Why CSPs must deploy IoT device management in SaaS
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All communication service providers (CSPs) aspire to become digital service providers (DSPs). To achieve this, most CSPs have taken initiatives to move forward in this direction. However, the paths taken to achieve this have varied significantly among CSPs, for various reasons, such as local market dynamics. Some are digitalizing their existing operational infrastructure – to enable a digital experience for consumers, while others are virtualizing their networks – to be more agile. However, almost all CSPs are expanding their offerings portfolios by adding new digital services – to diversify their sources of revenue (see Figure 1).
Figure 1: Analysys Mason’s CSP-to-DSP equation – three key elements of becoming a DSP
The Internet of Things (IoT) sector offers CSPs an opportunity to expand their portfolio and add new sources of revenue. It is an area that is increasingly becoming a part of our everyday lives. For consumers, it ranges from home automation services to smart watches, while smart meters and connected cars offer good examples for the enterprise business. Furthermore, the market is expected to grow over the next few years. The need for connectivity, to enable IoT solutions, makes CSPs a key participant in this sector. However, connectivity services only form a small portion of the available opportunity (see Figure 2). According to Analysys Mason, CSPs can adopt four approaches when formulating their IoT strategy. These are as follows.
- Connectivity – a must-have capability that all CSPs must offer.
- Generic platform – provide additional capabilities, such as device management, to help developer and enterprise customers create and support their IoT solutions across different verticals.
- Vertical-specific platform – offer capabilities, such as applications for specific verticals, but stop short of providing all components of these solutions.
- End-to-end solutions – offer all components of a solution.
Figure 2: IoT value-chain highlighting CSPs’ ‘natural habitat’ based on experience gained from offering traditional services
Extending their device management expertise to the IoT segment will be a low-cost initiative for CSPs, particularly now, because most vendors are adopting a cloud-delivery model for these solutions. The cloud-delivery model has low set-up costs, and offers the ability to scale as required. This also reduces upfront costs for CSPs, because these systems can support consumer-focused IoT solutions, such as home automation and security. In addition, CSPs’ enterprise customers also have the ability to scale depending on their needs and requirements.
Figure 3: CSP spending on SaaS-based device management systems, worldwide, 2017–2021
The availability of cloud-based delivery of device management systems is enabling CSPs to serve small and medium sized enterprises (SMEs), whereas in the past, CSPs primarily worked with large organizations that required bespoke solutions. Analysys Mason forecasts that SaaS-based spending on device management systems will grow at a 44.6% CAGR during 2017–2021 (see Figure 3). This growth will be driven by the need to support IoT devices for consumers and enterprises.
For more information, see Analysys Mason’s Operator approaches to IoT: from connectivity to platforms and full solutions. Available at www.analysysmason.com/operator-approaches-iot-jan2017.