IoT 4 mins read

How to lower operational costs for IoT service providers by 75%

Read how for service providers, IoT presents significant business opportunities to offer IoT services on demand.

Jos Grond Jos Grond

With enterprise digital transformation having significantly accelerated as a result of the pandemic, many companies now want to use the Internet of Things (IoT) to create new revenue streams, improve customer experience and deliver operational efficiencies.

But, because many companies cannot build all the key capabilities they need in house, there is a greater need to build strategic partnerships. As a telco or an IoT service provider, this is where you come in: IoT presents significant business opportunities.

Being able to offer IoT services on demand is essential for your enterprise customers to deliver enhanced customer experiences. But, providing scalable IoT services on demand to your customers is challenging.

It requires you to reimagine your business in order to remain relevant for your enterprise customers, who are looking for partners that can provide outcome-based services in an “everything-as-a-service” (XaaS) business model.

While many service providers recognize that an IoT platform provides them with the flexibility and agility needed to deliver these IoT services, not all platforms are equal and there remain both technical and business challenges.

Investment drivers

Software AG commissioned Forrester Consulting to study the economic benefits of using our Cumulocity IoT platform to deliver IoT services to internal and external customers. All interviewees in this Total Economic Impact™ spotlight had experimented with IoT using homegrown solutions or platforms from other vendors before deploying Cumulocity IoT.

Several conducted detailed build-versus-buy analyses, which revealed significant costs associated with a DIY approach. Others struggled with technical complexity of solutions, which required ongoing support from teams of engineers and administrators, limiting the potential for growth of IoT initiatives and offerings.

The following are investment drivers cited by interviewees as barriers to IoT adoption:

  • High costs associated with developing and maintaining IoT platforms. Several interviewees found that building a platform themselves would result in high up-front and ongoing costs and access to only a limited feature set.
  • Technical complexity in building IoT applications. Organizations struggled with the technical complexity of other platforms. Being able to spin-up proofs of concept, amend existing applications according to customer needs and effectively scaling successful applications presented significant challenges for service providers when trying to avoid fielding dedicated software teams and build a sustainable business.
  • Inconsistent platform performance. Organizations experienced performance issues with preexisting IoT platforms.
  • Lack of “basic” platform capabilities like original equipment manufacturer (OEM) branding and native multi-tenancy. Preexisting platforms did not always allow for white labeling. Interviewees wanted to deliver consistent experiences to their customers.

Cumulocity IoT to the rescue

The study found that, by using Software AG’s Cumulocity IoT platform to provision IoT services, providers realize financial benefits in three primary areas:

  1. Reduced costs to support IoT services. By partnering with Software AG, organizations avoid the substantial costs associated with developing and maintaining IoT capabilities in-house while maintaining a focus on winning, serving, and retaining customers.

“The Cumulocity IoT platform can very quickly and easily integrate with a wide variety of different hardware and protocols,” said the CEO of IoT at a multinational telecommunications company.

  1. Operational cost savings of 75%. Interviewees whose organizations that previously relied on alternative platforms reported lower costs for administration of the Cumulocity IoT platform.
  2. Licensing cost savings of 30% due to platform consolidation across the enterprise. Interviewees lowered cost savings by standardizing IoT initiatives on a single platform, Cumulocity IoT. Before deploying Cumulocity IoT, different teams and departments used different platforms, resulting in fragmentation and organizational silos

The head of smart city initiatives for a government agency focused on digital transformation and governance, replaced siloed platforms across government agencies with the Software AG Cumulocity IoT platform, and reduced technology costs by 30%.

In addition interviewees mentioned forward-looking benefits such as the ability to support new business models and the self-service capabilities of Cumulocity IoT, putting powerful IoT and analytics capabilities in the hands of the business experts at their enterprise customers.

IoT presents significant business opportunities for telcos and service providers alike, but interviewees confirm it’s important to choose the right IoT platform to take advantage of those opportunities.

Click below to see the economic benefits of using Cumulocity IoT to deliver IoT services to internal and external customers compared to other IoT platforms.