IoT recipe for success series part 1: It takes an ecosystem

Over the past several years, I have met with dozens of customers around the world who are starting to implement the Internet of Things (IoT) to improve their operations or to offer new value propositions. As expected, some of these efforts have delivered spectacular success and others have resulted in disappointment. And no wonder—IoT is a complex, multidimensional transformation, demanding new skill sets, technologies, and business models.  

So how can you increase your chances of success? Over years of working with companies at various stages in the IoT journey, I’ve developed a “recipe” for IoT success, with eight essential ingredients. In this eight-part series, I will detail each ingredient. First up: “Build an ecosystem of partners; learn and co-develop with them.” 

In the technology industry, we are used to seeing multi-billion dollar businesses built on open systems, open standards and collaborative partner ecosystems. Many “traditional” industries, however, are still structured in a 20th century model of one vertically-integrated vendor offering a complete custom solution based on proprietary or semi-proprietary technologies.  

Now, IoT—with its high-velocity technology evolution and the end-customer expectation to take advantage of ICT cost curves—is driving a fundamental market structure transition. IoT is making every industry a 21st century technology industry, founded on openness and collaboration. Co-innovating with a wide range of partners has become an essential part of a successful IoT deployment. End-customers are no longer accepting custom, high-cost solutions that lock them into vendors and their often out-dated proprietary or semi-proprietary sets of technologies.  

IoT is creating a world of partnership ecosystems and customer co-creation. In this new “co-economy,” companies partner with other companies that contribute their unique capabilities and combine their skills, talents, and resources for anything from a one-off project to ongoing strategic initiatives. Many organisations are working with their end-customers to develop optimal solutions based on horizontal reusable modules that are both open and interoperable. The result is an open ecosystem of standards-based contributors of IoT solutions.  

So far, I have seen IoT vendors take two approaches to ecosystem development:    

  • Major vendors invest in developing vertical expertise and partnerships so they can provide vertical solutions based on horizontal capabilities. Some of these vendors may eventually evolve to become IoT platform providers by identifying and converging common elements across multiple vertical solutions into horizontal modules and capabilities.
  • Horizontal module providers join the major ecosystems to get designed into vertical solutions, but they themselves do not invest/develop vertical access and capabilities.

It’s clear that partnering is essential for IoT growth. But at the same time, if we are not careful, the ecosystem approach can also backfire and slow us down—it is complicated to work across multiple parties with different processes and cultures. It also requires significant changes inside your own organisation. And even when the solution is based on industry standards (which is essential), we still need to ensure interoperability and integration.

So here are three practical steps you can take in your first joint IoT project :

  • Do your homework, prepare for scaling: For the solution, pick the use cases that are both high priority for your co-development customer and partners, and also can apply to many other customers with little customisation. Don't’ develop a custom solution for just one customer; resolve intellectual property ownership between you and your partners up front. Your co-development customer will benefit from time-to-market advantage, lower cost, and vendor commitment, because the solution is part of your multi-customer roadmap.
  • Assemble the right team and include users from the very beginning: You need the right mix of skills, experience and perspectives, so assemble your team from both inside and outside your organisation with the long-term goal in mind (you will most likely work on multiple implementations together). Bring end-customers into the development process from the get-go—let them co-own the project with you; use rapid prototyping instead of Powerpoint.
  • Pace the team and measure progress: Start small, looking first at the four fast paths to payback I have identified in my book, Building the Internet of Things. Stay on track by establishing clear metrics and measuring KPIs. After an early success, you’ll be ready to tackle a bigger challenge.

Okay, so how does this work in the real world?  

One example is Cisco’s long-standing partnership with industrial automation and information provider Rockwell Automation. Cisco provides technology know-how in IT infrastructure, security, and collaboration, and market knowledge of the IT industry. Rockwell brings technology know-how in manufacturing automation, and market knowledge in manufacturing, transportation, mining, and oil and gas segments. By adding the industrial robot capabilities of Japan’s FANUC, we complete a solution that extracts data from robots and securely connects them with people, processes and things to provide insight into robot performance—all based on industry standards, of course. If a major element is still missing, then perhaps an eager startup can fill the gap.  

Whatever the nature and duration of the partnership, it should start with customers’ business challenges rather than each partner’s technical offerings. When the customer is at the centre, the whole ecosystem benefits. 

In my next instalment I’ll discuss ingredient #2: Attract and train new and existing talent.  

Strategic innovation in the digital age is powered by people connected to the Internet of Things (IoT). Maciej Kranz has written a definitive guide on how to implement and capture the unprecedented value of IoT. The first of its kind, Building the Internet of Things,” gets past the hype to guide organisations across industries through the IoT journey. 

Maciej Kranz, Vice President, Corporate Technology Group, Cisco
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