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IoT in Digital Transformation

Market Analysis

by David Mayer

published on Jan 15, 2019

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Report Overview:

NelsonHall's market analysis of the transformational IoT services industry and trends consists of 74 pages. 

Who is this Report for:

NelsonHall’s “IoT in Digital Transformation” report is a comprehensive market assessment report designed for:

  • Sourcing managers investigating sourcing developments within IoT technology
  • IT and business decision makers exploring the benefits and inhibitors of transformational IoT as evidenced from the clients and vendor capability
  • Vendor marketing, sales and business managers developing strategies to target opportunities within the IoT sector
  • Financial analysts and investors specializing in the IT services and BPS sector

Scope of this Report:

This report analyzes the global market for transformational IoT and its constituent services. The report addresses the following questions:

  • What is the current and future market for IoT digital transformation services?
  • What are the customer requirements and how are they changing?
  • What are the benefits/results that vendors have been able to achieve for their clients?
  • What services are customers buying from transformational IoT vendors?
  • What technologies and platforms are being utilized and what are the latest developments and trends emerging?
  • What is the size and growth of the transformational IoT service market by geography?
  • What is the size of the transformational IoT services market by industry and which is seeing increased demand?
  • What are the vendor selection criteria, challenges and critical success factors for vendors targeting IoT-centric digital transformation services?
  • Additional topics include: industry-specific developments, trend identification, platform technology trends, and best practices in vendor selection and implementation 

Key Findings & Highlights:

The global transformational IoT services market is worth $3.2bn (estimated in 2018), with average CAGR of 23% through 2022. The United States, UK and Continental Europe, Japan, and Middle East are the largest and fastest-growing geos.

The IoT services landscape bears little resemblance to the market of five years ago. Where M2M technology was primarily used in point solutions during the early part of this century, it is increasingly being viewed as a transformational centerpiece technology, and in particular, a means to understand, manage and control entire supply chains across multiple organizations.

If IoT 1.0 was transactional, IoT 2.0 is transformational. The expectation set of IoT service offerings has moved beyond the ‘hub-and-spoke’ concept of multiple assets or vehicles contributing information inward to a centralized environment at relatively low data resolution.

Organizations seeking transformational IoT services see interconnected devices on the production floor or the petroleum field, working together to optimize task outputs, integrating with upstream and downstream supply chain partners, and understanding the operation of assets at the component level with Big Data-scale information sharing on a daily basis.

The market remains quite fragmented, with no one vendor holding a 10% share as yet. Accenture, NTT DATA, IBM, TCS, and Atos all have at least 5% market share. 

Table of contents:

Table of contents:

  • 1. Introduction
  • IoT is moving from being a point technology…..
  • …to becoming a key component of digital transformation….
  • …with an increasing emphasis on standards and interoperability
  • 2. Changing Shape of the IoT Services Market
  • IoT is progressing from providing asset visibility to becoming part of the core digital fabric of the extended enterprise
  • The current IoT market is driven by asset lifecycle management, process optimization, and cognitive awareness
  • By 2022, IoT will be the digital fabric for manufacturing and energy firms
  • IoT will evolve from point solution to transformational hub by 2022…
  • Now (2018-2019)
  • Next (2020-2022)
  • …and then to ecosystem IoT by 2025, demanding increased focus on interoperability and connecting IoT ‘Islands’
  • BY 2025:
  • 3. Customer Requirements
  • North America leads in volume for IoT-centric digital transformation
  • Asset lifecycle management, process optimization, cognitive awareness are the top drivers for transformational IoT adoption
  • Adoption Drivers
  • ‘Walled Garden’ standards, security, and sensor refresh are key inhibitors to continued expansion of IoT 2.0 adoption
  • Adoption Drivers
  • The most common use cases for transformational IoT today are manufacturing process optimization, asset lifecycle management, smart inventory management, and decision process acceleration
  • The ‘Cognitive Core’ of AI and ML is broadening in IoT usage
  • Adoption Drivers
  • 3.1 IoT Transformational In-Use Case Studies
  • 3.1.1 Manufacturing IoT Case Studies
  • Tech Mahindra assisted manufacturer in improving asset location tracking and reducing pick times
  • Objectives
  • Results
  • TCS achieved 50% manufacturing lead time reduction for CPG company
  • Objectives
  • Results
  • Infosys assisted Toyota in achieving an asset performance improvement of 10% for its spindle machinery
  • Objectives
  • Results
  • 3.1.2 Energy IoT Case Studies
  • EY assisted European petroleum refiner in improving the predictive accuracy of its refining model by 50%
  • Results
  • Atos assisted Indian petroleum provider’s retailing operations in reducing pump downtime
  • Objectives
  • Results
  • TCS assisted a major Japanese energy products manufacturer in saving $3m per coal-fired boiler
  • Objectives
  • Results
  • Genpact assisted oil & gas producer in achieving 90% prediction accuracy for new wellbore drilling
  • Objectives
  • Results
  • 3.1.3 Healthcare and Life Sciences IoT Case Studies
  • Virtusa designs smart blister pack to assist healthcare services provider in increasing medication compliance
  • Objectives
  • Results
  • Capgemini assists Welch Allyn in reducing device support issues by 30%
  • Objectives
  • Results
  • NTT DATA assisted medical analysis laboratory in increasing test throughput to ~500K analyses per day
  • Objectives
  • Results
  • 3.1.4 Transportation and Logistics IoT Case Studies
  • Sopra Steria assisted SNCF in reducing track incidents by 38%
  • Results
  • Genpact assisted aviation operator in reducing maintenance backlog by 50%
  • Objectives
  • Results
  • 3.1.5 Smart City IoT Case Studies
  • EY assisted Suez waste management in reducing claims for missed stops by 60%
  • Objectives
  • Results
  • 4. Market Size and Growth
  • Global IoT transformation market will grow at 23% CAGR to $7.3bn by 2022
  • ...with significant growth in U.S., U.K. & Europe, Middle East, Japan
  • Manufacturing, energy, logistics sectors lead global market
  • Forecast assumptions: interoperability becomes the norm; 5G becomes a source of tailwind; AI/ML in IoT matures quickly
  • 5. Vendor Market Shares
  • Accenture, NTT DATA, IBM, TCS lead IoT digital transformation market by revenue
  • 6. Vendor Offerings and Targeting
  • The service delivery architecture of transformational IoT involves four layers….
  • …with solution development typically taking 6-9 months
  • IoT-centric service delivery is moving from engineering group to the digital transformation organization
  • T&M dominates commercials with per-asset, outcome-based pricing on the rise
  • Ideation is an onshore task, but solution development is done offshore
  • IoT monitoring and analytics delivery is predominantly offshore
  • Transformational IoT delivery has transitioned faster from PoCs to production deployments in 2018 – and will continue to accelerate
  • Vendors are increasingly investing in soft sensor technology and enhancing the cognitive core….
  • …with vendor roadmaps also focusing on accelerator development, solution preconfiguration, MES/SCADA connectivity, and IoT microservices….
  • …in order to enhance IoT ease and speed of deployment
  • Vendors’ accelerator agendas center on minimizing time to PoC & MVP…
  • Accelerators
  • …with preconfigured IoT solutions used to reduce total design and testing time
  • Prebuilt IoT Solutions
  • Cognitive core investments are being undertaken to provide hybrid approaches to anomaly detection and resolution…
  • Cognitive Core Solutions
  • …with investment in MES/SCADA connectivity to expand the reach of IoT solutions
  • MES/SCADA Connectivity
  • MES connectivity prioritization favors GE, Siemens, ABB, & Rockwell
  • Microservices architecture provides solution modularity
  • Microservices Architecture
  • The U.S. and EMEA dominate target geographies for service providers
  • Manufacturing, energy, healthcare are most targeted verticals
  • The Fortune 1000 is the primary target for IoT vendors
  • 7. Selection Criteria, Challenges, and Success Factors
  • Primary drivers of transformational IoT vendor selection are environmental reach, security, and cognitive capabilities
  • Vendor selection is strongly influenced by use case experience and long-term vision for the transformed environment
  • Vendor challenges to success include security, performance expectations, infrastructural fragmentation…
  • Downstream success for IoT transformation vendors depends on their reach beyond the enterprise, interoperability...
  • …analytics maturity, edge capability, and digital twinning resolution
  • …together with analytic vision, and solution scale
  • Appendix I – Vendors Researched
  • IoT digital transformation services vendors researched

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