Exactly how big is the role played by the right information or data in the success of electronics and IoT businesses? Is data worth investing money in? As Indian technopreneurs pursue innovation and technological evolution, are they leveraging the power of research-backed content to the fullest? Aroop Zutshi, global president and managing partner of Frost & Sullivan answers these questions in a conversation with Baishakhi Dutta.
EB: How do you see the IoT industry evolving?
IoT is not something new that has emerged in the last five to ten years. Connected devices started being used when we first had the Internet revolution, though the channel of communication was very different at that time. Over the years, this has evolved for many reasons.
One of the biggest reasons for the increasing number of IoT devices is the significant price drop for sensors. With this, we have started seeing a tremendous proliferation of sensors. I consider ‘sensorisation’ to be one of the biggest trends enabling the growth of IoT. Yes, we do see IoT based infrastructure getting bigger and being implemented worldwide since the cost of implementation has also gone down.
EB: Has India witnessed the full potential of IoT yet?
No, the full potential of IoT has not yet been reached—not in India or pretty much anywhere else in the world. But if you ask me if IoT will now have a bigger impact on our lives in the long run, then I would say yes, it will, for sure! This mega-shift towards IoT has already started gathering momentum. Going forward, I predict that every home, retail outlet, grocery story, etc, will be sensorised. And 5G is going to completely revolutionise IoT implementation. With the latency dropping, people will be able to implement applications that they were struggling with for so long.
EB: Which industry segments do you believe will generate the highest demand in IoT?
One of the biggest sectors is retail. We see tremendous growth of IoT in e-commerce and supply chain management. This is primarily because the current generation of consumers wants instant gratification. One of the big challenges for large e-commerce companies is the last mile delivery. That has been well taken care of because of IoT.
The second big area is manufacturing. Medium to large and mega-sized enterprises all across the world, including in India, are IoT enabled. IoT is not just helping in increasing manufacturing efficiency, in product improvement and in cost reduction but is also playing a vital role in security. In fact, cyber security is a major area that has come under the direct influence of IoT.
The third area is connected cars. Cars are the biggest examples of connected devices, with electric vehicles now being a big trend. I would like to call it the trend of electrification. Today, there are more than 10,000 sensors in any car, and in the days ahead, your car will no longer be just a vehicle, but a prime example of a connected device.
So, these are some of the prime domains across the globe, in which demand for IoT will be high.
EB: Despite such high potential, why do you think India has not yet jumped onto the IoT bandwagon?
The reason why manufacturers are not necessarily doing so is that a lot of senior leaders who make these business decisions do not fully understand the crucial elements and components of an IoT enabled system. Not many clearly understand the implications of advanced technologies like Big Data, the blockchain, machine learning, AR/VR (augmented and virtual reality), IoT, etc. This lack of proper knowledge is accompanied by the fear of failure. It is mainly because of the latter that, in some cases, despite understanding the value of these emerging technologies, a lot of companies are hesitant to apply them.
On the other hand, from the vendors’ side, many companies are not providing solutions that are tailor-made for the specific needs or size of an organisation. We still have not got IoT devices categorised to cater to the different needs of small, medium and big enterprises. Because of this shortfall, the entire IoT game sounds too complex and complicated, ultimately leading to a delay in decision making and implementation. But we have to realise that these are trends that take time to get adopted. I believe that as 5G rolls out, more and more people will feel confident about adopting IoT.
EB: So can we conclude that, as of now, the IoT ecosystem is still unable to offer sufficient successful case studies to inspire confidence amongst customers?
Yes, that is very much the case. There are not too many case studies that people can refer to. A lot of business outcomes have not been publicised. As part of case studies, if you provide enough proof that the business outcome justified the investments made in IoT, I think there will be higher adoption.
Currently, we do not see enough data on that aspect. That’s why I always say that technology for the sake of it means nothing. Technology with a business outcome is when implementation happens. This is what the vendor community that provides solutions has to focus on and come up with more successful business outcomes, case studies and, most importantly, educate the market. Sadly, India is still stuck in that education phase.
EB: In order to bridge the awareness gap, what does F&S plan to do? What solutions do you offer your customers?
The foundation of our organisation is research. Over the years, around 1000 analysts worldwide have been tracking 33 different industries. Currently, we are tracking 275,000 segments. We are studying some of the biggest trends in the market along with how customer behaviour is changing over time. We have been looking at macroeconomic trends and predicting what the future will look like, along with advising companies on how to prepare for the future. Our research is consumed by companies worldwide. To educate the public, we speak on these trends and promote them at various levels. We are using multiple channels like our events, as well as social media platforms to communicate and educate our audience which includes the vendor community, service providers, the government and non-government organisations.
Our research reports are also bought by our clients on a subscription based model which helps them get access to all such crucial information that will enable the growth of their organisation. More importantly, we give our clients an effective way of implementing plans such that they derive the maximum business benefits. This entire shift is possible with the help of research, and that is the role we are playing very effectively to support our clients and prepare them for the upcoming wave of technological disruption.
EB: What role does data or information play in helping CXOs take business decisions? How has the role of content changed over the years?
At present, the availability of the right information is critical for making any important business decision. Getting baseline information of where we are is very important because without that you are shooting in the dark.
The most important part is packaging the content and making it meaningful to a customer. Information that does not drive decision making is of very limited value, and this is where we have seen the shift happening in the past couple of years. Our content was very measurement driven in the past, which included market size, growth rates, trends, etc. But now it has evolved dramatically. Now our content has become theme based. At the same time, it has become digitally available. At present, content needs to come in a format that is compact, relevant and crisp (preferably bullet points), and the frequency of such content has to be very high. These are the changes that we have incorporated into our business model.
EB: Does F&S research include live case studies?
Yes, we do have regional case studies. For each of the markets that we study, we have two frameworks that we follow. Such frameworks include customers as well as competitors. Our customer case studies clearly depict how the client has used our content to implement strategies and the outcome generated. Talking about case studies, we study the impact, benefits as well as the outcomes. Customers who subscribe to our research content get access to those studies, which enables them to go back to their drawing boards and come up with an implementation plan.
EB: Talking about subscription based models, many research firms do not give access to their research to an entire organisation. For them, separate teams within the same organisation are their customers. Does F&S also follow such a business model?
We have two subscription models. We have an enterprise model for which clients have unlimited access to our content as well as our experts. We have a group of more than 1800 experts. So if you subscribe to the enterprise model, you get access to all of them.
The other model is the leadership council user licences. In this case, curated content is given to specific individuals or a group of users in a specific department within an organisation. These are smaller deals and packages, and limited in terms of usage.
We also cater to client budgets accordingly. For us, enterprises are obviously larger deals but the value per individual is much better. Our digital platform allows us to ensure that we control access to the people who sign up with us.
EB: Who are your main target customers? Do you have an offering for startups too?
We have a broad spectrum of clients. We have nearly all the Fortune 1000 companies along with the Tier 1 suppliers. Governments are the biggest users of our research content. We have business and financial services companies (which is the investment community) as our major customers. We also cater to the startup ecosystem. So the startups, either directly or through our investment arms, get access to our content. We have solutions that meet the needs of organisations, right from the entry level to a large scale client.
EB: What is your approach towards MSMEs who are interested to work with F&S? Do you support them right from the ideation stage?
As mentioned earlier, we have solutions that are applicable to the entire spectrum of businesses. We believe that with technology, there does not need to be any differentiation as to where solutions can be implemented. This means that digitisation cuts across all sizes of industries—small, macro or mega entities.
How a solution can be implemented in a medium scale organisation is very different from how it can be done for bigger entities. Since we have expertise in the technology domain, we can help small or medium enterprises to pick the solution that fits their needs. Digitisation does not mean you have to digitise every part of the organisation. All MSMEs do not require the same kind of support. It varies from one organisation to other. You have to understand what the impediments and drivers of digitisation are in a particular organisation. We help small and medium enterprises figure out tailor-made solutions and support them accordingly, so that they can obtain the maximum business benefit from their investments. Hence, F&S is open to support customers of all sizes based on what their needs are.
EB: What is the typical payment model that F&S follows while dealing with customers?
We operate with two different models. The first is the ‘fix-free’ engagement model, which is a one-time payment scheme. The majority of our big customers work with us under this contract. However, we do look at the cash flow of our clients when it comes to payment terms. Sometimes clients have a specific issue that they want us to look into, and just want a heads up from us, as to whether they should invest in a solution or not. So, there is also the option for customers to pay over a period of three to four months, depending on the course the project takes.
But the preferred option for us is what we call the ‘retainer’ model. In this model, we put a team together, depending on the client’s specific needs. These are cross-functional teams, which understand the client’s business issues and growth opportunities in order to help it identify, qualify, quantify and, finally, implement a go-to-market strategy. This is the most preferred model, and is generally a long-term engagement. It can be for six to 12 months or even more, and it usually is an expensive option. We prefer not to follow a rigid payment plan, being more likely to keep a flexible structure, which can be modified according to the customer’s need.
EB: Why would a customer choose F&S over your competitors? What extra mile are you prepared to go to attract customers?
I believe what makes us different from our competitors is the unique methodology that we follow. What makes F&S stand out from its competitors is that we look at disruptions. These can include disruptive technologies, the disruption of industries, the collapse of markets, transformations as well as the disappearance of companies which has happened only because of technology. We are the only company that studies over 3000 technologies in nine different clusters.
We are the only firm that looks at all the big megatrends. We cover more than 13 large megatrends in the world, selected as the key ones out of many more megatrends. We have deeply studied the implications of these megatrends. It is not about understanding the megatrend alone but also understanding the social, transformative change that’s associated with it.
We study more than 12 new business models, since we believe that companies will not necessarily look out for new products or solutions in the future, but will look out for new business models.
Our prime focus is on industry convergence. As mentioned earlier, we are the only firm in the world that tracks 33 industries along with 275,000 market segments worldwide. In the future, we are bound to see more and more convergence of business models, and so we prepare our customers accordingly. We also focus on emerging geographies by studying more than 120 countries worldwide.
The growth that F&S believes in is not necessarily in the verticals. We believe in growth which is happening in convergence. It is when the ICT industry converges with the healthcare industry along with the energy industry that a new opportunity emerges. F&S is the only research firm that is working on such a model.
The interplay of all these facilities is what makes us unique and makes customers choose F&S over the competition, since no firm in the world will offer such models.
EB: What is F&S’ plans to expand services in the Indian market? Do you see a profitable business here?
The Indian economy is one of the fastest growing currently. We have not looked too closely at the most recent GDP growth since F&S India is not here for the short term game. For us, it is a medium to long term game. We were the first company in our field of work to introduce a full-fledged innovation centre in Chennai way back in the late ’90s. At that time, even when we did not have sufficient technology to connect, we still made such investments. Now that we have such advanced technology, it is easy for us to make investments and work across oceans.
We foresee a tremendous opportunity for us to grow in India. We now receive demands in India similar to the kind of help that clients seek in USA and Europe. Our plans to invest in India, and especially in content creation, remain the same since compared to F&S’ global business, the India and China markets are the fastest growing for us. We already have seven centres in India and over time, we will be adding more capacity. At present, almost 30 per cent of F&S’ headcount is based out of India and I guarantee growth of 40-45 per cent very soon. Our work will continue to grow with the Indian government too, which includes the state governments.
