M2M adoption is growing markedly and is impinging on a diverse range of businesses – from manufacturing to healthcare, as well as retail, energy and utilities, transport and logistics and consumer electronics.
The advent of low power processors, intelligent wireless networks and low power sensors, along with the development of ‘Big Data’ analytics, are all supporting the rapid development of M2M applications.
These technologies enable sensors to be placed anywhere and, as a result, companies are showing a growing interest in developing a range of connectivity, whether linking machine to machine, machine to robot or robot to factory equipment. This is impacting on network architectures, as well as business and operating models.
Fundamentally, M2M is about connecting things, rather than people, and in the third edition of its annual M2M Barometer, Vodafone has found the market is continuing to change dramatically.
“M2M communications is no longer a niche technical term, but is rather a key driving force for innovation and being recognised as such by business leaders across all types of industry,” suggests Erik Brenneis, Vodafone’s M2M director.
“More businesses are turning to M2M to help them achieve their goals, both as part of strategic M2M projects and as an integral part of the products and services they buy.”
When Vodafone first published the M2M Barometer in 2013, it suggested we would witness ‘significant change’ and that these developments would prove to be ‘game changing’.
Two years on, Brenneis believes the market has more than lived up to those expectations.
“2015 has seen a massive take up of M2M products by our customers. According to our research, around 27% of customers have purchased M2M products, while a further 37% are planning M2M projects.
“What is increasingly apparent is that, while the breadth of adoption is growing, there is greater clarity and understanding of the benefits associated with M2M.”
Jon Carter, head of business development in Deutsche Telecom’s Connected Home division is even more upbeat about the prospects for M2M.
“Our view of the Barometer is that it is simply scratching the surface. M2M innovation is happening right across the board and it isn’t simply about analysts talking up the industry – it is happening. We think consumer and companies are able to understand the benefits from M2M and, in the case of manufacturers, the value IoT can bring to their operations.
“As a result, they are revising their business models. Across Europe, for example, insurers and utilities are fully engaged with the market,” Carter suggests.
According to the Barometer, 83% of those questioned said they thought M2M implementation would bring greater competitive advantage; 59% expected a return on investment within 12 months and, crucially for effective implementation, more CEOs were getting involved in M2M implementation.
“I think we’re seeing the take up accelerating sharply and that has surprised me,” says Brenneis. “I’ve been in this sector for 10 years and even I’ve been taken aback by the growth we’re seeing.
“Companies across all market segments are using M2M. Few utilities, for example, are rolling out projects where M2M is not a key element of the project and a key change is the growing involvement of senior management,” he says.
“CEOs and senior management are most likely to see M2M in the context of innovation initiatives – ways to change what the business does and how it works in order to drive improved operational outcomes. Over the next two years, we expect to see more than a third of businesses describing their M2M projects as being ‘innovation projects’, as M2M moves outside the IT department and plays a larger role in determining customer experience and competitive advantage.”
According to the Barometer, while M2M is still led by IT, it is fast becoming a company wide initiative, which means different business functions have to be taken into account.
As a result, end to end providers of M2M solutions will be well placed if they can provide support for projects, not only with technical issues such as system integration and security, but also by taking part in risk/reward sharing and other aspects of the M2M business model.
M2M or the IoT has the potential to alter prevailing business models significantly. Transport and logistics operators and their suppliers are an interesting case in point.
“Instead of selling equipment to operators, manufacturers or distributors can lease it based on usage metrics that remote sensors can track – for example, distances travelled or weight of cargo carried. This gives the manufacturer a steady source of revenue while turning the operator’s cost from a capital to an operating expense.
“This fundamental change in business model, from a product-based approach to a service-based model, is having a major transformative effect across many different industries,” explains Victor Abelairas, senior director, marketing and business development, at Wind River.
While there is rapid growth in the M2M market, barriers remain to adoption. The most important being the investment companies have made in legacy systems and equipment.
“Companies may be keen to reap the economies, efficiencies and opportunities that the IoT promises, but they also have an understandable interest in protecting historic investments,” suggests Abelairas. “The challenge for those developing IoT solutions is to find ways to connect previously unconnected systems so that operators do not have to rip out and replace their entire infrastructure in order to realise the benefits of IoT. And that needs to be achieved with the utmost attention to systems security.”
M2M can deliver improvements to operational management providing economies of scale for many different and diverse industries through the use of embedded devices, connectivity modules and operating software.
Further to Abelairas’ comments, Brenneis says there is an initial threshold companies need to overcome if they want to exploit M2M.
“From my experience, there are two barriers to adoption. How connected is the company? If a company isn’t connected, then it will be a significant decision to build know-how into their systems.
“Business cases are also very fluid and some companies will find it difficult to identify the business benefits from adopting M2M. They are there, but can sometimes be difficult to realise.”
While the M2M market is evolving rapidly, there are challenges to overcome from issues such as interoperability and standards to the costs and complexity of the roll out.
Adoption is growing and the return on investment reported by most companies responding to the Barometer survey was impressive.
While barriers to adoption remain, concerns among those questioned focused on security and the related subject of privacy, but none said these issues were insurmountable when it came to adopting M2M.
