4 Ways Solution Providers Can Find Profit Opportunity In The Internet Of Things

Finding The Money In IoT

The Internet of Things is here now, but many solution providers are still scratching their heads over how to monetize it.

CRN recently hosted an IoT roundtable with executives from Cisco, ForeScout, Intel and KMC Controls and them to pinpoint where the channel profit opportunities lie. .

The four executives – Cisco Vice President of IoT Solutions Tony Shakib, ForeScout Senior Vice President Rob Greer, Intel Managing Director Steen Graham, and KMC Controls Vice President of Sales Mitch Kehler – talked about the ways channel partners can make money from Internet of Things solutions.

Following are how each executive views the profit opportunity in the Internet of Things for solution providers.

The Good News: The Profit Margins In IoT Are Very High

Cisco's Tony Shakib

Honestly, this was something I was very surprised at. The profit margins in IoT are awesome; they are very high. The level of expertise of the enterprises … to [deploy IoT] themselves is very low. Especially in the industrial sector, they're used to paying a very high premium. Like in the oil and gas [industry], the equipment that goes there, all the suppliers to them make very good profits. This is an area where I think the profitability is excellent, but the sales cycle and the lead times are very long.

The Less Good News: Partners Need 'Extremely Disciplined Sales Cycles' To Profit In IoT

Intel's Steen Graham

If you look at the IoT sales cycle and the challenges to profitability, it requires an extremely disciplined sales cycle where you're doing quite a bit of qualification, making sure you're solving a major problem in that company, making sure you've got line of business bought into that outcome, making sure you're at the C-level and this is transformative at the C-level for their business.

Then you're talking about economic creation. I think we don't want to mislead our channel partners that there's not going to be deals that are non-profitable because a lot of the IOT deals, there's a lot of IOT opportunities that start out as proof-of-concepts that never get productized, and that's because we haven't gone through that disciplined sales cycle and ensured that we're working on the right problem with the company. A lot of people that are still in that challenge of IoT as hype instead of IoT as revenue, they've got to focus on those right use cases and those right problems to solve and have that disciplined qualification process of those deals.

The Building Automation Space Is Ripe For The Picking

KMC's Mitch Kehler

There is a lot of opportunity in this building automation space and a lot of it comes from what's tied to this is that real-time data and the different things that you can with it … including asset management.

If you're looking at a large commercial facility, there's substantial investment in mechanical equipment, just like anything else, monitoring the vibration or the sound, and there's going to be additional ways to basically be able to forecast that asset and get a little bit better control of it. At the end of the day, that all runs down to the up time of the building, the comfort of the occupants of the building.

For us, our traditional partners don't do very much work in Software-as-a-Service or Platform-as-a-Service, so the recurring revenue is a nice incentive to go there, and it's something that IT providers are much more familiar with.

That's a nice differentiator for us in that market.

Opportunities Abound For MSSPs

ForeScout's Rob Greer

For MSSPs (Managed Security Service Providers), the Internet of Things has lots of value, as long as you're finding lots of commonality with the verticals you're going after. One of the things that people have challenges with now with all these devices is asking 'what's my inventory, and what connected devices do I have?'

It's not just from a security perspective, it's IT overall. If you're a small, midsize regional VAR that's transitioning, this has value.