Quotes from the 2024 paper: Internet of Things (IoT) Advisory Board (IoTAB) report
Quote:
By fostering symbiotic relationships and co-opetition among participants, platform-based IoT business ecosystems drive innovation, monetization, agility, and scalability through open architecture, governance, and network effects,45 as proven by trillion-dollar platform giants.
The Internet facilitated the development of digital platform business models. A platform-based business model “creates value by facilitating exchanges between two or more interdependent groups, usually consumers and producers. To make these exchanges happen, platform-based solutions harness and create large, scalable networks of users and resources that can be accessed on demand. Platforms create communities and markets with network effects that allow users to interact and transact.”
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Platform-based IoT business ecosystems are comprised of complementary partners, resources, standards, and tools. These have long been advocated by business scholars for their proven ability to fuel economic value by leveraging scalable digital platforms as the foundation for dynamic and interconnected business networks. By fostering symbiotic relationships and co-opetition among participants, platform-based IoT business ecosystems drive innovation, monetization, agility, and scalability through open architecture, governance, and network effects, as proven by trillion-dollar platform giants.
Orchestrated business partnerships
Partnerships are critical to the development of the IoT-enabled economy. End-to-end IoT solutions across industry ecosystems are inherently complex, and involve multiple companies, technologies, and standards. By forging IoT business partnerships with complementary stakeholders, organizations can leverage each other’s strengths to develop integrated solutions and accelerate the creation of data ecosystems.
Orchestrated platform-based business ecosystems bridge industries
While existing large-scale platforms have excelled in various domains, there remains a noticeable void in multi-stakeholder collaboration platforms across industry ecosystems. One of the main strategies for achieving hyperconnected growth is to encourage platform-based business ecosystems that link IoT value chains.
Findings:
- IoT systems depend on chips sourced through vulnerable global supply chains.
- Establishing trust in IoT requires a multi-dimensional ecosystem perspective, extending beyond cybersecurity and privacy.
- Privacy concerns undermine trust in IoT and are a significant barrier to widescale adoption.
- IoT cybersecurity concerns are a major barrier to widescale adoption.
- IoT modules built by Chinese companies dominating our market poses a serious security and economic risk.
- Interoperability is a key challenge for IoT across multiple industries.
- A variety of connectivity challenges are hindering IoT adoption, operation, and scaling.
- The IoT-enabled economy is unlocked and accelerated with platform-based business ecosystems, which require multi-stakeholder collaborative partnerships to be successful.
- Equity in access, opportunities, benefits, and outcomes is necessary for the sustainable integration of IoT into all aspects of the national economy and civil society.
Interoperability
A significant barrier is the inability of devices to communicate with each other or with the broader enterprise, legacy systems, and operations technology systems. In some cases, the lack of interoperability is caused by a lack of standards and protocols. In other cases, there are multiple competing standards as each solution provider creates “walled ecosystems”.
Complexity and Integration
IoT consists of sets of disparate technologies offered by a fragmented ecosystem of hardware suppliers, software platforms, and connectivity service providers. It is not a “one size fits all” solution, and components must be assembled to create a solution that meets the specific requirements. In addition, IoT implementations often require integration with existing systems and infrastructure. Integrating IoT devices and platforms with legacy systems is a significant barrier, costly, and requires technical skills that are in short supply.
These issues create “siloed” data trapped within a specific device or vendor’s ecosystem. As a result, integrating systems to enable communication and data exchange is complex and costly, requiring additional middleware and custom integration.
This inability to integrate IoT with existing legacy and modern systems hinders innovation and the full benefits of interconnected, automated systems.
Cost savings
Buildings: The lack of interoperability in IoT systems prevents significant cost savings and revenue opportunities. For example, in [USA] healthcare, it could result in $35 billion in missed annual savings in the U.S.123 In renewable energy, achieving interoperability could save up to $10 billion by reducing transaction costs and increasing efficiency. Without it, there may be $59 billion in lost opportunities from innovative energy applications not being deployed in buildings.
Transportation: In transportation and logistics [USA], improved interoperability and real-time data sharing could reduce global freight emissions by 22%.
Vendor lock-in
The lack of interoperability in IoT creates vendor lock-in and switching barriers, resulting in a fragmented market of “walled garden” solutions. These solutions only work with a limited set of compatible equipment, reducing choices and forcing buyers to stick with specific vendors. IoT technologies based on proprietary standards do not work with other systems, compelling buyers to continue using the same vendor and its partners, often leading to higher costs, fewer innovative features, and limited capabilities. Migrating from these systems to other lower cost or more innovative alternatives is difficult and may require significant switching costs.
Learn from the history if the Internet
The Internet connected people with people, businesses with businesses, and people with businesses. In doing so, the Internet facilitated the development of digital platforms and business models and services enabled by connectivity.
A platform-based business model “creates value by facilitating exchanges between two or more interdependent groups, usually consumers, partners, and producers. To accelerate adoption, platform-based solutions harness and create large, scalable networks of users and resources that can be accessed on demand. Platforms create communities and markets with network effects that allow users to interact and transact.”
IoT as foundation for the digital economy
To advance the IoT digital economy, it is crucial to build a foundation of connectivity and IoT platforms that promote interoperability, digital transformation, and collaboration across business ecosystems.134 History shows that platform-based economies accelerate the evolution of such ecosystems.
Multi-stakeholder IoT partnerships enabled by platforms are key to accelerating widespread adoption and contributing trillions to our GDP.