5 Unrealized Enterprise Opportunities Found Within the Internet of Things

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1 5 Unrealized Enterprise Opportunities Found Within the A TECHTARGET WHITE PAPER

2 In the sensor-less world, the primary focus of many value-added resellers (VARs) has been the sale of hardware and software. As customers continue to use infrastructure and applications in new ways, many VARs and solution providers are adapting. One primary way to do that is to develop a business model that is oriented more toward services and SaaS. Many of these resellers have heard about the tremendous opportunities the technology industry will experience as a result of the (IoT). Now, they are looking for new ways to take advantage of the growth projected in the IoT market in the coming years. A growing movement, IoT describes a world in which everyday objects like your fridge or your vehicle have always-on, always-connected sensors. These sensors track and measure movement, performance and any other quantifiable attribute you can think of. While home automation is a great use case for IoT in the consumer world, it is really just the tip of the iceberg for VARs focused on the enterprise marketplace. The most pressing challenge facing VARs today is finding their place in this expanding market, and learning how they can unlock the potential found in IoT. VARs would do well to remember that all of those devices and sensors generate data, and an increasing amount of it. The true power of IoT for the enterprise customer is not in the devices or sensors themselves but in how that user harnesses the data and turns it into business insight. VARs can provide true value in helping customers leverage this data. This is something that many VARs already know how to do, including managing the nuances around storage, analysis, and interfacing with and securing information. This emerging technology will not only change the way we live as consumers, it will also create huge potential in the enterprise. The bulk of the revenue will come from initiatives such as smart industrial applications, smart transportation, retail customer behavior modeling and smart energy. The public sector is also starting to see a rise in interest as it uses automation to reduce complexity. Even with the growing number of use cases, many VARs may still wonder how they can take part in the expanding IoT market. They look at their current enterprise capabilities perhaps selling server, storage, networking and software and wonder how they could engage in what seems to be a very device- and sensor-based ecosystem. There are five major areas of unrealized opportunity for VARs interested in IoT: 1. Cloud and data center automation 2. Data analytics 3. Mobile 4. Security 5. Converged hardware Let s take a look at what it will take to fully realize the potential.

3 Cloud and Data Center Automation Solution providers that have already built their capabilities around cloud computing are ready to begin helping many of their current customers. They are prepared to start collecting and manipulating the array of data that comes from new sensor infrastructure that their customers have already deployed or are planning to deploy. Converged Hardware Another potential opportunity can be found in the converged hardware market. When customers and OEMs pull data off of devices and put it into a data center, they will also require the hardware to both store that data and build a private cloud or run the analytics products. That expertise could come through selling cloud-based IoT platform offerings from companies such as Amazon AWS IoT or IBM IoT Foundation. These types of solutions help customers consolidate their data from most any device and perform actions on the data as appropriate. A VAR then has the opportunity to deploy data analytics, security or mobile applications to that cloud environment to turn their customers data into business insight. For customers wanting to implement IoT solutions on-premises, a VAR with cloud skills could provide the resources to help that customer build a private cloud to process and visualize the data. Either way, this type of expertise naturally provides a foothold into the IoT space. The fact is that the sensor infrastructure is only one part of the equation with IoT. Organizations need to have the infrastructure to support the data that will be streaming out of those sensors. And that scale of big data will call for some serious data center execution. This is particularly true when dealing with sensitive data that the customer or OEM doesn t want to put in a public cloud. The VAR has an opportunity to work directly with the customer or the OEM to provide the infrastructure support to properly handle that data. In many cases, this will mean reselling an IoT platform solution to handle the data ingestion, analysis and reporting. These platforms need to run on infrastructure, and a converged platform solution is a great choice. Analytics In a similar vein, VARs with a business intelligence or data analytics practice as a provider, and offerings that include products such as IBM Cognos, HP Vertica, SAP BusinessObjects or SAP HANA, already have the ability to play in the IoT space. Big data is getting bigger thanks to IoT, and this highly distributed data is generated by a wide range of sensors, beacons, applications, websites, social media, weather data, computers, smartphones and more.

4 In fact, analytics and management of big data is one of the most promising IoT opportunities for VARs today. Business leaders understand the primary value of IoT is not just connecting things, but the information that is collected, analyzed and delivered in a meaningful way to drive business value. Without the ability to leverage analytics services, a VAR s customer will be left with only sensor data and unable to truly harness the value of IoT. Instead, the VAR can become the trusted advisor on the customer s dark data, turning the data that has never been visible to the customer into quality information and analytics that will benefit their business. On the other hand, if the data analytics capability is already provided as part of an IoT platform, the VAR has the ability to help their customer implement it. Or, this capability could come by way of an external analytics platform, giving the VAR the opportunity to help deploy the analytics platform and integrate it with an IoT platform. Three customer challenges noted in a recent Cisco survey 1 include: Integrating the data from many sources (sensors, beacons, smartphones, etc.) Collecting the data in a low touch automated way Using data science to effectively analyze the data to help your customer identify actionable insights For example, take a municipality that s just bought 2 million smart residential power meters. Those smart power meters may have come with some IoT software to do aggregation of data collected from the devices. But they likely didn t include the exact analytic capability that the municipality needs to slice and dice power usage data. In this case, once the investment in the underlying infrastructure is made, there s a huge opportunity for a VAR. Now, the VAR can sell that municipality a data analytics software package and all of the implementation services necessary to help that IoT infrastructure deliver customized analytics the municipality needs. 1 Attaining IoT Value, Cisco, 2014

5 Mobile Another large untapped opportunity around IoT for VARs is in the mobility arena, particularly mobile development. Many OEMs do a great job building out the devices that are purpose-built to collect very specific data, but which don t necessarily include a lot of bells and whistles on the interface side. Security Often when people think about IoT security, they focus on things such as automatic door locks, car electronic systems, smart phone payment systems and other security concerns at the device level. But for VARs, data security is a potentially huge play for engagement with enterprise IoT deployments. For enterprises, the interface can make or break the true usefulness of a particular IoT device or sensor. For example, take an OEM vendor that sells 2,000 smart coffee makers to a restaurant chain. The OEM builds a capability into the coffee machines to warn the restaurant company when a machine needs service, effectively extending the life of the coffee makers. The challenge is that the restaurant chain needs to log in to the website of that OEM and manually manage these devices. The opportunity for the VAR is to help the customer develop a mobile application that would automatically notify the facilities manager of status changes with these machines. The application is powered by all of the information from the OEM website but truly helps the facilities person smoothly manage this equipment. Enterprises often collect sensitive data from sensors. For example, critical infrastructure sensors collect data around smart utility metering, including information about water consumption, power consumption and gas consumption. Similarly, industrial control sensors offer a lot of data around how a factory plant looks, something one wouldn t want competitors or nation states to know about. Healthcare information stored on portable devices in a hospital is another obvious concern for customers that must operate within the requirements of regulatory compliance and audits.

6 Regardless of the sensitive data being collected by these sensors, many of these devices push their data to the cloud. This creates a formidable security concern around the service providers that are hosting all the customer data that s in the cloud. VARs have a significant role to play in selling to not only the service providers that are hosting these applications, but all the OEMs in the market developing these sensors. The challenge is that these OEMs may not have the same level of expertise in running data centers or securely managing data the way that a seasoned VAR might. VARs can partner with OEMs to provide guidance in designing more secure applications and solutions. For example, VARs could play a valuable role in the encryption of data both in transit as it travels from a device to the data center or cloud, and at rest in the data center. Where to Begin There are so many available use cases and innovative ideas surrounding IoT that the opportunities in the market can induce analysis paralysis in VARs. The challenge faced by many VARs today is that they are pulled in so many directions that they re not sure where to begin in creating their IoT strategy. As a result, many continue to put off their IoT initiative. In order to map an effective strategy, it s important to start your initiatives with focus. One option is to begin with an untapped opportunity that you already have competencies in whether it s with cloud, analytics or mobile development and get some early wins with existing customers. By beginning the conversation surrounding IoT with customers you re already comfortable with and discovering their IoT data challenges, you may be able to pick up an immediate win and begin building momentum in the market. Just be sure that your business is truly aligned to make good on promised use cases. If your business hasn t yet dived into big data, robust cloud or analytics opportunities or if it is still stuck in a box-pushing model, some line-of-business changes must be made first so that you are able to offer your customers true value. Participating in the IoT requires a well thought out plan. It is not an area where you simply ask a sales rep to sniff for opportunity and then act. It will take good engineering to develop these solutions. Changing Your Mindset and Educating Your Workforce Taking advantage of IoT opportunities will also require a different mode of selling than many VARs are used to. For success in IoT, look to a new workforce skillset that effectively teams up information technology and operational technology to extend your reach to the line-of-business for new, but less traditional opportunities. This is not often the type of sale that begins and ends with the director of IT. Instead you re selling to line-of-business constituents in many sectors, such as: Retail: Chief marketing officer or chief operating officer Hospitals: Chief medical officer or chief nursing officer Energy: Facilities manager or chief operating officer Finance: Chief information officer or chief financial officer

7 If you re looking to develop an IoT practice, you need to be able to get into an account through different means than just the IT directory. Regardless of whom the sales team approaches, they must be armed with use cases in order to make headway. A lot of the opportunity in IoT will depend on the ability to offer creative solutions that may not have been possible in a sensor-less world. When the possibilities are seemingly endless, customers will need some help in imagining the potential for IoT devices and sensors. Here are some examples to get the sales team s creative juices flowing when selling into vertical markets. Retail: In one real-life use case, Best Buy wanted to get an idea of where customers went when entering their stores. By taking advantage of motion sensors, they were able to see that an overwhelming majority of customers took a right once they entered the store doors. That helped drive layout decisions that put the highest-grossing and enticing products to the right, and nuts-and-bolts items like appliances to the left. So a VAR approaching a retail customer could ask a decision-maker: If you could get into the heads of customers at the door, wouldn t you? Hospitals: Avnet currently works with an OEM manufacturer that creates a device that goes on a patient s wrist and measures blood pressure, sweat, heartbeat and even cholesterol level. Through these metrics it uniquely identifies the patient and sends information for each patient to a central database. If a VAR were to partner with this OEM, it could potentially unlock a host of additional value for hospitals using it. This could mean more customized analytics for research, improved patient care and better overall site administration. Or it could be an opportunity to provide robust security, since this is dealing in sensitive patient data. Energy/Facilities: Avnet works with companies deploying many types of facility and building automation IoT products and services. For instance, by placing thermal sensors in lighting pods, end users are able to detect when people are in a room or building and automatically control the lighting and the HVAC system. In a related use case, Avnet offers a solution that incorporates sensors that measure power, water and gas usage in venues like zoos, stadiums and museums. The solution allows the venue manager to know what it costs to run the venue for a particular event. All of the usage data is aggregated to a centralized application to be analyzed and reported on. Financial/Insurance: The insurance industry shows an accelerating appetite for creative uses of IoT. For example, insurance companies are already placing devices in personal vehicles to track driving behavior and incorporate that into the underwriting process in order to adjust insurance premiums accordingly. On the financial services side, one interesting use case is the dependence on weather sensors by companies to predict the approach of natural disasters in order to inform their stock trading. This kind of information has the power to potentially impact stock market prices in real-time.

8 Unlocking the Opportunity There s no doubt that IoT will put a lot of money on the table for solution providers in the coming years. According to IDC, IoT will be a $1.7T market by That can mean amazing things for creative and driven VARs. Analysts predict that we will likely figure out exactly how IoT is going to manifest itself in the market by mid-2017 or With much consolidation happening between IoT platform companies, VARs have time to develop their strategy and focus on a profitable area of IoT. But they must not delay. Will that be Smart Transportation, Smart Agriculture, Smart Lighting, Smart Industrial or any of the many other growing areas of IoT? The sky is the limit for VARs, and focus is key. Avnet stands ready to assist partners in narrowing their vision and executing their strategy with an extensive portfolio of enterprise ingredients to make IoT a reality. To learn more about how Avnet can help you tap into the IoT opportunity, contact your account manager. Want More? Watch: Business Applications for the Read: Tapping the Dark Data in IoT 2 Explosive Spending to Reach $1.7 Trillion in 2020, According to IDC, IDC, June 2, 2015 From components to cloud and design to disposal, Avnet, Inc. (NYSE: AVT) accelerates the success of customers who build, sell and use technology globally by providing them with a comprehensive portfolio of innovative products, services and solutions. Avnet is a Fortune 500 company with revenues of $27.9 billion for the fiscal year For more information, visit Avnet, Inc. All rights reserved. The Avnet Technology Solutions logo is a registered trademark and Accelerating Your Success is a trademark of Avnet, Inc. All other products, brands and names are trademarks or registered trademarks of their respective owners. Avnet Technology Solutions South Price Road Tempe, AZ

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