In September/October Transforma Insights undertook a survey of over 1,100 enterprises of their buying behaviour and vendor preferences for cellular-based IoT connectivity. The survey press release can be found here: ‘New survey from Transforma Insights reveals enterprise buying behaviour for cellular IoT connectivity’. As part of that survey we asked enterprises about their approach to selecting vendors. In this blog post we explore the responses to three such questions and the implications for operator offerings.
The first question that we asked was “What are the top factors that would influence you to select a particular IoT solution provider?” and the results were informative. Historically there have usually been two options that dominate here: price and security. However, in the case of this survey, the top response was “Reputation/Brand in IoT”. The implication is that there is a gating factor of “can I trust this company?” before any other considerations.
There is some variation between the different sub-categories of respondents. For instance, larger organisations significantly select security as their number one consideration, followed by pricing. Bigger adopters evidently care a little less about the brand of their suppliers, probably because they handle a lot more of the functionality in-house, meaning that they are less dependent on the vendors overall.
In the verticals, the preferences reflect the styles of deployments and sensitivities of the organisations involved. For instance, the transport sector favours end-to-end solutions, reflecting the availability of off-the-shelf fleet management solutions. The most price-sensitive sectors are utilities (with multi-million device smart meter programmes a lot of the focus is often on connectivity as a pure procurement exercise) and government (reflecting constrained budgets).
The implication is that enterprises are increasingly considering whether a company has the credibility, funding and future-proofing to be around for the duration of what could be a multi-decade relationship supporting mission-critical applications. Events like Google ditching IoT Core and Sigfox’s bankruptcy will have probably focused their attention.
The shift to focusing on long term viability will naturally favour big, well-established organisations such as telcos and systems integrators. It should also encourage vendors to focus on features and functionality that give confidence to enterprises that they will either be around for the duration or have some kind of insurance policy in the event that the relationship might break down for whatever reason.
As a side note: we are currently deep in the research for our forthcoming annual CSP IoT Peer Benchmarking report, which examines the approach of dozens of operators to delivering IoT. Stemming from that research we note many different approaches to products, services and strategy that might help mitigate enterprise fears.
The most obvious insurance policy is the use of standards-based technologies. This guarantees at least some form of replaceability should the worst happen. In the context of this survey, related to cellular-based IoT connectivity, there are also some other features which help instil confidence, such as eSIM/remote SIM provisioning, to allow switching away to another operators, or bring-your-own-connectivity, which mitigates the risk of committing to a single connectivity provider. There are also a number of examples of smaller IoT connectivity providers finding large strategic investors in the form of particularly telecoms operators: Transatel with NTT, Soracom with KDDI, Eseye with Telus, and 1NCE with Deutsche Telekom and Softbank. That certainly helps with credibility.
We also drilled down specifically into the enterprise’s views on their cellular connectivity provider. We asked them for their main vendor, what made them stand out. The top scoring categories were superior coverage and the ability to bundle connectivity with other solution elements. It was also fascinating to cross-reference the features that the respondents said made their provider stand out with the provider that they had chosen.
The chart below shows that cross referencing, with the lead vendor down the vertical axis and the reasons for the vendor standing out along the horizontal. Some vendors particularly stand out for different features, allowing us to do some very interesting segmentation work on how the different cellular IoT connectivity providers differentiate from each other.
More details of the survey and the methodology used can be found here: ‘Enterprise IoT connectivity survey 2022’.