understand how optimized connectivity improves iot roi

Proprietary and Confidential 1

Michele MacKenzie

Understanding How Optimized Connectivity Improves IoT ROI

NBED Title in sentence case

© Analysys Mason Limited 2016

Analysys Mason has been advising telecoms clients for more than 30 years

2

1000+CLIENTS THAT HAVE BENEFITED FROM OUR EXPERTISE

IN THE LAST 5 YEARS

200+EMPLOYEESWORLDWIDE

110+COUNTRIESWE HAVE

WORKED IN

12 OFFICES

Our approach to every project is customised to the client’s requirement

Clients see us as trusted advisers and partners who

deliver honest, independent advice

Our exclusive focus on telecoms sets our

company apart

We help clients improve performance and maximise profit,even in difficult market conditions

Our advice on mergers and acquisitions has helped shape the industry

Our consultancy has been shaping telecoms regulation since 1985



3

IoT and M2M Solutions research programme

Selected reports and forecasts for 2016

§ The business case for LPWA networks§ CSP strategies and organisational structures§ Security service revenue opportunities for CSPs§ Emerging APAC M2M carrier scorecard§ M2M in the Middle East and North Africa§ CSP strategies for the smart home§ Connected car opportunities for CSPs§ The role of regional alliances § The role of CSPs in smart cities § The impact of the eSIM on M2M§ End to end solutions for SMEs§ M2M RoI case studies§ Usage based insurance§ Telehealth strategies: case studies§ Worldwide M2M device connections and revenue: 2016–2026§ Worldwide LPWA connections and revenue forecast: 2016–

2026



Our expertise in IoT is built on projects performed in multiple regions4

Examples of recent IoT and

M2M client projects, by geography

Assessed the regulatory implications and regulatory feasibility for the implementation of a new M2M service in a dozen countries

Conducted a study on international opportunities for a European operator

Provided an assessment of M2M market opportunity for a software vendor

For a global operator, provided a forecast of the market opportunity for IoT, including all elements of the value chain

Developed forecasts of M2M device connections and revenue for Brazil, the Caribbean, Latin America and worldwide Conducted a study to

determine demand for a satellite M2M product and end-user requirements for hardware and software

Development of a cost–benefit model for operators and enterprises for Ericsson

Sized quick-win opportunities in the international M2M market and helped to develop a long-term M2M strategy for a leading mobile operator

Supported a leading mobile operator in developing its strategy for IoT and M2M services

For a European operator, conducted a market assessment of a new type of sensor network

Overviewed fleet management in five South-East Asian countries

For a Japanese operator, provided advice on which sales channel to use M2M/IoT services in Europe (including assessment of MVNOs)

For a major regional operator, conducted a workshop to assist with IoT and M2M strategy

For an operator client, developed a list of over 100 potential partners, with key information for each [e.g. details of existing contracts and partnerships]

Countries of IoT and M2M projects

Countries of other projects

IoT/M2M client countr y



5

The evolution of equipment with respect to time and intelligence

Smart connected devices will redefine many industry sectors and transform companies and user experiences

‘Dumb’ physical equipment

Smar t equipment with

embedded system

Smar t connected

equipment with networking capabilities

Past, present & future

Present & future

Recent past, present & future

Prod

uct I

ntel

ligen

ce

Time

5



Cellular M2M connectivity is set to grow at a CAGR of 19%

6

Cellular M2M connections forecast, 2015-2025, worldwide

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.420

13

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Conn

ectio

ns (b

illio

n)

Automotive and transport Financial services Healthcare Industrial Other Public sector Retail Security Utilities



A lot depends on IoT connectivity

7

Key enablers and drivers for enterprise adoption of internet of things

New providersThe lowering cost

of service provision has led

to hundreds of new start ups

New revenue streamsNew providers

The lowering cost of service

provision has led to hundreds of new start ups

Reduce operational costsNew providers

The lowering cost of service

provision has led to hundreds of new start ups

Awareness

New providersThe lowering cost of

service provision has led to hundreds

of new start ups

Cost of IoT deployment has

decreased

$$

New providersThe lowering cost



RegulationNew providersThe lowering cost



ROI



Reducing costs has been a key driver for IoT connectivity in many verticals and ROI is significant

8

Cellular M2M connections, 2025, worldwide, selected verticals

Smart transportation

Aftermarket Connections

PoSConnections

Fleet managementConnections

145m

116m

35m

“ROI depends on the major fleet issues in each market. It could be oil theft, driver behaviour, route optimisation, vehicle recovery and cold storage monitoring. However, on average, an ROI in the 15–20% range can be expected.”

Head of M2M, Middle East telco



And the role of connectivity is often under-stated

9

Internet of Things: generic value chain

§ Offer the network for data transmission of the IoT services

§ Connectivity providers

Systemsintegration

§ Offer the end user module, with the embedded M2M chipset

§ Device OEMs

§ Provide the actual applications that manage the data collected by the device

§ Application developers

§ Manage the distribution, supply chain and fulfilment

§ Billing and support

§ Provide system integration services

§ System design/ development

§ Solutions provider

§ 5-30%

100%

Des

crip

tion

Spen

d

Serviceprovision

ApplicationDeviceConnectivity

§ 5-20% § 30-60% § 20-30% § <20%



The cost of connectivity failure can be measured in more than just financial terms

10



As IoT matures enterprises need to be aware of the following pitfalls..

11

SIM Connectivity

Monitoring/Management

Scale



12

But an unmanaged approach risks undermining the IoT business case

Objective Impact of connectivity failure

Reduce costs • Higher operational and maintenance costs to identify and replace SIMs• Downtime costs if connection fails

New revenue streams • Downtime impacts on customer contracts • Inability to correctly bill customer

Scale business • Additional costs to build new IoT solution to be able to scale

Trust and brand• Failure undermines customer trust in your organisation • May result in customer churn

Source: Analysys Mason

Proprietary and Confidential 13

Understanding How Optimized Connectivity Improves IoT ROI

Dan Martensson

VP Cloud & Connectivity Business Line

14

SIERRA WIRELESS: Building the Internet of Things

2015 revenue: $608 million

1,100 employees worldwide

Customers in 130+ countries

2015 revenue: $608 million

15

35.0%

20.7%20.4%

23.9%

Sierra Wireless is building the IoT

Building the IoT with intelligent wireless solutions

120 Million Devices Shipped

#1 in cellular devices for the IoT

(1) Source: ABI Research – June 2015

Cellular Embedded ModuleRevenue Market Share in 2014 (1)

Sierra Wireless

Innovative open-source embedded

platformsTechnologyleadership

Industry’s broadest portfolio

20+ years of wirelessM2M experienceIoT specific

ConnectivityComplete device to

cloud offering

16

Our complete device-to-cloud solution

Your applications& enterprise

software

Yourdevices

Cellular Devices

Embedded Solutions

Gateways Solutions

IoT Cloud Services

ConnectivityManagement

ApplicationEnablement

360 Operations

SIM & Connectivity

End-to-End Security & Differentiation

17

Well positioned in key IoT segments

Automotive & Transport

Energy & Industrial Enterprise Residential &

Healthcare

• Automotive• Fleet Mgt.• Toll Collect• User-based

Insurance

• Smart Meters• Smart Grid• Industrial• Public

Infrastructure

• Sales & Payment

• Distributed Enterprise

• Mobile Computing

• Home Security

• Residential Automation

• Patient Monitoring

Strong global base of blue-chip customers

18

Our IoT Learnings

Global operator independent IoT Services delivered by the worldwide leader in cellular modules

1000+Customers

>2MSubscribers

180+Countries

Small & Medium Enterprises Large Enterprises & OEMS

19

Our Customers IoT Goals

Mission CriticalFixed location

EU-Wide

Difficult to serviceUrban & RuralLatin America

Access ControlDeep Indoors

EU-Wide

Maximizes potential customers & minimizes

deployment costs

Maximizes market potential & simplifies

management

Enables an SLA &minimizes downtime

service costs

20

Our Customers IoT Challenges

ROI, Complexity, Time-to-market, Scalability

Securing expected ROI from IoT projectsTransforming into a service driven businessLack of focus on business value of data, customer experienceUnderestimating technical complexity and risk

21

Need to Focus on Measurable Objectives in ROI

Reducing:

• Service Costs

• Customer Down Time

• Mean time to Repair (MTTR)

Increasing:

• Service Revenue (MRR)

• New Customers

• Service Efficiency Gains (fewer truck rolls)

• Customer Satisfaction

22

Need to Understand Your Real Connectivity Costs

• 30% of IoT OPEX is connectivity

• Hidden costs often underestimated and can double TCO

• Real cost per MB = network communication costs + Support Costs

• Downtime costs significantly impact service levels and revenue

23

Network Communication Costs

Re-occurring Cost to Connect Devices

• Monthly access fee– expensive if your deployment includes periods non-connectivity

• Optimizing Monthly Data plans – Pay-per use – cost effective with low usage or fluctuating usage

– Pay per device for fixed amount of data

• Overage– Additional charge if your usage fluctuates

• Roaming– Devices on the move pay roaming when out of primary

coverage area

24

IDC – Essential to Minimize Data Usage Costs

üSeamless network switching between high & low speed networks

üHigh usage & low devices usage on same data plan

üNo overage costs because of malfunctioning devices

üMid-cycle rate plan changes

25

IOT Support Costs

• Tech Support Call cost– Diagnose the problem– Troubleshoot

• Service Visit Cost– Cost to roll a truck to fix device– Service Efficiency (truck rolls)

26

Cost of IoT Downtime

• Downtime Cost– Lost Revenue– Poor Service Level – SLA Compliance Penalty

27

Nube: Transforming LPG supply

NubeChallenge

Sierra Wireless Device-Cloud Solution

devices platformconnectivity

AirPrime Embedded Modules

üFully Integrated

• Innovative start-up company based in Mexico

• Focused on delivering best in class B-to-B-to-C services

• Start of operation in Mexico; global expansion plan

• Gas levels• Consumption• Alerts• Orders

Consumers• No knowledge of gas levels• Constantly refueling gas tanks manually

Gas Companies• No knowledge of customer gas levels • Ad hoc supply, ordering and delivery;

inefficient logistics

• Payment Status• History• Analytics

üReady to deploy üGlobal Solution

Sierra Wireless

Smart SIM

IoT Acceleration

Platform

Customer Snapshot

28

Coverage

Data quality

Flexibility

Simplicity

Nube’s Connectivity Challenges

IoT deployments require a consistent & resilient data connection without human intervention.

UNTIL NOW CONNECTIVITY SERVICES WEREN’T DESIGNED FOR IOT

TECHNICAL CHALLENGES

IoT deployments need the broadest possible coverage to ensure machines are always connected.

Customers connecting global products need a SIM and tools that simplify logistics and operations.

OPERATIONAL CHALLENGES

IoT deployments have long lifespans. Customers need the flexibility to update providers and networks.

29

TOO COMPLEX FOR IOT

Nube’s Connectivity Options

OPERATIONAL SIMPLICITY EASY TO SCALEDIFFICULT TO MANAGE

TEC

HN

ICAL

CAP

ABIL

ITY

LOCAL SIMS• Geographically restricted• Many MNO’s needed for coverage• Very complex SIM logistics• Poor support for OTA updates (eUICC)

LACK FLEXIBILITY & COVERAGE

ROAMING SIM• Coverage restricted to alliances• Costs sky-rocket outside of footprint• >1 MNO needed for coverage & cost• Poor support for OTA updates (eUICC)

Smart Multi-Operator SIM & Dedicated IoT Core Networks

30

Sierra Wireless Solution = Simplicity

Best Coverage

Best Quality

Most Flexibility

Multi-Operator Connectivity

Quality centric and resilient service

Carrier-agnostic subscription management

Simplicity of a Single SIM for Regional or Global IoT Deployments

31

End-to-End Connectivity and Platform Services

• Bring your own SIM and/or Sierra.

• Open to any bearer: cellular, fixed, satellite, LPWA

• All you need to connect your machine:– Data collection

– Monitoring

– Billing

ConnectivityManagement

ApplicationEnablement

360 Operations

Third party SIM

eUICC

SIM & Connectivity

32

Real Cost per SIM

Real monthly project cost

Pricing Options Comparison Table for PowerPoint

Number of SIMs

Project Timeline

Cost per MB

Number of Issues

Level 1,2 Support Cost

$1.004,020

$20 @100%

$1.001,327

$10 @100%

Roaming SIMSierra Wireless

Smart SIM

Typical Telematics Customer Connectivity ROI

Downtime/Compliance Penalty

Average Cost per Issue

$50 @1%

$30.50

$1.61

$50 @1%

$15.50

$1.10

Data Usage/SIM/Mth

Field service visit cost $200 @5% [email protected]%

Dep

loym

ent

Supp

ort C

osts

Real LT Project Cost $19,416,600 $13,293,738TCO

201,000

1 MB 5 Years

$323,610 $221,562

Reduced by 2/3 by Smart SIMFaster resolution time

Lower cost per issue

Lower total cost of ownership

Visits cut in half

33

Improve Your IoT ROI by

üFocusing on Measurable Objectives in ROI

üUnderstanding Your Real IoT Connectivity Costs

= network communication costs + Support Costs

üMinimizing Downtime Costs

34

Thank You

Dan Martensson, VP Cloud & Connectivity Business [email protected]