IoT is the Future of Telecoms

Telecoms companies are fairly advanced at managing Internet of Things devices for simple customer situations, but there is work to be done before they can manage complex IoT ecosystems such as smart cities or smart energy.

In my last blog "Telecoms: From Optimization to Transformation", I said that in the next two years, we will see telecoms focus on optimizing their existing businesses and infrastructures; this will be followed by two years of focus on new business models. Phase 1 of this will be creating value through optimization. Now I will discuss the next phase.

Phase 2: Creating value by a mix of optimization and transformation.

A.   Internet of Things in ecosystems. The IoT is an ecosystem that comprises “Things,” communications, applications and data analysis. Telecommunication companies already benefit from this and are doing well in this area since they are good at managing the blurring physical and digital worlds in the ‘not too complex’ customer situations, like predictive maintenance for a manufacturer or smart parking spots for a municipality. However, for broader ecosystems, such as smart energy, traffic management, waste management or smart buildings, there is an inter-dependency upon each other, which means they need to share data and services to ensure the end-user experience is smooth and efficient. This goes far beyond traditional integration and API capabilities.

B.   IT and OT. The key challenge is that IoT physical devices do not live in the world of IT, but rather in the world of OT (operational technology). These are often completely separate parts of an organization with different personnel, approaches, drivers, and objectives. Successful IoT initiatives require the seamless combination of the OT & IT worlds to enable companies to benefit from the data available from the physical world to accelerate initiatives and gain exponential business benefit. And telecommunication companies have not reached the combination yet -- despite the broad partner network that they have built.

C.    High value IoT products and services. Telecommunication companies should collaborate and consolidate their offerings while leveraging those vendors who can provide a digital business platform that can be their gateway to their ERP, CRM and other systems of records. I expect that an uptake will take some more years when telecommunication companies will offer end-to-end, high-value IoT products and services that will generate new revenue streams with new ecosystems.

Gaining value from optimization works only for so long and then it can become a liability. For creating value through digital transformation, the IoT will play an important role. My advice to telecommunication companies would be to discuss a mix of optimization and transformation in their digital business strategy at the board level and start executing the strategy and monitoring as soon as possible.