ResourceM
anagement
PartneringAPIs
Product CatalogueAPIs
CustomerManagement APIs
Customer LoyaltyAPIs
Customer OrderAPIs
Billing & PaymentAPIs
Customer ServiceAPIs
MarketingAPIs
AnalyticsAPIs
EnterpriseAPIs
CommonAPIs
ServiceManagemnet APIs
Charging APIs Service InventoryAPIs
Service OrderAPIs
Service CatalogueAPIs
ResourceManagemnet APIs
ResourceInventory APIs
Resource OrderAPIs
ResourceCatalogue APIs
Process and operational changes
Culture and mindset
Security and privacy
Defining a digital services strategy
Monetization
50%
45%
36%
35%
33%
44%Security managementand assurance
27.5%Fewer than 5 million
CUSTOMERS PAY AFIXED CHARGE TO USE THE PLATFORM
15.0%5 million to 25 million
27.5%More than 25 million
to 50 million
15.0%More than 50 million
to 100 million
0.0%More than 100 million
to 150 million
15.0%More than 150 million
41%Customer experiencemanagement
36%Cost
31%Product andservice delivery
31%Defining a technologystrategy for digitalservices
Communicating IoE(selling the IoE vision)
20%
5%
7.5%
10%
37.5%20%
Europe and/or Russia
Asia/Pacific
Middle East and/or Africa
Global
Latin America/CaribbeanNorth
America
50%End-to-end visibility
40%Security
35%Performance and QoS
33%Customer care
31%Orchestration
FIXED FEE
THE PLATFORM PROVIDER CHARGESTHE CUSTOMER A FEE FOR EVERYTRANSACTION CARRIED OUT OVER THE PLATFORM
TRANSACTION FEE
CUSTOMERS PAY A SHARE OF THEIR REVENUESTO THE PLATFORM PROVIDER IN RETURN FORTHE USE OF THE PLATFORM SERVICES
REVENUESHARING
68%CENTRALIZE PRODUCT MANAGEMENT TO CREATE AN END-TO-END PRODUCT
65%CREATE A NEW OR SEPARATE BUSINESS UNIT RESPONSIBLE FOR END-TO- END DIGITAL SERVICES
60%DEVELOP A GLOBAL PARTNER STRATEGY FOR CONTENT
Service providers are already making these business changes or are seriously considering them:
Security50% Identifying the
right partners
50%
Performancemanagement
38% Integration intoCRM, sales andcustomer care
30%
Cost21% Contract
management
18%
Security (device vulnerability, network breaches, database hacking, data theft, DDOS attacks)
Technology failure
Platform or application abuse
Breakdown in trust between partners
Financial risk (failing to meet business objectives)
Project risk (breakdown in communications, roles and responsibilities)
of network performance and location based on customer experience
ANALYSIS
unmet needs of the customer FORECASTING
of consumption data to devise better offers USE
pricingDYNAMIC
tracking and managementASSET
replenishment of goodsPROACTIVE
maintenance and upgrading customers’ devicesPREDICTIVE
5. Big data and analytics
4. Wi-Fi
3. LPWAN
2. Network virtualization
1. 5GEVOLUTION5G is intended to enable network operators to evolve their current business models to support a wide variety of relationships with partners and customers in the IoE
ELASTICITY5G will dynamically support user and application requirements based on context and behavior, and will support dynamic partnering and business models. A good example of this is network slicing
CAPACITYspecifications are for 5G to connect up to 500 billion devices
SPEEDdownload speeds will increase from 100-1000 Mbps on 4G to 10-100 Gbps on 5G, and latency will be guaranteed at 1-10 milliseconds
AGILITY5G takes advantage of virtualization andsoftware-defined networking to increase programmability and agility
WHAT ARE THE BIGGEST CEM CHALLENGES?
Source: TM Forum, 2016
INSIGHTS RESEARCH
The roadmap of options: Monetizing and managing IoE services7
Top technologies to watch
Download the new report,The roadmap of options: Monetizing and managing IoEservices, to get your IoE strategy on track: bit.ly/TMFIoE2016
Make it happen: Strategies for success
Security50% Identifying the
right partners
50%
Performancemanagement
38% Integration intoCRM, sales andcustomer care
30%
Cost21% Contract
management
18%
Process and operational changes
Culture and mindset
Security and privacy
Defining a digital services strategy
Monetization
50%
45%
36%
35%
33%
5G Networkvirtualization LPWAN
Blockchain Big dataand analytics Wi-Fi
Identify thevalue proposition
Keep itsimple
Define amonetization
strategy
Use open APIs
Addresssecurity first
Ensure customerexperience
Implementend-to-end
orchestration
Plan for emergingtechnologies
Build a trustedpartner ecosystem
Security50% Identifying the
right partners
50%
Performancemanagement
38% Integration intoCRM, sales andcustomer care
30%
Cost21% Contract
management
18%
Process and operational changes
Culture and mindset
Security and privacy
Defining a digital services strategy
Monetization
50%
45%
36%
35%
33%
5G Networkvirtualization LPWAN
Blockchain Big dataand analytics Wi-Fi
Identify thevalue proposition
Keep itsimple
Define amonetization
strategy
Use open APIs
Addresssecurity first
Ensure customerexperience
Implementend-to-end
orchestration
Plan for emergingtechnologies
Build a trustedpartner ecosystem
DOWNLOADTHIS REPORT NOW
For more about the Forum's work on monetizingand managing the Internet of Everything, please contactCraig Bachmann, Senior Director, Open Digital Program,