Opportunities: Back To The Future – IoT & Smart Systems Evolution Challenges

Seven Obstacles We Must Overcome To Realize Our Potential

Many IT equipment suppliers, silicon suppliers, enterprise software players and wireless carriers have arrived to the Smart Systems and Internet of Things arena over the last two to three years.  It’s a bit ironic that after several years of trying to get away from all the narrow and cryptic “labels” used to describe this opportunity space like M2M, that all these — somewhat naïve — newcomers are dragging everyone back to the old and limiting terminology. It’s like the new incoming class of students at a university who are trying to look “cool” but have yet to really figure the social order.

All of these new market entrants have made big pronouncements concerning the scale of the Internet of Things.  We believe there will be challenges from both the technology side of this opportunity as well as from the business side.

We do strongly believe that the Smart Systems market opportunity is reaching a new level of maturity; there is now substantially greater recognition of the technological capabilities and the potential benefits of connecting devices to the Internet than there was even 2 years ago.  However, our analysis and, more importantly, our experience working with many diverse players in this arena points to the many challenges in realizing such growth, including:

  • Challenges with developing an effective cross-industry technology reference architecture that will allow for true interoperability and ease of deployment.
  • Complex services and solution delivery eco-systems that require supply-side players to relate in new and different ways.
  • Fragmented M2M and Smart Systems vendor landscape that is not yet well aligned with the larger IT infrastructure and network services players.
  • Requirement for vertically focused solutions from a supply-side world that historically has been far more horizontally driven.
  • Technology disruption causing shifts across value chains in where revenue and profits are realized.
  • Challenges in adopting new business models and making the business case to support investments.
  • Anticipation of new product, service and systems innovation modes that are not widely adopted today.

When it comes to laying the groundwork for the future Internet of Things, we think most people assume that “the technologists are taking care of it.”  They take it on faith that the best possible designs for the future of smart systems will emerge from large corporations or centralized authorities. But those are big, unfounded assumptions.  In fact, most of these newly arrived IT and network services players are showing little appetite for radical departures from current practice. Yet current practices will not serve the needs of a genuinely connected world.

When we say Smart Systems we are literally contemplating incorporating the Internet into physical things and infrastructure, making something like a “smart building” much easier to contemplate than ever before. The building itself is literally on the Internet and the Internet is in the very matter of the building. If this is such a good idea, why hasn’t it been done before?

The answer is that most of the current IT and communications technology in this area is really a holdover from the early days of client server systems.  All the new entrants are trying to drag yesterday’s story to tomorrow’s opportunity.

The realization of pervasive smart systems will involve billions upon billions of protean network nodes that ultimately “take on a life of their own.” Our present-day conception of “intelligent devices” and global data networking does not allow for that. Until we change that situation, we will not achieve the emergent magic implied by the phrase “the Internet of Things.”

So how will all this work?  For all of this smart systems value to be realized the alignment of embedded systems technologies, intelligent device communications, network services and IT infrastructure and application services will all have to be re-thought.  The knowledgeable players in this arena today and all the newcomers will have to commune and align themselves in ways that will change all the player’s business models.

Though their business modes are intermingling today, all of the major categories of IT and “Network Arms Merchants” have historically operated within well-established business models that reflected the distinctive competencies at the core of each group. The advent of Smart Systems is causing a blurring between these legacy business models and all the existing emergent players as well as the larger IT and network players will ultimately have to re-think their strategies.


Glen Allmendinger
President and Founder, Harbor Research


<Previous: New Relationships For A New Value Chain

Next: Creative Evolution For Smart Systems And The Internet Of Things>

Related Posts