Outcome-based Pricing for M2M and IoT Solution Providers

Mar 26, 2015

Background

M2M and IoT System Integrators (SIs) integrate various technologies, and component platforms to develop and manage connected solutions. Their primary task is to ensure that various hardware and software pieces work together as intended, and the deployed M2M and IoT solutions meet the end customers' specific set of requirements. SIs can also offer consulting services, help with hardware design, and can also be a value added reseller (VAR) of M2M equipment. In certain cases – especially when offering managed services – SIs can also be an "agent" to handle connection activations and deactivations. Overall, providing customers with end-to-end solutions that can be monitored remotely is a key component of the execution strategies of leading M2M and IoT SIs in North America.

Emerging Pricing Models for M2M and IoT

M2M and IoT system integrators (or, solution providers) charge for solution design (including engineering design), solution development, deployment, and integration, and, lifecycle management services. However, M2M and IoT is all about delivering business efficiencies, and about enabling new revenue streams. As end customers demand more out of their connected deployments, a combination of a base level pricing and results-based payments is expected to become more popular in North America. Therefore, leading solution providers are actively considering a performance-linked payment structure where they could generate revenue based on their ability to help customers achieve the desired business objective with their connected deployments. For example, if a solution provider can help a fleet company achieve the targeted savings in fuel consumption by deploying a remote vehicle monitoring solution, then, a portion of this savings could be shared with the solution provider. From a solution provider's perspective, ability to commit upfront to such a model helps them get the attention of key decision makers that can push the needle on M2M and IoT deployments within an organization. Clearly, this is a win-win situation for M2M and IoT customers and solution providers.

But Who Can Commit to Such a Model?

Frost & Sullivan believes that companies that have an end-to-end, proven portfolio of M2M and IoT hardware and software platforms, and possess an intimate knowledge of their customers' business domains are ideal for offering success-based pricing. One such provider is Wipro Ltd., a leading global provider of M2M and IoT that has deployed cutting-edge solutions for customers worldwide through its design engineering, integration, data capture and analytics, and lifecycle management services. By treating M2M and IoT as a business project (and not as only an IT project), Wipro has helped several customers successfully improve their top and bottom lines through M2M and IoT. Wipro takes a consulting driven approach to bring together an end to end solution; including technology, business components, partners and managed operations; for customers business challenges or priorities. Overall, Wipro is a good example of how a company with a clear, laser-like focus on M2M and IoT can succeed in the connected machines space.


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Vikrant Gandhi

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Fourteen years of product marketing, research, and consulting expertise, which includes supporting clients’ needs through more than 140 syndicated market research deliverables and consulting assignments. Particular expertise in Assessing next-generation telecommunications trends, technologies and market dynamics; Helping clients develop and execute their go-to-market strategies; Providing continuous inputs to clients into new market developments and helping them understand the strategic implications.


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