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In-Depth

How Microsoft Partners Are Putting IoT into Action

The Internet of Things is everywhere. RCP looks at how Microsoft partners are getting involved and starting to make money in this burgeoning field.

For most emerging technologies, the path to becoming a viable business practice follows a similar bell-shaped curve. The lowest part of the curve represents the technology as a purely academic idea, just a twinkle in the IT industry's eye. As our expectations for this new technology build, the curve rises. Then comes a steep dip -- our disappointment as the earliest real-world examples of that technology fall short. But sooner or later that trough is followed by another incline, this one more gradual, as implementations become more successful and expectations become more realistic.

Gartner Inc. calls this curve the "hype cycle." Every IT trend past and present, from cloud to 3-D printing to quantum computing, goes through some iteration of this curve. And currently right smack-dab at the top of that hype curve -- the "peak of inflated expectations," in Gartner's parlance -- is the Internet of Things (IoT).

There's no doubt that IoT is getting a lot of hype -- enough to inspire backlash in the form of multiple satirical Web sites (one called "We Put a Chip in It" has the subtitle, "It was just a dumb thing. Then we put a chip in it. Now it's a smart thing."). But that snark belies IoT's promise. For 2016, Gartner predicts that spending on IoT endpoint products will increase by nearly 20 percent year-over-year to total $1.4 trillion; by 2020, it expects that figure to top $3 trillion. IoT is also a lot more entrenched than the current buzz around it might suggest. Internet-connected "things" have existed in some form or another for many years -- at least as long as RFID technology has been around and arguably even earlier. However, as the technologies related to data collection, storage and analysis have become more advanced, so has the number of connected devices accelerated. CompTIA projects the number of IoT-enabled devices will more than double between 2016 and 2020 to 50.1 billion -- roughly six devices per person.

It's obvious that IoT is more than a flash in the pan. Across consumers and enterprises, there is a real and growing demand for ways to collect data from devices to solve problems. What's less obvious is how IT channel partners can start to make money from IoT. With the IoT category still so new, partners may find themselves navigating waters that have largely been uncharted.

In the IoT Mystery, There Are Margins
Collecting data from a single device is one thing, but it's quite another to collect vast amounts of data from many different devices used by many different industries. Many of the biggest consumers of Internet-enabled devices are enterprises that use large, industrial, legacy equipment -- think manufacturers, trucking and construction firms, or facilities-management companies. These businesses have likely never thought to collect data from their equipment at the scale that IoT currently makes possible, so the devices they use have never been digitized. This makes these companies ripe for the expertise of partners that can help them transition from the analog world.

"Tying these devices, these 'things' together and making them do things together -- that's building a system. And that's the whole point of a systems integrator."

Dave Sobel, Senior Director of Partner Community, LogicNow Ltd.

Microsoft CEO Satya Nadella described this transition during a keynote talk at the Hannover Messe trade conference in Germany this past April. In front of an audience of industrial technology leaders, Nadella stated that while industries such as manufacturing have always used some form of IT -- the earliest CRM and ERP applications were built to answer manufacturers' needs, for example -- the rise of Internet-enabled systems represents a sea change, blurring the line between the digital and the industrial.

"I would posit that what is new today is that the very thing you produce, the very thing that you manufacture, for the first time is connected with all of the web of activity around it," Nadella said. "That is what's really different. It is not just the connection with everything. It is the ability to reason about that activity, the data that is being generated, continuously. And not just reason about it, but to gain insight and predictive power that can then be fed back into the operation of the thing you manufacture. These new digital feedback loops that I refer to as systems of intelligence is the new inflection point."

(Notably, Nadella did not use the terms "Internet of Things" or "IoT" in his keynote, even though that's precisely what he was describing. Instead, he described this transition as the convergence of "IT" and "OT," or operations technology.)

Of course, Nadella's vision of a world where manufacturers are also digital companies introduces a host of new problems that partners have to resolve. What happens when traditionally low-tech industries go high-tech?

"I always like to point out that in mystery, there are margins," says Dave Sobel, senior director of partner community at LogicNow Ltd. "If this was simple, it wouldn't nearly be as much of a big opportunity."

Sobel, who is an avid watcher and consumer of IoT (see "A Case for IoT at Home"), sees the rapid proliferation of Internet-connected devices as an opening for partners that know how to secure those systems. "I think the first piece you've got to focus on is security because there's a lot of crazy chaos going on in that space right now," he says. "It's not mature, it's not fully thought-out, so by its definition that means you need to be concerned about security."

The chaos that Sobel refers to is a result of the fact that as these businesses and their mostly analog devices make the leap into cloud connectivity, they become exposed to a myriad of security issues. Seth Robinson, senior director of technology analysts at CompTIA, concurs. "[These vendors] that typically haven't had to worry about cybersecurity now have to worry about it, and they probably haven't put all the pieces in place, they haven't asked all the questions. They just don't have that expertise," Robinson says. "So you've got vendors of products that were typically not technical now making technical products. There's definitely some security issues there."

Those issues are projected to ratchet up IoT-related security spending from $348 million in 2016, a nearly 25 percent year-over-year increase, to over half-a-billion dollars by 2018, according to Gartner. "The effort of securing IoT is expected to focus more and more on the management, analytics and provisioning of devices and their data," the research firm reported in April. "IoT business scenarios will require a delivery mechanism that can also grow and keep pace with requirements in monitoring, detection, access control and other security needs."

Besides security, there is a host of other revenue opportunities for partners to mine. CompTIA's latest "Sizing Up the Internet of Things" report from August 2015 lists service areas such as deployment/integration, infrastructure, reselling and consulting as among the top expected revenue-earners in the IoT channel. In terms of the types of channel companies that stand to make the most money out of IoT, CompTIA found device makers to be the obvious leader. However, IT solution providers, managed services providers (MSPs), and companies that focus on application development or analytics were also in the running.

Sobel also points to a basic business problem in IoT that channel partners are well-positioned to solve: how to build a coherent system out of all these disparate parts. "Tying these devices, these 'things' together and making them do things together -- that's building a system. And that's the whole point of a systems integrator. We've been using that phrase for a while," he points out. "Now, the system-building is different, and it's a different kind of system, but the analytics and the way of thinking about it -- that's pretty consistent."

Partners Putting IoT to Work
The partner opportunities that IoT presents may be consistent in a broad sense, but on a practical level, it's much more complicated. The kinds of verticals that are the biggest consumers of IoT have very industry-specific needs that many partners may be unused to meeting. What follows are four partners that have managed to use their existing skills to provide IoT services to customers across a range of industries.

New Signature
A 320-person solution provider headquartered in Washington, D.C., New Signature is one of a growing number of Microsoft partners that have successfully cracked the code of how to spin up an IoT business. For nearly two years now, the company has been providing IoT consulting services to customers across many industries, including those involved in energy, fleet management and manufacturing. According to CTO Reed Wiedower, New Signature's IoT practice developed as a way to help customers in these verticals solve business problems that they may not have realized are rooted in a lack of data.

He points to one customer, a major candy manufacturer, as an example. The production equipment used by that manufacturer was, in some cases, over a decade old and "networked" only in the most elementary sense. Each machine was connected to a central control panel so that workers who needed to make adjustments (for instance, change the temperature in an oven) didn't have to make a trip to the factory floor to do so. However, because the equipment lacked any sensor data that could provide more granular information (such as humidity levels) in real time, the manufacturer's quality-control process was mostly reactive, instead of proactive. "They would make the candy and then they would test the candy, and that was quality control," Wiedower says. "A bunch of people on the line saying, 'This is too hard,' or, 'This is too soft,' or, 'This isn't produced the right way. Let's go back and tweak the temperature.'"

"You've got vendors of products that were typically not technical now making technical products. There's definitely some security issues there."

Seth Robinson, Senior Director of Technology Analysts, CompTIA

New Signature's solution to that efficiency problem was to embed sensors running on the Microsoft Azure IoT platform on each piece of equipment. The sensors enable the manufacturer to gauge in real time whether each machine is performing at the right levels to ensure that the final product meets quality standards. They also let the manufacturer know what levels won't churn out the right kind of candy, and adjust accordingly.

"Once you're able to make changes in real time, it can really drive a huge increase [in efficiency]. Even small percentage changes -- 1 percent, 5 percent -- can greatly impact the profitability from the manufacturing perspective," Wiedower says.

He notes that many of New Signature's IoT customers, including the candy manufacturer, initially didn't see their lack of "intelligent" machinery as a problem at all. The key for New Signature has been to show these customers how data could take their businesses to the next level. "What business challenges can you solve if only you have more data available at your fingertips?" Wiedower says. "As soon as you frame the problem in that perspective...it becomes easy to find lots of opportunities for Internet of Things scenarios."

Tribridge
Another Microsoft partner incorporating IoT in its business is Tribridge, a Tampa, Fla.-based systems integrator that works heavily with all parts of Microsoft's cloud stack, as well as Dynamics. Its Health360 product uses Microsoft's IoT platform to deliver what Damon Auer, vice president of Tribridge's health care unit, calls value-based medical care. The argument is that traditional medical records aren't enough to ensure that patients receive proactive, personalized and, if necessary, life-saving care. "What that means in layman's terms is that health care providers have to know a lot more about you or me or any other person they're obligated to serve...whether we're in front of the doctor or not. So [data] becomes a perpetual requirement," Auer says. "We've always known that connected devices enhance our ability to observe."

Health360 lets health care professionals gather information on a patient using data from connected medical devices -- including scales, glucometers, blood pressure cuffs and activity trackers -- as well as self-reported data. They can then use that data to make recommendations to treat the patient's existing or pre-existing conditions. Auer notes that this constant stream of up-to-date health data is especially useful for patients with pre-chronic conditions, whose health care teams can now be more proactive in staving off those diseases. The platform also lets health care providers establish "personalized rule sets" that would trigger an alert if, say, a patient with hypertension gets a blood pressure reading higher than 140 twice in a single month.

Health360 evolved from Tribridge's earlier integration with HealthVault, the Web-based medical-records service that Microsoft launched in 2007. Microsoft intended HealthVault to be an online repository where individuals could input their health records, which they could then distribute to whatever care providers they chose. HealthVault also supported a select number of medical devices to automatically upload patient data, effectively acting as a very early framework for IoT. It was these device connections that originally prompted Tribridge to tether Health360 to HealthVault.

However, for all the work that Microsoft threw at HealthVault, the service has seen very little consumer adoption. As a result, Tribridge pivoted its focus in recent years to the emerging Azure IoT platform and Microsoft Health, the service that runs the Microsoft Band fitness tracker. "Now we are leveraging Azure IoT [and] Microsoft Health, taking a massive quantity of data. One individual generates hundreds of observable data points in a day from a wearable device, particularly if you are observing things like activity and sleep. We can run predictive models off of those observable signals," Auer says.

Beyond health care, Tribridge is also looking at ways to incorporate IoT into its public-sector solutions -- for instance, its Offender360 product, which helps companies in the prison industry track offenders from pre-trial to post-release. Tribridge is currently exploring IoT use cases for that industry, according to Auer.

10th Magnitude
At barely 6 years old, pure-play Azure partner 10th Magnitude already has IoT customers in multiple verticals and in varying stages of adoption. "In terms of projects that we're actively delivering on today, we have one [customer] in health care, one in fleet management, one in manufacturing, one in discrete manufacturing, one in consumer goods and one in government services," says Brian Blanchard, vice president of cloud solutions at the Chicago-based systems integrator. "We also have others coming. We're supporting people in the logistics space for package monitoring and the moving of parcels. We have others that involve higher-volume packaged goods and manufacturing. We're looking at the diamond industry for tracking movement of high-value goods."

As 10th Magnitude describes it, its goal for its IoT customers is "transformational." That is, its customers typically already have IT departments that are fully versed in the need for Internet-connected devices, but need guidance on how to actually deploy and manage those devices. "We come alongside them and help them on the tough technical pieces, like how do you connect devices? And how do you figure out these Azure architectures and how they play into the development paradigms and the implementation that you're already doing? We help transform those existing teams from [on-premises] traditional teams to cloud-based teams that can accelerate what they're doing," Blanchard says.

He points to one customer, a major, commercially held construction company that uses large-scale industrial equipment and vehicles, as an example. This customer already employs programmers who have built connectivity and applications for its equipment, as well as teams to monitor the data from those machines. "What they didn't have," Blanchard says, "is an understanding of how they tie all those things together." So 10th Magnitude created interfaces to help the customer collect and centralize its equipment data, analyze it on the fly using Azure Stream Analytics, automate some of its data-search processes using Azure Machine Learning algorithms, and visualize its data using Power BI.

"It's taking all of those disparate pieces and bringing them together into a streamlined solution that gets the data from one department to another faster," Blanchard says.

The key to 10th Magnitude's success across such a wide swath of industries is its IP called "Field Gateway." 10th Magnitude's Field Gateway is a small form factor piece of hardware that runs Windows IoT Core and Android, as well as proprietary software, that essentially "makes it so the various different languages that devices in the field are communicating in can be intelligently aggregated," Blanchard says. "That is what allows us to be in so many verticals and across so many customers without having to have thousands of developers out in the field [with] all those different vertical specialties."

Attunity
With its focus on data analytics, Microsoft solution provider Attunity is a little bit more upstream on the IoT stack than the previous partners. The Burlington, Mass.-based company is less focused on the "things" aspect of IoT than it is on providing the data management tools that customers participating in IoT need to corral the large amounts of information from their connected devices.

However, as IoT becomes more and more mainstream, partners like Attunity with significant Big Data expertise are inevitably seeing higher demand.

"What business challenges can you solve if only you have more data available at your fingertips? As soon as you frame the problem in that perspective... it becomes easy to find lots of opportunities for Internet of Things scenarios."

Reed Wiedower, CTO, New Signature

"The Internet of Things is a big driver of data analytics," says Kevin Petrie, tech evangelist at Attunity. "In many cases, the data that comes from physical sensors is going to end up on a Hadoop platform or on a cloud analytics platform." That's where efficient data management becomes critical.

Moreover, IoT isn't driving demand for data analytics by itself; it's driving demand for novel ways to interpret data. "It's becoming more and more of a competitive imperative for companies to use new data sources and correlate them with a variety of other data sources in order to gain new insights on customers, on competitors and on operations," says Petrie.

Before Jumping in, Some Things To Consider
IoT is made up of a vast and still-evolving galaxy of components that can be difficult for partners to take in, at least at the outset. However, most partners likely have the beginnings of an IoT practice in their businesses already; they just might not recognize it as such, according to CompTIA's Robinson. "When we talk with partners and channel firms, some of them will say that...they're dealing with connected printers or connected copiers that they can monitor. That really is a piece of what we're talking about," he says. "You've probably got channel firms that already deal with [IoT] pieces of some sort, whether that is a device that has some amount of connectivity to it, or whether it's dealing with storage and building out client storage architectures."

Microsoft has several resources aimed at helping partners take their IoT businesses the rest of the way. Foremost, of course, is the Azure IoT suite, which gives partners templates for basic IoT processes like remote monitoring and asset management. There's also the Azure Certified for IoT program and the Azure IoT Practice Building Portal, among other assets.

However, one potential hurdle for partners looking into Azure IoT is the fact that Microsoft's roster of Azure-related services is constantly changing, with services being introduced, entering preview, reaching general availability and being updated at a rapid clip. It's a bear to keep track of these changes, as Tribridge's Auer explains.

"One of the toughest things for us has been -- and, to a degree, continues to be -- staying up to speed on the new services that are being deployed and the way that they're being packaged for deployment on the Azure platform," he says. "Because this is an area of rapid innovation for Microsoft and many other big cloud companies, the pace of the introduction of new services and understanding what they can and can't do, and which ones are mature and which ones aren't, is a real challenge."

Because of its scale, Tribridge gets a fair amount of direct guidance from Microsoft that smaller partners may not. However, keeping track of all the moving parts of Microsoft's IoT platform is still "a constant struggle," Auer says.

In addition, depending on a partner's existing expertise, pursuing an IoT practice could mean bringing on new talent. This was something that New Signature grappled with, according to Wiedower, who says the company made investments to shore up its employees' strengths in three areas. The first of these is cloud. "For organizations that already have a strong data platform practice, they may view a lot of these new [IoT] capabilities as merely being extensions of the existing on-premises equivalent," he says. This is a problem because the IoT cloud model, which enables companies to process exponentially more data than on-premises, requires a vastly different mentality. "That was something we had to work hard to overcome, making sure we brought on individuals that were cloud-focused."

The second category was statistics. "If you don't know R, if you don't know machine learning, it becomes very difficult for you to build out these complex models," Wiedower says. "That's an area we had to make investments in. We had to say, 'Look, we need to get more folks up to speed on the statistical side of the curve.'"

Third, New Signature focused on developing its employees' expertise with hardware -- the "things" that comprise IoT. "You have to have something that's taking the sensor data or measuring the electricity or testing the humidity," Wiedower notes. "That's something that I think most consulting shops might have to bone up on."

An absence of people with expertise in these three categories doesn't mean that a partner is shut out of IoT. It might just mean they'll need help from other partners to develop their practice. "That offers opportunities for partners to work with other partners," Wiedower says. "You might be a partner who only focuses on the data ingestion and generating the data, and there might be other partners who are pure statistical gurus -- they read FiveThirtyEight.com, they know R backward and forward, they build mental models for Azure ML. There are lots of opportunities for cross-pollination."

But there's another stumbling block, and it's a big one: standards. IoT presents a potential standards nightmare for partners as millions of new devices hitch onto the Internet for the first time. Not only is there no real consensus right now on what IoT standards should be, but each industry, device and section of the IoT stack will require different rules. According to Robinson, this might be the issue that keeps IoT from becoming a viable business model as quickly as cloud computing did. "You're dealing with a greater number of players here. You're not just dealing with technology companies," he says.

For its part, Microsoft is a member of at least two IoT standards groups: the AllSeen Alliance and the Open Interconnect Consortium. However, there's also Threat, the Industrial Internet Consortium and the Wireless IoT Forum. It will take some time for a standard to emerge as the winner, according to Robinson. Attunity's Petrie agrees. "Because the infrastructures that are involved in IoT are so varied, and the implementations so specific to individual [industries], it appears unlikely that we will have anything near a universal standard for IoT anytime soon," he says.

The upside to this standards tangle is that it buys partners some time to assess their qualifications and fill in any gaps before IoT becomes ubiquitous. On the other hand, in some ways, IoT is already inescapable -- and has been for a long time now. Simply look at all the ways that today's smartphones and tablets can tell us about where they currently are and how they're currently being used, says Tribridge's Auer. "If you think about IoT that broadly, and I think you should, then who's not using it today? They just aren't maybe aware of it. And that's the perfect outcome for a piece of technology -- to be invisible. Invisible, but helpful."