LICENSED FOR DISTRIBUTION

Market Guide for IoT Service Providers

Published: 03 January 2018 ID: G00315950

Analyst(s):

Summary

Internet of Things service providers address a range of IoT services from upfront planning and solution architecture to deployment and integration. CIOs should use this Market Guide to evaluate and select IoT service providers able to bring IoT services that align with their digital business goals.

Overview

Key Findings

  • Various types of IoT service providers continue to enter the market making it fragmented and challenging for buyers to identify the best-fit provider.

  • Asset-intensive industries, such as manufacturing and transportation, remain as high-growth industries applying IoT solutions. As such, providers continue to gain stronger IoT expertise in these industries, as well as smart cities, automotive and retail.

  • Vertically focused solutions remain the primary way service providers will market. However, they continue to overemphasize technology as the key value proposition relative to the emphasis on business value.

  • IoT analytic capabilities supporting the identification of viable business decisions such as cost or process improvements remain a limited area of expertise for many service providers.

Recommendations

CIOs who are planning for IoT-enabled solutions should:

  • Use a structured IoT framework in support of evaluating and identifying the right IoT service provider for your business.

  • Evaluate potential IoT service providers based on proven IoT solution deployment experience in your vertical market. Require the provider to demonstrate expertise through IoT case studies with proven ROI and use of IoT IP/assets that accelerate the IoT project.

  • Apply distinction between business and technology expertise within your IoT service provider evaluation criteria and associate this with expected IoT business outcomes per solution.

  • Include an evaluation criterion that requires IoT analytic services skills and expertise in descriptive, predictive and prescriptive streaming analytics. It should have the ability to understand and manage time series data in the cloud, in the corporate data center and/or at the edge.

Strategic Planning Assumption

By 2021, more than 65% of midsize to large enterprises will use external IoT services for at least half of the IoT solution build effort, up from 35% today.

Market Definition

Internet of Things (IoT) services represent a set of end-to-end services in which businesses contract with external provides to design, build, install and operate IoT solutions, including advisory consulting for IoT planning (see "Forecast: Internet of Things — Endpoints and Associated Services, Worldwide, 2017" ). See Figure 1.

Figure 1. IoT Services Scope
Research image courtesy of Gartner, Inc.

Source: Gartner (January 2018)

IoT service providers represent a range of small, midsize and large service firms that build and deploy IoT solution applications across industries. The focus of this Market Guide is on the medium and large service providers supporting key vertical markets for IoT adoption such as manufacturing, healthcare, transportation and retail (see "Forecast Analysis: Internet of Things — Services, Worldwide, 2017 Update" ).

This Market Guide's IoT service focus aligns with the design, build and install of an IoT solution. Gartner defines an IoT solution as an integrated combination of IoT devices, an IoT platform suite and existing business applications used to produce a seamless end-to-end IT choreography to support intelligent operations and improved business process execution to achieve specific business objectives (see "Use the IoT Platform Reference Model to Plan Your IoT Business Solutions" ).

Additionally, the Market Guide includes IoT planning services for an IoT-enabled digital business environment. That is, providers that offer consulting services to assist clients to identify IoT strategies, as well as both strategic and tactical IoT solution deployment plans.

Note: There are various service providers that support the management of IoT solutions, as well as networking, infrastructure and edge device support. These providers are not within the scope of this Market Guide.

Market Direction

Market Fragmentation

The IoT service provider market continues to be a broad mix of providers, including but not limited to advisory consulting firms, system integrators, software providers and communications service providers as well as OT providers. Many of these providers continue to have IoT service practices as a small part of their total portfolio — they aren't "IoT only" and would not label themselves as such. Figure 2 provides a sample of the various providers with IoT services focus. A key driver for the IoT services market fragmentation is the parallel alignment that exists between provider expertise and end-user IoT solution deployment. As providers gain stronger expertise, we will begin to see leaders, fast followers and those that will drop these IoT services.

Figure 2. IoT Market Guide Service Provider Landscape — Provider Sample
Research image courtesy of Gartner, Inc.

Source: Gartner (January 2018)

We also expect the IoT services landscape to see more consolidation. Providers, including advisory consulting firms, system integrators (SIs) and OT providers, will look to fill gaps in their IoT go-to-market (GTM) portfolios by making strategic acquisitions.

Provider Experience

Over the past year, IoT service providers have gained experience in IoT solution planning, design and deployment from client projects, as well as through collaboration with IoT-related consortia and their own internal development of IP/assets. Although, we have observed that many IoT engagements struggle for several reasons (including focus on technology capability versus alignment with business outcome) to move into production systems from a proof of concept (POC).

Providers continue to place IoT service focus within their offerings in the following areas:

  • Business value: From the start of an engagement, providers are doing a better job of aligning their ability to deliver business value with their client's business goals. Such value is derived through collaboration between the provider and their client. They are placing more focus on proven ROI, including the use of tools and in support of defining and measuring the business outcomes.

  • Business transformation: Providers are aligning business transformation concepts with IoT business outcomes, for example:

    • Change management necessary with IoT operational efficiency outcomes derived from an IoT asset performance management solution

    • Transition management in support of digital disruption (for example, working with virtual assistants, robots)

  • Use IoT IP/assets accelerators: Providers are now offering the use of proven IoT IP/assets to support project acceleration. For example, condition-based monitoring solutions leading to predictive maintenance POC that can be installed in a few weeks to demonstrate both technology and business value capabilities within manufacturing. Other assets include use-case-specific data models or reference architectures.

  • Use of collaborative innovation centers/labs: Providers have built IoT innovation centers in support clients in the deployment of IoT solution projects. Clients join the provider to collaborate and design the right-fit IoT solution from a selection of use cases and available technology choices. These centers have a range of focus from ideation with senior leadership to the development of IoT pilot projects. IoT service providers have deployed such centers globally in key locations, for example (sample only), Accenture, Capgemini, Cognizant, Deloitte Digital, Epam, EY, Hitachi, HCL Technologies, IBM, LTI, Mindtree, NEC, NTT Data and PwC (see "Three Best Practices for Selling IoT" ).

Trends Shaping IoT Services

The IoT market overall continues to rapidly change including supporting technologies; services-, product- or software-focused players; IoT platforms; industry use case opportunities and more (see "Market Guide for IoT Platforms" ). The following key trends are impacting and shaping directions for the IoT services provider market:

  • End users continue to gain experience leveraging IoT solutions, yet realize that they need external support to design, build, implement and operate their IoT solutions. Thus, they continue to engage with IoT service providers (see "Three Strategies to Achieve Better-Than-Planned Outcomes for IoT Projects" ).

  • Throughout the second half of 2017, Gartner observed more IoT solution case studies shared by providers across industries highlighting IoT production solutions with proven outcomes. Providers are gaining more and more IoT solution deployment expertise beyond POCs and pilot engagements. This leads to stronger expertise and IP ready for market.

  • IoT solution deployment remains in early stages for many enterprises. Thus, IoT is broadly characterized as being supply-led. Supply-led markets see high levels of supplier interest, capacity and investment, out of proportion with levels of buyer demand and revenue generated (see "Market Trends: 5 Strategies for IoT Vendors to Thrive in a World of Rampant Oversupply" ). There isn't an explicit set of evidence to support a hypothesis that IoT is supply-led. However, based on the limited number of proven case studies observed and the many number of provider projects in POC mode, we find this supply-led concept to prevail.

  • Few enterprises can deploy IoT solutions alone. They recognize the need for critical IoT skills and expertise that are not often found from within the enterprise (such as business domain knowledge and data scientist expertise), to derive:

    • Business insights from the significant data captured

    • Technical expertise in support of IoT edge development and integration

  • Use of external service providers in support of IoT solution deployment and operations will continue to increase (see "Three Strategies to Achieve Better-Than-Planned Outcomes for IoT Projects" ).

  • Cost optimization continues as the dominant business focus for enterprises across most industries. Thus, service provider IoT solution portfolios focus on internal business outcomes such as operational efficiency, process improvements and cost reductions. As businesses gain experience and deploy holistic enterprise IoT plans, they will want to see broader focus and expertise from service providers to drive external business value like new revenue streams and customer experiences (see "Three Strategies to Achieve Better-Than-Planned Outcomes for IoT Projects" ).

  • Many service providers continue to enrich their IoT offering portfolios around risk reduction, especially security, safety and avoidance of violation of regulations/compliance rules work. Often they work together with partners in order to build up confidence especially in risk-averse economies/countries.

  • Advisory consulting services are becoming more important for businesses as a focus in leaning toward the development of holistic IoT enterprise plans that scope beyond single IoT point solutions. Such plans develop IoT strategies as well as solution areas and key industry use-case priorities across the enterprise.

These trends are characteristics of evolving IoT solution deployment across all industries. As enterprises advance their use of IoT, IoT service providers will continue to evolve, as well.

Market Analysis

The IoT service provider market continues to expand in the types of providers getting into this market, as well as provider experience gained. Using Gartner's IoT Maturity Model, we conclude that some IoT service providers continue to focus IoT projects within Level 2 (Explore), that is, delivering point solutions with narrow context to a single business solution (see "Maturity Model for the Internet of Things" ). However, more and more have expanded into Level 3 (Define) this past year, thus supporting clients in defining a more holistic IoT solution rollout strategy. We expect to see more providers move toward the higher levels of maturity over the next 12 months as they gain stronger IoT solution development experience. Figure 3 provides a snapshot of Gartner's view on the IoT service provider market.

Figure 3. IoT Service Provider Alignment With Maturity Model
Research image courtesy of Gartner, Inc.

Source: Gartner (January 2018)

For reference, the following summarizes the five levels of the Gartner IoT Maturity Model:

  • Initiate: Organizations rely on IoT service providers for IoT POCs and pilot project deployment to demonstrate proof of value, mostly from a technology perspective.

  • Explore: Service providers deliver point solutions that provide value in a narrow context to individual business units. They may assist their clients to initiate an enterprise IoT framework, but neither are ready to fully define the scope of the program. These siloed projects have a narrow focus mostly on internal business value related to cost optimization. There is limited integration to existing business processes and systems.

  • Define: Organizations recognize the need for an enterprise IoT framework that provides IoT strategies and prioritized solution plans. Thus, prompting IoT service providers to develop GTM offerings for establishing an enterprisewide IoT plan and services for delivering value to the business at a departmental or business unit level. Business value includes both internal and external value. Providers are developing and applying some initial IoT assets/IP for engagement acceleration and proof of value.

  • Integrate : Few organizations prevail at Level 4. IoT capabilities are interwoven with the business, and the technology has been fully integrated into existing IT and OT systems. Products, operations and services are evolving to include IoT capabilities, and the organization is beginning to realize fundamental improvements in core operations and systems, as well as some differentiation relative to its competition. The IoT program is delivering value, and there are solution patterns and architecture guidelines that make delivery repeatable. IoT service providers have prebuilt vertical-focused solutions, as well as repeatable architectural patterns and frameworks in support of industry-specific IoT plans/solutions.

  • Optimize: There are few organizations at this level of IoT maturity. Business units or the enterprise as a whole is able to develop new and differentiated offerings, and the relationship between IoT and enterprise economic and operating models is well-defined and managed to drive efficiencies, effectiveness and growth. Most IoT service providers have limited expertise at this level of IoT maturity; however, a few do prevail in providing business transformation services (see "Market Guide for Digital Business Consulting Services" ).

Representative Vendors

The vendors listed in this Market Guide do not imply an exhaustive list. This section is intended to provide more understanding of the market and its offerings.

The six vendor profiles here — Epam, EY, GE Digital, Hitachi, HPE Pointnext and World Wide Technology — represent a small sample of IoT service providers that Gartner has interacted with throughout the year.

For reference, the vendor profiles appear within a table format as defined in Table 1.

Table 1.   Vendor Profile Table Key

Vertical Focus

Key industry-specific or cross-industry IoT solution areas the vendor supports through its IoT services

Supporting IoT Assets/IP

Several IoT assets and/or IP the vendor may apply on IoT service engagements

Notable Case Study

A single IoT case study to demonstrate vendor's IoT services

Sample IoT Service Partners

A sample of partners within the vendor's IoT services ecosystem

Source: Gartner (January 2018)

IoT Service Provider Profiles

Epam Systems (Epam) www.epam.com

Epam, a global software engineering firm, has augmented its product and platform engineering, operations and optimization services with IoT design and consulting capabilities (see Table 2). Epam has 800+ IoT services staff. It provides a mix of IoT services including data design, design thinking and architecture, embedded engineering, solution integration, and data science. Epam also supports optimization and analytics operations. Epam has multiple IoT R&D labs, called Garages. These labs focus on solution design prototyping and insights through client collaboration.

Table 2.   Vendor Focus — Epam

Vertical Focus

  • Healthcare: Patient care (wearable sensors, remote monitoring, tracking and responding to a patients' health status in real time)

  • Transportation: Fleet management (maintenance, routing, utilization) and connected car

  • Consumer products: Well-being, fitness tracking, additional revenue streams

Supporting IoT Assets/IP

  • Epam Fusion: A vehicle service orchestrator, which provides ability to easily develop, install, upgrade and remove services on any connected vehicle

  • Epam FLEXO: Constructor for different platform combinations — flexible digital business platforms that improve time to delivery, optimize costs and reduce risk

  • Reusable service blueprints: Provide POCs and solution design/concept for a particular challenge/problem (Epam Healthcare IoT Blueprint)

  • KaaIoT: Based on open-source software, used as an IoT platform as a proof of concept and as an accelerator (in terms of architecture) rather than a software product. It covers connectivity, data processing, analytics and visualization

  • Garage Labs that provide a dedicated space for R&D turning into solutions and insights for clients

Notable Case Study

Smart Greenhouse case study

A Smart Greenhouse solution that includes remote management and control of light, temperature and humidity, automated time-lapse photography of plant growth, and continuity in case of power outage

Sample IoT Service Partners

Amazon Web Services (AWS), Microsoft, PTC

Source: Gartner (January 2018)

EY www.ey.com

EY is a global professional services firm with a dedicated IoT Network of Excellence (NoE). This consists of 2,000+ IoT services staff with industry-specific business expertise, data science and analytics knowledge. EY's IoT services is supported by its dedicated wavespace centers for IoT innovation. Based on its' global bench strength, EY has depth in all industry sectors (see Table 3).

Table 3.   Vendor Focus — EY

Vertical Focus

  • Manufacturing, transportation, oil and gas, and industrial products: Asset performance management: solution delivery using IoT/OT data integration and advanced modeling techniques to obtain real-time insight

  • Cross industry: Protect end-to-end consulting service defining security risk appetite and transforming the business operations in order to create a new IoT/OT security function

Supporting IoT Assets/IP

  • Condition-based maintenance application: Built on continuous, real-time monitoring of equipment's performance critical parameters and comparison with equipment's normal behavior model

  • Manufacturing energy management application: Delivers insight, enables improvements in energy and utilities usage

  • Soft sensors applications: Measuring operating conditions, quality results, faults and environmental data

  • EY Synapse: Proprietary IoT platform

  • IoT NoE: Proprietary organizational model to drive innovation, industrialization and sector infusion of IoT solutions and assets

  • 16 wavespace centers: Used for IoT ideation and solution design

Notable Case Study

Suez Waste Management case study

Suez, a waste management and water treatment services company, applied IoT technology as part of its digital transformation efforts through workshops and a governance framework. The results include operating model changes, investment in a command center, and real-time route optimization.

Sample IoT Service Partners

GE Digital, Microsoft, SAP

Source: Gartner (January 2018)

GE Digital www.ge.com

GE Digital provides IoT services through a global organization that evolved from GE's own Industrial IoT (IIoT) transformation. GE Digital services has 700+ IoT services staff, augmented by additional domain capability within each of the business units. GE Digital applies a decentralized services structure approach with service capabilities within regions, foundries and through its partners. GE Digital services places focus on its vertical competencies (e.g., energy, power, oil and gas) and within domain specialty areas such as asset performance management, field services management and brilliant manufacturing (see Table 4).

Table 4.   Vendor Focus — GE Digital

Vertical Focus

  • Manufacturing:

    • Asset performance management: Enables operations and asset safety, reliability, availability and performance at a lower cost. Key use cases: predictive maintenance, asset optimization

    • Brilliant manufacturing incorporates design, engineering, manufacturing, supply chain, distribution and services into one system. Key use cases: balancing plant production, real-time visibility and operational intelligence

  • Oil and gas:

    • Field services management: provides insights on field operational metrics. Key use cases: service delivery management, compliance management, view into SLA commitments

  • Cross industry:

    • Operations performance management: Optimizes workforce productivity and operational efficiency, provides situational awareness. Key use case: operational decision making to respond to changing conditions

Supporting IoT Assets/IP

  • GE Predix IoT Platform; GE Asset Performance Management; GE Field Management (ServiceMax); GE Machine Learning & Data Ingestion (including GE Wise.io AI + GE BitStew); GE Cyber Security

  • GE Digital's IoT services are built on its OEM expertise managing and optimizing global assets such as power plants, oil fields, wind farms, jet engines and healthcare equipment

  • Blueprinting services: architectural blueprint services developed and applied internally and offered to customers when implementing digital transformation

Notable Case Study

Plant Reliability case study

GE Digital's client experienced a reduction in plant failures utilizing asset performance management services, resulting in plant availability.

Sample IoT Service Partners

PwC, EY, Accenture

Source: Gartner (January 2018)

Hitachi www.hitachi.com

Hitachi offers IoT-related consulting, solution design, platform implementation and integration. Hitachi has 1,000+ IoT services staff including data scientists, UX/UI consultants and data engineers. Hitachi services applies domain expertise in operational technologies (such as deep insights into the manufacturing of equipment) and information technology solutions (such as IoT and analytics platforms) in support of IoT service offerings (see Table 5).

Table 5.   Vendor Focus — Hitachi

Vertical Focus

  • Cross industry: Predictive maintenance/condition-based monitoring and maintenance

    • Key use cases: Industrial air compressor monitoring and maintenance, train transportation as a service, failure prediction for chillers and HVAC systems, fleet management for mining, construction and marine operations

  • Public safety/security/commercial safety: Safeguard cities and public spaces, transportation (e.g., airports, trains, ships), and commercial entities

    • Key use cases: Ferry services, connected airport and university campus security

  • Smart manufacturing: Enhance operations and drive business transformation in manufacturing

    • Key use cases: Dynamic scheduling, predictive quality and maintenance optimization

Supporting IoT Assets/IP

  • Predictive maintenance reference architecture for transportation

  • Remaining useful life calculations for engines using AI

  • Machine event exploration for oil and gas for real-time key performance indicator (KPI) trend analysis

  • Smart city IoT architecture blueprints in support of public safety and city operations

  • Lumada IoT platform

  • Pentaho data integration and analytics software

Notable Case Study

Predictive Quality Detection case study

All manufacturing companies seek ways to globally improve the quality of their products. Therefore, increasing productivity and improving worker's field of operation. Daicel together with Hitachi was able to improve their automotive airbag inflator production process by accurately tracing and detecting signs of operational failures and deviations in worker activities on the front lines

Sample IoT Service Partners

Tata Consultancy Services (TCS), Infosys, Tech Mahindra

Source: Gartner (January 2018)

HPE Pointnext www.hpe.com

HPE Pointnext IoT services are composed of advisory and transformation services, professional services and operational services. To complement their IoT services, they provide security services, operational services, technology services consulting and support services. HPE Pointnext helps clients modernize their operational IT systems and implement edge analytic solutions that leverage sensor data close to where it is generated (see Table 6).

Table 6.   Vendor Focus — HPE Pointnext

Vertical Focus

  • Intelligent spaces: Buildings (smart meeting rooms, way finding, smarter building); venues (visitor's engagement, video/digital signage, ops optimization)

  • Smart manufacturing: Asset management and predictive maintenance, digital factory, supply chain management

  • Future cities: Citizen service delivery; hyperconnected city, safe city (surveillance, video), resource management (smart meter, waste management)

Supporting IoT Assets/IP

  • IoT transformation workshop: Takes a customer through the building blocks that need to be considered as they design their digital transformation strategy

  • IoT coloring book: Details IoT architectures for specific use cases derived from a standard set of architectural foundations as reusable patterns

  • Trusted IoT transformation methodology: Covers the whole IoT stack from sensors to action-centric applications. Includes program management and governance, security services, management of change, and flexible financial services

Notable Case Study

Refinery of the Future case study

Texmark's digitization redesign of their petrochemical plant to implement worker safety, predictive maintenance, traffic modeling, and physical security/traffic video analytics

Sample IoT Service Partners

Microsoft, PTC, GE Digital

Source: Gartner (January 2018)

World Wide Technology (WWT) www.wwt.com

WWT is an IT and supply chain services provider with 200+ IoT services staff. The firm supports custom consulting work and a deployment IoT practice. Services are supported through use of WWT's innovations lab applicable to IoT solution testing. WWT's IoT service offerings focuses on business outcomes and a commitment to independence backed by its traditional capabilities in vendor system integration (see Table 7).

Table 7.   Vendor Focus — WWT

Vertical Focus

  • Mining, oil and gas: Predictive maintenance (e.g., engine failure models to determine probability of failure and associated reason codes)

  • Public sector (including defense), utilities, transportation: Sensor integration platforms (partly through acquisition) (e.g., mobile field kit to analyze and visualize multiple biochemical, radioactive, and other security threats)

  • Retail manufacturing: Real-time location analytics (e.g., customer tracking, capturing and analyzing movement of shoppers through a mall with various stores and attractions)

Supporting IoT Assets/IP

  • Multiple patents for models in mining industry (e.g., location analytics and measurement of efficiency for haul trucks)

  • Sensor "nodes" software to combine various sensor standards

  • Innovation hub environment advanced technology center (ATC) replicates customer environments, includes sensor integration and drone detection

Notable Case Study

IoT defense case study

Public-sector sensor integration: Mobile Field Kit (MFK) platform provides real-time sensor data for weapons threat detection and collaboration tools for personnel for major sporting, cultural and political events in the U.S. and internationally

Sample IoT Service Partner Sample

Cisco, OSIsoft, Davra

Source: Gartner (January 2018)

Market Recommendations

CIOs should accelerate the creation of an enterprise IoT framework that defines the right set of business and technology strategies and, more importantly, a well-defined set of plans for the rollout of IoT solutions that meet business objectives (see "IoT: Think Big, Start Small, Move Fast" ). Then determine what internal IoT capabilities exist and where you need to source with IoT service provider(s).

Ensure that the IoT service provider selected to support your firm's IoT solution efforts has strong domain expertise. Be sure that it fully understands your business operations, and has the IP/assets that will accelerate your IoT project so that you can demonstrate the right level of success sooner than later. In addition, easily demonstrate an understanding of what must go into the design, development and deployment of an IoT solution to fully realize its potential (see "Market Guide for IoT Service Providers" ).

When evaluating the IoT service provider market, consider the following key characteristics highlighted in Table 8. These characteristics will support your evaluation process and final decisions.

Table 8.   Key IoT Service Provider Characteristics

Key Characteristics

Offering Portfolio

  • Vertical-focused IoT solutions supporting business outcomes

  • Use of proven IoT ROI tools/methods assisting client justification

  • Applies design reuse and scalable core building blocks across the portfolio

  • Clear, concise value proposition that differentiates the firm's IoT practice from competition

Engagement Approach

  • Use of Mode 2 disciplines (Agile, DevOps, etc.)

  • Sponsorship gained at the C-level and business units

  • Applies new ways of thinking to engagement pricing, such as risk sharing

  • Applies IoT assets in support of project acceleration

Skills and Capabilities

  • Business transformation skills in support of change/transition management

  • Offers a focused IoT ecosystem that complements skills and expertise

  • Embraces a new culture of skills, methods and technologies (Mode 2-type development approach)

  • Proven IoT analytics experience

  • Industry domain knowledge, including regulatory and standards knowledge

  • Skills align to your key enterprise applications and IoT platform choice

Source: Gartner (January 2018)

This guide shares a representative list of IoT service providers. We recommend that you reach out to the provider for further understanding of its service expertise and capabilities.

IoT brings change throughout the business. As such, there is a strong need for collaboration between the business units and IT, a solid understanding of why and how to apply the data collected from an IoT solution, and the potential for business process change. Look to the IoT service provider to guide your firm through such change.

Evidence

This report is based on vendor briefings and insights conducted throughout 2017, as well as end-user inquiries and previous IoT-related surveys since January 2016. We selected a short profile list of IoT service providers based on firms Gartner clients and/or the creators of this research encounter regularly.