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INSIGHT: What IBM's new IoT unit says about related professional services opportunity

INSIGHT: What IBM's new IoT unit says about related professional services opportunity

“I predict we will see more from IBM on "insights as a service" over the next year or two, and not strictly as a cloud services offering."

Last month, IBM created an Internet of Things "startup" with 2,000 consultants and a commitment to invest $3 billion over the next four years.

For the tech giant, the move adopted a similar approach to its launch of the Watson group in 2014, and the Business Analytics & Optimisation group in 2009.

Moreover, IBM sat down with research analyst firm IDC last to describe how it is helping clients, and its ecosystem partners, build IoT solutions.

While many noteworthy hardware and software items were discussed, Gard Little, research analyst, IDC, focuses on what IBM's strategy tells the industry about the professional services opportunity.

“Two strategy elements inform the professional services opportunity, each with its own implications,” Little explains.

“IBM does not aspire to own, or control, all of the data generated by the things in the IoT ecosystem, rather it wants to sell insights about customers’ data back to its customers, by combining its customers’ data with other third-party data sources in innovative ways.”

While much of the IoT professional services opportunity sounded very familiar (e.g., define a strategy, conduct a maturity assessment, and develop a roadmap), Little believes one new element stood out.

“The new consulting opportunity will be figuring out which data sets should be combined to generate new insights and to support a client’s need to make a decision,” he adds.

“In cases where clients make decisions via intuition rather than data, it will take real finesse, using organisational change management, to get them to trust the insights generated, and to use these insights as a basis for decision-making.”

Likewise, Little believes determining when to override an insight, or recommendation, generated by a computer algorithm will become a “hotly-debated topic.”

Secondly, Little explains that IBM does not aspire to tightly control the entire IoT ecosystem, but rather to be a participant in growing an open, standards-based, and secure ecosystem.

“IBM believes this new ecosystem will feature more flexible roles for service providers that further blur the lines between the traditional design—build—run services across the IT services value chain,” he explains.

“IBM has embraced numerous examples of an “open” strategy over the past 10 years and its approach towards the IoT ecosystem continues in that pattern.”

As the design—build—run service lines blur, Little reports that IBM will have to provide a “more seamless transition” between traditional services components to maintain satisfied customers.

“Another implication of this blurring is greater co-opetition, but even so IBM can still make money providing customers with "insights as a service" as a key real-time input,” he adds.

For Little, whether or not IBM’s consultants can come up with more valuable insights than its client will be a key determinant of IBM’s success.

“I predict we will see more from IBM on "insights as a service" over the next year or two, and not strictly as a cloud services offering,” he adds.

“We are at an exciting time because technology, like IoT, is evolving to support our larger aspirations.

“In the IT industry to-date, most of our sights have been set pretty low (e.g., financial or management accounting, managing the location, movement or use of key resources as inputs to create products or services).

“Clearly, there are more gains to be made in IT efficiency, but beyond cost cutting what will keep the consultants busy for the foreseeable future is generating new insights, using things like the IoT, to drive more innovation and growth for organisations.”

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