The importance of strategic alliances in the IoT world

This text is written by Stefan Skarin, CEO, IAR Systems.

Existing for more than 30 years in a role of true independence, we are caught up with a market that I believe is the total opposite in dependency of close relationships. How come relations are critical now and what is the way for us to deal with the challenge?

The market of the Internet of Things consists of the relations actually mentioned already in the name, being Internet relations and Things relations. In the internet area as well as for the “things” vendors, we are all providing services, technologies and products to our customers. However, there are few very basic, and still big, differences that make it challenging to create strong strategic relations. These differences are of course easy to grasp and conquer when it comes to technology challenges, since these are the things that we as tool vendors are used to solve. The big challenge is that most of us vendors that provide solutions for the IoT are most often operating under different business models. This is not because we have decided to create business models to differentiate from competition. This is simply because the internet world is completely different from the things world. In the internet world, there are mostly services or software offerings and they are often billed in use or through cloud. In the things world, there is always a hardware cost that lately (as determined by the Gartner group recently) is below 50% of the implementation, but still a cost for the customer in terms of units as part of the cost of man-hours developing the thing. You can imagine that when these two offerings meet, with possibly several ways in billing, it is easy for the customer to get confused and, in worst case, reject a one-stop-shop solution.

There is only one way to pioneer this business model challenge and that is to start interacting more closely with the key partners that you believe will succeed. For us, this means partners that have long-term offerings, solid profitable business and, in the best of worlds, a global services offering. We need to be brave and take a first step, and we need to be open to adjust an already working business model. Also, we need to be patient before we measure our ROI. Still I believe this is the only way. And trust me when I say that the return of a few close and strategic relations is as energizing as 450 technology partners. Which partners will be the most beneficial? Well, to make that analysis I think we will need another 32 years.