understand how optimized connectivity improves iot roi
TRANSCRIPT
Proprietary and Confidential 1
Michele MacKenzie
Understanding How Optimized Connectivity Improves IoT ROI
NBED Title in sentence case
© Analysys Mason Limited 2016
Analysys Mason has been advising telecoms clients for more than 30 years
2
1000+CLIENTS THAT HAVE BENEFITED FROM OUR EXPERTISE
IN THE LAST 5 YEARS
200+EMPLOYEESWORLDWIDE
110+COUNTRIESWE HAVE
WORKED IN
12 OFFICES
Our approach to every project is customised to the client’s requirement
Clients see us as trusted advisers and partners who
deliver honest, independent advice
Our exclusive focus on telecoms sets our
company apart
We help clients improve performance and maximise profit,even in difficult market conditions
Our advice on mergers and acquisitions has helped shape the industry
Our consultancy has been shaping telecoms regulation since 1985
NBED Title in sentence case
© Analysys Mason Limited 2016
3
IoT and M2M Solutions research programme
Selected reports and forecasts for 2016
§ The business case for LPWA networks§ CSP strategies and organisational structures§ Security service revenue opportunities for CSPs§ Emerging APAC M2M carrier scorecard§ M2M in the Middle East and North Africa§ CSP strategies for the smart home§ Connected car opportunities for CSPs§ The role of regional alliances § The role of CSPs in smart cities § The impact of the eSIM on M2M§ End to end solutions for SMEs§ M2M RoI case studies§ Usage based insurance§ Telehealth strategies: case studies§ Worldwide M2M device connections and revenue: 2016–2026§ Worldwide LPWA connections and revenue forecast: 2016–
2026
NBED Title in sentence case
© Analysys Mason Limited 2016
Our expertise in IoT is built on projects performed in multiple regions4
Examples of recent IoT and
M2M client projects, by geography
Assessed the regulatory implications and regulatory feasibility for the implementation of a new M2M service in a dozen countries
Conducted a study on international opportunities for a European operator
Provided an assessment of M2M market opportunity for a software vendor
For a global operator, provided a forecast of the market opportunity for IoT, including all elements of the value chain
Developed forecasts of M2M device connections and revenue for Brazil, the Caribbean, Latin America and worldwide Conducted a study to
determine demand for a satellite M2M product and end-user requirements for hardware and software
Development of a cost–benefit model for operators and enterprises for Ericsson
Sized quick-win opportunities in the international M2M market and helped to develop a long-term M2M strategy for a leading mobile operator
Supported a leading mobile operator in developing its strategy for IoT and M2M services
For a European operator, conducted a market assessment of a new type of sensor network
Overviewed fleet management in five South-East Asian countries
For a Japanese operator, provided advice on which sales channel to use M2M/IoT services in Europe (including assessment of MVNOs)
For a major regional operator, conducted a workshop to assist with IoT and M2M strategy
For an operator client, developed a list of over 100 potential partners, with key information for each [e.g. details of existing contracts and partnerships]
Countries of IoT and M2M projects
Countries of other projects
IoT/M2M client countr y
NBED Title in sentence case
© Analysys Mason Limited 2016
5
The evolution of equipment with respect to time and intelligence
Smart connected devices will redefine many industry sectors and transform companies and user experiences
‘Dumb’ physical equipment
Smar t equipment with
embedded system
Smar t connected
equipment with networking capabilities
Past, present & future
Present & future
Recent past, present & future
Prod
uct I
ntel
ligen
ce
Time
5
NBED Title in sentence case
© Analysys Mason Limited 2016
Cellular M2M connectivity is set to grow at a CAGR of 19%
6
Cellular M2M connections forecast, 2015-2025, worldwide
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.420
13
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Conn
ectio
ns (b
illio
n)
Automotive and transport Financial services Healthcare Industrial Other Public sector Retail Security Utilities
NBED Title in sentence case
© Analysys Mason Limited 2016
A lot depends on IoT connectivity
7
Key enablers and drivers for enterprise adoption of internet of things
New providersThe lowering cost
of service provision has led
to hundreds of new start ups
New revenue streamsNew providers
The lowering cost of service
provision has led to hundreds of new start ups
Reduce operational costsNew providers
The lowering cost of service
provision has led to hundreds of new start ups
Awareness
New providersThe lowering cost of
service provision has led to hundreds
of new start ups
Cost of IoT deployment has
decreased
$$
New providersThe lowering cost
of service provision has led
to hundreds of new start ups
RegulationNew providersThe lowering cost
of service provision has led
to hundreds of new start ups
ROI
NBED Title in sentence case
© Analysys Mason Limited 2016
Reducing costs has been a key driver for IoT connectivity in many verticals and ROI is significant
8
Cellular M2M connections, 2025, worldwide, selected verticals
Smart transportation
Aftermarket Connections
PoSConnections
Fleet managementConnections
145m
116m
35m
“ROI depends on the major fleet issues in each market. It could be oil theft, driver behaviour, route optimisation, vehicle recovery and cold storage monitoring. However, on average, an ROI in the 15–20% range can be expected.”
Head of M2M, Middle East telco
NBED Title in sentence case
© Analysys Mason Limited 2016
And the role of connectivity is often under-stated
9
Internet of Things: generic value chain
§ Offer the network for data transmission of the IoT services
§ Connectivity providers
Systemsintegration
§ Offer the end user module, with the embedded M2M chipset
§ Device OEMs
§ Provide the actual applications that manage the data collected by the device
§ Application developers
§ Manage the distribution, supply chain and fulfilment
§ Billing and support
§ Provide system integration services
§ System design/ development
§ Solutions provider
§ 5-30%
100%
Des
crip
tion
Spen
d
Serviceprovision
ApplicationDeviceConnectivity
§ 5-20% § 30-60% § 20-30% § <20%
NBED Title in sentence case
© Analysys Mason Limited 2016
The cost of connectivity failure can be measured in more than just financial terms
10
NBED Title in sentence case
© Analysys Mason Limited 2016
As IoT matures enterprises need to be aware of the following pitfalls..
11
SIM Connectivity
Monitoring/Management
Scale
NBED Title in sentence case
© Analysys Mason Limited 2016
12
But an unmanaged approach risks undermining the IoT business case
Objective Impact of connectivity failure
Reduce costs • Higher operational and maintenance costs to identify and replace SIMs• Downtime costs if connection fails
New revenue streams • Downtime impacts on customer contracts • Inability to correctly bill customer
Scale business • Additional costs to build new IoT solution to be able to scale
Trust and brand• Failure undermines customer trust in your organisation • May result in customer churn
Source: Analysys Mason
Proprietary and Confidential 13
Understanding How Optimized Connectivity Improves IoT ROI
Dan Martensson
VP Cloud & Connectivity Business Line
14
SIERRA WIRELESS: Building the Internet of Things
2015 revenue: $608 million
1,100 employees worldwide
Customers in 130+ countries
2015 revenue: $608 million
15
35.0%
20.7%20.4%
23.9%
Sierra Wireless is building the IoT
Building the IoT with intelligent wireless solutions
120 Million Devices Shipped
#1 in cellular devices for the IoT
(1) Source: ABI Research – June 2015
Cellular Embedded ModuleRevenue Market Share in 2014 (1)
Sierra Wireless
Innovative open-source embedded
platformsTechnologyleadership
Industry’s broadest portfolio
20+ years of wirelessM2M experienceIoT specific
ConnectivityComplete device to
cloud offering
16
Our complete device-to-cloud solution
Your applications& enterprise
software
Yourdevices
Cellular Devices
Embedded Solutions
Gateways Solutions
IoT Cloud Services
ConnectivityManagement
ApplicationEnablement
360 Operations
SIM & Connectivity
End-to-End Security & Differentiation
17
Well positioned in key IoT segments
Automotive & Transport
Energy & Industrial Enterprise Residential &
Healthcare
• Automotive• Fleet Mgt.• Toll Collect• User-based
Insurance
• Smart Meters• Smart Grid• Industrial• Public
Infrastructure
• Sales & Payment
• Distributed Enterprise
• Mobile Computing
• Home Security
• Residential Automation
• Patient Monitoring
Strong global base of blue-chip customers
18
Our IoT Learnings
Global operator independent IoT Services delivered by the worldwide leader in cellular modules
1000+Customers
>2MSubscribers
180+Countries
Small & Medium Enterprises Large Enterprises & OEMS
19
Our Customers IoT Goals
Mission CriticalFixed location
EU-Wide
Difficult to serviceUrban & RuralLatin America
Access ControlDeep Indoors
EU-Wide
Maximizes potential customers & minimizes
deployment costs
Maximizes market potential & simplifies
management
Enables an SLA &minimizes downtime
service costs
20
Our Customers IoT Challenges
ROI, Complexity, Time-to-market, Scalability
Securing expected ROI from IoT projectsTransforming into a service driven businessLack of focus on business value of data, customer experienceUnderestimating technical complexity and risk
21
Need to Focus on Measurable Objectives in ROI
Reducing:
• Service Costs
• Customer Down Time
• Mean time to Repair (MTTR)
Increasing:
• Service Revenue (MRR)
• New Customers
• Service Efficiency Gains (fewer truck rolls)
• Customer Satisfaction
22
Need to Understand Your Real Connectivity Costs
• 30% of IoT OPEX is connectivity
• Hidden costs often underestimated and can double TCO
• Real cost per MB = network communication costs + Support Costs
• Downtime costs significantly impact service levels and revenue
23
Network Communication Costs
Re-occurring Cost to Connect Devices
• Monthly access fee– expensive if your deployment includes periods non-connectivity
• Optimizing Monthly Data plans – Pay-per use – cost effective with low usage or fluctuating usage
– Pay per device for fixed amount of data
• Overage– Additional charge if your usage fluctuates
• Roaming– Devices on the move pay roaming when out of primary
coverage area
24
IDC – Essential to Minimize Data Usage Costs
üSeamless network switching between high & low speed networks
üHigh usage & low devices usage on same data plan
üNo overage costs because of malfunctioning devices
üMid-cycle rate plan changes
25
IOT Support Costs
• Tech Support Call cost– Diagnose the problem– Troubleshoot
• Service Visit Cost– Cost to roll a truck to fix device– Service Efficiency (truck rolls)
26
Cost of IoT Downtime
• Downtime Cost– Lost Revenue– Poor Service Level – SLA Compliance Penalty
27
Nube: Transforming LPG supply
NubeChallenge
Sierra Wireless Device-Cloud Solution
devices platformconnectivity
AirPrime Embedded Modules
üFully Integrated
• Innovative start-up company based in Mexico
• Focused on delivering best in class B-to-B-to-C services
• Start of operation in Mexico; global expansion plan
• Gas levels• Consumption• Alerts• Orders
Consumers• No knowledge of gas levels• Constantly refueling gas tanks manually
Gas Companies• No knowledge of customer gas levels • Ad hoc supply, ordering and delivery;
inefficient logistics
• Payment Status• History• Analytics
üReady to deploy üGlobal Solution
Sierra Wireless
Smart SIM
IoT Acceleration
Platform
Customer Snapshot
28
Coverage
Data quality
Flexibility
Simplicity
Nube’s Connectivity Challenges
IoT deployments require a consistent & resilient data connection without human intervention.
UNTIL NOW CONNECTIVITY SERVICES WEREN’T DESIGNED FOR IOT
TECHNICAL CHALLENGES
IoT deployments need the broadest possible coverage to ensure machines are always connected.
Customers connecting global products need a SIM and tools that simplify logistics and operations.
OPERATIONAL CHALLENGES
IoT deployments have long lifespans. Customers need the flexibility to update providers and networks.
29
TOO COMPLEX FOR IOT
Nube’s Connectivity Options
OPERATIONAL SIMPLICITY EASY TO SCALEDIFFICULT TO MANAGE
TEC
HN
ICAL
CAP
ABIL
ITY
LOCAL SIMS• Geographically restricted• Many MNO’s needed for coverage• Very complex SIM logistics• Poor support for OTA updates (eUICC)
LACK FLEXIBILITY & COVERAGE
ROAMING SIM• Coverage restricted to alliances• Costs sky-rocket outside of footprint• >1 MNO needed for coverage & cost• Poor support for OTA updates (eUICC)
Smart Multi-Operator SIM & Dedicated IoT Core Networks
30
Sierra Wireless Solution = Simplicity
Best Coverage
Best Quality
Most Flexibility
Multi-Operator Connectivity
Quality centric and resilient service
Carrier-agnostic subscription management
Simplicity of a Single SIM for Regional or Global IoT Deployments
31
End-to-End Connectivity and Platform Services
• Bring your own SIM and/or Sierra.
• Open to any bearer: cellular, fixed, satellite, LPWA
• All you need to connect your machine:– Data collection
– Monitoring
– Billing
ConnectivityManagement
ApplicationEnablement
360 Operations
Third party SIM
eUICC
SIM & Connectivity
32
Real Cost per SIM
Real monthly project cost
Pricing Options Comparison Table for PowerPoint
Number of SIMs
Project Timeline
Cost per MB
Number of Issues
Level 1,2 Support Cost
$1.004,020
$20 @100%
$1.001,327
$10 @100%
Roaming SIMSierra Wireless
Smart SIM
Typical Telematics Customer Connectivity ROI
Downtime/Compliance Penalty
Average Cost per Issue
$50 @1%
$30.50
$1.61
$50 @1%
$15.50
$1.10
Data Usage/SIM/Mth
Field service visit cost $200 @5% [email protected]%
Dep
loym
ent
Supp
ort C
osts
Real LT Project Cost $19,416,600 $13,293,738TCO
201,000
1 MB 5 Years
$323,610 $221,562
Reduced by 2/3 by Smart SIMFaster resolution time
Lower cost per issue
Lower total cost of ownership
Visits cut in half
33
Improve Your IoT ROI by
üFocusing on Measurable Objectives in ROI
üUnderstanding Your Real IoT Connectivity Costs
= network communication costs + Support Costs
üMinimizing Downtime Costs