With more than 50% of connected devices set to be deployed in business settings, the IoT market is estimated to exceed US$1trillion in value by 2025.

According to the report by forecasts, the market will shift away from connectivity, instead, it will shift its focus towards services, platforms and applications.

More than two-thirds of this market share will fall on platforms, applications and services, while professional services, including system integration, managed services and consulting, will account for the remaining share.

Vertical-specific applications

The report found that those deployed within enterprises of vertical-specific applications will account for more than 50%, while the Asia Pacific region is estimated to become the largest region both in terms of revenue and number of connections, accounting for 35% of revenue worth US$386 billion, and 44% of connections worth US$11billion.

Connectivity revenue will grow throughout the decade, but this will only account for 5% of the trillion-dollar revenue opportunity projected.

The IoT market has been expanding into a variety of sectors including healthcare services. Earlier this month, a Scottish hospital began trialling IoT-powered medical beds, so these could be monitored more efficiently as they moved through the building.

IoT security issues

But as the IoT market expands, so will concerns over the growing attack surface that deploying billions more connected devices will bring, underlined by security issues involving IoT devices in recent months.

“In terms of IOT, I have recently been looking into how it is going to affect the market and the main barriers around the IOT remains security, implementation and technological fragmentation,” said Akheel Ali, Cloud Computing International.

“Horizontal management for IoT addresses several of these concerns. A standards-based, horizontal platform allows for greater access control to give control over IoT devices and sensors. Organisations are able to manage data with end-to-end authentication and scale solutions across all vertices without having to be a solution for each application.”

Written by Leah Alger

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The reality – change is here.  The IoT software stack has arrived which changes company operations and opens up new opportunities for monetisation.  These best practices will help businesses prepare.

Best practice 1

What are your IoT monetisation goals?

Before you implement new models, a good practice is to take a step back and review your goals.  Here are some ideas to get started when incorporating digital solutions:

• Impact revenue growth. Ask how you can: monetise software, create flexible pricing models and add new features and services over time.
• Improve efficiency. Ask how you can: eliminate manual processes, implement remote monitoring/services/maintenance, increase order accuracy and reduce downtime/waste.
• Increase customer satisfaction. Ask how you can: provide a simple end-user experience, implement customer self-service and streamline end-to-end processes.
• Protect intellectual property (IP). Ask how you can: minimise unauthorised use, stop gray market abuse and improve compliance across the board.

Best Practice 2

Have you centralised software licensing information?

In a manufacturing environment, it is essential to know what software is running where. From a business perspective, it tells you who owns what and ensures you’re on top of monetisation. From a customer perspective, it helps manufacturers provide a positive experience of helping customers understand what they have licensed, number of users, renewal needs and more.  From a compliance perspective, a unified view helps guarantee compliance with highly regulated and controlled production environments and keep a high-security level by analysing software for vulnerabilities and deploying software upgrades and patches. Furthermore, support cost and field service activity can be reduced by enabling appropriate remote diagnostics and maintenance procedures.

A central entitlement management system will help consolidate your software licensing information as well as offer other benefits. You gain a unified customer experience, even if different products still use unique license generators as well as a smooth transition towards Cloud and SaaS offerings.  Other wins include a reduction in operating costs, up-sell and renewal opportunities, visibility into channel sales and overall insight into market dynamics.

Best practice 3

Is it time for “use rights?”

Selling “use rights” instead of a product is becoming more popular in the industrial automation industry. It’s a highly flexible model where the manufacturer retains ownership but can deliver different products through as-a-service models, including subscription, pay-per-use and pay-per-outcome (e.g., actual cars produced, scans taken).  Some manufacturers offer hybrid models by continuing to sell the hardware while applying flexible monetization models to the software only.

Best practice 4

Can customer satisfaction go up?

Because new monetisation models involve dynamic business information, manufacturers need to offer direct access, often called self-service, to customers for transparency and ease of use. For example, an intelligent device manufacturer who wants to lower costs by moving manufacturing to a 3rd party will need to understand their licensing to assess the impact.  By enabling self-service information, clients can see what they have, what they are using and react in the best way.

Best practice 5

Are there hidden operational benefits?

Using different software components in standard hardware speeds bringing devices to market quickly while keeping manufacturing costs low. Manufacturers can produce different products on the same hardware chassis by adopting the right licensing models, which eliminates additional production and minimises inventory. Innovation also becomes easier since the same foundation can be adapted with software to become a different product. Evolving customer needs can also be met without requiring a swap out of hardware or other disruptions of their operations.

A software infrastructure also offers the benefit of continuous software and firmware updates, which are crucial for security, compliance and efficient support processes.  It’s difficult to scale as you increase your customer base, the number of software products and versions or the frequency of updates. Without tight tracking of licenses, you also increase the risk of revenue losses up to 30% from customers receiving upgrades without maintenance, security issues from software vulnerabilities in older versions and high support and software development costs to support multiple versions and compatibility.

Best practice 6

Are there security gaps?

Security can be effective if it is designed into the product and applied in all the layers that make up the IoT. Since embedded software often uses Linux systems and 9 out of 10 IoT developers use open source code, it’s important to stay in compliance with open source licenses and manage vulnerabilities.  Steps include identifying open source and third-party components, creating a Bill of Material and implementing permission workflows to register any new components before use and shipping.

Implementing the right software licensing technology also protects companies that outsource their manufacturing processes to third-party manufacturing shops from grey market abuse.  For example, manufacturers can implement a “call home” to a cloud-based license server to obtain an activation license and make the device operational. If an illegally manufactured device tries to do this, it will not be granted a license and, in turn, will not function.

In addition to these best practices, it’s also important to prepare your organisation. Product offerings will change with a focus on digital solutions, data and outcome. There will be new pricing and product packaging. Culture issues will need attention to help employees embrace digital offerings, different compensation and new processes in sales, support, field services and engineering. Customers may have the option to pay in a perpetual licensing model or a new flexible way, which offers flexibility and decreases the impact on cash-flow.

With a plan to manage change and attention to these 6 best practices, manufacturing companies can experience the big gains in flexibility and monetisseation opportunities offered by IoT.

Written by Matthew Dunkley, Strategy and Product Management Director at Flexera

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DigitalOcean announced to Business Insider that it’s close to reaching its target to generate US$175million in revenue this year, reaching 48% more revenue than the US$77million it generated in 2015.

Yahoo revealed some facts on DigitalOcean’s business:

• The company claimed revenue of US$118million in 2016, up from US$77million in 2015
• DigitalOcean says that it’s been profitable on an earnings before interest, taxes, depreciation, and amortisation (EBITDA) basis since 2015
• The company said spending and costs have stayed flat, even as revenue increases, leading to widening margins “well north of 20%,” according to Uretsky
• Uretsky also said the company still has the entirety of its US$83million Series B investment from 2015 in the bank — the money was used as leverage to obtain a US$130million line of credit in early 2016
• DigitalOcean has 400 employees today, up from 209 at the end of 2015

DigitalOcean, CEO and co-founder Ben Uretsky, said: “We’re approaching the cloud market from a totally different angle. No one is really paying attention to the smaller market.”

Written by Leah Alger

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The IDC illustrates that ICT is dependent on new technology, with traditional business technology revenues in decline as cloud-based computing solutions rise.

The study shows that new technologies known as ‘Innovation Accelerators’ will provide up to US$7.4trillion in the aggregate industry revenue by 2020, with US$1.8trillion annual sales being added to the overall size of the industry by the end of its forecasted period.

The annual revenue of IoT is forecasted to reach US$1.3trillion by 2020, although security, virtual reality, cognitive systems and 3D printing will also add to the growth of the ICT market.

‘Big data is at the heart of the fastest-growing opportunities’

Vice President at IDC, Stephen Minton, said to Cloud Tech: “The traditional ICT market of data centre infrastructure, client devices, software, services, and telecommunications is now growing at a rate not much faster than real gross domestic products (GDP), and increasingly resembles a mature sector of the overall economy.

“Device sales are now dominated by mobile devices and cloud service providers represent a growing proportion of all infrastructure hardware and software sales, while big data and analytics are at the heart of the fastest growing opportunities. Meanwhile, growth in the telecom market is already entirely dependent on mobile.”

Asia-Pacific is forecasted to reach over US$600 billion by 2020, representing the largest market for Innovation Accelerators, followed by the United States, Latin America, Central and Eastern Europe, the Middle East and Africa.

Written by Leah Alger

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