The rise of the Internet of Things (IoT) is creating all kinds of new opportunities for IT service providers. But like most new areas that open suddenly, there’s a rush on as different types of services providers compete to stake their claims.
A survey of 200 IT decision makers conducted by TechValidate on behalf of Red Hat finds that IoT platform providers and systems integrators are tied at 43 percent each in terms of being engaged by IT decision makers on IoT projects. IT providers came in a close third at 37 percent, followed by communications specialists at 31 percent and IoT consultants at 25 percent.
IoT competition heats up
Obviously, there’s room for interpretation when it comes to how end customers distinguish between what one type of provider is versus another. What's clear at this juncture is that two broad types of partners are squaring off for IoT dominance. On the one side are various classes of carriers rolling out one IoT service after another. On the other side are traditional IT service providers looking to expand their reach well beyond traditional endpoints in the enterprise.
Neither of these camps will get very far without the other. After all, IoT solutions need to tap into global networks at some point. But historically many carriers have been challenged to deliver anything more than access to a dumb pipe. The real issue is which type of service provider will be the primary IoT contractor. Carriers are clearly making a major play, but the bulk of the actual application development work gets accomplished by IT service providers and systems integrators.
With the rise of IoT solutions what will change most is how tightly coupled applications and hardware will become. More often, the same solution provider will be chosen to deliver both. In contrast, hardware and software are usually governed by completely different acquisition and purchasing processes. For that reason, many solution providers will need to acquire additional hardware and software expertise to even be considered for an IoT project.
Challenges for IT service providers
The other major challenge IT service providers will face will simply be navigating who inside any given organization has actual budget authority. While IoT is one of the hot buzzwords of the day, operations teams that report directly to line-of-business executives have been implementing what are known as machine-to-machine (M2M) solutions for decades. In many IoT instances, the internal IT department lead by a CIO plays a secondary role. However, as IoT becomes more strategic many CIOs are extending their influence. IT service providers will need to carefully navigate the corporate politics at play within any given customer organization.
IoT is the next great trillion-dollar opportunity for IT service providers. The issues IT service providers will need to overcome to realize that potential span products, people, and processes. By any measure, working through all the issues will require a fair amount of patience. But as is often the case inside and outside IT, good things come most often to those willing to wait.