White Paper November 2015 IOT PLATFORMS

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White paper November 2015IOT PLATFORMSThe central backbone for theInternet of ThingsCompanies that want to take advantage of IoT need solutionsto manage data and interact with customers. Learn about IoTplatforms and how to choose the right one for your connectedproduct or service.sponsored by

AT A GLANCEAT A GLANCEAs the Internet of Things (IoT) begins transforming businesses, economies and society, IoT platforms are emerging asthe central backbone in the overall IoT infrastructure.In this study we examine the current landscape of IoT platforms, how they work and the main aspects to consider whenchoosing a platform provider.INSIGHTS In the next five years, IoT platforms will manage the interoperability of around 25 billion newly connected devices andtheir 44 zettabytes of generated data. Besides basic device connectivity and data storage, advanced platforms encompass (among other things): devicemanagement, action management, analytics, and integration with external interfaces. The IoT platform market is expected to grow 35% per annum and attain a size of 1.16B by 2020. More than three hundred IoT platforms are available today, most of them are relatively new and often still underdevelopment. They differ by technological depth, segment-focus, and technology implementation offering. By outsourcing the IoT platform development, companies can benefit from a 50% shorter implementation cycle andthe assurance of working with IoT experts.IN THIS STUDY YOU WILL LEARN Why IoT will create a 11 trillion business opportunity How IoT platforms work and the modules they incorporate How an IoT platform operates smart washing machines for an electronics retailer (use case) Whether to make or buy an IoT platform 2015 IoT Analytics. All rights reserved.2

1. IOT: AN 11 TRILLION BUSINESS OPPORTUNITY1 IoT: An 11trillion businessopportunityThe idea of connecting the physical world to theInternet has been around since the 90s. But theidea didn‘t accelerate twenty – or even ten – yearsago. It is accelerating now. The phenomenon of aninterconnected world is called “Internet of Things” andit will dramatically change our lives in the coming years.and PCs more than 25B “things” will be connected tothe Internet by 2020 (See EXHIBIT 1)1.Everything is becoming connected: the lightbulbsin your home, the shelf space in your grocery store,and the machines in many factories. With these newconnections, business cases are popping up everywhere:smart parking, autonomous production, automatichome security alerts, and many, many more. Much likethe Internet did roughly twenty years ago, IoT is bringingconvenience, efficiency and safety to a totally new level– changing industries and society itself.The Internet of Things will influenceour lives like never before1.1 Understanding the Internetof Things and its impact25 billion things will be connected tothe Internet by 2020The Internet of Things (IoT) in its essence describes howthe physical world is being connected to the Internet.Gartner estimates that besides smartphones, tablets,2009 1BSome industry experts go as far as saying that IoT willbe the most influential and most disruptive technologyin the history of mankind. McKinsey estimates at the topend that IoT will be an aggregated 11 trillion businessopportunity over the next ten to fifteen years – equalingabout 11% of the world economy2.Business leaders, innovators, and investment firms aretaking note. In 2014 and 2015, Gartner3 proclaimed IoTon top of its infamous hype cycle. A Forrester survey4 of1,055 business decision makers that came out in July20155B202025 BExhibit 1: Explosion of connected “things” – IoT adoption will accelerate, 25B objects will be connected by 2020 (Source: Adapted from Gartner1) 2015 IoT Analytics. All rights reserved.3

1. IOT: AN 11 TRILLION BUSINESS OPPORTUNITY2015 revealed that 33% of businesses are planning oralready conducting IoT projects while 25% are currentlyassessing the option of doing so.1.2 Why is this happening now?Running a somewhat smart factory ten years agorequired expensive, custom-made automation systemsthat only large companies could afford. The situationwas similar in your home. Automating a house withintelligent thermostats and security systems was farfrom being “smart” and you had to be a tech-heavybillionaire like Bill Gates to have your own custom-madesystem.There are several reasons why the IoTopportunity is occurring now: Affordable hardware. Costs for actuators & sensorshave been cut into half over the last ten years. Smaller, but more powerful hardware. Form factorsof hardware (sensors, communication technology,etc.) have shrunk to millimeter or even nanometerlevels. Now you can get a low-energy, state-of-theart sensor with ubiquitous connectivity the size ofyour fingertip. Ubiquitous & cheap mobility. Cost for mobiledevices, bandwidth and data processing havedeclined as much as 97% over the last ten years5. Availability of supporting tools. Big data tools& cloud-based infrastructure have become widelyavailable and fairly sophisticated. Mass market awareness. IoT has surpassed acritical tipping point. The vision of a connected worldhas reached such a followership that companieshave initiated IoT development & marketing budgets.The commitment is irreversible.1.3 Changing businessparadigms: IoT data is thenew goldGathering and connecting data points from physicalobjects is the key to letting new IoT business cases cometo life. As Robert Metcalfe postulated in the 1980s: “Thevalue of a telecommunications network is proportionalto the square of the number of connected users of thesystem6. Insightful data is the key to unlocking thisvalue.This trend will be seen in many industries: selling themain product becomes a byproduct, while the businessmodel around the data becomes the main product. Ontop of that, we will see the creation of entirely newindustries that build business models solely on IoTdata and use hardware partners to get access to thenecessary data sources (e.g., the insurance industry ofthe future).It is the Internet of Things with its25 billion connections that willaccelerate the data explosion. In thatsense IoT data is the “new gold”IDC estimates that the amount of data in the world willmore than quadruple in the next five years to reach 44zettabytes in 20207 (See Exhibit 2). 2015 IoT Analytics. All rights reserved.4

2. IOT PLATFORMS: THE BACKBONE TO MANAGE IOT BUSINESS CASES2005201020120.1 ZB1.2 ZB2.8 ZB2015202044 ZB8.5 ZBExhibit 2: Explosion of data in the world – Data created by people, enterprises, and things will attain 44 zettabytes by 2020 (Source: Adapted from IDC7)2 IoT platforms:The backboneto manage IoTbusiness cases2.1 The IoT technologyinfrastructureFour major building blocks of IoTThe 44 zettabytes of data generated by the Internet ofThings need a solid infrastructure in order to bring themany business cases to life. From a bird’s eye view, fourmajor technological building blocks of IoT are emerging.Security is an additional element that is so important itneeds to be mentioned as a foundation for each at thesame level (See Exhibit 3). Hardware. This is where data is produced. Thehardware layer includes the physical devices withtheir in-built microprocessors, sensors, actuators andcommunication hardware. Communication. This is where data getstransported. This part of the technologyinfrastructure ensures the hardware is connectedto the network, via proprietary or open-sourcecommunication protocols. Software backend. This is where data is managed.The software backend manages all connecteddevices and networks and provides the necessarydata integration as well as the interface to othersystems (e.g., ERP-system). Applications. This is where data is turned into value.In the application layer, IoT use cases get presentedto the user (B2C or B2B). Most of the applications runon smartphones, tablets, PCs or other devices/thingsand “do something valuable” with the data.Security is a must-have element for all of these buildingblocks. The IoT infrastructure has to be holisticallydesigned so that the threat of attacks is minimized onall levels. This entails the protection and encryption of 2015 IoT Analytics. All rights reserved.5

2. IOT PLATFORMS: THE BACKBONE TO MANAGE IOT BUSINESS CASESApplicationsIoT platformsSecuritySoftware backendCommunicationHardwareExhibit 3: Central building blocks of IoT – IoT platforms are part of the central software backend in the IoT infrastructure (Source: IoT Analytics)data and metadata, the management of device access,user authentication, and much more. While securitymust be scalable it is unfortunately often a trade-offwith convenience, quick workflows, and project cost.A quickly emerging landscape with fewstandardsThe IoT technology architecture is currently far frombeing standardized or accurately defined and it isevolving very quickly. There are hundreds of differenthardware units, connection protocols, low-level softwarelanguages, and an increasing number of IoT platforms.It is a relatively young infrastructure that hasn’t comeinto itself yet.IoT can be compared to the Internet of the early 90swhere Microsoft and Netscape fought out the browserstandardization battle, while Altavista and Yahoo weretrying to develop the best search engine.Companies are bundling their forces in consortia such asthe AllSeen Alliance or the Industrial Internet Consortiumin order to develop interoperable standards that wouldstreamline the complex technology landscape. Whilesome companies apply an open-source approach thatfosters transparency and collaboration, others keep theirAPIs private. The latter are hoping to lock-in customersinto a proprietary technology so they can cash-in onlicense fees and a monopoly-like position later on.The IoT technology architecture iscurrently far from being standardized,but is evolving very quicklyAs a result, one of the important functionalities of thesoftware backend and especially the IoT platforms, isto integrate the different hard- and software standardsone by one and enable interoperability. 2015 IoT Analytics. All rights reserved.6

2. IOT PLATFORMS: THE BACKBONE TO MANAGE IOT BUSINESS CASES2.2 What is an IoT platform andhow does it work?form, the platform consists of a variety of importantbuilding blocks:Connectivity & normalization, device management,database, processing & action management, analytics,visualization, additional tools, and external interfaces.(See Exhibit 4)The eight main components of anIoT platformIoT platforms are the central piece in the Internet ofThings architecture that connect the real and the virtualworlds and enable communication between objects.McKinsey2 estimates that “40 percent of the total valuethat can be unlocked with the Internet of Things requiresdifferent IoT systems to work together”. In its mostsimple form, an IoT platform is just about enablingconnectivity between objects. In a more sophisticated1. CONNECTIVITY & NORMALIZATIONEvery IoT platform starts with a connectivity layer. Ithas the function of bringing different protocols anddifferent data formats into one “software” interface.This is necessary in order to ensure all devices can beinteracted with and data is read correctly. Having allExternal interfacesRepository that stores the important data setsDatabaseAPIs, SDKs and gateways that act as interfaces for 3rd party systems (e.g., ERP, CRM)AnalyticsAdditional toolsAlgorithms for advanced calculations andmachine learningFurther development tools (e.g., app prototyping,access management, reporting)Data visualizationGraphical depiction of (real-time) sensor dataProcessing & action managementRule engine that allows for (real-time) actions based on incoming sensor & device dataDevice managementBackend tool for the management of device status, remote software deployment and updatesConnectivity & NormalizationAgents and libraries that ensure constant object connectivity and harmonized data formatsExhibit 4: The eight major building blocks of an IoT platform (Source: IoT Analytics) 2015 IoT Analytics. All rights reserved.7

2. IOT PLATFORMS: THE BACKBONE TO MANAGE IOT BUSINESS CASESdevice data in one place and in one format is the basicnecessity to monitor, manage, and analyze IoT devices.What sounds fairly simple can be a nightmare fromthe point of view of a computer engineer. Libraries needto be set up for individual devices so that somethingas basic as an industrial pressure sensor that sendsanalogue signals can be integrated into the platform forone use case while a wearable device or the data fromsomeone’s smartphone can be integrated for anotheruse case. Volume. The amount of data that needs to be storedcan be massive. In many IoT solutions only theminority of the generated data can be stored. Variety. Different devices and different sensor typesproduce very different forms of data. Velocity. Many IoT cases require the analysis ofstreaming data to make instant decisions. Veracity. In some instances, sensors produceambiguous and inaccurate data.Advanced devices usually provide an API that allowsfor a standardized communication interface to theplatform. However, very often so-called software agentshave to be developed and installed on the hardware inorder to enable the IoT platform to establish a stableconnection.An IoT platform therefore usually comes with a cloudbased database solution that is distributed acrossdifferent sensor nodes. It should be scalable for big dataand should be able to store both structured (SQL) andunstructured data (NoSQL).2. DEVICE MANAGEMENT4.The device management module of an IoT platformensures the connected objects are working properly andits software and applications are updated and running.The data that is captured in the connectivity &normalization module and that is stored in the databasegets brought to life in this part of the IoT platform. Arule-based event-action-trigger allows performance of“smart” actions based on specific sensor data.Tasks performed in this module include deviceprovisioning, remote configuration, management offirmware/ software updates, and troubleshooting. Asthousands or even millions of different devices becomepart of an IoT enabled solution, bulk-actions, andautomation are essential to control costs and reducemanual labor.3.PROCESSING & ACTION MANAGEMENTIn a smart home, for instance, an event-action-triggercan be defined so that all lights get turned off when aperson leaves the house. The technical realization oftencomes in the form of an If-this-then-that rule (IFTTT):If the GPS signal indicates Jason’s smartphone is morethan 5 yards away from his house, then turn off all thelights in his house.DATABASEData storage is a central piece in an IoT platform. Themanagement of device data brings the requirements fordatabases to a new level:5.ANALYTICSMany IoT use cases go beyond action-management andrequire complex analytics to get the most out of the IoTdata-stream. 2015 IoT Analytics. All rights reserved.8

2. IOT PLATFORMS: THE BACKBONE TO MANAGE IOT BUSINESS CASESIn a smart home, for example, the analytics enginecan provide the algorithms that allow the IoT platformto learn which combination of lights and heating arepreferred by the user at what time of the day and inrelation to the outside weather conditions.T. he analytics engine encompasses all dynamiccalculations of sensor data, from basic data clusteringto deep machine learning.Management-focused tools support the dailyoperations of the IoT solution. An example is an „accessmanagement“ tool that determines who has accessto which device and to which data. Another tool is“reporting”, that allows for data export (e.g., in a .csv or.json format) as well as data queries and other forms ofstructured output.8.6.DATA VISUALIZATIONSometimes also referred to as “visual analytics,” datavisualization presents a much-underrated part of theIoT platform.The combination of human eye and brain is still farsuperior to most analytic and rule-based engines. Thatis why data visualization is so important: it enableshumans to see patterns and observe trends.Visualization comes in the form of line-, stacked-, orpie charts, 2D- or even 3D-models. The visualizationdashboard that is available to the manager of the IoTplatform is often also included in the prototyping toolsthat an advanced IoT platform provides.7.ADDITIONAL TOOLSAdvanced IoT platforms often offer an additional setof tools for the developer and the manager of the IoTsolution.Development tools allow the IoT developer to prototypeand test the IoT case. Sometimes even in the form ofwhat-you-see-is-what-you-get-editors (WYSIWYG) thatlets you create simple smartphone apps for visualizingand controlling connected devices.EXTERNAL INTERFACESIoT enabled businesses are rarely built standalone andon a green field. In established companies it is crucialthat the Internet of Things integrates with existing ERPsystems, management tools, manufacturing executionsystems and the rest of the wider IT-ecosystem.Not every IoT platform is an IoTplatformMany companies offer an “IoT platform.“ Foran outsider it is often hard to tell whetherthis term refers to a complete and mature IoTplatform with the eight components describedabove or whether the term has been stretched todescribe just an element of a platform – or evensomething completely different.Companies active in providing just cloudstorage, data security, CRM software, or simpleconnectivity management claim to offer acomplete IoT platform. While it is certainly truethat these software platforms offer a solution forthe wider IoT ecosystem, a mature IoT platformrequires all of the elements described above. 2015 IoT Analytics. All rights reserved.9

2. IOT PLATFORMS: THE BACKBONE TO MANAGE IOT BUSINESS CASESBuilt-in application programming interfaces (API),software development kits (SDK ), and gateways arethe key to the integration of 3rd-party systems andapplications.Well-defined external interfaces can cut specificintegration efforts for enterprises from months to justa few days.IoT platforms in action: Use case for anappliance retailerA UK-based electronics retailer is bringing productexperience and customer satisfaction to a new level,through the use of connected devices and an intelligentIoT platform.One of its use cases is a sophisticated customer serviceprogram for smart washing machines.In this use case, the Internet of Things enables thefollowing benefits to the user of the washing machine: The machine is stopped automatically prior toa breakdown that could cause water damage(predictive maintenance). The user is informed about problems and has controlover his/her washing machine via a smartphone app,independent of the user‘s whereabouts. A customer-service specialist or a craftsman canbe dispatched. Based on important data such aswashing machine type, performance data, history,and previous problems he/she can make aninformed decision instantly.Apart from an increase in customer satisfaction, theretailer has the following benefits: A commission for every local craftsman sent to acustomer. The ability to actively recommend a new washingmachine or additional products to the customer (e.g.,if the washing machine is too expensive to repair). Further revenue opportunities by developing jointprograms with partners (e.g., insurance companiesthat benefit from the reduced risk of water leakagewhen using a “smart” washing machine).There are four major elements of the use case:PART 1: CONNECTING THE WASHING MACHINEOnce the CPU of a washing machine has been WiFienabled and access to the API has been granted ora local IoT platform agent has been installed, thecustomer is ready to enter the new age of IoT-enabledwashing machines.All that is left to do for the customer is to connect thewashing machine to his local WiFi and download thesmartphone app that is either provided directly by theIoT platform or the retailer. The consumer then connectsthe washing ma

1.1 Understanding the Internet of Things and its impact The Internet of Things (IoT) in its essence describes how the physical world is being connected to the Internet. Gartner estimates that besides smartphones, tablets, and PCs more than 25B “things” will be connected to the Internet by 2020 (See EXHIBIT 1)1.

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