IoT Service Enablement Platform Role in 2020

The Internet of Things (IoT) is creating entirely new businesses and disrupting old business models. It’s fascinating to watch entire new business models emerge and track the companies that will shape the next wave of IT technology – connected products.

The impact of IoT is not confined to individual market segments. It will reshape entire industries in the eco-system. Professor Michael Porter from Harvard University has published articles on the technology waves of IT-driven transformation. The first wave of IT innovation occurred in the 1970’s and drove changes in the order processing, computer aided design, and ERP. The first wave was driven by data processing for activities and the standardization of processes across companies. The second wave occurred in late 1980’s with the rise of the internet and ubiquitous connectivity. It allowed global integration across the supply chain.

We are now entering the third wave of IT transformation. IT is becoming part of the product. This is a result of low cost sensors being deployed in cars, shipping containers, medical devices, utility meters, and other products across a diverse set of industries. Combining embedded sensor technology with cloud computing platforms expands the market opportunity for value creation for companies in the IoT ecosystem. It opens up new markets because the supply value chain is expanded to systems and not simply discrete products or services. Today we are in the era of connected devices. Figure 1 provides a simple diagram on the evolution of the connected automobile. The future IoT market expansion system will grow well beyond the existing market today which is essentially focused on the individual automobile manufacturer. Future markets will expand to include transportation optimized services.

Figure 1

IoT Service Enablement Platforms are an integral part of optimizing and expanding the market opportunity and transforming businesses. The IoT Service Enablement Platforms must provide management of the connectivity, device management, and sensor management. This includes activating, on-boarding the device, and performance monitoring of the M2M devices. Sensor data provide advanced analytics for control decision and usage analysis.

The evolution of the IoT market and the expansion opportunities will bring new competitors into the market. Technology companies will disrupt the supplier market in each vertical industry. Google is exerting its position as an OS supplier. In the automobile industry GM, Honda, Audi, and Hyundai have joined the Open Automotive Alliance to utilize the Android operating system. AT&T is opening up its network to provide a platform of APIs to allow developers to create new cloud-based solutions on top of connectivity. It includes vehicle remote controls, child safety innovations, theft control and e-commerce from the vehicle.

Look for future blogs and in-depth research in IoT Service Enablement Platforms in the coming months.

Customer Experience Analytics Must Blend Real Time Network Usage Data with Customer Profiles

Voice of the customer is a repeated process used by companies that want to understand customer’s preferences for engagement and levels of satisfaction with services delivered. To successfully execute a VOC activity, analytics will be applied in each phase of the customer journey. Customer experience management and analytics go hand in hand.

The telecommunication industry has put a priority on improving the customer experience. This is a top down driven initiative driven largely by increased competition from OTT players, revenue declines in core business segments, and an obsession to reduce subscriber churn. But a gap exist in truly understanding the customer experience often measured using NPS scoring and customer satisfaction surveys with the data reported in internal systems.

Customer Experience Analytics (CEA) closes the gap and helps take real time customer behavioral data and push this information into the hands of managers tasked with improving customer retention and satisfaction thru all stages of the customer lifecycle.

CEA is a strategic business imperative and it impacts marketing, customer care, network planning, and operations. The software systems if implemented properly bring together different data sets from different organizational groups to solve specific business problems. Most CSPs want to be more customer centric. Changes towards customer centricity is reflected in the fact that some CSPs have designed compensation models tied directly to NPS scores. When more employees have skin in the game, the culture of the organization begins to change. This focus on customer centricity is a result of competitive changes in the marketplace and a desire to generate more revenue from the same set of customers.

The CSP thinking a decade ago focused on the network. KPI’s measured network uptime, order to fulfillment timeframes, and mean time to resolve a problem. These metrics remain relevant but network faults increasingly are being correlated to customer impact. Metrics such as revenue per cell site drive new RAN deployments. The notion of improving the customer experience will vary depending on who you speak with inside a CSP and their ability to enact change in the organization. This includes both developed and developing countries.

The figure below provides some sample use cases by departmental group where CSPs can expect to achieve improvements in the business outcome by applying CEA techniques.

NetScout Seeks To Become The Leading Service Assurance Supplier In 2015

Every month, I will profile a supplier which is either outperforming peers in a respective market segment, or carving out a niche in a new high growth market.

NetScout Systems, Inc. (NASDAQ:NTCT) is a supplier of passive network probe technology to CSPs and enterprise companies. NetScout has been growing much faster than its peers and posted double-digit growth this past year. In 2014, CSPs accounted for 45% of its sales in the first six months. Revenue for the first six months was $211.5 Million. My estimate for growth in the overall passive network probe market was 7% in 2014. Netscout's ability to outgrow its peers is a result of strong demand from communication service providers (CSPs) for its nGenius products to support mobile broadband technology.

I have been following NetScout for 15 years and have seen a dramatic transformation of the company that supplied DS3 and ATM OC3 probes to mostly Fortune 500 companies at the start of 2000. Since then, NetScout has acquired small technology focused suppliers such as Psytechnics and Accanto, and larger well established firms, most notably, Network General.

The pending acquisition of the Danaher assets which includes Tektronix Communications, Fluke Networks, and Arbor Networks changes the supplier landscape and will vault Netscout into the leading service assurance supplier globally. Assuming the deal is completed in mid 2015, it raises questions on how the company will be structured and which products will be supported in the future.

The size and scale of the Danaher businesses will require a lot of time and attention from the NetScout senior leadership team to assess the target company’s management team and understand the capabilities of the diverse portfolio. A key outstanding question for me is; “Will the Danaher companies operate independently or will they eventually be incorporated into NetScout?”  All other NetScout acquisitions to date have been integrated into the company. If NetScout plans to eventually integrate the Danaher companies, it will take at least two years to complete the restructuring effort. In the first year, I would expect each operating entity to maintain autonomy until a plan has been established. During the second year, a restructuring of the new company will be necessary to align Netscout to focus on high growth segments.  At this point, NetScout will need to shed non-core assets and boost investments in higher growth areas of the business.

Arbor Networks brings a strong domain expertise in the security threat detection market and proven Distributed Denial of Security products deployed at tier 1 CSPs including AT&T, Verizon, DT, and NTT. The Arbor solutions expand the NetScout product arsenal.  NetScout also gains entry into the threat detection market which will remain strong for the foreseeable future.

Fluke Networks is mostly a handheld business, which one could argue, is non-core to Netscout -why would Netscout want to compete in a lower margin business where Fluke is not in a leading position?

Tektronix Communications strengthens NetScout’s reach into the top tier CSP market and provides excellent cross selling operations across IT and operation groups inside existing CSP accounts. Most of Netscouts growth has come from CSPs in the mobile segment of the market which deployed nGenius in the data center. Tektronix Communication has a larger business in the CSP segment and a large part of the revenue mix is comprised in the core network. Tektronix Geoprobe is widely deployed in the signaling network at many large Tier 1 CSPs, both mobile and fixed. Tektronix Communications portfolio certainly needs to be pruned - and it’s long overdue. Of all three assets under the Danaher umbrella, the Tektronix pairing will solidify Netscout’s dominance in the passive probe market. The next closest competitor JDSU is a distant second.

The ability of NetScout to remain focused on its IP probe business; support the demands of Tektronix Communications large existing install base; and transition the company to future markets in the NFV, 5G, VoLTE, and video based services; will require the NetScout leadership team to shuttle some assets quickly and prioritize R&D investments. I would argue that Fluke Networks is not essential to NetScout’s vision and should therefore be sold off, pending close of the deal. The entire portfolio of products needs to be evaluated. Some of the products that have been sustained have not achieved success in the market. The most lackluster products within the Tektronix portfolio that have underperformed include Iris and touchpoint. The risk for NetScout is not moving quickly enough to rationalized the portfolio and restructure the company. The interim period will create doubt in the customer base and open up opportunities for NetScout competitors.

For more insight contact me at Patrick.kelly@appledorerg.com