Beyond ConnectivityA Guidebook for Monetizing M2M in a Changing World

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c o n t e n t sc o n t e n t s

4 IntroductIon

4 The Core Elements of M2MBy Suhas Uliyar Global Vice President, M2M/IotssAP

6 Going Beyond TelcoBy Jens Amailsenior Vice President and General Manager, service IndustriessAP

8 A World of opportunIty

10 Building an M2M BusinessBy Steve HiltonPrincipal Analyst Analysys Mason

14 The M2M Value ChainBy Christina GiraudGlobal Lead, solutions ManagementsAP

18 Networked for BusinessBy Suresh Babustrategy and Market DevelopmentsAP Research

22 Protecting the EnvironmentBy Dawn Antleecosystem Managerswisscom

24 the MonetIzAtIon of M2M

26 The Rising Voice of Empowered IndividualsBy William HoffmanAssociate Director World economic Forum

30 Connect Billions Around the Globe By Ioannis FikourasProduct Manager – Device connectionsericsson

34 M2M at SeaBy Ioannis FikourasProduct Manager – Device connectionsericsson

36 M2M and the EnterpriseBy Christoph PeyloVice Presidenttelekom Innovation Laboratories

40 Speed Up Traffic with M2MBy Thorsten HaasGlobal Research & Business Incubation, thought Leadership and communications, sAP

42 Data Collection and MediationBy Mikael RykatkinAlliance Director, DigitalRoute

46 Rise of the Urban MachinesBy Sean O’BrienGlobal Vice President, Urban Matters and Public security, sAP

50 Getting Value from M2M DataBy David JonkerHead of Big Data, Product Marketing, technology & Innovation Platform sAP Labs canada

54 cApItAlIzIng on the M2M opportunIty

56 M2M Building Blocks

57 Considerations for Setting Up an M2M Business Unit

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In the U.S. alone, the vending industry consists of 5 million machines and 50 million daily transac-tions, but the market has been shrinking. this is because of a failure to adopt new technologies, which has resulted in low quality customer experiences when machines take people’s money and fail to dispense the purchased snack or beverage. thanks to recent trends in machine-to-machine (M2M) communications, this may soon be a scenario of the past.

the traditional vending machine has no knowledge about its buyers or what they like. It doesn’t know what’s been sold or if something is broken. A smart vending machine, however, knows all that and more. M2M technology is helping to transform vending ma-chines from simple terminals into data-rich points on a digital network tied to a central computer. smart vend-ing machines know when they need to be replenished. they can adjust prices based on outside temperature. smart vending can even help support regulations like a proposed United states Department of Agriculture (UsDA) rule that seeks to ban food with high fat, sugar, and sodium from schools in America.

Along with other smart trends in logistics, metering, asset management, and urban matters, smart vending is a thriving example of the M2M communication that’s at the core of the Internet of things (Iot). the Iot is everywhere where people are using mobile and cloud

technology to manage their data volumes and connect the different devices, machines, and appliances needed to run businesses better than ever before.

Managing this smart M2M evolution requires a comprehensive architecture and innovative technology solutions. At the core of M2M are three key elements: Mobility, “Big Data,” and the cloud.

Mobility. the distribution and consumption model of these services will primarily be mobile, so the need for a platform and architecture to securely mobilize the data into consumable consumer and enterprise applications becomes critical.

Big Data. connecting the physical world is creating a data exhaust of incredible volume. With the addition of social chan-nels like Facebook and twitter, the Big Data challenge must deal with unstruc-tured data in addition to the structured data generated by devices, sensors, and machines. the key challenge is to convert this data into information and wisdom. this will require entirely new software platforms, tools, and techniques, including in-memory analytics, device connectivity, event-driven execution, and dynamic user experiences to enable this brave new world.

The Core Elements of M2M: Big Data, Mobility, and the Cloud

By Suhas UliyarGlobal Vice President M2M/IoTS, SAP

The Cloud. Most M2M solutions, because they need to manage hundreds of millions of devices and petabytes of data, will be best deployed in the cloud. This will allow enterprises to more effectively manip-ulate and understand the knowledge derived from Big Data analysis without the need to build new internal infrastructures. The flexible and scalable processing power available in the cloud will foster innovation and new discoveries in the M2M world.

communication solution providers (csPs) are positioned to take a leadership role in this

marketplace. to help them, this guide presents thought leader-

ship insights from industry leaders to help every

csP better discern what opportuni-

ties lie ahead.

•••

CoMMunICATIon SoluTIon ProVIDErS (CSPS) ArE PoSITIonED To TAkE A lEADErShIP rolE In ThIS MArkETPlACE. To hElP ThEM, ThIS GuIDE PrESEnTS ThouGhT lEADErShIP InSIGhTS froM InDuSTry lEADErS To hElP EVEry CSP BETTEr DISCErn whAT oPPorTunITIES lIE AhEAD.

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Today, there are as many mobile handsets around the world – approximately seven billion – as there are people. Add on nearly two billion connected machine-to-machine (M2M) devices, sensors, and machines and there is a new and attractive opportunity for communication service providers (csPs).

early M2M solutions have already proven that there is great potential for enabling transformational busi-ness models, driving substantial incremental value, and building better customer relationships. Product-centric companies now have the means to become service-oriented companies, thanks to the proliferation of M2M solutions across almost every industry.

enterprises are now looking for industrial partners to help them capitalize on M2M, making business processes more efficient and transforming their busi-nesses through innovative new services. And, csPs are uniquely positioned to become the service providers for M2M as well as key enablers of the enterprise.

Advantage – CSP Because telcos have a long-standing track record of being successful service-oriented companies, they have the potential to be big winners in the exploding M2M market. not only do they have the ability to provide network connectivity, but they can also provide significant incremental value in other areas critical to the enterprise’s M2M success.

csPs have unique experience with large-scale service delivery and the 99.99% availability that mission-critical M2M scenarios will require. “Big Data” analytics, mass volume operations, and billing for micro services, plus management of complex partnerships, are other csP capabilities of high value in the area of M2M.

A Major Shift Is Required csPs will be moving away from traditional business models to new and innovative ones that fully exploit and abstract the industry-specific value of M2M.

some of the early adopter industries include transpor-tation, automotive, public sector, utilities, and con-sumer products, but there are opportunities for almost every industry to adopt some form of M2M scenario. csPs would best be served by looking at the industries where they have the strongest footprint, allowing them to build upon their current strengths.

CSPs will evolve their offerings using standard and scalable platforms, complemented where needed by solutions for the specific industries they want to support. By providing complete end-to-end solutions, csPs are becoming highly valuable partners for

Going Beyond Telco rootsfueling the M2M revolution

By Jens AmailSenior Vice President and General Manager, Service Industries, SAP

enterprise companies within different industries that are looking to transform their businesses with M2M.

csPs have already built a strong arsenal of partners in terms of content, apps, specialized solutions and ser-vices, and integration, as well as modules and termi-nals. these alliances are now being complemented by other partnerships to unlock deep vertical value, and to quickly roll out and scale up global comprehensive services, simplifying the adaptation of M2M for the enterprise. Finding the right partners will be a criti-cal success factor for the sustainable and profitable growth of csPs beyond telco.

By leveraging their strengths and assets, csPs will power the M2M revolution, and bring the M2M busi-ness opportunity to a whole new level. this guide pro-vides further insight from a variety of different players in the M2M value chain who share their thoughts and expertise about how to leverage this opportunity and unlock the true value of M2M. •••

By lEVErAGInG ThEIr STrEnGThS AnD ASSETS, CSPs wIll PowEr ThE M2M rEVoluTIon, AnD BrInG ThE M2M BuSInESS oPPorTunITy To A wholE nEw lEVEl.

The machine-To-machine (m2m) markeT presenTs an exciTing opporTuniTy for communicaTion service providers (csps)

around The globe. WiTh exponenTial groWTh, m2m presenTs The building blocks for one of The mosT innovaTive, exciTing

advances in The hisTory of TelecommunicaTions.

“m2m communication is a hot bed of innovation,

offering vast possibilities, many of which have not

even been thought of yet.”

suresh babu, sap

“Today, the penetration of M2M connections as a percentage of CSPs’ total mobile connections in developed markets is 5%, but within the next few

years, there will be billions of things connected to billions of devices.”

sTeve hilTon, analysys mason

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2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

100%

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

100%GROwTH CHART FOR M2M DEVICES

Figure 1: M2M device connections and developed markets’ and fixed networks’ share of connections, worldwide, 2011–2021 [source: Analysys Mason, 2012]

connections

Developed markets’ share of connections

Fixed networks’ share of connections

Machine-to-machine (M2M) seeks to be the next high growth sector in fixed-line and mobile con-nectivity, and this presents a significant revenue opportunity for communication service providers (CSPs). Driving the M2M market is the high growth rate of device connections, which will have com-pound annual growth rates of 40–50% between now and 2021.

today, the penetration of M2M connections as a per-centage of csPs’ total mobile connections in developed markets is 5%, but within the next few years, there will be billions of things connected to billions of devices. In fact, M2M connections are predicted to grow to 2.1 billion devices worldwide by 2021 (see Figure 1).

total worldwide connectivity as measured by average revenue per user (ARPU) will be Us$6.5 billion in 2012, increasing to Us$51 billion by 2021, at a compound annual growth rate (cAGR) of 26% over the forecast period.

or industries that most align with their current customer bases. With a wide array of wireless, satellite, and fixed-line opportunities, profitability metrics will vary according to the application, country of operation, and CSP cost characteristics, so finding the right market to focus on is key.

Placement of Teamsto achieve a high degree of success, csPs would be wise to treat their M2M initiative as a start-up business unit, with a dedicated leadership team and functional heads. csPs should also establish dedicated resources in the areas of sales and marketing, technical support, product marketing, R&D, operations support systems (oss), business support systems (Bss), platform, and customer support. each resource area should have key performance indicators (KPIs) tied to the health of the M2M business. If csPs plan to support various industry sectors, it would be most efficient to have a centralized marketing staff, as well as a consolidated

human resources group. Field-based sales teams, however, should be dedicated to the industry sectors in which the csP expects the highest growth.

Participationthere are three distinct routes to market for csPs of-fering M2M solutions: co-selling partners’ solutions; selling or reselling their own solutions; and acquiring solutions. one of the most viable options for csPs will be for them to form partnerships that provide M2M infrastructure hardware such as modems, modules, and equipment. Hardware manufacturing is not a core business for csPs, and hence it would be more advantageous for them to partner to provide this piece of the value chain to enterprises. A csP’s core competency lies in knowledge of networks, connectivity, and managed services, so offering con-nectivity and a platform layer exploits its strengths. For those csPs that have their own systems inte-gration businesses, they can incorporate a series of

the tremendous growth in devices and connected people opens up new doors for csPs, especially when other areas of connectivity – including mobility in the developed world – show signs of slower growth.

The Five Key Steps for Success As the market accelerates, csPs will be one of the most influential groups in the M2M value chain, and they can easily position themselves for success in this area. To gain a profitable foothold in the M2M market, there are five operational and go-to-market factors that are recommended best practices for building an M2M business.

PrioritizationWith the anticipated rapid growth of the M2M market, csPs have myriad opportunities, so prioritization based on the potential for profitability is critical. Automotive and transport, energy and utility, security, government, retail, and industrial are leading the way in M2M solutions, so csPs can start with the industry

Building an M2M Business

Five key steps for driving M2M Success

By Steve HiltonPrincipal AnalystAnalysys Mason

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Prioritization

On which M2M opportunities

should a provider focus, based on

revenue and profitability?

PrioritizationOn which M2M opportunities

should a provider focus, based on

revenue and profitability?

Placement of Teams

What is the best M2M

organizational structure?

ParticipationWhat role

should a provider play in the

complex supply chain?

PartnershipsWho are the

top M2M partners and how should

providers choose from them?

PersonaWho should a

provider choose to create an

M2M marketing identity?

FIVE KEy STEPS FOR M2M SUCCESS

Figure 2: The five critical M2M success factors for csP success [source: Analysys Mason, 2012]

integration-related services into their M2M offerings as well.

the application layer presents the biggest conundrum in a csP’s route-to-market strategy. some providers are capable of offering their own viable, well support-ed applications for many M2M solutions, while others are not. In almost all cases, csPs will need to partner with credible application partners that specialize in the development, testing, and management of appli-cations. those application vendors that have expertise in both on-premise and cloud-based solutions will be most desirable.

PartnershipsNo CSP has a toolset sufficient to offer a complete end-to-end M2M solution for the countless number of opportunities in the market, and this speaks to the need for value-added partnerships. When looking for partners, csPs will want ones with strong, complementary technologies – such as device management, data management, or connectivity in other regions – as well as indirect channels for the marketing of M2M solutions.

In creating a profitable M2M business, it is of para-mount importance to pick the best partners rather

than the greatest number of partners. csPs must review the partnership landscape systematically, by geography and application, in order to find those best suited to their needs. It is important to keep in mind that the best partners for providing M2M services to the utility and energy sector may be different from the best partners in offering services to the healthcare sector. to complicate matters further, the best part-ners can often vary by region of the world or country.

PersonaA csP should establish an identity or image of itself in the M2M market. A csP can use its existing brand – sometimes a consumer brand, but often an enterprise brand – to build its M2M marketing image.

It is important that csPs understand existing market perceptions of their strengths and weaknesses when attempting to offer M2M solutions, because M2M is one of those technology solutions in which connectivity meets It. enterprise It departments play a very strong role in decision making for, and implementation of, M2M solutions. sometimes It departments are less willing to engage a csP in heavy technology implementations than they are a systems integrator (sI), other It channel partner, or It vendor. Remember that many of these

M2M solutions hinge on an application – of which many are customized and in their first generation versions. the risks for It managers are high and, consequently, decisions often favor incumbents, which in this case are sIs and various It suppliers. In some instances, it would be best for csPs to have a “behind the scenes” pres-ence and to allow the partner to front the bid, as is the case with many complex enterprise It projects.

A Foundation for Success Much of the value in operating an M2M business unit will be realized after three to five years, when the num-ber of device connections is three to five times that of today. Up-front investment in these M2M business units is significant and competition for investment capital within csPs is high, so initially there will be some risk. But with 2.1 billion device connections and Us$51 billion of connectivity-related ARPU by 2021, M2M provides savvy csPs with the opportunity to create new, profitable, growth-centric businesses.

to be successful, however, csPs must properly scope and scale these new M2M business units, decide where to participate in the supply chain, pick the best part-ners, and create meaningful branding for these busi-nesses. Building an M2M business has some unique requirements; however, csPs have the core assets to help connect people, things, and machines across the world. •••

Steve Hilton, Principal Analyst at Analysys Mason, is lead analyst for the firm’s Enterprise and SME Strategies research programs. Analysys Mason Limited delivers strategy advice, operations support, and market intelligence worldwide to leading commercial and public sector organizations in telecoms, It, and media.

RECOMMENDATIONS FORCOMMUNICATION SERVICE PROVIDERS(CSPs)

COMBINE partnership, resale, and acquisition models to bring M2M solutions to market. the go-to-market approach for each csP will vary according to specific competencies, but sales of a more end-to-end solution require a fairly strong presence across the supply chain. Partnerships, particularly at the applications layer, will be critical for most csPs.

PRIORITIzE M2M solutions based on revenue and profitability metrics. there are more M2M applications in the enterprise and consumer worlds than may be addressed profitably. Pick the top solutions and focus your resources.

DEDICATE human resources to an M2M busi-ness unit. treat M2M like a start-up business unit and dedicate staff and budget to the group. Reconsider the placement of human resources – whether in corporate functions or in the field. Allocate profit and loss responsibility accordingly.

CREATE an M2M identity based on existing enterprise perceptions and brand awareness. M2M is a solution in which communications – with growing emphasis on mobility – and It overlap. It will be important in creating an M2M identity for a csP to understand the enterprise It buyer’s impressions of its overall enterprise capabilities.

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As the telecommunications market rapidly chang-es, communication service providers (CSPs) are moving beyond connectivity — and beyond telco — to venture into new services and market opportuni-ties. this is leading csPs into new ecosystems, which are characterized by value-based multisided business models involving complex upstream and downstream partnerships. core to this shift is machine-to-machine (M2M) communication — the interaction between ma-chines, devices, and centralized data sources through automated service platforms. M2M is providing csPs with the opportunity to become the new service enablers of the digital economy.

As a global market, M2M is already here. Rapid M2M development is literally starting to transform key in-dustries such as automotive, healthcare, transport and logistics, and utilities. For enterprise companies, M2M opens up a complete business model metamorphosis, enabling them to deliver new and innovative services instead of commoditized products. M2M also enables

It’s Time for CSPs to Step InMany telcos are still focused on generating revenues only from network connectivity and roaming. However, even if the M2M connectivity revenues continue to grow, there is more value in providing any or all of the many services that enterprises are demanding.

When it comes to M2M, csPs are at an enormous ad-vantage due to their expertise and capabilities within highly reliable large-scale service delivery, worldwide operations, and complex partnership management. In addition to providing connectivity, csPs have the capability to fast forward M2M to a whole new level. they can take the complexity out of M2M for enterpris-es by providing industrialized end-to-end solutions and services in the cloud with global and horizontal scale.

the M2M market is rapidly evolving, and now is the right moment for csPs to act and capitalize on the revenue opportunity that M2M presents.

A New Approach: Agnostic Service DeliveryWithin this evolving market, there is an M2M stack of technologies and services – from connected devices through to industry-specific applications – that pro-vide a launching pad for success in this market. And despite the diverse nature of M2M services throughout various industries and use cases, the stack enables a horizontal approach that helps csPs establish a rapid go-to-market strategy. standardized multi-industry support offers scalability and cost-effective reuse and repurposing, with no need to reinvent capabilities when entering into new industries.

The M2M Value Chain

more effective business processes, helps establish a great customer intimacy, and even facilitates the rebranding of company images.

today, there are connected cars using M2M tech-nology to make driving safer and more comfortable. tomorrow, people’s cars will be infotainment centers connected to their personal clouds for contextually personalized content and services. cars will also be connected to the transport network around them, including other vehicles, traffic lights, parking garages, and fuel or electricity stations. And this connectivity will extend to people’s homes, offices, and businesses, allowing them to control everything from everywhere.

enterprises that want to connect machines, places, and people to their processes to provide services like those mentioned above face a daunting task of assem-bling solutions from niche vendors. they also face steep costs and long implementation times, resulting in a low return on investment and slow time to market.

“WHen iT CoMeS To M2M, CSPs Are AT An enorMouS AdVAnTAge due To THeir exPerTiSe And CAPABiliTieS WiTHin HigHly reliABle, lArge-SCAle SerViCe deliVery, WorldWide oPerATionS, And CoMPlex PArTnerSHiP MAnAgeMenT.”

A foundation for achieving profitability beyond telco

By Christina GiraudGlobal Lead Solutions Management, SAP

the M2M stack provides an end-to-end standardized approach for low entry barriers such as minimum inte-gration effort, minimal up-front investment, and global reach. The stack will provide, in its most refined form, an enterprise-ready, one-stop shop for M2M services that consists of these technologies and solutions:

Industry-specific M2M solutions - these innovative cloud-based apps on devices and machines provide for vertical-specific value add and differentiation.

M2M enablement platform - this layer includes “Big Data” real-time analysis, M2M billing, and a framework for apps management, as well as security, device, and content management, plus integration to business support systems.

Device connectivity platform - this layer allows csPs to provide large-scale connectivity, including sIM authentication and authorization, access services management, enterprise self-service portals, and APIs.

network connectivity - this is the layer of communi-cation services such as mobile and Wi-Fi connectivity, along with communication hardware.

connected devices - At this layer, people, machines, and things are connected through devices, sensors, modules, and sIMs.

With the stack, csPs can move up the M2M value chain to become complete M2M service providers, helping enterprises better connect with their customers for a more sophisticated, differentiated value. In addition, CSPs can offer enterprises significant improvements to business process efficiency.

Connecting People, Machines, and ThingsWhile csPs are already experts in providing connectivity, M2M applications will require new ways of doing

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Industry-Specific M2M Solutions Cloud-based M2M apps for devices and

machines, with vertical-specific customiza-tion and user experience

M2M Enablement Platform Application enablement

Framework for apps development and management

”Big Data”Business intelligence, decision support,

reports and alerts, and analytics

M2M billingComplex industry-specific charging and

policy management

Device managementSecurity, device, and content management to handle the billions of “connected” things

Device Connectivity PlatformLarge-scale connectivity for SIM

authentication and authorization, access services management, enterprise

self-service portals, and APIs.

Network ConnectivityCommunication services including

communication hardware

Connected DevicesDevices, sensors, modules, SIMS,

and more.

THE M2M STACK:AN END-TO-END APPROACH

business in this area. With billions of M2M devices to manage, csPs may need to extend their own capabilities through cloud-based device connectivity partners to provide the flexibility and scalability that M2M solutions demand. M2M applications may also extend beyond a csP’s geographic boundaries, driving expensive roaming charges. Partnering with global providers will allow csPs to expand their network connectivity and offer more far-reaching and location-independent capabilities.

Creating Value from M2M DataMillions and billions of sensors and embedded devices will be collecting enormous amounts of data. this data will need to be filtered, transformed, consolidated, se-cured, billed, managed, analyzed, and turned into intel-ligence and knowledge driving the M2M applications.

device Management the wide range of machines, sensors, and devices, and the multitude of device operating systems add com-plexity to device management requirements. csPs will need a highly automated device management solution that encompasses the entire device lifecycle. this includes service delivery and provisioning, data and content backup, alerts with usage thresholds, and the remote upgrade, installation, and removal of applica-tions. these solutions must also have capabilities for device monitoring, data security, device retirement, decommissioning, and cleansing to protect sensitive data on lost or stolen devices.

next-generation Billing M2M introduces new business models that challenge traditional telecommunications billing systems, so csPs will need to adopt a scalable, event-agnostic charging and billing solution with multi-industry support. the solution will need to manage consumption of not only minutes and bytes, but also beverage cans, parking minutes, and megawatt hours, all in one engine. It also needs to support advanced B2B pricing structures.

utilize the M2M infrastructure and connect mobile devices and machines to back-end systems. enterprises will receive great value from connecting smart, com-plementary M2M apps with mission-critical systems such as an eRP or supply chain management solution. M2M applications, which will vary greatly because of industry-specific nuances, may be developed by the enterprises themselves, enterprise software providers, or third-party developers. csPs will want to provide an application support platform that facilitates creation and management of the mobile applications. they will also look to provide secure connectivity between the ap-plications and their customers’ back-end systems. this will allow M2M services to flourish, and enable mobile devices and machines to collect and process more data.

Partnering for Success the M2M value chain involves a multitude of regional, vertical, and horizontal stakeholders, from providers of wireless M2M network services and integrators to app developers with special vertical competence or application-specific differentiation. The value chain also includes module and terminal vendors with M2M services potentially preinstalled on devices, as well as M2M platform providers and specialized solution or service providers.

By forming strategic and tactical partnerships, csPs will have all the means at hand to become key players in providing industrialized, standardized, end-to-end services to enterprises. these partnerships will be key to accelerating the commercial success of M2M. Selecting the right partners – with specific vertical industry knowledge and horizontal software expertise – will enable CSPs to achieve profitability and growth way beyond telco. •••

Christina Giraud is the Global Lead for solutions Management at sAP.

An M2M billing system also needs to accommodate advanced partner management features for revenue sharing and settlements. With the massive number of low value transactions common to M2M, a billing system that has a low total cost of ownership while being highly scalable to meet volume requirements is an optimal choice for csPs.

Finally, policy management integrated with the rating and charging solution will become a strategic part of customer loyalty and the improved monetization of M2M. this will allow for customer-centric services adapting in real time to context, thus substantially improving the customer experience and consumption.

Big data Analytics M2M solutions will generate large volumes of data traditionally not available to enterprises in real time. However, data itself is useless unless intelligence can be derived from it. Real-time visibility into network and device data, paired with business process information (from eRP, cRM, and scM systems) as well as social network and apps data, will provide for true differentia-tion and high business value.

CSPs can offer the data processing piece to provide additional value to partners and enterprise custom-ers. By deploying advanced database and real-time analytics to exploit structured and unstructured data sources, csPs will be able to extend their monetization opportunities.

Delivering Innovative, Integrated Apps, And Morethe true value of M2M communication is realized through smart mobile and machine applications that

By ForMing STrATegiC And TACTiCAl PArTnerSHiPS, CSPs Will HAVe All THe MeAnS AT HAnd To BeCoMe Key PlAyerS in ProViding induSTriAliZed, STAndArdiZed, end-To-end SerViCeS To enTerPriSeS.

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The M2M opportunity Suresh BabuStrategy and Market developmentSAP research

The machine-to-machine (M2M) market is a rapidly growing opportunity that enables enterprises to leverage the power of connected devices and machines to deliver new and compelling business capabilities to its employees, customers, and partners.

Pervasive connectivity – connectivity for M2M has pushed the boundaries of regional or local coverage to include a more global approach. Plus, high-speed networks are costing less, supporting the viability of scalable, flexible M2M solutions.

Maturing technologies – Fourth-generation (4G) mo-bile networks, smartphones, tablets, mobile apps, and other related technologies are maturing at a rapid rate, further enabling the M2M market.

Regulatory mandates – stricter regulations are spur-ring a faster adoption of M2M solutions, especially in industries such as energy, automotive, and healthcare. For example, as the above report states, the european Union has mandated that 80% of european homes must have a smart meter installed by 2020.

Repurposed apps and business models – Advancements such as integrated telematics like those used in high value vehicles and equipment to automatically provide remote monitoring and main-tenance can easily support applications and business models in other industries as well. this highlights the potential for innovation in the M2M market.

Lean approaches – M2M applications can be lean, with little organizational waste, thus providing return on investments in less than two years.

Maturing provider ecosystem – As the number of telecoms, device providers, services, and business software companies supplying M2M services grows, it’s easier for enterprises to find the right providers with whom to partner. In fact, most major telecom companies already have dedicated M2M business

units that can help their enterprise customers quickly implement new and innovative applications.

Cloud-based offerings – With the volume and scale of apps, ”Big Data,” and devices needed to support M2M solutions, enterprises are finding that they don’t have the internal bandwidth and systems to manage the technical aspects in house. However, the rise and maturity of cloud computing provide the answer, with flexible, cost-effective, and scalable technology platforms.

Emerging M2M Markets the M2M market is driven by “smart” or “connected” applications, which are comprised of connectivity, the collection and analysis of data from smart endpoints, and actionable insights. collectively, these smart appli-cations deliver an intelligence and level of automation that ultimately create better, smarter customers and businesses.

several industries, including transportation and logis-tics, utilities, automotive, and healthcare, are leading the way for smart M2M solutions, but the innovation driven by M2M communication can be applied to almost every industry. Here are a few examples of verticals commonly identified by providers as potential markets to explore:

Smart retail – to reach and facilitate the shopper in real time, innovation in smart retail includes mobile shopping, location-based services, interactive kiosks, smart vending machines, intelligent point-of-sale (Pos) terminals, and contactless payments.

Smart cities – As cities strive to provide more cost-effective services to their citizens, communities, visitors, and businesses, there will be smart traffic management, lighting, parking, and other similar M2M solutions.

M2M communication is a hotbed of innovation, offering vast possibilities, many of which have not even been thought of yet. For instance, imagine a smart vending machine that can communicate and send alerts with key data. the machine could advise if it’s fully stocked with the right product mix, how shoppers are interacting with it, when power fails, or if routine maintenance is due.

now imagine millions of such machines worldwide and how much opportunity this could provide busi-nesses. shoppers could pay for the products in these machines with a number of intelligent devices such as smartphones, smart cards, or iPads. the business that owns the machines could remotely and dynamically program them with advertising, pricing, promotions, customer loyalty programs, language, and currency. these possibilities – and more – are not that far away.

Billions of Devices, Billions in RevenueIt is predicted that there will be 50 billion M2M and other connected devices by 2020,1 with revenue from M2M solutions reaching nearly Us$950 billion, including hardware and connectivity.2 In 2011 alone, the worldwide number of cellular M2M subscribers exceeded 100 million, and that number will continue to grow substantially.3

The Rise of Machines, a 2012 report from the economist Intelligence Unit, notes that many of the vital building blocks for M2M are, or will soon be in place, as the fol-lowing key drivers rapidly move the market forward:

Falling costs – technology is continually getting more sophisticated, yet costs are dropping, making M2M solutions more feasible and attractive. the report notes, for instance, “sensors, microprocessors, and wireless technologies that once cost hundreds of dollars are now available for as little as the cost of a cup of coffee.” And, the devices are getting increasingly smaller and more intelligent.

networked for Business

iT iS PrediCTed THAT THere Will Be 50 Billion M2M And oTHer ConneCTed deViCeS By 2020,1 WiTH reVenue FroM M2M SoluTionS reACHing neArly $950 Billion.

Connectivity(Communications services, associated communications hardware)

Professional Services(Consulting, integration, software development)

Service level management(Security, demand response, performance management)

Business Intelligence(Decision, support, reports and alerts, analytics)

2012 2015

M2M

Rev

enue

Dis

trib

utio

n

Fig. 1 - Future value shift in M2M communications

SOURCE: Informa Telecoms & Media

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Smart energy – With a need to deliver smart metering and manage energy demand spikes and supply fluctu-ations more efficiently, smart metering, building, and infrastructure technologies will provide the intelligence and real-time responsiveness to address energy usage variations and controls.

Smart logistics – Incented by the desire to reduce costs in the supply chain and to provide real-time, comprehensive visibility, there will be smart logistics throughout the chain. For instance, there will be smart containers equipped for cold storage monitoring, whether they are transported via the ocean, road, rail, or air. There will also be smart fleet management with telematics and smartphone applications, along with last-mile city logistics with real-time routing for smart replenishment.

Smart autos – the connected car is a fertile area of innovation, offering new possibilities for smart services like infotainment, emergency services, diagnostics, parking, charging for electric vehicles, and pay-as-you-go insurance.

Smart healthcare – spurred on by the high costs of healthcare and the need to extend the reach of coverage and expertise, smart applications such as telemedicine and remote care are becoming more available. For patients at home, for example, there are services such as remote monitoring of health indica-tors through connected devices and diagnostics that help improve dosage tracking and ordering.

Smart manufacturing – M2M innovation is helping

lems. consequently, they are looking to cloud comput-ing, virtualization techniques, and M2M solutions to lower costs and drive new capabilities. But enterprises are not equipped to fully undertake these technologi-cal endeavors, nor do they want to take them on.

common to almost every industry, these business needs provide significant opportunities for commu-nication service providers (csPs) who choose to take advantage of the M2M market. enterprises are eagerly seeking out CSPs who can offer a new end-to-end value proposition that drives innovation and better customer service. they want to partner with csPs who can provide comprehensive, cloud-based M2M solu-tions that include the right devices, applications, con-tent, services, and connectivity – all at the right cost, scale, security, and flexibility for enterprise businesses.

Moving Beyond ConnectivityAs the need for enterprise M2M solutions continues to grow, csPs have the opportunity to move beyond only selling their core capability of connectivity, along with the associated communications services and hard-ware. they can now become a supplier of the entire M2M value chain to enterprises.

According to the Informa telecoms & Media report entitled M2M Communications: Turning Potential into Profit, connectivity represented 90% of M2M revenue in 2012. However, by the year 2015, Informa predicts that M2M revenue will reach $Us65 billion, driving a value shift where the revenue distribution includes more software and professional services, service-level management, and business intelligence.

This is a significant shift in the CSP’s current opera-tional model. the demand for custom, solution-centric, industry-specific M2M solutions will require a new business model that goes beyond the current, highly standardized delivery of connectivity-based offerings by CSPs. Consequently, CSPs will be making signifi-cant changes to the way they operate their businesses.

this guide presents the M2M value chain and the evolving M2M business and computing trends that are prevalent today. In addition, the guide explores how csPs can capitalize on every service in the value chain as they turn their existing network into a network for business. •••

Suresh Babu conducts strategy and market development at sAP Research.

1. More than 50 Billion Connected Devices, Ericsson, February 2011

2. M2M global forecast and analysis 2010-20, Machina Research, October 2011

3. The Global Wireless M2M Market, Berg Insight, 2010

manufacturers reduce downtime, improve overall equipment effectiveness, decrease maintenance costs, and increase traceability. there are solutions such as smart equipment and industrial machinery that remotely monitor and perform diagnostics to enable predictive maintenance and quick repair.

Smart construction – To improve safety, efficiency, and cost effectiveness, there is now construction equipment equipped with telematics as well as solu-tions that verify skills before equipment operation. there are also solutions such as safety monitoring for mining operations and fuel usage tracking for manag-ing construction deadlines.

Smart government – At every level, governments can serve citizens more cost effectively with traditional ser-vices such as parking, traffic relief, and public safety, while also providing more sophisticated early warning, disaster response, and national security systems.

Getting Networked for Business enterprises are becoming more global, their cus-tomers are savvier, and competition is more intense. technology is continually growing in sophistication, and everything that surrounds an enterprise is getting smarter. Plus, there is an explosion of data and infor-mation that enterprises know they should exploit, but aren’t sure how. And behind every action is a demand for more innovation.

to address each of these challenges, enterprises are increasingly seeking mobile and high-performance computing approaches to real-time business prob-

enTerPriSeS Are eAgerly SeeKing ouT CSPs WHo CAn oFFer A neW end-To-end VAlue ProPoSiTion THAT driVeS innoVATion And BeTTer CuSToMer SerViCe. THey WAnT To PArTner WiTH CSPs WHo CAn ProVide CoMPreHenSiVe, Cloud-BASed M2M SoluTionS THAT inClude THe rigHT deViCeS, APPliCATionS, ConTenT, SerViCeS, And ConneCTiViTy – All AT THe rigHT CoST, SCAle, SeCuriTy, And FlexiBiliTy For enTerPriSe BuSineSSeS.

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Machine-to-machine (M2M) communication is a powerful tool for businesses around the globe, and it is well suited to virtually any and all industries. M2M solutions significantly increase productivity, improve operational efficiency, enhance customer services, inspire new business models, and make environments safer, along with a host of other benefits. the potential of M2M has become a popular topic in the boardroom, as executives discuss how their companies can best harness the value of an M2M deployment within their existing business model.

the business case for M2M deployments is so compel-ling that the adoption rate is set to skyrocket over the next few years. Device manufacturers are scrambling to satisfy the needs of a burgeoning industry, and M2M applications from both innovative start-ups as well as established industry giants are flooding the market. What enterprise does not want to be more efficient, safer, and optimized? Who doesn’t want a healthier bottom line?

Although these reasons are compelling enough to embrace M2M, the less well recognized benefit is environmental. With more intelligent processes, enterprises can minimize waste and immediately reduce the consumption of natural resources. With the cost of diesel and gasoline climbing, it is easy to see how implementing processes that reduce consumption will positively impact the bottom line. In addition, many companies have very aggressive corporate sustainability initiatives, increasing the value proposition of M2M to an enterprise beyond simple cost savings or revenue generation.

one M2M application that is already having a positive impact is the use of better intelligence on vehicle maintenance and ongoing diagnostics. M2M solutions can notify operators when a fleet vehicle’s oil or gas consumption has increased, or when servicing is necessary. By addressing the needed repairs and

Protecting the environmentReducing carbon footprints, protecting rainforests, and creating cleaner cities

By Dawn Antleecosystem ManagerSwisscom

maintenance when required, the vehicle performs at a higher level. this helps avoid unscheduled mainte-nance, reduce gasoline consumption, and extend the life expectancy of a vehicle. not only does this sort of investment improve both operating and capital outlay, but it also reduces the overall carbon footprint. And these benefits extend throughout the value chain. As more and more companies embrace M2M-driven solutions, their consumption of natural resources will decrease. Rarely is there a situation that presents itself as a win-win for both bottom-line improvements as well as environmental.

such is the case with swisscom partner sensile technologies in switzerland. the company develops and markets M2M solutions for the oil and gas indus-try. Fuel tanks are often located in remote areas, with constant monitoring required of the content levels to ensure that a vehicle is dispatched to fill the tanks when necessary. In the past, oil companies would manually monitor the tanks, a grossly inefficient option in comparison to the sensile technologies solution. With the sensile M2M telemetry solution, a device installed in each container monitors the fill level of the fuel tanks. A central server receives a transmission regarding the fill levels, which then triggers a command or a warning and ultimately, an action, such as the dispatch of a fuel tank. sensile technologies’ custom-ers benefit from more efficient operations, increased reliability, and a reduced environmental impact. through the optimization of fuel deliveries, sensile technologies’ solutions not only help customers save money, but also ensure significant reductions in CO2 emissions. In fact, sensile technologies’ M2M solutions alone help reduce the emission of transport-related co2 by six tons daily.

However, the benefits of M2M-driven solutions are not just for business-to-business markets; they also extend to consumers. M2M technology already enables several consumer conveniences, such as

automatic call features in automobiles and home-based security systems. As homes become increasingly connected, there will be more M2M-based applications, with features that are either remotely controlled or sensed. soon, power consuming appliances will sched-ule themselves to run at times when it is less costly, homes will adjust heating when it is most convenient, and appliances will run in reduced power modes. the impact of such energy saving endeavors should also have a substantial impact on the way power is con-sumed. It is exciting to think that these M2M home solutions are only the beginning of what will soon be available.

For the environment, M2M does not just aid in the reduction of natural resource consumption. M2M solutions also protect the Brazilian rainforest from illegal logging, monitor radiation levels in animal habitats following accidents, measure water quality in reservoirs and lakes, and track pollution levels in cities. the opportunities enabled by M2M are essentially endless.

As M2M helps the world become more and more efficient and enables environmental communication, businesses and consumers alike are better able to preserve and protect the earth’s valuable resources.

•••

Dawn Antle is the M2M ecosystem Manager at swisscom. swisscom is switzerland’s leading telecom provider, with 6.2 million mobile customers and approximately 1.7 million broadband connections.

AS M2M HelPS THe World BeCoMe More And More eFFiCienT And enABleS enVironMenTAl CoMMuniCATion, BuSineSSeS And ConSuMerS AliKe Are BeTTer ABle To PreSerVe And ProTeCT THe eArTH’S VAluABle reSourCeS.

ThroughouT The M2M value chain, coMMunicaTion service providers (csps) have The opporTuniTy To capiTalize on new revenue

generaTing services. FroM exTended, scalable connecTiviTy Through To indusTry-speciFic applicaTions, iT’s TiMe For csps To eMbrace The poTenTial oF M2M and build a business Model ThaT propels TheM inTo The FuTure oF Mobile TelecoMMunicaTions.

“as enterprises turn to their csps to support their M2M applications, csps

are finding that they require connectivity that is broader in scale and geographic coverage than anything that was ever

needed before. Not only are potentially tens of billions of devices to support, but there will also be a need for CSPs to move

from a regional or country-based type of connectivity to a more global one.”

ioannis Fikouras, ericsson

“M2M communication has the potential to help enterprises around the globe better serve customers,

save money, and improve operational efficiency, especially in vertical markets such as healthcare,

logistics, and utilities. However, some barriers remain for businesses: the gap between the necessary capital

investment and the potential costs savings; the network scalability and functionality; and the operational

complexity of managing large numbers of devices.”

dr. chrisToph peylo, TelekoM innovaTion labs

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Today we live in a hyperconnected world, where the number of connected people and devices is now in the tens of billions and growing at velocities that we have never seen before.

thanks to machine-to-machine (M2M) communica-tion, all of these connected things and people can now understand and interact with each other in a more sophisticated and coordinated fashion. this has led to new and highly meaningful interactions between indi-viduals, their environments, their social structures, and the organizations with which they do business.

In urban areas, we see these interactions evolving into smart cities, with intersecting relationships and inner connections between transportation, communication, public support, and healthcare systems. coordinating

the movement of people and things in urban environ-ments brings benefits beyond the economic return, with potential yields demonstrated in new efficien-cies such as carbon reduction and fewer congested highways.

Healthcare is another area where the connecting of devices with people is set to have a major impact. systems that can more easily identify and diagnose health-related issues based on a more holistic view of a patient’s “digital exhaust” hold much promise. combining an individual’s digital activities such as his or her purchases, banking transactions, online usage behaviors, gaming activities, and interactions with other people provides a richer understanding of the individual. With this intelligence, providers can deliver healthcare solutions that are uniquely tailored to the specific needs of each person.

Individuals want to Be Heard – and ProtectedAs more people and things are connected, there is an opportunity for communication services providers (csPs) to help enterprises deliver M2M solutions that

empower individuals and businesses alike. However, because the connected world is operating differently as it becomes faster and more uncertain, changes are occurring that move at a pace that at times may seem out of control. this is especially of concern to individuals whose personal data is collected and used in M2M solutions. As these individuals become more empowered because they are more connected, they are voicing their concerns and asking for greater trust, transparency, and control. As respect for these needs becomes more prevalent, there are several key areas where csPs can expect shifts that may require new processes, systems, and overall approaches to business.

Be Aware – Trust is Eroding the explosive growth in the quantity and quality of personal data has created significant potential for generating new forms of economic and social value, especially in the M2M market. However, historic misuse and security lapses around the use of an individual’s data have created a growing trust deficit as data gets exploited without any apparent consent or knowledge.

The Rising Voice of Empowered Individuals

By William HoffmanAssociate Director World Economic Forum

Lessons for CSPs in personal data, privacy, and the rights of individuals

create Value Generate Efficiencies

Predict Behavior

Drive Growth simulate Innovation Protect Individuals

ExHIBIT 1:A lack of trust has the potential to pull the ecosystem apart Individuals

Governments Private Sector

enhance control Increase transparency

obtain Fair Value Distribution

Lack of Trust

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Almost daily reports of high-profile data breaches and missteps involving personal data are increasing the individual’s already present fear when it comes to sharing data.

the reality is that today, no one has the answer to the question of where an individual’s data is or who has access to it.

the types, quantity, and value of personal data being collected are vast – from social profiles and demo-graphic data to bank accounts, medical records, and employment data. there are also many online activities such as Web searches, likes and dislikes, and purchase histories, along with tweets, photos, and videos, which trigger data collection.

With unprecedented complexity, velocity, and reach, much of this data can get copied instantly and distrib-uted globally, with many secondary and tertiary uses that may not include consent or any type of tracking or accountability.

Plus, as data collection becomes more proficient with advanced sensors available in some of today’s M2M applications, people’s faces are now identifying them when they walk outside, tagging them into a digital realm. this type of information gathering is eroding the value of an individual’s anonymity, giving rise to questions about what mechanisms are in place to interrupt the process of people being tagged down to their genomes.

Individuals already trust csPs with personal and billing information that is required for connectivity. to continue to build on this, csPs may simply need to explore what new additional security measures M2M solutions will require for ongoing protection of their customers’ data and privacy moving forward.

Prepare for Greater TransparencyAs things get more connected and as huge volumes of data are generated, it’s becoming more important for csPs to be better at obtaining permissions around how data can be used.

there is a need for a shift in transparency, with more awareness of data flows and more accountable ways to track data, such as with increasingly efficient metadata and data tagging. one way to address this is to create incentives that will engage individuals and allow them to have greater efficacy in the use of their data. that will start to create a world where the use of data can be better permissioned and the flows can be better understood at the individual level. technology can provide real-time personal data analysis that will help to engage individuals and allow them to see how the use of their data can provide benefits in the form of much more individualized, and thus useful, offers and communications.

csPs can also develop new data structures that will help to restore trust in the personal data ecosystem. csPs can establish new procedures and policies around some of the key areas of personal data,

including additional measures for securing and pro-tecting data, as mentioned above. Restoring trust may also require the development of better accountability systems, and agreeing on rules for the trusted and permissioned flow of data for different contexts. central to the success of these systems is the inclusion of individuals, who will continue to play an increasingly important role as both data subjects and as data creators.

creating more transparency will help reduce the risk profile and the potential for privacy backlashes that could be very significant in the M2M market space.

Share Data More Effectively csPs, by nature, have access to tremendous volumes of data, and they will want to stop looking at data as an asset that gets locked down and overprotected in a silo. they must start recognizing that data is a resource that is most effective when it’s shared and linked.

csPs will also need new technological infrastructures so that the contextual value of data can be more fully realized. As csPs extract data, they can immediately turn it into information and knowledge that can be shared with a wide variety of M2M partners.

Build New Models of GovernanceAs data collection and sharing increase, there is a need to develop new models of governance for the data as well. traditional approaches don’t work anymore, so there will be a need for a fundamentally new approach to data governance. there will be a need for new rules that are both robust enough to be enforceable and flexible enough to accommodate the evolving meth-ods of information gathering and usage. Regulators, businesses, individuals, and technology can play com-plementary roles in establishing some of the account-ability systems mentioned above, as well as developing better enforcement mechanisms.

Policy makers and regulators should avoid the pres-sure to put forward one-size-fits-all solutions that may unintentionally lock down the flow of data rather than encourage the trusted sharing and use of it to create value. organizations, whether they are commercial businesses, not-for-profits, or governments, need to take responsibility at the most senior leadership level. And individuals need to engage more proactively with organizations that hold data about them, and demand more accountability about how that data is used.

Encourage InnovationWhat’s going to grow and drive the M2M space and the overall digital economy is the ability to discover and innovate in ways that can’t even be imagined today. Innovations and insights will spring from the bottom up very quickly, with seemingly small contributions creating tremendous change.

For instance, when csPs work with technology part-ners and advanced computational systems, they will develop new correlations and data linkages that are simply beyond the ability of humans to understand at this moment in time.

M2M to Peoplethe M2M marketplace is ripe with opportunity, and with the right protective measures for personal data, individuals all over the globe will start to benefit from M2M solutions. •••

William Hoffman heads the World economic Forum’s Ict Agenda, where he supports a global community of commercial, governmental, and civil society organizations in addressing some of the world’s most pressing economic, social, and environmental challenges.

AS ThIngS gET moRE ConnECTED AnD AS hugE VoLumES oF DATA ARE gEnERATED, IT’S bEComIng moRE ImPoRTAnT FoR CSPS To bE bETTER AT obTAInIng PERmISSIonS ARounD hoW DATA CAn bE uSED.

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Connect billions Around the globe Achieving worldwide scalability through cloud-based partnerships

By Ioannis FikourasProduct manager – Device ConnectionsEricsson

Telecommunications started back in the late 1800s, and it took nearly 100 years to connect the first one billion places on earth. Then, as industry evolved, it took only 25 years to connect the first five billion people.

By the year 2020, there will be 50 billion connective devices and almost everyone, everything, and every-where will be connected in real time, fundamentally changing the way people innovate, collaborate, pro-duce, govern, and achieve sustainability. there will be new methods of working together, sharing, and getting informed. And innovative ways of doing business will create efficiencies in both the public and private sec-tors that are beyond one’s imagination today.

Like with any major change in technology, going from the first one billion fixed devices to five billion connected people required a change in the business model for communication service providers (csPs). now, as the machine-to-machine (M2M) market of connected people and things rapidly evolves, there will be another shift. A csP’s customer will no longer be the consumer that has four or five connected devices, but enterprises that want to drive better service and improved revenues through millions of connected devices and people.

As enterprises turn to their csPs to support their M2M applications, CSPs are finding that they require connectivity that is broader in scale and geographic coverage than anything that was ever needed before. not only are there potentially tens of billions of devices

to support, but there will also be a need for csPs to move from a regional or country-based type of connectivity to a more global one. As the business model shifts to accommodate the requirements of the enterprise, csPs will need to partner with device connection partners to expand their M2M offerings while not overloading or compromising their existing networks.

Scale Quickly to Millions and Billions connectivity volume will grow exponentially as busi-nesses across almost every industry begin to capitalize on the benefits of M2M solutions. In fact, by 2020 it is estimated that there will be a cumulative 100 billion processors that are capable of communicating information.

to accommodate this large volume of connectivity today and in the future, csPs can tap into the scalable cloud-based services of device connection partners. these services will help csPs go from connecting four or five billion subscribers using mobile devices one day to connecting fifty billion people, devices, and sensors the next. As an example, think of the utility company that decides to install smart electric or gas meters. As soon as those meters are in place, the utility company will look to its csP to supply connectivity to millions of smart meters – immediately. With millions of sub-scribers already, most csPs will not be able to handle this volume themselves. However, a device connection partner can rapidly scale up the csP’s connectivity capability to accommodate up to ten times more devices in a cost-effective, efficient, and reliable way.

by ThE yEAR 2020, ThERE WILL bE 50 bILLIon ConnECTIVE DEVICES AnD ALmoST EVERyonE, EVERyThIng, AnD EVERyWhERE WILL bE ConnECTED In REAL TImE, FunDAmEnTALLy ChAngIng ThE WAy PEoPLE InnoVATE, CoLLAboRATE, PRoDuCE, goVERn, AnD AChIEVE SuSTAInAbILITy.

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Location Independent, worldwide ReachDevice connection partners will also help csPs address the broad reaching requirements that will be inherent in many global M2M solutions from enterprises such as the automotive industry. Almost every auto manufacturer makes cars in one country and ships them around the world. As the auto indus-try adopts M2M solutions, manufacturers will require connectivity beyond the capability of csPs in their own countries to successfully implement M2M solutions.

For instance, in europe, there is no single operator that has a footprint that covers every country on the continent. For a German automotive manufacturer who sells cars with M2M solutions in France, there will be a requirement to have local support. French owners of the cars made in Germany will want their GPs and other intelligent systems to be in the French language. other key services such as customer support, bills, and other related information need to be in French as well, according to the country’s customs and appropriate legal and compliance regulations. If this car is later sold to someone in spain, the same requirements will need to be met in spanish.

typically, providing these services would be beyond the capability of the csP in Germany who currently supplies the auto manufacturer with connectivity. In cases such as this, csPs will need to look to a device connection partner to find connectivity services that can support the M2M solution regardless of location.

Another sector that is employing M2M solutions is the appliance industry. smart refrigerators and other like appliances are made in one part of the world and shipped internationally. the traditional telecommuni-cations model would require putting a sIM card into each smart appliance before it ships. Unless the sIM card is programmed for the country where it will be used, the sIM’s connectivity would be roaming as it looks for the country of origin, resulting in huge costs.

the other option for the appliance manufacturer is to stock up to 180 sIMs (one for every country in the world) and set up the logistical means to test the device locally to ensure that it’s properly configured for the country where it is being deployed. this would present a very complex and costly business require-ment that would inhibit innovation in this area.

A more cost-effective choice is for the CSP to work with a device connection partner that allows appliance manufacturers to install a sIM card in the factory of origin that is country independent. the sIM can be tested locally in the destination country and automat-ically activated for connectivity via the local operators in the device connection partner’s network. this allows the manufacturer the freedom to ship its appliances essentially anywhere in the world without having to set up anything in advance. If the appliance is moved to another country, the configuration of the SIM can automatically be changed to comply with the specifi-cations of that country.

Global, Scalable Efficiency In addition to scalability and global footprints, device connection partners also provide business process integration, which promotes efficiency and reduces the complexity and the cost of M2M solutions for both csPs and their enterprise customers. Because the offerings of device connection partners are typically cloud-based services, it is easy to automatically inte-grate massive amounts of device data with enterprise applications such as an eRP or cRM system, and drive the complex intelligence that M2M solutions require.

throughout the process, the csP’s enterprise custom-er retains complete control, with the ability to config-ure sIMs as needed rather than purchasing additional ones. the enterprise can also change contract condi-tions and conduct real-time, in-depth analysis on any aspect of the solution, all without operator interven-tion. And the csP remains in complete control of the

connectivity through dedicated portals that allow for order and account management.

Because of the nature of the cloud, both csPs and enterprises can take advantage of a pay-as-you-go model that allows for the rapid and wildly fluctuating elasticity of resources that comes inherently with M2M solutions. This flexibility helps address the solutions with devices that send and receive small amounts of data infrequently, as well as others with devices that generate large amounts of data on a regular basis.

Collaboration and PartnershipFor the most successful M2M solutions, there is a great need for global support on the technical level and operational support as well. customer service, incident management, and related functionality need to be leveraged in every country around the world to fully support M2M applications effectively.

As the M2M market rapidly evolves, CSPs are finding that they can rely on collaborative operator alliances through device connection partners, where cloud services can be shared and resources can be aggre-gated to jointly offer M2M solutions to a single enter-prise. these types of alliances and partnerships will help csPs virtually extend their footprint and address requirements in a larger scale than they could ever before. •••

Ioannis Fikouras is a Product Manager for Device connections at ericsson, a world leading provider of telecommunications equipment and services (including the connectivity management platform described in this article) to mobile and fixed network operators.

bECAuSE oF ThE nATuRE oF ThE CLouD, boTh CSPs AnD EnTERPRISES CAn TAkE ADVAnTAgE oF A PAy-AS-you-go moDEL ThAT ALLoWS FoR ThE RAPID AnD WILDLy FLuCTuATIng ELASTICITy oF RESouRCES ThAT ComES InhEREnTLy WITh m2m SoLuTIonS. ThIS FLExIbILITy hELPS ADDRESS ThE SoLuTIonS ThAT hAVE DEVICES ThAT SEnD AnD RECEIVE SmALL AmounTS oF DATA InFREquEnTLy.

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bringing real-time connectivity to the oceans

By Ioannis FikourasProduct manager – Device ConnectionsEricsson

Most of the world’s cargo transportation needs are served by ocean transport, yet these vast areas have been cut off from communication, as no network has been able to supply connectivity – until now.Major shipping companies are utilizing ericsson technology for end-to-end systems integration and

deployment of mobile and satellite communication to entire fleets of vessels. Shipping companies like the Maersk Line, one of the largest in the world, will use this technology to outfit their vessels with Ericsson antennas and GsM base stations. With this technology, radio waves will communicate with mobile devices, enabling real-time connectivity across every ocean on the globe.

Achieving Benefits Across the SeaMost container ships are already equipped with satellite connectivity to support communication for vital shipboard functions like navigation and distress calls. With the help of ericsson’s technology, there will now be extended connectivity throughout entire fleets while at sea, allowing for new ways of commu-nicating and contributing to efficiency, reliability, and

cost reduction. this kind of communication also paves the way for immediate access to remote expertise, re-sulting in extended access to information and, in turn, improved efficiency in vessels’ daily operations.

shipping companies will have real-time access to infor-mation about vessel operation, bunker fuel consump-tion, and electric conditions. they will also be able to monitor and prevent any difficulties in systems on board before they happen.

One of the primary benefits for shipping companies will come from their ability to proactively manage bunker consumption through real-time data, which will create significant operational savings.

Making Containers SmartWith Ericsson’s technology, vessel fleets in the middle

of the ocean are essentially running their own wire-less networks via satellite uplink. this allows shipping companies and their customers to monitor their containers while they are being shipped. For instance, a refrigerated container, which typically transports meat, fruit, and other perishables, will have a device that continuously transmits information to the ship and other points worldwide. the people monitoring the containers will receive information about their physical position as well as temperature and other vital data.

A full view of every container will be available, whether a vessel is in the middle of the ocean or at a dock in a port. once docked, the device connectivity of contain-ers will switch to a local operator network so that the tracking can continue when the next leg of trucking transportation begins.

Creating Industry-Wide EfficienciesMachine-to-machine (M2M) solutions, such as the one described here, will help shipping companies employ new and efficient ways of addressing fleet manage-ment. this technology will help manage delivery times, improve interaction with vessels, and increase the efficiency of the global supply chain. Shipping compa-nies will be able to proactively resolve issues, promptly share information with customers, and even improve energy efficiency – all thanks to M2M. •••

Ioannis Fikouras is a Product Manager for Device connections at ericsson, a world leading provider of telecommunications equipment and services (including the connectivity management platform described in this article) to mobile and fixed network operators.

WITh ERICSSon’S TEChnoLogy, VESSEL FLEETS In ThE mIDDLE oF ThE oCEAn ARE ESSEnTIALLy RunnIng ThEIR oWn WIRELESS nETWoRkS VIA SATELLITE uPLInk.

m2m at Sea

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The term ”Internet of Things,” or IoT, was first used almost 15 years ago to describe the tagging of objects with radio-frequency identification (RFID) tags to track, count, or monitor goods. Major retailers were among the first to try broad scale tracking of goods to improve the efficiency of shipping and inventory. Unfortunately, the capital and operational costs of these projects were often greater than the projected cost savings.

Kevin Ashton, founder and executive Director of the Auto-ID center at MIt, described the problem in 1999 as “… today’s information technology is so dependent on data originated by people that our computers know more about ideas than things. If we had computers that knew everything there was to know about things – using data they gathered without any help from us – we would be able to track and count everything, and greatly reduce waste, loss, and cost. We would know when things needed replacing, repairing, or recalling, and whether they were fresh or past their best.”

since those early days, the Iot vision has matured. one implementation of this vision is machine-to-machine (M2M) communication, which includes a wide range of sensors, personal devices, and identifying tags. M2M communication has the potential to help enter-prises around the globe better serve customers, save money, and improve operational efficiency, especially in vertical markets such as healthcare, logistics, and utilities. However, some barriers remain for business-es: the gap between the necessary capital investment and the potential cost savings; the network scalability and functionality; and the operational complexity of managing large numbers of devices.

enterprises are a long way from being able to overcome these barriers internally. Instead, they will be looking to communication service providers (csPs), who are already their trusted partners, to deliver M2M services. Using cloud technologies and their operational

expertise, CSPs can deliver M2M industry-specific solutions with the scalability and elasticity that most enterprises today just don’t have.

Providing Scalability and ElasticityM2M applications can create chaos for an enterprise’s infrastructure. M2M communications may be large in volume, yet they are not constant, making it difficult to design an affordable IT environment that can support peak traffic efficiently. However, CSPs can offer a secure and managed cloud infrastructure larger than any one company would need, saving organizations from building and operating a fully customized solution with the accompanying capital investment. this allows an enterprise to start small based on its current utilization for an M2M solution and add resources as the need dictates.

the cloud also provides an entry into other M2M service aspects such as data analytics. the very large amounts of data created from M2M solutions can overwhelm an enterprise’s traditional analysis tools. enterprises can incur additional costs trying to transform data into formats that their existing tools can process. cloud-based data management platforms can use technologies that process and analyze data in near real time. Google uses a popular version of this technique, commonly known as MapReduce, for its large processing tasks. With data – and the informa-tion resulting from analyzing that data – at the heart of many M2M service offerings, it’s important to be able to leverage the best tools available. Being able to in-corporate open source algorithms or implementations into a cloud-based platform reduces capital expenses

m2m and the EnterpriseImproving operational efficiency using CSP m2m platforms and services

By Christoph PeyloVice PresidentTelekom Innovation Laboratories

mAnAgIng A LARgE SET oF DEVICES CREATES ITS oWn SET oF ChALLEngES. PRoVISIonIng, SoFTWARE uPgRADES, AnD DEVICE mAnAgEmEnT ARE ALL AREAS WhERE moST EnTERPRISES ARE InExPERIEnCED, buT WhERE CSPS hAVE STRong ComPETEnCy.

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for enterprises, eliminating another source of upfront costs and allowing them to finance the service from operational savings.

Reducing the Operational Cost of Device EquipmentManaging a large set of devices creates its own set of challenges. Provisioning, software upgrades, and device management are all areas where most enter-prises are inexperienced, but where csPs have strong competency. A commonly overlooked area is the inefficiency of modular systems in their network utili-zation and battery consumption, leading to unneces-sary data transmission and operating costs. the GsM Association created a set of development guidelines for application connectivity, power consumption, and network reliability (gsma.com/smarterapp) for more responsive and reliable apps and improved battery life. While directed at smartphone apps, the guidelines apply to M2M devices as well. For example, in M2M it is inefficient to maintain a persistent network connec-tion, so messages might be delayed or not delivered. A common response to this issue is an additional layer of connection management and error correc-tion, which can significantly increase network traffic. Instead, robust M2M systems should act asynchro-nously and be able to continue operations with partial information.

Another common pitfall is the frequent switch from idle to transmit state when M2M devices send several small messages. the management overhead in opening and closing network connections uses more battery life than maintaining transmit mode for a slightly longer period to send all the messages at once. Applications should bundle messages together so that they are sent over a single session, reducing battery consump-tion. If a technician must constantly replace batteries on remote devices, operational costs skyrocket and the service quickly becomes unprofitable. CSPs can provide a knowledgeable and experienced consultancy

role to application developers, reducing both network and maintenance operating costs for customers.

Offering M2M Mash-upsThe cloud allows CSPs to offer M2M solutions that are designed to adapt and serve multiple organizations. these solutions can be set up as modular architec-tures with interoperable and interchangeable parts, which can be combined in different ways and with a variety of different services for different scenarios. For example, a service that tracks vending machine status and sales can be combined with a mapping application for a geographic view, or weather information for sales analysis by temperature. With connectivity represent-ing only about 10% of an M2M solution, csPs can act as a general contractor for firms with specialized knowledge and applications, delivering complete solu-tions for an industry.

even social media can be integrated into an M2M cloud-based offering. By connecting appropriate machines to the cloud, devices can send automatic status updates to a company’s Facebook followers or ask them to participate in interactive marketing cam-paigns. For example, a vending machine might tweet or post about its cold drinks when the temperature is above a certain point, give customers a free sample if they post or “like” the product, or allow people to buy a friend something from the machine via their smartphone.

Best Practice: An Iterative ApproachDeutsche telekom has partnered with many applica-tion providers to offer end-to-end services designed for specific industries. Based on these experiences, the best practice for getting the most out of clouds and M2M is an iterative approach to application design. The first step is avoiding entanglement with an enterprise’s existing business processes, which can constrain deployment. Instead, design each module as a dedicated cloud application. For

example, a tracking service for high-value packages might involve placing a small mobile device in each package. At the beginning, the cloud application uses data from a small number of packages as they move through the delivery system to provide, monitor, and manage the solution. If the solution fulfills enterprise expectations, it is expanded to cover more packages. the next step is a closer tie-in to existing internal systems such as billing or customer service. Additional cloud applications can be added, such as mapping to provide a real-time geographic view, or reporting sensory information from the tracking device. Device management applications make it easier to order, manage, and dispose of the tracking devices themselves. At this point it is possible to identify which application elements can be general-ized, which can be offered as a service to other enter-prises, and which are proprietary. services are then moved into broader deployment, or integrated with other business processes. Finally, when this service is operating efficiently, look for the next round of opportunities or further cost savings.

Vision to Realitythe 15-year-old vision of the Internet of things is much closer to reality today, thanks to cloud technologies and the csPs that manage them. Barriers to entry are low, so enterprises can start small and grow as needed with lower risk. Leveraging existing csP infrastructures reduces capital investment requirements, so business-es can fund projects directly from operational savings.

For csPs, designing modular applications is critical, not only so they can be reused in other business areas, but also to capitalize on other existing and future cloud applications. While being aware of a customer’s business processes is important, starting projects with too close a tie-in to existing systems and proprietary processes impedes the scalability and extendibility of services to other clients and markets.

Most enterprises do not have the internal skill sets or experience to build and manage a large M2M system. outsourcing of capabilities that are not core to a busi-ness is a common practice, and M2M communications are no different. CSPs can be a trusted M2M partner, quickly enabling all of the information and efficiency benefits while allowing the business to focus on its core products and services. •••

Dr. Christoph Peylo is a vice president at the telekom Innovation Labs, an innovation and development institute of Deutsche Telekom AG. For a first-hand look at how Deutsche telekom delivers end-to-end M2M solutions in conjunction with partners, read thorston Haas’ article on telematicone and how the Hamburg Port Authority is using it to reduce traffic jams and increase the flow of goods through Europe’s second-busiest port.

ThE 15-yEAR-oLD VISIon oF ThE InTERnET oF ThIngS IS muCh CLoSER To REALITy ToDAy, ThAnkS To CLouD TEChnoLogIES AnD ThE CSPS ThAT mAnAgE ThEm. bARRIERS To EnTRy ARE LoW, So EnTERPRISES CAn START SmALL AnD gRoW AS nEEDED WITh LoWER RISk.

Private CloudBased on SAP

NetWeaver Cloud

Smart Port Logistics: Create value across business networks through SAP‘s cloud capability

1 Container status: order assignment, packaging rate, assigned staff nal2 Infrastructure information: disruptions in operating procedure, weather impacts, security3 Location data: freight vehicle location, velocity, standstill time4 Access control: incoming ships, delays, permission to dock5 Unloading surveillance: docking, shipment date and location

Logistic Network OperatorGoods, Containers

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Road Traffi c ControlInfrastructure

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Unloading Control

Sea Traffi c Control

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As the second largest port in Europe, the Port of Hamburg is the size of 7,000 soccer fields and welcomes up to 40,000 trucks a day, each carrying six or twelve containers. the Hamburg Port Authority (HPA) needed to increase the flow of goods transshipped in the port area. Physical expan-sion was not an option, since the city of Hamburg sur-rounds the port. the port’s road infrastructure – over 80 miles (130 kilometers) – is restricted, and offers very limited ability to expand. What was needed was an efficient traffic management system.

HPA partnered with sAP and Deutsche telekom in its smart Port Logistics pilot project. During an initial three-month trial, 30 trucks were fitted with tablets

Speed Up Traffic with m2m

Improving logistics in the Port of hamburg

Thorsten Haasglobal Research & business IncubationThought Leadership and Communications

connected to the prototype smart Port Logistics system. the system receives and integrates three sources of information in real time: traffic information; infrastructure information, including parking and the status of tunnels and moving bridges; and the location of participating trucks approaching or within the Port of Hamburg. Drivers receive automated, personalized text-based messages with relevant traffic information and details about available parking, allowing them to take optimal routes and avoid long waits. As an added benefit, participating freight forwarding companies are

also able to track their transport orders in real time. Thanks to a geo-fence notification method, drivers and dispatchers receive only information relevant to their position or company, preventing information overload, a common complaint with M2M applications.

Results were unequivocally positive, with HPA spend-ing less time responding to traffic diversions or instructing truckers to proceed to a different truck holding area. Drivers found the text messages they received via tablets or mobile phones more convenient and less prone to misunderstandings than the previous phone communications. the pilot suggests that as more trucks use the system, waiting times for trucks will decrease, and there will be fewer traffic jams within the port area and on the approach roads.

smart Port Logistics comprises the telematicone solution from Deutsche telekom, a private cloud based on sAP HAnA cloud Portal, mobile applications, and various applications providing infrastructure and traffic information from HPA. TelematicOne is a central control portal for logistics services suppliers that consolidates freight information from various telemat-ics systems in a single application, where it is then

actionable. sAP HAnA cloud Portal provides the platform where the It-assisted logistics services and processes, such as telematicone, reside.

the pilot project has entered a second phase, where HPA is developing a business model with the goal of offering an expanded Smart Port Logistics service to all of its trucking partners. Real-time traffic and infrastructure information tailored to individual trucks will reduce delays caused by traffic, infrastructure, or parking issues, allowing drivers to reach their destina-tion on time and transship their loads faster.

Whether or not trucking companies sign up for the service is up to them; however, HPA will register the radio transmitters of all trucks in the port to ensure that traffic information is as accurate as possible. In the future, HPA has its eye on expanding smart Port Logistics to other port traffic, such as container ships, rail, and air traffic. •••

Thorsten Haas manages global research and business incubation, along with thought leadership and communications, at sAP.

mAny CSPS ARE moVIng ToWARDS m2m mAnAgED ConnECTIVITy, WhICh InCLuDES mAny oF ThE SAmE ComPonEnTS AnD REquIRES mAny oF ThE SAmE InTEgRATIonS AS mobILE mAnAgED ConnECTIVITy SoLuTIonS: A SIm CARD, TARIFF mEChAnISmS, SIm mAnAgEmEnT, AnD monIToRIng AnD DIAgnoSTICS.

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Increased efficiency and reduced costs are driving the adoption of machine-to-machine (M2M) technology, with industry-specific applications for transport, utilities, auto-motive, healthcare, and security sectors leading the way. M2M devices send a variety of data, and each byte provides more significant value compared to devices that require human intervention. combine that with the growth of devices – expected to exceed 50 billion by

2020 – and it all adds up to lots of data that needs to be managed, collected,

secured, validated, transformed, consolidated, and routed.

Data volume – and the impor-tance of each byte – is not the only challenge. Where data comes from and where it needs

to be sent is becoming more complex. Many of today’s M2M solutions comprise

specific sensors and devices that transmit data to and from a single vertical application, such as an electric utility billing application gathering data from smart meters. tomorrow’s solutions will involve mil-lions of devices, external data, and third-party applications combined

in countless ways. to meet the needs of their customers, communication service providers (csPs) require a

platform that can efficiently collect, process, consol-idate, and deliver volumes of M2M data in real time. this article explores the business models, the chal-lenges, and the opportunities csPs face in managing the plethora of M2M data that is poised to transform the M2M landscape.

From Connectivity to Vertically Integrated ApplicationsGlobally, csPs are embracing various M2M business models. Providing network connectivity for M2M applications and devices is a good first step for CSPs entering the market. to use the smart meter example, csPs can provide the connectivity between the utilities and the meters, ensuring that the utility can bill based on real – rather than estimated – energy consumption.

Many csPs are moving towards M2M managed connectivity, which includes many of the same com-ponents and requires many of the same integrations as mobile managed connectivity solutions: a sIM card, tariff mechanisms, SIM management, and monitoring and diagnostics. Additionally, the csP can manage the M2M devices, collect data from various sensors and concentration systems, and transform that into appropriate formats for operation support/business support systems (oss/Bss) and other applications in need of device data. Managed connectivity allows csP customers to quickly roll out new M2M solutions while still maintaining control of the data and applications.

At the pinnacle of today’s business models, csPs can position themselves as an end-to-end solution

provider, bringing together partners with devices and applications that address a particular need in a par-ticular market. Leading application examples include vehicle telematics, smart metering for utilities, building control and monitoring systems, and asset tracking and logistics. Developers design each application to fit the needs of a particular industry, for example, a fleet management vehicle telematics application. csPs can resell partner devices verified for each application, activate the sIM cards, and collect device data. they may also provide oss/Bss, structured data distribu-tion, and possibly even the application or presentation layer. csPs can be a single point of contact for the en-tire solution, reducing complexity for their customers.

Moving to the M2M Marketplaceonce these vertically integrated applications are established, the next challenge on the M2M horizon is integrating complex data from multiple types of devices. With the number of data sources increasing – from vehicles, retail, utilities, buildings, and more — there is more opportunity to integrate this data into new services. often these services involve correlating real-time, event-based information about the device and the position of that device in the network.

continuing with the utility example, imagine a driver who owns an electric car with an embedded M2M device. If that person visits a friend and needs to charge the car, he or she can connect the car to the friend’s charging pole. Both M2M devices in the car and on the electricity pole send information that is routed to business intelligence applications that

Data Collection and mediationEnabling the interconnected network of machines and applications

By Mikael RykatkinAlliance Director, DigitalRoute

Data Mediation Platform

EnterpriseClients

Third Party

PartnerPortal

WebServer

DataWarehouse

Mobile Operator NetworkM2M Portal

BusinessIntelligence CRM

Social MediaWorkshopsCall Center

GPRS & 3G & 4GIP-Based

SMS

App.Examples

APIlayer

Collect, Media& Enhance Layer

IntegrationLayer

CarrierLayer

DeviceLayer

SIM Layer

source: DigitalRoute

A DATA mEDIATIon PLATFoRm IS ThE hIgh VoLumE, hoRIzonTAL DATA InTEgRATIon LAyER bETWEEn DEVICE DATA CoLLECTIon AnD APPLICATIonS, SToRAgE, AnD DATAbASES.

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correlate the location of the car with the charging. this is a valuable service for utilities, as subscribers can charge their cars at any smart charging outlet, have it metered, and the proper charge will automatically show up on their all-in-one electricity bill combining home and vehicle usage.

However, device status and position information could also be valuable for other high-value applications that have broader opportunities for monetization. csPs could facilitate an “M2M Marketplace” model, where consumers or enterprises could purchase devices, applications, or complete solutions that best suit their needs. A trucking company could choose different M2M devices that suit its different vehicles, for example. or, as in the electric car example above, imagine that

the driver is in an unfamiliar neighborhood when the battery charge of the car becomes dangerously low. the car’s M2M device could alert the network, and the data infrastructure platform could send this event in-formation to a smartphone application called “My city charging Locations.” the driver, who has purchased this application, immediately receives information on the closest charging stations.

As the market transitions from prescribed devices and applications to an M2M Marketplace model, there will be a growing need to collect data from different sources and route it to a larger number of customers. collecting data from several sources increases not only data volumes, but also data processing require-ments. Data from a single device will often have to be

routed to more than one application, and then trans-formed into several different formats for billing and service management systems, as an example. this is the role of a data mediation platform.

A data mediation platform is the high volume, horizon-tal data integration layer between device data collection and applications, storage, and databases. It must be able to amass data from different types of devices involving a variety of different vendors. Data collection gathers and aggregates data from a variety of different networks. It delivers complex data processing such as correlating data from these various sources, collects data from sensors and collection systems, and can trigger events. Data collection systems may also perform network policy management functions, such as instructing devices to minimize data transmission when roaming in expensive networks. Finally, it routes data in real time to appropriate applications.

Building a Foundation for the FutureM2M industry solutions today typically employ specific devices that transmit to and receive from specific ap-plications. M2M solutions of tomorrow will gather data from multiple types of sensors, devices, and collection systems, and data from each of those devices may be relevant to more than one application or industry.

With the M2M market still in its infancy, the require-ments for an M2M infrastructure, and the data media-tion platform that is a part of it, will change over time. Business requirements will also change, so any data mediation platform must incorporate flexible business rules that will transform and route data as necessary

to different applications. For example, electric utilities could integrate social media into their offering, using it to notify subscribers when outages occur. this may require not only new business rules, but also a third-party API with a completely new interface. A data mediation platform should be able to quickly expose a new API to accommodate this rapidly evolving market.

The crowded partner landscape will also affect inter-faces to devices and applications. In the absence of standards, current application providers have hard coded their applications to receive M2M data from only certain devices. For example, today’s home monitoring applications may only integrate data from security sensors, and not receive fire or utility informa-tion. M2M standards will take several years to solidify. In the meantime, any data mediation platform must have the ability to rapidly integrate data from different devices, while being able to adapt to emerging stan-dards. With global mobile networks in transition, the data mediation platform must support current and future networks.

csPs must also employ a high-performance data medi-ation platform with enough computing power to handle the flood of data from these various M2M devices and analyze it in real time. However, the data path is bidirec-tional. As M2M devices and applications become more complex and more critical, future devices and networks will require a higher level of real-time monitoring and control to meet service-level agreements. •••

Mikael Rykatkin is the Alliance Director at DigitalRoute and manages the company’s partner relations. Based in stockholm, sweden, DigitalRoute is a developer of mediation platform technology that helps enterprise organizations manage their data in regards to billing mediation, usage management, policy enforcement, service assurance, and more.

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Today’s urban areas are not just densely populated; they are also a dense mass of electronic sensors, transmitters, and receivers. From smart homes and utility meters to GPs sensors and video surveillance, many aspects of people’s lives are becoming digitized. once standalone, these devic-es are now connected, able to com-municate status and alerts over wired or wireless networks to a centralized system for analysis and action.

While still in the early stages of de-ployment, machine-to-machine (M2M) solutions offer communication service providers (csPs) the opportunity to work with urban governments to im-

prove their cities, empower officials, increase safety, and deliver

innovative services. Most importantly, these solutions can help fulfill each city’s

goal of engaging its citizens and improving their quality of life.

Real-Time Mobile Apps Lay the Groundworknot long ago, city It infrastructures

were closed networks, with little information coming in and even less information going out to citizens. today, ubiquitous smartphones and tablets are re-shaping the way citizens interact with city services, and cities and their inhabitants are reaping the rewards. Bus riders in many cities can download a mobile app that accurately predicts when buses will arrive at stops. GPs sensors in each bus provide re-al-time updates, so citizens spend less time waiting and ridership increases. Pune, the fastest growing city in India, is using a mobile app to conduct a tree inventory of the entire city, helping preserve green

space and shade for its citizens in an increasingly dense, urbanized environment. A tree census applica-tion allows city employees on scooters to take photos of trees and catalogue them by size and variety. the application uploads data – including geo-location information – in real time and superimposes the trees on a geographic information system (GIs) mapping application. the city can track the productivity of municipal employees, while ensuring that new devel-opment conforms to policies around tree preservation and replanting.

Mobile apps are human-to-machine or machine-to-hu-man conversations that lay the groundwork for M2M. they open up city It infrastructure to outside data and encourage citizens to engage with their city in new ways. they connect real-time data with back-end city systems. Additionally, the geographically distributed and real-time nature of mobile apps often requires a cloud infrastructure, another building block for M2M.

Cities Moving towards M2MNot surprisingly, smartphones are part of the first wave of truly M2M apps being deployed in urban areas. the city of Boston, as part of its “Boston about Results” e-government initiative, encourages citizens to download its free “street Bump” application and turn it on while driving in the city. street Bump uses the accelerometer in smartphones to identify bumps on a route and uploads data to a server for analysis without human intervention. the route is overlaid with known speed bumps, and locations of as yet unidentified bumps reported from several vehicles are automatically submitted to the city’s issue tracking system without requiring a visit to the site.

M2M extends beyond smartphones, however. sensors in cars, transport vehicles, high value goods, and smart meters all send and receive data over wireless networks. With each device able to generate tens, hundreds – or more – messages per day, the enormous volume of

devices per city could easily overwhelm municipal networks and data centers. Add security and privacy concerns, and it becomes evident that urban M2M deployments require a partnership between csPs and cities (see sidebar).

With urban machines increasing, let’s look at three areas showing growth and promise for M2M urban applications: transportation, utilities, and health and safety.

Transportation Vehicles are one of the largest groups of connected machines in urban environments. GPs devices are regularly used for enhanced services such as truck routing and traffic notification. As vehicle sensors become more sophisticated, additional services be-come possible. Accelerometers and brake sensors can identify that a vehicle has been in an accident, imme-diately dispatching the closest available emergency responders. By 2015, all new cars in europe will have these systems, saving lives by improving emergency response times by up to 40%.

Traffic congestion management is another M2M area showing great potential for improving the quality of life for residents. Most current systems use highway signs or in-car notification to alert drivers to traffic ahead, and rely on human judgment to choose alter-nate routes. While this can improve traffic flow, greater gains are possible. Traffic controllers, integrating data from vehicle GPS, road sensors, and traffic cameras, can modify traffic signals to redirect traffic. This not only eases traffic congestion, it also reduces carbon

AS VEhICLES ADD moRE SEnSoRS AnD gET SmARTER, TRAFFIC mAnAgEmEnT WILL bEComE InCREASIngLy EFFECTIVE. CITIES ThAT PRoVIDE ThE SmARTEST TRAFFIC RouTIng WILL bE Among ThE moST ATTRACTIVE PLACES To LIVE.

Rise of the urban machines

making cities more efficient, secure, and livable

Sean O’Brien global Vice President urban matters and Public SecuritySAP

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emissions. As vehicles add more sensors and get smarter, traffic management will become increasingly effective. Cities that provide the smartest traffic routing will be among the most attractive places to live.

Utilities Roads are not the only infrastructure supporting growing populations in cities. Webs of utility systems deliver electricity, gas, and water to homes and businesses. Smart meters not only offer accurate, rather than estimated, bills to subscribers, but can also help meet conservation efforts. Some electric utilities operate summertime demand management programs that allow them to automatically reduce air condition-ing at participating homes and businesses during peak times. Participants get free digital thermostats and other perks, while the publicly owned utilities avoid purchasing expensive electricity from other utilities.

Utilities are such an integral part of cities that they can interact with many other systems. Future M2M appli-cations include smart home sensors informing gas and electric utilities of fires so they can rapidly disconnect service, decreasing risks for responders and reducing property damage. Water utilities could use M2M to monitor water main breaks or water quality, rapidly informing cities and citizens of any health or safety issues.

Health and Safety cities can use devices and sensors to monitor and manage their citizens’ health and safety. Video surveillance, already used by many cities to promote safe streets, can be automatically connected to alarm management systems for property protection, or to lighting systems that turn on brightly when sensing disturbances at night.

chronic health conditions are the biggest cost in healthcare systems. Real-time monitoring of people with chronic issues, like heart disease or diabetes,

THE ROLE OF CSPS IN URBAN MACHINES: SENSE, PREDICT, ACT

For CSPs, the majority of M2M service oppor-tunities have three essential elements: sense what is happening, predict what will happen next, and initiate the appropriate action.

SENSINGWith so many sensors and devices, csPs are the natural choice to efficiently collect, route, and if necessary, store the data for analysis in M2M urban applications. M2M conversations are always on, and generate many more but smaller messages than human-to-machine conversations. Many of these conversations have value to more than one organization. csPs, acting as intermedi-aries, can filter the messages, directing relevant portions to applications and partners that can use the information. Different segments of these messages can be disseminated to multiple desti-nations, requiring complex billing across multiple customers and industries. For example, informa-tion gathered from GPs sensors in vehicles and smartphones can be sent to navigation applica-tions for traffic updates, to transportation compa-nies for vehicle logistics, and to municipalities for traffic management and emergency response.

With the broad range of partners and applica-tions, privacy and security concerns begin with data collection. Messages typically contain infor-mation that should not be relayed to everyone. csPs can act as a trusted intermediary, making data anonymous or encrypting it as needed.

PREDICTINGData from these urban machines is most effective when open and shared, as more data increases the quality of analysis and predictions. csPs can implement incentives and revenue

systems that encourage sharing while gener-ating appropriate revenue for their services. Analytics services can be layered on top of data collection for customers without the capabilities or scale to handle the messages directly. For example, police services can be overwhelmed by false alarms from direct connections to alarm systems. Alarm companies can supply a needed service by gathering data from multiple sensors, improving the prediction of which alarms are false, and contacting police with a smaller set of genuine calls.

ACTINGone goal of urban machines is improving municipal efficiency. Predictive analytics, when integrated with other big data information sourc-es, provide expert systems with near artificial intelligence. these systems can act long before a human could, as long as the messages are gath-ered, processed, and delivered in real time. csP infrastructures, with their reliability and capacity, are necessary to handle these tasks.

Acting in real time also means keeping billions of devices operating across a wide range of operat-ing systems and functionality. Automated device management – including software upgrades, backup, and security – is essential to keeping the urban machine running smoothly. CSPs can offer managed devices as a service, or partner with other organizations to manage devices through their network.

provides substantial benefits. Regular contact with a medical professional improves compliance with health-care recommendations, reducing costs from hospital visits and lost productivity. early detection of critical markers can also reduce hospital visits, enabling para-medics to treat situations on site.

Real-Time RealityUrban M2M deployments have only scratched the surface of their total potential. csP infrastructures will be necessary to handle the growing scale of urban ma-chines. sensing millions or billions of messages in real time, filtering the content for security and privacy, and delivering data to multiple organizations involves more than a broad and reliable network. the driving force in urban machine adoption is applications, often highly specialized, that use the available machine data to pro-vide a better service. csPs have the suitable platforms, interfaces, and security to support a broad range of application developers, including governments. csP billing systems are equipped to handle a large number of very small, low-cost transactions with a wide variety of customers and partners, from utilities to trucking firms. Combining real-time big data from multiple sources and predicting probable actionable outcomes offers tremendous potential, yet it is also the future challenge for csPs and governments. together, their combined ingenuity will help improve citizens’ work, play, and lives. •••

Sean O’Brien is the Global Vice President, Urban Matters and Public security at sAP.

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The promise of “big Data” and analytics

By David Jonkerhead of big Data, Product marketing, Technology & Innovation PlatformSAP Labs Canada

Providing connectivity for machine-to-machine (M2M) communication is an essential job for com-munication service providers (CSPs). However, as the number of machines grows and network compe-tition increases, margins will be under constant pres-sure. As the machine sensors and software become more complex, the frequency and volume of data

getting Value from m2m Data they transmit will grow. collecting, distributing, and analyzing the “Big Data” produced by M2M communi-cation is a big challenge for enterprises, and a prime opportunity for csPs.

Data has the promise of a high value revenue stream, helping enterprises to better understand their environ-ment, respond faster to trends, and improve customer service. the incredible volume of data from machines is fueling an explosion in innovative applications, as enterprises experiment and apply the data to their specific needs. For most enterprises, a large part of their M2M data is unique and proprietary, and adding this data to existing information is the true value of an M2M solution. Data sets also retain and even grow in value over time, creating the foundation for strate-gic positioning of csPs as trusted partners with the enterprise.

Capturing Value from M2M DataFor enterprises, getting the most value from M2M services means analyzing data at the right time to anticipate and adapt to changes that could affect the business. these changes could be as diverse as cus-tomer behavior, traffic and logistics, weather, energy consumption, or major news events. Integrating and correlating M2M information with public and private databases is necessary to build a more complete picture.

For csPs, getting the most value from M2M services means establishing a platform that can handle the enormous volume of data, integrate and analyze that data, and sense and respond in real time. these capabilities can be developed and delivered in-house, providing greater control over the resulting service. or they can be delivered with a selection of partners, which typically results in faster execution and a broader set of specialized services. either way, M2M requires a cloud infrastructure to manage the massive data and processing requirements involved.

Adding Value with a CloudHowever, cloud capabilities are essential for more than just the scale of processing and storage. Remote sensors and other machines tell only part of the story and need to be connected to other data sources and applications. A cloud infrastructure provides the necessary scalability and standardized interfaces to connect these data sources. For example, sales information from vending machines can be correlated with internal data such as sales from other locations, marketing promotions, or production statistics. external information can also be incorporated, such as weather statistics, commuting timetables, sporting or entertainment event schedules, and even social media posts. the very large and growing collection of cloud-based applications add more value, enabling data to be visualized on a map or allowing customers to analyze their own slice of the data.

Generally, CSPs can offer M2M services in two differ-ent business models: in-house or partner. Building or expanding a cloud infrastructure in-house with additional servers and storage for M2M data and analysis can be capital intensive. It typically requires adding personnel with expertise in Big Data. However, this model gives the csP greater control over the M2M value chain, from connectivity to data collection and even analytics. An alternate model is partnering with various specialists, as mentioned above, to assem-ble a complete service for the customer. this could include one or more partners in cloud servers and storage, data analytics, and cloud applications. While this model puts less of the service offering under the direct control of the CSP, it is more flexible and faster to market, and requires much less capital.

FoR CSPs, gETTIng ThE moST VALuE FRom m2m SERVICES mEAnS ESTAbLIShIng A PLATFoRm ThAT CAn hAnDLE ThE EnoRmouS VoLumE oF DATA, InTEgRATE AnD AnALyzE ThAT DATA, AnD SEnSE AnD RESPonD In REAL TImE.

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Open Up Data to Otherssome data sets may be valuable to multiple customers. Location data from mobile phone subscribers, when made appropriately anonymous, is sold for real-time traffic analysis and predictions. Energy consumption data is used by the utility for billing and planning, but also by consumers for assessing their own usage. Again, when made anonymous, this data could be sold to appliance manufacturers to gain an understanding of how and when different demographics use their prod-ucts. Data can also be opened up to other application developers. Many of today’s leading cloud applications came not from the data owner but from third parties or subject matter experts with a unique perspective. opening up to app developers is critical for delivering the broadest solution to market and uncovering addi-tional market opportunities.

enterprises may express concerns about the privacy and security of cloud functionality and openness. But just because the analysis and some applications are cloud-based does not mean that the data has to be. cloud activity can be encrypted and securely isolated. Data can be stored in a public cloud, a private cloud, or integrated into existing databases. solutions can be crafted to address the privacy requirements and regulations of any industry, keeping some categories of information behind the firewall while opening up others.

Analytics in the CloudAnalysis platforms for Big Data are also cloud-based. the volume of data is far beyond the capacity of most enterprise analysis tools. cloud-based analytics split up the job into a large number of very small jobs, spreading the load among a variable set of servers. cloud analysis works for varied data sets, expanding to use as many servers as necessary. Because the anal-ysis is separate from the data storage, one analytics platform can be used for all customers and services.

the separation of analysis and data storage makes cloud analytics ideal for M2M applications. Data platforms in the cloud can pull data from any number of sources and combine them to look for patterns. Data can be highly structured, such as sales or en-ergy records from machines, or unstructured, such as internal documents or social media posts. Both structured and unstructured data can be stored in scalable repositories, enabling enterprises to identify and analyze specific patterns, isolate trends as they emerge, and respond accordingly.

Key Capabilities of an M2M Data Platform Handling data collection and analysis for M2M com-munication requires specific capabilities. The first is a robust platform that can handle the speed and volume of M2M communication. An architecture that can work in-memory as well as across slower disks, and scale with minimal overhead is essential to collect and distribute M2M data in real time. Processor memory is up to 10 million times faster than a spinning disk drive. Increases in memory capacity combined with price decreases are making it possible to collect and process very large streams of data in real time, instead of days or weeks later. A data platform needs to move data from the collection points to various processing and storage locations securely. some of these moves may require filtering data to comply with privacy rules, transforming the data into usable formats, cleaning up noise and errors, and correlating new information with existing records.

next are analytics capabilities to work with any type of data, from highly structured records to the much larger mass of conversations, images, machine logs, sensors, and mobile devices. not only are these data types unstructured, but also their form can change frequently as new devices or applications are adopted. For example, think of the changes in social media us-age over the past few years, from Facebook to twitter to tumblr.

the results from Big Data analyses are often easier for people to process in some visual representation, rather than a table of numbers. Visualization tools create charts and dashboards from multiple sources that peo-ple can add and modify on their own, without program-ming. Ideally, interactive graphics allow exploration, what-if questions, and predictions, so that users can figure out what questions to ask and what patterns are happening. Data input needs to be live so that all of this happens in real time. Ideally, visualization tools support a variety of formats, such as Web pages, Adobe PDF, and Microsoft Office, enabling many different ways of acting on the analysis.

All of these capabilities are only useful if the remote and mobile machines are operating, up-to-date, and in compliance with security and privacy rules. Many machines, such as sensors and GPs units, will belong to the enterprise, but others, such as smartphones or tablets, will be personal property. Device management tools will have to keep track of these different units, provisioning and upgrading apps over-the-air, and se-curely separating enterprise and personal apps without having to physically touch them. Devices do get lost or stolen, so centralized tools that can enforce policy compliance and remotely lock or erase devices when necessary are another key requirement. there are, and will continue to be, a wide range of device hardware and operating systems. Device management functions need to be provided in a platform-independent fashion, to avoid creating repetitive management tasks across separate silos of devices.

Delivering High Value Through Datathe ultimate value for enterprises from M2M commu-nication is intelligence and predictive analysis that is timely and actionable. Getting these results requires expertise with large-scale communications infrastruc-ture, real-time collection and distribution of very large data sets, and analytical processing spread across racks of servers. this expertise is not common to many enterprises, but is very familiar to csPs. Adding cloud-based data management, massively scalable analytics, and mobile device management to M2M connectivity services are ideal ways for csPs to deliver higher value to enterprise customers. these higher margin services improve strategic positioning of csPs as a trusted advisor for future enterprise opportunities. •••

David Jonker is the head of Big Data, Product Marketing, technology & Innovation Platform at sAP Labs canada.

DATA hAS ThE PRomISE oF A hIgh VALuE REVEnuE STREAm, hELPIng EnTERPRISES To bETTER unDERSTAnD ThEIR EnVIRonmEnT, RESPonD FASTER To TREnDS, AnD ImPRoVE CuSTomER SERVICE.

Ready to take advantage of M2M? HeRe aRe a few tips on How to set up an M2M business tHat is geaRed towaRd pRofitability and innovation.

“to become a player in the M2M market and deliver on its potential, Csps require a well structured incubation plan.”

M2M building bloCks

Capitalizing on the

M2M Opportunity“an M2M business unit within the Csp will

provide the change in mindset to tap the full potential of the M2M market. such a unit will

also provide the right structure to develop the nascent market, balance exploration with

achieving business goals, address the key M2M drivers, and overcome the structural

barriers to innovation and solution delivery.”

ConsideRatons foR setting up an M2M business

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M2M is a signification inflection point for the com-munication service provider’s (CSP’s) business. the potential is enormous, yet at the same time the way forward is still far from clear, especially because of the custom and vertical-specific nature of M2M solutions.

According to the 2012 report M2M communications: Turning Potential into Profit from Informa Telecoms & Media, several key questions must be considered when a csP decides to enter the M2M market.

Structure: Where does the M2M division belong within a csP’s organization? As csPs consider this, they need to balance autonomy and speed-to-market with the integration and sharing of existing operational ser-vices, such as billing, for the greatest efficiencies.

Leverage: What are the internal metrics used to deter-mine M2M profit and loss? CSPs already have 2G and 3G legacy networks, so M2M income can be viewed as incremental, with limited oPeX costs and with as much as 70% gross margins. However, if the 4G/Lte net-works best support M2M, csPs will need to consider the costs of investing in new networks when projecting M2M profits. Or they can leverage the 4G/LTE “net-work as a service” cloud offering using an OPEX model for the M2M build out.

Roaming: What are the costs to deliver cross-region or international M2M services? M2M traffic, with high volume and short sessions, is different in nature from

other locally based connectivity, and may result in expensive roaming costs. Partnering with other opera-tors will extend a csP’s reach, as will the use of global M2M sIM cards.

Platforms: How does a csP handle service management costs and platform capabili-ties? The maturity of the cloud offers a quick

migration path, with a low investment for entry and operations, enabling CPSs to extend their offer-ings on the scalable, flexible basis that M2M solutions demand.

Modules: How does a csP factor module costs into M2M pricing? the module cost dynamics, such as csP supplied versus embedded devices with over-the-air provisioning, will play a role in how csPs price M2M solutions. the networks they support – whether 2G, 3G, or 4G – will also affect pricing as well as the costs of chipsets, modules, and devices, which are dramati-cally different for each.

Partners: What do the partner payout models look like? the multiplicity of partners that are in the M2M value chain will require identifying and addressing value creation. csPs must look at how they can add value to their partners to more effectively monetize their own offering(s).

Charging: What are the types of pricing models supported? A csP’s existing billing and operational systems must accommodate diverse models such as the multilateral value chain, as well as the criticality, frequency, and timing of M2M data – all of which have different monetary values.

To become a player in the M2M market and deliver on its potential, CSPs require a well structured incubation plan. For tips on how to create such a plan, please see the next article. •••

M2M Building BlocksThe foundational keys to success

Considerations for Setting Up an M2M Business Unit A well structured plan for the CSP

M2M potential for the CSP is enormous. yet at the same time, the way forward is still far from clear, especially because of the custom, solution-centric, and vertical-specific nature of M2M solutions. An M2M business unit within the csP will provide the change in mindset to tap the full potential of the M2M market. such a unit will also provide the right structure to develop the nascent market, balance exploration with achieving business goals, address the key M2M drivers, and overcome the structural barriers to inno-vation and solution delivery.

In particular, the new M2M business unit should seek to establish the following goals:

Address the new M2M market from the perspective of vertical needs and horizontal capabilities

Tackle the multilateral M2M value chain that includes networks, connected devices, and applications

Create the right technology platform and strategy for M2M, offering the necessary end-to-end integration

Develop the right business models in respect to met-rics, payout, and charging

the structure of the M2M business unit or competency center can incorporate the following functions.

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M2M STrATegy, MArkeT DeveloPMenT, AnD CoMMerCiAlizATion

Business strategy and commercial models for M2M target verticals (industry or line of business)

Business strategy and commercial models for customer development

• engagement (by geography and market matu-rity, size, industry, and line of business)

• Sample M2M services by customer size

- consumer: Advertising, apps, de-vices and electronics, social media, location-based, embedded automo-tive, security, media and entertain-ment services, gaming, and mobile healthcare

- Small office/home office (SOHO): content, business apps and mobile cloud, money, and healthcare apps

- small and medium enterprises (sMe): smart devices, apps, content, cloud, mobile money, business ser-vices, business analytics, and social media

- Large enterprise: smart devices, apps, content, cloud, mobile money, business services, business analytics, social media, advertising, video con-tent management, location-based ser-vices, and intelligent M2M networks

• Solution delivery: Build, deploy, run

Business strategy and commercial models for strategic M2M partnerships and the service pro-vider ecosystem for the multisided M2M market

• Strategic partner engagement

- enterprise services – software as a service (saas), Platform as a service (Paas), Infrastructure as a service (Iaas), analytics, and mobility

- M2M communication technology

- Business services – services such as banking, insurance, and logistics

- system integration and managed services

• Service provider enablement

- Application development

- Integration

- content

- connected device

- cloud providers

- other M2M alliance operators

• Solution delivery (build, deploy, run)

Technology strategy for capturing the M2M market

• M2M solutions and marketplace

• Cloud and M2M PaaS

• Real-time M2M analytics as a service

• Money services (pricing, rating, charging, billing, and payment)

• Smart device management

• Smart connectivity

• Smart devices (devices, hardware, and modules)

• System integration services and managed operations

M2M r&D

Applied research, technology integration, archi-tecture, and early M2M product development

Strategic partner asset evaluation and integra-tion (as defined by business goals), including asset acquisition

M2M PaaS delivery for service providers, includ-ing the developer community, system integra-tion, and device manufacturers

engagement with mature product and business units for M2M portfolio development and joint roadmap

• Product units and services, for example, consumer services such as mobile money, location-based services, and short Message service (sMs); business services such as telematics, and charging systems)

• Device and communication network such as group and national companies, devices, distri-bution points, and M2M connectivity

• Global business alliances, including merchant networks for banking and mobile money; device alliances for chipsets, sensors, mod-ules, smart devices, smart machines; multiple industry alliances; and content partnerships

• Infrastructure and managed services such as cloud and app hosting, system integration, and managed services for delivering M2M solutions

M2M oPerATionS (MArkeTing, FinAnCiAl, legAl, iT, AnD The CloUD)

M2M business unit operations that are shared for the various initiatives being incubated by the business and engineering teams

Coordination with global, cross-functional units to set up fast-track processes for nimble operations

Marketing and communications for different new initiatives such as an information center and events

Financial and legal support for incubator oper-ations such as internal operations, customer co-innovation, and partner management

Shared computing for M2M initiatives such as devices, software, hardware, hosting, integration, and operations

•••

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