40% of Pilot Industrial IoT Projects Move to Full Deployment

Few industrial internet of things projects--about 40 percent--move from proof of concept into full production, and those that do often struggle to achieve a positive ROI or business outcome while running into significant technology scaling and data integration challenges, a 451 Research report sponsored by Hewlett-Packard finds. 

That should not come as a surprise, given the high failure rates of most other large information technology projects. 

Of the $1.3 trillion that was spent on digital transformation--using digital technologies to create new or modify existing business processes--in 2018, it is estimated that $900 billion went to waste, say Ed Lam, Li & Fung CFO, Kirk Girard is former Director of Planning and Development in Santa Clara County and Vernon Irvin Lumen Technologies president of Government, Education, and Mid & Small Business. 

That should not come as a surprise, as historically, most big information technology projects fail. BCG research suggests that 70 percent of digital transformations fall short of their objectives. 

From 2003 to 2012, only 6.4 percent of federal IT projects with $10 million or more in labor costs were successful, according to a study by Standish, noted by Brookings.

source: BCG 

IT project success rates range between 28 percent and 30 percent, Standish also notes. The World Bank has estimated that large-scale information and communication projects (each worth over U.S. $6 million) fail or partially fail at a rate of 71 percent. 

McKinsey says that big IT projects also often run over budget. Roughly half of all large IT projects—defined as those with initial price tags exceeding $15 million—run over budget. On average, large IT projects run 45 percent over budget and seven percent over time, while delivering 56 percent less value than predicted, McKinsey says. 

Significantly, 17 percent of IT projects go so bad that they can threaten the very existence of the company, according to McKinsey . 

Beyond IT, virtually all efforts at organizational change arguably also fail. The rule of thumb is that 70 percent of organizational change programs fail, in part or completely.

Rational Asset Use Does Not Drive Sharing

Subscriptions are a major business theme. So are various forms of asset sharing sharing. (short-term rentals, ride sharing, bicycle rental) that monetize little-used assets. 

It often is said the car ownership paradigm is challenged by ride sharing or car sharing “since cars sit idle 95 percent of the time.” All that might be true, but also irrelevant to many consumers, whose other “owned” goods also sit idle most of the time. 

Think of showers, toilets, most of your kitchen utensils, seasonal recreational equipment, much of your clothing, most of your content (books, music, videos) or gardening equipment in areas where there is a winter. 

The point is that consumer behavior does not necessarily change because an alternative becomes available. Convenience and overall cost of ownership make ownership a favored choice even if usage statistics suggest it is more efficient to rent capabilities. 

source: Ericsson

Some 10 percent to 20 percent of urban users expect to be using ride sharing for regular commutes to work in 10 years, Ericsson surveys have found. Higher percentages expect “other people” to do so. 

In other words, respondents say they will not be ride sharing, but expect others to do so. Of course, automobiles and other vehicles are deemed useful for purposes other than getting to work. Many consumers would still want to own their vehicles for other life pursuits. 

“Renting rather than owning” as a trend will likely continue to grow. But change will not happen because higher utilization of assets is rational.

How Much 5G Revenue Lift?

A new report issued by the by BCG for the European Telecommunications Network Operators’ Association suggests new use cases enabled by 5G will generate nearly 66 percent of total “telco” revenues by 2025.

source: ETNO 

It is not entirely clear what that claim means. In the context of an argument for government financial support, it seems to suggest that “new 5G use cases” will drive overall telecommunications revenue. 

That seems unrealistic in the extreme. For starters, mobility services in Europe account for about half of total revenues. Were 5G to displace 100 percent of telecom revenues, 5G would account for about half of total revenues, best case.

Even the more-focused argument that 5G might drive 66 percent of “mobile revenues” by 2025 is plausible only if one assumes that 5G replaces most existing mobile revenue and adds substantial new fixed wireless, internet of things revenue, despite the existence of competing networks and use of premises wireless that does not necessarily create substantially higher connectivity revenues. 

Do you really believe IoT drives 35 percent of total mobile revenue by 2025? Were that the case, do you not believe revenue forecasts would incorporate that expectation? Of course, there is a rational explanation. 

Legacy telecom revenues could drop so much that new IoT revenues simply allow the industry to tread water. The larger problem is that the typical firm in the telecom industry has to expect to lose about half its current revenue about every 10 years. 

That means the mobile industry has to expect to replace about $500 billion in recurring revenue, while fixed network operators have to expect to replace $400 billion in recurring revenues, within 10 years, assuming global revenues in the $1.8 trillion range by perhaps 2025. 

Those are daunting numbers. 

source: Statista 

In Asia and much of the Pacific, mobile revenues account for something closer to 70 percent of total revenue. In the Middle East, mobile revenues account for as much as 80 percent of total revenue. In such regions, one might argue that the impact of incremental new IoT revenues could be substantial. 

source: IDATE 

But that remains a tall order. GSMA has estimated service provider IoT connectivity revenue at less than $45 billion globally by 2025. In a global business of $1.6 billion, IoT at that level would represent less than three percent of total industry revenues, but possibly six percent of mobile revenues. 

That the report is issued at all reflects the importance communications regulators have in creating and shaping the business model. It is deemed necessary, from time to time, to “remind” regulators and politicians of the economic contributions an industry makes.

In that regard, the ETNO report argues that 5G and gigabit fixed networks can provide enormous economic benefits. No surprise there. What would be surprising is an argument that no financial help is required and that 5G is such a lucrative thing that service providers cannot wait to deploy it.

How Much Will Remote Work Continue to Shape Enterprise Spending Priorities?

Over half (59 percent) of the respondents to a survey by Aryaka said they expect 25 percent to 50 percent of their workers to remain remote at the end of 2021, and a further 21 percent with more than 50 percent remaining remote, the study found.

That will have repercussions for connectivity service provider revenue, possibly capital investment and architecture planning, if the trend continues longer term. 

Performance issues, for example, will be a bigger issue if a substantial portion of the work force is remote for significant amounts of time. 

source: Aryaka

Global WAN Business has Bifurcated

The global capacity business has bifurcated. Hyperscale data center operators, media and content providers have one set of needs while enterprises have different sets of needs. 

Hyperscalers need to connect with other data centers (including cable landing sites, internet points of presence, owned and third party data centers). The hyperscaler requirements are almost exclusively internet data volumes, and video entertainment represents the bulk of that demand. 

source: Cisco 

Enterprises not in the content business, on the other hand, need to connect headquarters locations with branch offices and workers with cloud or premises-based applications. 

source: Aryaka 

Hyperscalers require optical transmission and IP bandwidth. 

Non-content enterprises need quality of service networking (MPLS) and virtual network support (SD-WAN and VPNs), plus voice services. 

Much of the hyperscaler need is met by owned facilities. Nearly all the non-content enterprise demand is met by retail services. Very little hyperscaler bandwidth demand is access network related (connections to end users), while almost all non-content enterprises require access network connectivity.

Hyperscalers require relatively less collaboration support (in terms of bandwidth volume or spending). Enterprises always need significant amounts of unified communications support.

So MPLS and SD-WAN are important non-content enterprise concerns and purchases. That is virtually never true for hyperscalers and content enterprises (in terms of bandwidth demand and spending).

Singtel and Optus Partner with AWS for Edge Computing

By 2022, more than 50 percent of enterprise data will be created and processed outside the data center or cloud, up from less than 10 percent in 2019, Gartner predicts, which partly accounts for hype around edge computing as well as connectivity provider hopes for a role in edge computing. 

The issue is what roles mobile operators will choose to pursue.

Singtel and Optus, for example, have chosen to embed Amazon Web Services capabilities into their Multi-access Edge Compute (MEC) infrastructures using AWS Outposts. It is not immediately clear why Singtel chose to use the AWS Outposts platform, rather than the AWS Wavelengths platform. 

Outposts was built to reside on a customer’s premises, while Wavelengths was designed to reside in a telco edge computing facility. Outposts equipment is managed directly by AWS, but that should also be true for Wavelengths deployments. 

AWS Outposts provides the full suite of AWS tools and services on the premises in a self-contained rack. AWS Wavelengths puts AWS servers inside a telco facility. Perhaps Singtel simply preferred the footprint, capacity and ease of using Outposts, rather than using Wavelengths. 

Outposts supplies a rack of servers managed by AWS but physically on-premises. In Singtel’s case that is its own facilities. 

Presumably Singtel provides the power and network connection, but everything else is done for them. If there is a fault, such as a server failure, AWS will supply a replacement that is configured automatically. Outposts runs a subset of AWS services, including EC2 (VMs), EBS (block storage), container services, relational databases and analytics. S3 storage is promised for some time in 2020. 

Use of AWS Outposts also requires certain loading dock, connectivity and other physical requirements that Singtel and Optus might have concluded was easier to standardize if provided at telco facilities. 

Perhaps ensuring adequate facilities also is a requirement. But Singtel also says it can deploy the MEC with AWS Outposts to the customer’s location, especially for use cases where confidential data must be kept, or preferably is retained, on the customer premises.

The shift to edge computing is part of a historical oscillation between centralized and decentralized approaches, and the virtualized 5G network core essentially requires use of edge computing capabilities. It is not yet clear how much synergy might be developed between a mobile operator’s core 5G network edge computing requirements and retail customer requirements. 

source: GSMA Intelligence 

But many argue that 5G-based private networks, edge computing, and network slicing represent the best chance for mobile operators to boost revenues. Those use cases “present network infrastructure vendors and telcos with the best chance to capture the next wave of wealth that will be generated by 5G,” said Raj Yavatkar, CTO at Juniper Networks. 

source: Gartner 

Video Calling Used by 82% But Voice Calls Decline, Metrigy Finds

Metrigy’s “Workplace Collaboration 2021-22” study, Metrigy found that 82 percent of survey participants now use video for all or most meetings. Almost 44 percent of respondents say phone utilization declined in 2020 by an average of 34.6 percent. 

Fully 28.6 percent say that calls have shifted to video-enabled meeting apps, while 17 percent say that they shifted to using personal mobile phones for voice. On the other hand, given the Covid-induced shift from field sales to inside sales, neither is it surprising that 25 percent of respondents reported higher phone usage. 

Also, inbound calls to customer support centers arguably increased during the pandemic. 

source: Metrigy