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IoT Services

Market Analysis

by Dominique Raviart

published on May 03, 2017

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Report Overview:

NelsonHall's market analysis of the IoT services market consists of 59 pages. It provides an in-depth understanding of the dynamics at play in the IoT services market.

Who is this Report for:

NelsonHall’s IoT Services report is a comprehensive market assessment report designed for:

  • Sourcing managers investigating sourcing developments within digital and, in particular, within IoT services
  • Vendor marketing, sales and business managers developing strategies to target IoT service opportunities
  • Financial analysts and investors specializing in the IT services sector.

Scope of this Report:

The report analyzes the worldwide market for IoT services. It addresses the following questions:

  • What is the current and future market for IoT services?
  • What are the client segments for IoT services, and their characteristics? What are the drivers, benefits, and inhibitors for each segment?
  • What is the size and growth of the IoT services markets by client segment, geography, service line, activity and sector?
  • How did spending grow in 2016 and how will it increase in 2017 and onwards?
  • How is the market organized? Who are the main vendors? How can they be assessed and compared? What are vendor challenges and critical success factors by market segment?
  • What are the offerings in the market?
  • How are IoT services shaping?
  • What are the delivery capabilities of vendors providing IoT services?

Key Findings & Highlights:

The IoT services market is an emerging and dynamic market. Current spending is limited, at ~$2.1bn, but growth potential is very high (2016-2021 CAGR of 26%).

The IoT services market is not a single market, but a series of nine major markets, centered around major vertical use cases. The vertical use cases are based on different IoT technologies, IoT platforms, middleware, and applications, as well as communication services. IoT’s underlying technology is therefore heterogenous and drives a wide ecosystem of technology partners for IT service vendors. This heterogeneity of the technology landscape will increase as the number of vertical use cases increases.

Spending growth will be relatively homogeneous across geographies. Looking in detail, North America is fast adopting connected car, smart manufacturing, and smart energy, while B2C IoT adoption is slowing down. In APAC, as in North America, B2B connected car, smart manufacturing, and smart energy account for ~65% of the market spending, and in addition, this region is adopting smart city/building and e-healthcare. The majority of IoT-related projects in APAC are conducted in China, India, and Japan.

In Europe, EU and country-led directives and initiatives have furthered the use of IoT in the manufacturing and energy industries.

Adoption of IoT services often results from consulting engagements, with clients aiming to identify IoT business cases. IoT consulting, from workshops to PoCs, will continue to remain important, while several major IoT systems integration programs will be launched in the next five years. Spending on enhancements and on monitoring services will remain limited.

Table of contents:

Table of contents:

  • Changing Shape of the IoT Services Market
  • The IoT market will experience a growth of ~23% CAGR to 2022 and will reach a market size of ~$7.2bn in 2022
  • Customer Requirements: IoT Services
  • The principal benefits sought by IoT clients are increased efficiency and enhanced products and services….
  • ….followed by better product and customer knowledge
  • Cost-cutting is an indirect benefit of automation established organizations looking to enhance, rather than replace, their business models
  • The principal drivers of IoT services projects are needs for efficiency gains, development of enhanced offerings, customer engagement improvement, and new business models
  • Market Size and Growth
  • The global IoT services market will grow at 23% per annum to reach $7.2bn in 2022
  • Efficiency gain clients are and will remain the largest client and fastest growing client segment thanks to Industry 4.0
  • North America is and will remain the largest IoT services market
  • Industry 4.0 has become the next big opportunity. Smart city also has high potential in Asia and, in the long-term, in North America and Europe…
  • .… B2C is becoming B2B2C, healthcare has high potential in US and RoW. Demand for connected car is solid. Industry 4.0 is the next main wave of investment
  • In 2017-18, organizations have moved from PoCs to mid-sized systems integration projects. This trend is accelerating
  • Vendor Market Shares
  • The global IoT market is led by Accenture, IBM, Atos, Infosys, TCS, and Harman
  • In North America, Accenture, IBM, Infosys, Harman, Wipro, TCS, LTTS and Genpact lead
  • In EMEA, the IoT market is led by Atos, Accenture, IBM, and Altran
  • Vendor Delivery Capabilities and Trends
  • IoT programs require skills that far exceed core IoT services
  • The IoT skills requirement is changing with client focus shifting from consulting and workshops and PoCs, to project implementations
  • Most IT service vendors are coping with this wide range of IoT capabilities through a CoE structure
  • Most vendors have put their IoT CoE under the responsibility of their digital units to benefit from skills in digital
  • Delivery currently requires client intimacy through an onshore presence, with global delivery sourcing focused on technology services. It will remain so for the next five years
  • Accenture, Altran, IBM, and Capgemini are well positioned with their onshore and offshore delivery mix
  • Most vendors are investing in (technological) accelerators, as they move to the implementation phase
  • Standalone accelerators: focus is on protocol mgt, analytics and AI at the edge
  • Vendor Offerings and Targeting
  • Most vendors are going to market through a use case approach
  • Most vendors are expanding their use cases from blueprints to IP-based
  • In the mid-term, vendors will need to rationalize their IP-based use cases
  • Service vendors will need to migrate their proprietary IoT platforms as add-ons to COTS
  • T-Systems, Infosys, Accenture, Genpact, and Capgemini have changed their IoT platform strategies already
  • All vendors have analytics capabilities supporting their IoT offerings. They are now investing in UX skills
  • Manufacturing provides immediate opportunities, and several vendors are expanding their offerings to industry 4.0
  • In the mid-term, vendors will need to enhance their security offerings
  • Vendor Challenges and Success Factors
  • Organizations targeting efficiency gains require consulting capabilities and IP based execution
  • Organizations focusing on improved and new products & services require the best of two worlds: consulting and IT services, offshore and onshore delivery
  • Organizations focusing on customer engagement improvement need a combination of digital agencies, product design, UX, and product engineering services
  • Organizations looking for new business models need a truly digital fail fast approach
  • Appendix I – Vendors Researched for Analysis
  • The following vendors were interviewed for this report:

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