An Interview with
Principal Analyst for the Internet of Things
Frost & Sullivan
In this excerpt from a recent interview, Dilip Sarangan introduces Frost & Sullivan’s IoT 2.0: Predictive Computing Practice, discusses what people may not know about Frost & Sullivan’s IoT coverage, highlights some key industry trends, and identifies a variety of growth opportunities.
“The Internet of Things is not new at Frost & Sullivan. We track the applications for IoT in a variety of vertical markets, and have done so for decades, helping clients identify viable growth opportunities.” – Dilip Sarangan, Principal Analyst, IoT, Frost & Sullivan
What is your role at Frost & Sullivan?
My role within Frost & Sullivan is to coordinate the research and consulting services for our unified Internet of Things program. In its 50+ years in the business, Frost & Sullivan has covered most of the applications that now roll up into IoT. This is outlined in the image below.
How do you distinguish between Machine-to-Machine (M2M) and Internet of things (IoT)?
M2M is about connectivity and connecting devices to the network. IoT is basically M2M 2.0—it is about creating the ecosystem to provide security, storage, the cloud, and data analytics to transform the data collected by devices into actionable intelligence. The graphic below shows a representation of how we define and differentiate M2M and IoT.
Our vertical coverage includes data from various segments: automotive, industrial automation and process control, security and surveillance, connected consumer services, energy and environment, building technologies, healthcare, defense, and smart cities.
Our horizontal coverage provides a detailed analysis of IoT ecosystems, partners, platforms, connectivity, cloud, Big Data analytics, and so on. We also use Frost & Sullivan’s Mega Trends to provide relevance to why some of theseIoT technologies have the growth trajectory they do by incorporating macro-level economic and social trends that have an impact on enterprise and residential customers.
What does the everyday person need to understand about the IoT?
While everyone thinks of IoT as connected devices, that is not always the case. With these devices being connected, enterprises must understand that people and processes are a vital part of what must be connected to really provide value and help achieve the typical goals or reducing operating costs, generating revenues, or improving organizational efficiencies.
From a consumer standpoint, they must really understand the difference between connecting devices to the Internet and the need to connect devices to the Internet. Not all devices need to be connected. There are significant privacy and security concerns with IoT today and consumers must really analyze the impact of putting private information online and tread that fine balance between convenience and security.
What are the biggest challenges that you are seeing in the IoT/M2M space?
Based on our research, there are some areas that are particularly troubling:
- Security and Privacy: Security is the biggest concern for all IoT applications. One of the factors that must be considered is the difference between security and convenience. IoT solutions (this is especially true for consumers) provide a large degree of convenience. However, at some point, security must be compromised to achieve convenience. What every manager or user must evaluate even before undertaking an IoT project is where is that line in the sand for me? At what point will enterprises and consumers give up convenience for better security? Until that question is answered, IoT will continue to suffer from being overly hyped.
- Cost: For enterprises, bringing all these disparate devices, processes, and people together to be managed with a central system that provides a 360 degree view of an organization, will not be cheap. In a lot of cases, it might require a complete overhaul of existing systems and retraining users on new systems. The costs can be to the tune of millions of dollars. This large upfront investment is hard for any organization to swallow. In addition, technology is evolving so rapidly now that a system that might work best today may be obsolete in a couple of years. Organizations must strategize on future needs and build the solution that will serve them best for the long term.
What are the biggest successes you have seen in the IoT /M2M market to date?
IoT applications that have been around for a long time have been the most successful till date. In my opinion, fleet management and asset tracking and monitoring are applications that have helped enterprises save money and increase efficiency. In addition, the industrial segment provides the most opportunity for IoT in the short term. This includes factory automation but also other industrial-type solutions such as oil and gas pipeline monitoring, tracking and monitoring at ports, agriculture, and so on.
From a consumer standpoint, the alarm monitoring industry has seen great success over the past 15 years. New market entrants aid in increased competition that will stimulate innovation and possibly make the vision for smart homes a reality in the next few years.
I think that the technology is now available to make the vision of IoT a reality. However, we are caught in the cycle of the “chicken or the egg”. We need the scale to reduce device costs but the cost is too high to increase the demand. At this point, it might be wiser for system integrators and service providers to take a hit on hardware costs to put the solution in that will help with long-term growth.
What are the biggest growth opportunities?
Within IoT, there are opportunities at every level of the ecosystem and within many vertical markets. For instance, in connected home, the real opportunity is not in connecting elements or hardware, but in the value-added monitoring capabilities and integration of the home with the vehicle. Just as with that example, IoT is really blurring the lines between vertical markets.
Take Oil and Gas (O&G) as an example. In the past, O&G vendors were interested in opportunities in upstream, downstream, and midstream. Now, integrated O&G vendors own gas stations and need to collect data from gas pumps, retail systems such as Point-of-sale (PoS) systems, digital signage, and so on. In addition, oil companies must understand the data collected by utilities about their residential and commercial customers, their energy usage, uptimes, downtimes, and so on.
Connecting billions of devices and sensors generates a large amount of data. Analyzing and creating intelligence from this data (and learning from it) will create growth opportunities for IoT service providers and their ecosystem partners.
IoT is an evolving market, with new entrants in the ecosystem every day. To survive and thrive in this industry, companies must focus on enhancing their core areas of expertise and forging partnerships in areas where better solutions exist. Without a thriving ecosystem and constant evolution, companies will be finding things difficult over the next few years.
Since 2006, Dilip Sarangan has held positions of ascending significance at Frost & Sullivan, including Research Analyst, Industry Analyst/ Lead Consultant and Research Team Leader for the security industry. He also forecasts disruptive technologies. In his current role as Industry Principal, IoT & Digital Transformation, he covers the horizontal IoT ecosystem and marries that with vertical market and application expertise.