MBK 00302

AN INTRODUCTION TO
INTERNET OF THINGS (IoT)
IN BUSINESS
CHAPTER 3
M2M TO IOT - MARKET PERSPECTIVE

PREPARED BY:
NASHRAN HARITH BIN NAZREE
 INTRODUCTION

The increasing interest in M2M and IoT

solutions has been driven by the
potential large market and growth
opportunities.

The market development for IoT,

however, is involvedly linked to the
technology implemented today, and
how this will evolve to provide new
economic benefits and value creation
opportunities.
 INFORMATION MARKETPLACES

M2M solutions: Data remains within strict boundaries it is used solely for the purpose that it was
originally developed for. M2M solutions will evolve to be able to share greater data with each other and
across value chains or information marketplaces.

Internal marketplaces: Data can be shared between companies and value chains in internal information
marketplaces.

Public information marketplace: Focusing on data exchange for information products, are a vision for IoT,
especially for Smart Cities. However, their common adoption may require proper management of trust,
risk, security, and insurance for data exchanges.
 GLOBAL VALUE CHAIN

A value chain describes the full range of activities that firms and workers perform to bring a product from
its conception to end use and beyond, including design, production, marketing, distribution, and support
to the final consumer (Gereffi 2011).

Global Value Chain (GVC) analysis provides a holistic view of global industries, focusing on tangible and
intangible value-adding activities.

In technology industries, GVC analysis helps identify boundaries between existing and emerging
structures, like M2M solutions and IoT market.
 ECOSYSTEMS vs. VALUE CHAINS

Business Ecosystems, defined by James Moore (Moore 1996), refer to “an economic community supported by a
foundation of interacting organizations and individuals

Over time, the community members co-evolve their capabilities and roles and tent to align themselves with the
directions set by one or more central companies.

IoT market currently is belived as an “ecosystem”, with multiple companies establishing loose relationships with
one another.

A value chain is associated with the creation of value. It is the instantiation of exchange by a certain set of
companies within an ecosystem.

A value chain model explains market value creation and evolution, with ecosystems where value chains
complement each other, preventing a decrease in overall market value due to price competition.
 M2M VALUE CHAINS

M2M applications are primarily developed for business process optimization, offering cost reduction, product
quality improvements, and increased employee health and safety protection, often within a company's internal
processes.

Inputs: The base raw ingredients that are turned into a product.
Examples could be cocoa beans for the manufacture of chocolate or data from an M2M device that will be
turned into a piece of information.
 M2M VALUE CHAINS

Production/Manufacture: The process that the raw inputs are put through to become part of a value chain.
For example, cocoa beans may be dried and separated before being transported to overseas markets.
Data from an M2M solution, needs to be verified and tagged for provenance(origin).

Processing: The process whereby a product is prepared for sale.

For example, cocoa beans may now be made into cocoa powder, ready for use in chocolate bars.
An M2M solution involves combining multiple data sources to create an information component that can be
combined with other data sets for effective corporate decision-making.

Packaging: The process whereby a product can be branded as would be recognizable to end-user consumers.
For example, a chocolate bar would now be ready to eat and have a red wrapper with the words “KitKatt” on it.
M2M solutions combine data from internal corporate databases to identify action requirements, providing
recognizable information in visualizations or Excel spreadsheets for end-users.

Distribution/Marketing: To the channels to market for products.

For example, a chocolate bar may be sold at a supermarket, a kiosk, or even online.
An M2M solution generates an Information Product that enhances corporate knowledge, such as detailed
maintenance scheduling and improved product design based on real-world feedback.
 EMERGING INDUSTRIAL STRUCTURE FOR IOT

M2M and Iot are about rapidly integrating data and workflows that form the basic of the global economy at
increasing speed and precision.

• Mobile broadband platform

The adoption of the mobile broadband platform is therefore different from previous incarnations
(personifications) of Information and Communication Technology (ICT) industrial platforms as it reshapes not
just how economic actors

• System integrator
With start of new platform, a new type of system integrator has emerged. For IoT, new sets of system integrator
capacity are required for two main reasons: Technical & Financial

• Sensors and radio frequency identification (RFID)

There is in fact a new type of value chain emerging one where the data gathered from sensors and radio
frequency identification (RFID) is combined with information from smartphones that directly identifies a
specific individual, their activities, their purchases, and preferred method of communication.
 EMERGING INDUSTRIAL STRUCTURE FOR IOT

• Information-Driven Global Value Chain (I-GVC)

Actors that perform this data collection, storage, and processing are forming the basis of what may be viewed
as an I-GVC, a value chain where the product is information itself.

• Fundamental embedding of human beings

The second change in the nature of the economy is the fundamental embedding of human beings into the
very foundation of these technology platforms. Google's search engine continuously improves with every
individual search query, tracking and refining algorithms based on individual clicks, a crucial aspect of its
functionality.

• The broad-scale consumerization of technology

Combined with the cheap means of “information production” due to cloud computing, has led to information
management systems that are now being developed for end-user consumers, not just enterprises. Social
networks and content sharing sites enable end-users to store personal information online, seemingly free.
However, in the capitalist economy, companies pay for computing resources and charge users daily for
targeted advertising.
 IoT VALUE CHAINS

Move towards IoT from a value creation perspective comes with the desire to make some of the data
from sensors public available as part of an "information marketplace".

Such a marketplace could be internal to a company, alternative to this is a public marketplace.

IoT value chains based on data are to some extent enabled by Open APIs and the other open web-
based technologies.

Open APIs in conjunction with the Internet technologies mean that knowledge is no longer tied to
one digital system.
IoT VALUE CHAINS
 IoT VALUE CHAIN - INPUTS
Inputs: The first thing that is apparent for an IoT value chain is that there are significantly more inputs than
for an M2M solution.

• Devices/Sensors: these are very similar to the M2M solution devices and sensors, and may in fact be built
on the same technology. As we will see later, however, the manner in which the data from these devices
and sensors is used provides a different and much broader marketplace than M2M does.

• Open Data: Open data is an increasingly important input to Information Value Chains. A broad definition
of open data defines it as: “A piece of data is open if anyone is free to use, reuse, and redistribute it”.

• OSS/BSS: The Operational Support Systems and Business Support Systems of mobile operator networks
are also important inputs to information value chains and are being used increasingly in tightly closed
information marketplaces that allow operators to deliver services to enterprises, for example, where
phone usage data is already owned by the company in question.

• Corporate Databases: Companies of a certain size generally have multiple corporate databases covering
various functions, including supply chain management, payroll, accounting, etc. ...Over the last decades,
many of these databases within corporations have been increasingly interconnected using Internet
Protocol (IP) technologies.
 IoT VALUE CHAIN - PRODUCTION/MANUFACTURE

In the production and manufacturing processes for data in an IoT solution, the raw inputs
will undergo initial development into information components and products.

• Asset Information: Asset information may include data such as temperature over time
of container during transit or air quality during a particular month. Essentially, this
relates to whatever the sensor/device has been developed to monitor.
• Open Data Sets: Open data sets may include maps, rail timetables, or demographics
about a certain area in a country or city.
• Network Information: Network information relates to information such as GPS data,
services accessed via the mobile network, etc. ...
• Corporate Information: Corporate information may be, for example, the current state
of demand for a particular product in the supply chain at a particular moment in time.
 IoT VALUE CHAIN - PROCESSING

Processing: During the processing stage, data from various sources is mixed
together.

At this point, the data from the various inputs from the production and
manufacture stage are combined together to create information.

This process involves the extensive use of data analytics for M2M and IoT
solutions
 IoT VALUE CHAIN - PACKAGING
Packaging: After the data from various inputs has been combined together, the packaging section of
the information value chain creates information components.

These components could be produced as charts or other traditional methods of communicating

information to end-users.

In addition, however, they could be fed into knowledge management frameworks in order to create not
just visualizations of existing information, but to create new knowledge for the enterprise in question.

Both the processing and packaging sections of the Information Driven Global Value Chain (I-GVC) are
where Information Marketplaces will be developed.

At this point, data sets with appropriate data tagging and traceability could be exchanged with other
economic actors for feeding into their own information product development processes.
 IoT VALUE CHAIN - DISTRIBUTION/MARKETING

Distribution/Marketing: The final stage of the Information Value Chain is the creation of an Information
Product. A broad variety of such products may exist, but they fall into two main categories:

• Information products for improving internal decision-making

These information products are the result of either detailed information analysis that allows better
decisions to be made during various internal corporate processes, or they enable the creation of
previously unavailable knowledge about a company’s products, strategy, or internal processes.

• Information products for resale to other economic actors

These information products have high value for other economic actors and can be sold to them.
For example, through an IoT solution, a company may have market information about a certain
area of town that another entity might pay for (e.g. a real-estate company).
INFORMATION- DRIVEN VALUE CHAIN FOR RETAIL

In a clothing store, using personal information

and RFID tags, customers can be guided to the
right clothing for their age group, education level,
and current employer.

This information can be used to improve store

layouts, track interest in clothes, and track the
items they select.

This system could also be used to track the

customers' paths through the store, allowing for
more efficient and personalized shopping
experiences.

Overall, this technology could revolutionize the

clothing industry and enhance customer
experience.
 THE INFORMATION-DRIVEN GLOBAL VALUE CHAIN

There are five fundamental roles within the I-GVC that

companies and other actors are forming around:

1. Inputs:
• Sensors, RFID, and other devices.:
These devices are working as inputs to the I-GVC
through the capture and transmission of data necessary
for the development of information products.

• End-Users.
The I-GVC relies on end-users, who are deeply
embedded in the digital economy. They contribute
their unique data and knowledge to the value chain,
using digital technologies for banking, taxes,
information searches, and communication.
 THE INFORMATION-DRIVEN GLOBAL VALUE CHAIN

2. Data Factories.
Data factories produce digital data for I-GVC use, such as Ordnance Survey in the UK. They sell their data assets
through accurate, targeted advertising mechanisms, targeting specific markets for companies seeking to reach
them.

3. Service Providers/Data Wholesalers.

Collect and use data from global sources to improve their own information products or sell them, like Twitter,
Facebook, and Google, which sell their data assets through targeted advertising.

4. Intermediaries.
Intermediaries are needed to handle various aspects of information product production, addressing privacy and
regional issues related to personal information collection.

5. Resellers.
Resellers are those entities that combine inputs from several different intermediaries, combine it together,
analyze, and sell it to either end-users or to corporate entities.