Verizon’s Acquisition Of Fleetmatics Group Boosts IoT Momentum In The Telco Space

Verizon’s acquisition of Fleetmatics Group isn’t the first deal that involves a telco pushing into new internet-of-things (IoT) territory in the vehicle management space. In 2015, Orange acquired fleet management provider Ocean to strengthen its vehicle fleet management activities.

However, at $2.4 billion, the Fleetmatics deal is much bigger than most telcos have been willing to contemplate to date, underlining Verizon's commitment to the IoT space. But this deal won’t transform Verizon’s enterprise revenue composition overnight. While it will help improve Verizon's position in terms of IoT revenues, Fleetmatics had revenues of $285 million in 2015 – compared to Verizon’s $132 billion.

The price it is prepared to pay for Fleetmatics shows that Verizon expects to see impressive long-term benefits from the deal. Forrester expects that Verizon will ultimately extend Fleetmatics’ business model beyond global fleet and mobile workforce management solutions to more general tracking and tracing solutions for nonpowered objects like skips, agricultural equipment, machinery, and other connected assets.

Verizon has its work cut out: The acquisition is the easy part. But successful integration will be much harder, as this deal is about supporting customers with their business processes rather than just selling them new products.

Digital Transformation - Part 2: Culture And Organization

The most digitally aware managers are realizing that cultural and organizational transformation will dominate their agenda for years to come. Emerging business models will not function based on old organizational structures, traditional innovation approaches, and outdated management techniques.

In the late 1990s, many traditional businesses mentally leapfrogged by adding a “dotcom” to their name. Those old enough to remember those days, know that many businesses failed miserably in their efforts and still have not fully adjusted to IP realities.

Today we see a similar trend, with every business claiming to be a "digital" business. To me, this is a clear sign that we have crossed the zenith of digital hype. This period is a risky one. Just as the once mighty telcos were blown out of the water by the much more agile and flexible social media and big data players in the 2000s, I believe a majority of traditional businesses will succumb to the forces of successful digital businesses. Declarations of digital intentions, the creation of chief digital officers, or the allocation of digital budgets alone will not translate into digital success.

Most grand digital visions and strategic ambitions that have become the staple diet of corporate presentations mostly fall short of concrete plans for management innovation. It is not conceivable how traditional management techniques can deliver on promises of ongoing and inside-out-driven innovation as well as responding instantaneously to fast-changing customer demand. The creation of a work environment that stimulates employees’ self-initiative and creativity as well as passion for one's work must be the central building block for an agile, flexible, and experimental digital business.

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Microsoft’s Acquisition Of LinkedIn Will Not Translate Into A Revolution Of Enterprise Social Networking

In a report, Forrester discussed arguments made by Microsoft regarding the potential benefits of the tie-up. There are some additional aspects that I also consider important when discussing the implications of the tie-up:

  • LinkedIn's status of trusted independent platform for professional information exchange could be undermined. Although the deal, should it go through, would help Microsoft to strengthen its social networking services and professional content, there will be LinkedIn users that are not keen to become sucked into the Microsoft ecosystem as part of their social collaboration activities and abandon LinkedIn as active users.
  • Microsoft must be much faster to decide on LinkedIn's strategy than it did with Skype. It took Microsoft several years to define its strategy for Skype, and Yammer for that matter. This slow response to sort out Skype's place in the Microsoft family slowed down Skype's momentum significantly. By the time the new Skype strategy was announced, most of the hardcore Skype users had migrated away towards other social collaboration platforms like WhatsApp, Facetime, or WeChat.
  • Microsoft must redouble its mobile efforts. A large part of LinkedIn users’ activities are mobile based. Microsoft's weak position in mobile ecosystems could dramatically undermine LinkedIn's longer-term opportunities. If Microsoft underestimates the mobile dimension for LinkedIn, the future for LinkedIn could be very questionable. Users are fickle and there is no loyalty to outdated social media platforms.
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Mobile Edge Computing Will Be Critical For Internet-Of-Things And Distributed Computing

Computing at the edge of the mobile network will frame your IoT-enabled customer experiences in the age of the customer. As products and services based on the internet of things (IoT) continue to thrive, so does the reliance on the underlying network infrastructures to drive business success. Most IoT assets will be connected via mobile infrastructure, and cloud services are central to many IoT initiatives to deliver real-time and context-based services.

However, data transmission costs and the latency limitations of mobile connectivity pose challenges to many of these IoT installations that rely on cloud computing. Mobile edge computing (MEC) is an important technology that enables businesses to deliver real-time and context-based mobile moments to users of IoT solutions, while managing the cost base for mobile infrastructure.

  • Cloud and IoT solutions are increasingly intertwined and improve IoT experiences. IoT solutions gain functionality through cloud services, which in turn open access to third-party expertise and up-to-date information.
  • Mobile connectivity can create challenges for cloud-enabled IoT environments. Latency affects user experiences, so poor mobile connectivity can limit cloud computing deployments in the IoT context.
  • MEC provides real-time network and context information, including location. MEC gives application developers and business leaders access to cloud computing capabilities and a cloud service environment that’s closer to their actual users.
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Mobilize The Internet Of Things

Businesses can obtain major benefits — including better customer experiences and operational excellence — from the internet of things (IoT) by extracting insights from connected objects and delivering feature-rich connected products.

The mobile mind shift requires businesses to proactively support these IoT benefits for nonstationary connected objects that exist as part of IoT solutions. In particular, the IoT forces businesses to acquaint themselves with the implications of mobility in the IoT context for connectivity, security, compliance with privacy and other regulations, and data management for mobility. This means that:

  • Mobile technologies are central to most IoT solutions. To date, technology managers have mostly focused on enterprise mobility management (EMM) as part of their mobile activities. This narrow focus is insufficient for IoT solutions.
  • Mobile IoT is not a technology revolution but a fundamental business process transformation. Mobility requires managers not only to deploy mobile technologies but also to exploit them to support specific business process requirements.
  • Mobile technologies set the framework for IoT solutions. Mobile has distinct implications for aspects like broadband availability, data management, security, and local data compliance. Ignoring these will undermine your IoT initiatives and return on investment.

My new report, Mobilize The Internet Of Things, provides advice and insights for businesses on addressing these mobile challenges in the context of planning for and implementing IoT solutions.

EU Blocks Three's Takeover Of O2 And Leaves The UK Mobile Market In Limbo

After months of rumors, the EU finally decided to block the £10.5 billion takeover of Telefonica's O2 UK by Hong Kong’s CK Hutchison, the owner of Three UK. Brussels loves to shine as the white knight protecting UK consumers from higher prices and less choice. Yet, I believe the rollercoaster will continue.

But what does this prevented merger really mean for the UK telco market? What does it mean for business customers? And what does it mean for the telcos concerned? In my opinion:

  • UK consumers should expect the same dull mobile offers that they have been receiving for years. There are no signs that any telco in the UK market is about to radically rethink its offering along the lines of the T-Mobile US reset that John Legere kicked off several years ago after the T-Mobile/AT&T merger fell through. Rather, I expect more business-as-usual in the UK and no step-change in mobile broadband investments, and as a result, no great benefits for consumers to arise as a result of the merger blockage.
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Reflections On Huawei’s Analyst Summit 2016 – And Beyond

As always each year, Huawei hosted its analyst event in April, with hordes of analysts descending on Shenzhen. Here are a few observations from the event:

In 2015, Huawei’s revenues grew by 37% to €61 billion and its EBIT grew by 34% to €7 billion, keeping the operating margin stable at just under 12%. Huawei’s strategy paid off across all of its divisions in 2015. Huawei’s Carrier Business pushed deeper into carrier transformation support and grew by 21% in 2015. Its Consumer Business operations entered the mainstream: The division grew by 73% in 2015, with Huawei gaining the No. 3 spot in the global smartphone league table. Huawei’s Enterprise Business is gaining traction and grew by 44% in 2015.

There are four distinctive aspects that go some way to explaining why Huawei keeps on outgrowing its peer group. First, Huawei’s heart beats in its R&D division, and most of Huawei’s top managers have come through the ranks of the R&D team. Second, Huawei benefits from strong internal collaboration and flexibility. Compared with other vendors, Huawei seems a lot less process-driven. Instead, Huawei seems to tolerate, even encourage, self-organization among employees — despite strict management hierarchies. Third, Huawei has a flexible and unconventional approach to customer experience. Huawei completes projects that overrun without overanalyzing whose fault it is. Fourth, Huawei is not listed and therefore not answerable to external shareholders. This gives it the freedom to experiment and take a long-term view.

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Innovation Management Solutions Push Innovation That Creates Both Change And Value

Source: The Forrester Wave™: Innovation Management Solutions, Q2 2016

Innovation that only creates change is just that — change. When we asked firms about their major business objectives, 37% claim that product and service innovation is central to their business transformation.

But old-style innovation will be very tough to maintain. To exploit business value from digital technologies, innovation managers need to increasingly think in open ecosystems, open standards, open platforms, and open source software. Digital innovation equals service innovation, which in turn requires a willingness to experiment and engage in minimal-viable-product thinking, because:

  • As customers’ demand changes more quickly, innovation cycles must get shorter. Fast software innovation will “eat” slow hardware innovation given the ever greater role that software plays for today’s business value creation. An innovation management solution supports decision sessions and real-time voting and collaboration to quickly validate or gauge the interest of organizational priorities in short sessions. Organizations need to be willing to fail fast, be able to work iteratively on product and service improvements, run idea experiments based on soft-launches, and get feedback on innovation efforts via external feedback loops quickly.
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Businesses Need To Prepare For New Digital Realities

Photo: Bergmann

At Mobile World Congress 2016, GE outlined some fundamental insights about the digital transformation efforts of industrial businesses. William Ruh, CEO for GE Digital, a US$6 billion business of General Electric, shared valuable insights about the digital transformation process that industrial businesses need to tackle.

Businesses must focus on those activities that they can transform into digital business models. Not every industrial activity can become a digital business, but it will be impossible to succeed in digital transformation by developing a digital business and an industrial business and then operating them side by side indefinitely. GE sold 40% of its business activities because it felt that it could not transform them into digital businesses. For those industrial activities that can become digital businesses, executives need to be aware that:

  • Every industrial worker has to develop digital DNA. Industrial workers and mechanical engineers have to be comfortable interacting with digital systems. At GE, mechanical engineers have to design a locomotive in such a way that they can place a local data center inside it. Every industrial worker will have to have analytics skills, whether that’s the ability to create sensible and reliable data sets or to analyze and interpret these data sets.
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Managers Must Understand The Differences From Past Ways Of Doing Business

Photo: Bergmann

At Mobile World Congress 2016, GE outlined some fundamental insights about the digital transformation efforts of industrial businesses. William Ruh, CEO for GE Digital, a US$6 billion business of General Electric, shared valuable insights about the digital transformation process that industrial businesses need to tackle.

Industrial companies are very different from consumers: They don’t want to buy a great mobile or social experience; they care instead about business outcomes, such as lower energy consumption, faster cash cycles, or higher employee productivity. Digital transformation means that industry will do things differently than in the past.

  • Industrial firms will learn from the consumer world only up to a point. Industrial products are not developed, designed, and sold like consumer products. Uptime and longevity are critical in the mechanical-electrical world. Industrial products often have lifetimes spanning decades, rather than being replaced every two years like smartphones. Often, industrial equipment is not turned off for years, making ongoing software upgrades difficult. Moreover, the results of faulty industrial equipment like aircraft engines can be much more serious than for consumer products.
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