Communications Services Providers (CSPs) need an infrastructure that provides four key capabilities: Data Analytics, Device and Connectivity Management; Applications Support; and Flexible Billing. This is a guest post by SAP highlighting best-in-class examples.
Machine-to-machine (M2M) communication – the interaction between devices and centralized data sources through automated service platforms – is potentially a lucrative opportunity for communication service providers.
According to Ericsson and Machina Research respectively, by 2020, there will be more than 50 billion connected devices with M2M revenues reaching $948 billion. The revenue generated by communication service providers through M2M communication is directly proportional to their degree of involvement with it. But how can CSPs increase this involvement?
Providing connectivity for M2M services in itself is a promising revenue stream, but the real value for communication service providers is in going beyond connectivity and differentiating themselves by enabling end-to-end M2M solutions. E.g.: CSPs can provide connectivity for transportation providers and then extrapolate their revenue by offering analytics-as-a-service to help their customer enjoy operational benefits by gleaning the data available through connectivity.
M2M communication will challenge the way CSPs do business traditionally by introducing the Telco 2.0 ecosystem, characterized by multi-sided business models. CSPs will be at the epicenter of an ecosystem with a large number of upstream and downstream partners including content providers, individual software vendors, cloud infrastructure providers, consumers, enterprise customers and vertical industries. To be successful in this ecosystem, they will need an infrastructure to tie in all stakeholders and enable and monetize services.
The M2M infrastructure should fulfill four basic functions:
- Data Analytics to process the data collected from connected devices and provide necessary insight;
- Device and Connectivity Management to secure devices and the data on them and to keep them up-to-date with the latest applications and upgrades;
- Application Support for creating and enabling applications that run on connected devices;
- A Flexible Billing System to accommodate new and evolving business models.
Besides providing the infrastructure, CSPs need to approach the M2M opportunity strategically with a clear action plan in mind. The solutions across various industry verticals are diverse and must meet industry specific requirements and standards. CSPs therefore need to have a clear road map for the industries they want to target to earn ROI. In the near future automotive, healthcare, utilities and transportation and logistics industries have the highest revenue-generating potential, making them the best targets.
Although M2M solutions tend to be industry-specific, CSPs can be more efficient by reusing the four basic functions mentioned above across all industry verticals. A framework fulfilling these functions provides CSPs a launch-pad to win in the M2M communication space as they can leverage it every time they approach a new customer or a new industry. CSPs that have ventured into the M2M market are moving closer to the M2M enablement framework either by forming partnerships with best-in-class providers and weaving together the framework, or by developing the framework themselves. E.g.:
- Verizon’s contribution and then complete acquisition of nPhase
- AT&T’s numerous partnerships with Jasper Wireless, KORE telematics, Axeda DCX and Trimble
- Deutsche Telecom’s collaboration with Intel to provide tool-kits to developers and application providers.
The M2M opportunity is up for grabs (see infographic below) and CSPs need to act now to be successful and sustainable players in this evolving industry area.
This guest post was written by Amit Atre, IBU Telecommunications, Industry Solutions, SAP Labs.