Tuesday, March 19, 2024
HomeEditor's ChoiceThe Way Ahead For IoT Startups: Collaboration And Co-Creation

The Way Ahead For IoT Startups: Collaboration And Co-Creation

By Mukul Yudhveer Singh

- Advertisement -

Unless startups in the IoT ecosystem give their customers 4x to 5x return on investment, their solutions will not be adopted widely. It is better to realise this in the pre-stages of developing a solution than after burning money. So, they should spend time with the customer. More the time spent more is the understanding developed on what the customer really wants to achieve. Read on for more of such valuable advice.

The Internet of Things (IoT) has been gaining importance in the last few years but has witnessed increased adoption after the havoc caused by coronavirus. With forced shutdowns all over the world, industries now see IoT as a necessity to survive in the market.

- Advertisement -

“IoT is a complete ecosystem of hardware through connectivity and platforms. Aftersale services are the most critical yet neglected aspect of this ecosystem,” says Anand Bhandari who heads NB-IoT, Smart Utilities and Smart Assets at JioThings. He adds, “The journey of IoT can only begin when the ecosystem comes out of the blind-man-and-elephant scenario, each trying to look at IoT from his own prism.”

As per a study done by Zinnov, there are over 1,200 public-listed large enterprises in India with a current IoT adoption rate of around 35%. The Zinnov study also discloses that India is one of the richest talent ecosystems for IoT, with 30,000 to 40,000 professionals dedicatedly working on this technology. Yet, experts feel that the adoption rate is much slower than any report on IoT has anticipated so far.

Where the problem lies

The problem lies both on the seller as well as on the buyer side. People are always excited to talk about IoT and its implementation but deals between sellers and buyers do not close that easily. Sellers should focus more on IoT solutions as a business case development concept rather than as a business development concept.

“The business development cases give IT heads and CTOs a reason to push through to have internal teams on the same page of implementing IoT. I talk to people who have a lot of fancy use cases, but nothing has made money,” notes Amit Satpathy, EVP & Head, Vodafone Idea IoT Business.

Additionally, different sellers might also be confusing customers with different technologies and models. There is a good number of IoT sellers available in the market, and this simply means that customers have a lot of technologies and use cases to choose from. However, a lot of options in the technology might be confusing buyers more than they are helping them decide. What adds more worries to the extended list of options is the fact that only a few focus on what the customer wants to achieve through the IoT. So much so that even the good ones appear to be under the same shade as ones promising fancy use cases.

“Going through so many technologies makes the buyer think about how soon they will mature more. The customers simply say that they will wait for the technology to get more mature before making a decision. As nobody’s focusing on the outcome, and the buyer is thoroughly confused, they keep postponing their decision saying, okay, fine. Let me gain more knowledge. Let this thing mature,” explains Amit.

Then comes the apprehension associated with implementing Industry 4.0 measures in an organisation. Many organisations looking to benefit from Industry 4.0, commonly referred to as IIoT, do not want the technology implemented at the core of their operations.

Instead, they tend to get these solutions implemented in areas where there are a lot of individuals working already. These solutions end up facing resistance from people who have already been working in that domain.

“If you see the setup of a large organisation, you will notice that the guy who enjoys a lot of power is usually sitting in a remote area, and the problem arises when this leader starts feeling that he will get redundant, and the problem amplifies when his team starts feeling that they will also get redundant,” notes Amit.

One solution for this can be to inform the customer at the stage when he wants the answer to where he should start in terms of implementing IoT. That, as per Amit, is the golden question that can break the ice between the seller and the buyer. Amit is also of the view that the next five months, in terms of IoT implementation, will not be the same as the last five years. The outbreak of Covid-19 has made businesses engage in a fight for survival, and IoT is now being seen as a major weapon to win this fight.

Cementing what Amit explained, a report by Markets and Markets notes that the global impact of Covid-19 on the IoT market size is expected to grow from $150 billion in 2019 to $243 billion by 2021 at compound annual growth rate (CAGR) of 13.7% during the forecast period. The report also predicts that the countries falling under the APAC region including India, China, and Australia will showcase a huge base amidst the Covid-19 outbreak. For the record, countries in APAC accounted for more than 42% of the total installed smart meters in 2018.

Next in line as a problem affecting the adoption of IoT is the affordability parameter. There are reports claiming that there are billions of connected devices already existing on the planet. Such reports also hint at IoT market being an opportunity upwards of $10 billion.

However, the irony, as per Trushit Buch, India Lead, Codifyd Inc, is that most of such reports do not mention the exact addressable markets. He is of the view that while such reports are great for a consulting purpose, they may not be as good when it comes to the practical part.

“Primary reason in my mind is affordability. I think the addressable market is sort of driven by the affordability of the solution that it provides. IoT has been here for a while, but we should not miss the truth that large-scale manufacturers sort of survive quarter to quarter, and a lot of them see IoT as a science based experiment. Hence, most of the companies put the same under the tag of R&D department,” says Trushit Buch.

He adds, “Given these challenges, how does IoT come at the heart of operations of such companies? I think what Covid has done is, it has changed the perception of IoT from could-not-afford to the could-not-survive-without-it status. Obviously, it would be a progression that would happen, but nobody would be able to get away from it as it happens. The question at the end of the day is, whether IoT implementation would be able to generate an additional revenue channel or not, or is IoT good enough to help the organisation save tremendous amounts of money?”

“I second you on that. India was 150th on the list of most data consuming countries when the data tariffs were on the higher side. But since data became cheaper, we have become the number one consumer of data. Affordability of IoT solutions available in the market is a big factor and challenge indeed,” says Anand.

Interestingly, a survey by Gartner notes that 47% of organisations the research and consulting company spoke to, plan to increase investments in IoT. However, the same survey also found that 35% of the respondents were looking to scale down their investments in the technology.

The biggest of these challenges comes when an organisation offering IoT services goes on to explore a new case. The experts agree that this is true in most cases, because with every company an IoT solution is pitched, the uniqueness of the use-case also changes. New use cases, in turn, affect the affordability factor further with more research and development, and in some cases the proof of concept that needs to be established.

In most such cases the IoT provider passes on the additional expenses to the client to meet RoI. Data processing further adds to the burden of additional costs as there are instances where tens of GBs of data gets generated in a single day. IoT providers, especially startups, have to find a way to compress this data, which in turn might make them lose some of it in the process.

“If you’re doing something on IoT, it’s not something that’s been explored before. It’s probably a new kind of use case. You don’t know what kind of numbers you can pitch them. How am I supposed to give across, you know, what is the amount of money you’re saving, or what value you’re going to get, when this is not something that’s been implemented before?,” explains Abhishek Satish of Vicara.

One of the answers to most of the problems mentioned so far might be co-creation. By co-creation, as Anand explains, IoT developers should work together with enablers and customers to create the solutions. Anand is of the view that co-creation helps in crossing the chasm from pilot to real-use cases.

Collaborations and end-to-end solutions

End-to-end solutioning, not a new term in business but relatively still a concept in the IoT vertical, stands for solutions that deliver big data, insight, management, operational efficiency, compliance, and automation in order to reduce operational costs. These kinds of solutions are not present in large numbers in the IoT arena, and the existing ones are either too expensive or require big-scale deployments. This simply means that a big organisation looking to implement IoT solutions, or a small organisation looking to automate its processes, might have to spend a bombshell upfront. Then comes the dilemma of use-cases and PoC, which make the problem a chicken-and-egg story.

“If I have to bundle all the solutions in an end-to-end thing, then I will end up with out-of-box requirements posted by every customer. In terms of plug-and-play solutions either I develop an end-to-end solution under my shop, or I collaborate with different providers and try to make my solution affordable. The beauty of the second model is that these providers I am working with already have solutions, and those solutions are helping me make an end-to-end solution appeal to a customer in a much better and affordable way, “ says Trushit.

However, there could also be a third approach, the approach that starts with pre-integration. This approach gives creators space to create solutions by collaborating with platforms, enablers, integrators, and implementers before actually reaching out to a company for pitching solutions. This is different from the second approach as the creator here is working on a solution in advance, whereas in the second approach the creator is working on a solution after getting a list of requirements from a potential client. Also, who to collaborate with in the third approach is decided in the pre stages, whereas in the second approach a creator starts looking at possible collaborations after knowing what kind of solution is the client looking for.

“I see this as an opportunity which still is a blank slate. If I am aggregating a large sum of data from a large manufacturer, each product queue would have a sensor. I, as a manufacturer, would not sell it to my customer but I would be needing a distributor to sell that data. This entire process is painful because it involves costs at every stage due to the presence of people at every stage. If you can charge for that data, the benefits include better time to market. The data that you have given to an IoT company is now giving you money in an iterative fashion,” feels Trushit.

However, any end-to-end solution cannot be completed unless there are multiple parties involved in creating and deploying that solution. Some examples of teams that are required to be involved in any end-to-end solution are cloud teams, developers’ teams, applications providers, edge computing teams, and more. All these teams, in a lot of cases, can either be from the same vendor or from different vendors.

Since, there is an ecosystem working on the same case, it can end up making win-win for everybody. Such collaborations can not only help democratise the data but it can also open doors for providers to work on definite solutions instead of forcing them to work on everything on their own. The same can also help bring down the time required to develop solutions as different parties are working on different aspects of the same.

“The only challenge is people will have to change the way they pitch solutions. Instead of saying I provide this, people will have to say I am responsible for this. Providing and moving out doesn’t mean you are concerned about the client,” says Anand.

The question of end-to-end solutioning is also more pertinent from the buyer’s side as it is he who is going to be spending on getting the solution deployed. Hence, the benefits of the same should be clearly visible to the customer. Such solutions, as per Amit, should give more clarity on the outcome to the consumer. Most customers are usually focused on what they need and talk less about which technologies can help them reach there.

“It, as an end-to-end solution, is better if it’s given to one service provider. A small problem in the solution can cause a mad rush and blame game among all the providers in the ecosystem,” feels Amit. He adds, “An end-to-end solution from a single source reduces risks and makes the single party responsible for everything that is part of that solution. Moreover, innovation is much faster with integrated IoT.”

From the solution provider’s point of view, the biggest battle in this journey usually start when different pieces of the equation do not fit together. There could be times when the hardware available does not mix well with the infrastructure of a company, or there can be instances where software-hardware integration become difficult. These instances usually leave creators and service providers with just one option, and that is to start everything afresh.

For example, a manufacturer working on SMT lines may find sensors not good enough to gather data that he really wants. Similarly, there could be manufacturing units where heat generated is not allowing the sensors to function properly. Here, better sensors (the new ones) will cost more and will require more time to be proven to work efficiently.

“I think the issues come when you are building a solution and using someone else’s product. There’s only a certain amount of control that you have over what you can do with what’s available. So, as a provider you must always be clear on what you can build from scratch and what you need to outsource to build from scratch. However, at the end of the day, you as a company should be accountable for the solution that you are providing. This should be irrespective of the number of vendors working with you,” says Abhishek.

He adds, “You should not go to a client and tell him the problem was caused due to a certain fault in a certain part of the process provided by a vendor of yours. No client would like to hear that someone else is accountable when you were the one who pitched and provided the solution. Clients would not like to run to third-party vendors in any case!”

An IoT solution makes absolute sense when the responsibility for it to work flawlessly is taken absolutely by one party. There is no way a client would expect data management from someone else and making the sensors function the way they were supposed to from someone else. While there can be multiple vendors responsible for creating an end-to-end IoT solution, the responsibility for making sure that the solution works as per the standards set should always be on the shoulders of one party. There’s a saying that goes well in such scenario: Too many cooks spoil the broth!

The startup part

Given the present circumstances, there is a clear mandate that the health and medical industry is currently leading in terms of IoT adoption. Hospitals, primary care nursing homes, pharmaceutical companies among other verticals of the health and medical industry are trying to find and implement IoT solutions for the benefit of humans. However, shutdowns during Covid-19 have made the manufacturing industries think more about IoT. The recovery in the manufacturing sector, as per a Deloitte report, may take longer to reach pre-pandemic levels. Projections based on the Oxford Economic Model anticipate a decline in annual manufacturing GDP growth level by as much as 3.5% for 2021.

Pharma logistician using IoT based on blockchain
Pharma logistician using IoT based on blockchain

Distribution companies, as per the Deloitte report, are investing in IoT at a substation level to better forecast demand. Smart electricity meters are in fact the biggest example of how big the IoT vertical is getting, and these smart meters will likely enable more IoT-related use case development.

Similarly, managing and monitoring large-scale wind and solar farms is also a problem that can easily be addressed with IoT. The government of India has set a target of achieving 175GW of renewable energy capacity. This target includes 100GW of solar energy and 60GW of wind energy by 2022.

In healthcare sector, IoT-enabled devices like wristbands and smart watches with heart monitoring and heart rhythm detection have already proved their worth.

Smart electricity meters are in fact the biggest example of how big the IoT vertical is getting
Smart electricity meters are in fact the biggest example of how big the IoT vertical is getting

In agriculture sector, India has not done much in terms of empowering it with IoT, despite a majority of India’s population depending on agriculture as their primary source of income. The government of India, as per the Deloitte report, is advocating the use of sensors in agriculture value chain. The deployment of IoT sensors to collect and transmit data in agricultural activities will lead to the development of advanced techniques in precision agriculture monitoring.

“Other sectors, such as automotive, metals, and mining, are also deriving significant value from IoT. Therefore, this allows us to predict that IoT is expected to become a key investment area around later 2021, once cash flows improve,” reads the report by Deloitte.

It is critical for startups in the IoT ecosystem to realise that unless the solutions they are offering are giving their customers 4x to 5x return on investment, the solutions will not be adopted widely. It is better to realise this in the pre-stages of developing a solution than after burning money. Startups, in most cases, are usually short on finance, and such mistakes only aggravate their problems. The best way to make sure that the solution a startup is offering would deliver that kind of RoI starts with the time a creator spends with the customer. More the time spent, more is the understanding developed between the creator and the customer on what the latter really wants to achieve.

“Startups should not go too niche as well. It is extremely important that you take the first few steps right. People who you partner with are extremely important. It is better to reach clients through an accelerator or an incubator instead of going and pitching the solution to a client directly,” advises Abhishek.

“What the startups need to do is, think more on the execution side. They have to be able to say that I might or might not be able to support pan-India operations, but I can definitely support 24×7 in Bengaluru, Delhi, Mumbai, or a region they have the strongest presence in. It is usually the execution that is the more difficult part,” says Amit.

Startups, as per Trushit, should not go too much into innovation. The innovation that they should focus on must be in terms of the after-sale services they offer. They could work on innovation that helps them better their connections with the industry, partners, and their clients. The focus should be on innovation for a vertical, and then how they can apply the same innovation in different verticals.

Amit adds, “Startups should not burn their money on tweaking products just to meet demands of a single client. They should also restrain themselves from becoming R&D centres for large organisations who offer them free-of-cost PoCs. The way to do this right is by collaborating with some large trustworthy and transparent organisations.”

“Initially, it takes a long time, but if in the long run you are able to get ten logos which are really referenceable, you can create your kingdom on that,” says Trushit.

Additionally, startups should never underestimate the service part, as it can help with a tremendous amount of revenue. The biggest areas where IoT startups can start are remote working, telehealth, and e-commerce. Remote working makes every enterprise a potential customer, and startups should never forget that.

As Amit concludes, “Startups are the arteries of the IoT ecosystem!”

This article is based on a panel discussion held during the IoT Startups Show on the Tech World Congress Platform.


Mukul Yudhveer Singh is a technology journalist at EFY

- Advertisement -
Related Articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

News

Solutions

Most Popular