Transcript Mobile Solutions

Structure of Value
Networks in Telematics
Business
2.9.2003
Ville Salomaa
Structure of Value Networks in Telematics
Business
 Made by Ville Salomaa at Siemens Oy in Espoo
 Supervisor: Professor Heikki Hämmäinen
 Instructor: Lic. Tech. Janne Kankare
 Professorship: S-38 Telecommunications
Management
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Agenda
 Introduction
 Definitions
 Market potential
 Technical overview
 Value networks in wireless telematics
 Two case studies
 Conclusions
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Introduction (1)
 The market of mobile subscribers is becoming
saturated in Western Europe
 New potential customers beyond human
beings
wireless machine-to-machine communication
= M2M = wireless telematics
 M2M has huge market potential due to the fact
that machines outnumber humans by a ratio of
at least four to one
 The M2M market potential can not be utilized
by usual means in telecommunications
industry
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Introduction (2)
 Need for cross-business know-how
–
–
–
–
Vertical M2M markets, understanding customer
Telecommunications
IT, application development
Business processes and applications
 No single telecommunications company can
cover the whole fragmented value network
Need for partnerships
 Value network fragmented -> brings the
complexity back to business logics in
telecommunications
 Value Networks basis for business strategy ->
VN must be studied in this new business area
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Intoduction (3)
 Reseach Problem: The largest challenge in
wireless telematics business is considered to
be the finding and managing of the fragmented
value networks.
 Objective: The key objective of the study is to
define the structure of value networks in
wireless telematics business.
 Scope: Wireless M2M from business point of
view
 Reseach Methods: literature analysis,
interviews and calculations. Literature mostly
studies and articles.
 Reliability: Extensive research material does
not exist -> much is based on real-life business
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Definition of Wireless Telematics (1)
 Definitions not established
 The Vocabulary of Mobile Communication
(2001) describes telematics as follows.
“Telematics: Sector of information technology which
simultaneously combines telecommunications technology and
data processing technology”
 Lately also used in the meaning of “automotive
telematics”
 M2M is modernly emphasized as wireless
machine-to-machine communications
– machine-to-machine,communication between machines
– machine-to-mobile, for example remote monitoring by the user
– mobile -to-machine, for example remote control by the user
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Definition of Wireless Telematics (2)
In this thesis:
“Wireless Telematics” refers to
computerized wireless
communication with or between
machines
= M2M
= Wireless machine-to-machine
communication
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M2M Market (1)
 Huge market estimations
 Nature the same in all of them, but scale varies
remarkably
M2M Market Estimates
Estimation
100-160 million terminals
over 8 billion terminals
10,9 Mio M2M terminals in W-E and 8,8 Mio in U.S
100 million M2M connections
market grows 28 $ billion
market grows 30-60%
35-40 million GSM/GPRS/UMTS terminals in Europe
400 million GSM/GPRS/UMTS terminals in Europe
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Schedule
by 2007
2005 onwards
by 2006
by 2005
by 2007
2001-2005
by 2004
by 2009
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Estimated by
Gartner
Forrester Research
Strategy Analytics
Nokia
The Wireless Data Research Group
Nokia
e-principles
e-principles
© Siemens Osakeyhtiö, 2003
M2M Market (2)
Device Population Estimates
700
600
Millions
500
ARC
400
DLJ
300
Ericsson
200
100
0
2002
2003
2004
2005
2006
 Conclusion: M2M market is hard to forecast.
Some studies predict strong growth. But as
learned in the near history of mobile
telecommunications, all market estimations in
this business field have to be dealt with
caution.
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M2M Market Areas








Telemetry
Telematics / in-vehicle applications,
Public traffic services,
Mio. EURO
Million
EURO
Industrial applications,
4000
Security and surveillance,
Automotive
3500
Sales & payments,
Industry
3000
Consumer
Fleet management
2500
Telemedicine
2000
1500
1000
500
 B2B market is estimated to
grow first, because
consumer market adopts
new technologies slower
,
0
FY00
FY01
FY02
FY03
FY04
FY05
FY06
Sources: Dataquest 2000, IDC 2000, ARC Telemetry Report, WM STM
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Technical overview (1)
 Fundamentally, existing technologies used
– GSM/GPRS/UMTS are major M2M technologies
– Short range technologies: WLAN, Bluetooth, RFID
(Radio Frequency Identification)
– XML and Corba to hide the underlaying technologies
from applications
– Location technologies based on GPS, wireless
terminals and networks
 At the moment GPRS enables cost effective IP
connectivity in M2M solutions
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Technical overview (2)
Short-range
hub
M2M
Application
Application
Telematics
Telematics
Gateway
Gateway
GSM Wireless
Module
GSM
GSM
GPRS
Internet
Internet
UMTS
UMTS
Wireless
short-range
connection
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Technical overview (3)
 Wireless module is essentially a stripped-down
version of a mobile phone
 Wireless moduless and terminals highly
developed
– fast application developement and integration (java)
– Rugged, operation in temperatures of (–20) – (+65) C
– weight 10-18 grams
Siemens MC45 Wireless Module
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Siemens TC 35 Wireless Terminal
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Technical overview (4)
 There is basically no M2M standardization
-> strongest technologies will develop into
de-facto standards
 From technology perspective it is quite clear
that no wireless technology can provide such
QoS that life-critical M2M services could be
implemented in the near future
 QoS enough for applications where best effort
reliability level is enough
– cost reductive applications
– new features to products via mobility
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Value Chain
 Value chain is a chain of interactions which
takes place inside or between organizations
in order to produce products and services to
customers
 The term value chain is used to underline the
sequence of actions in value creation.
 VC is a linear mechanistic model of business
that is based on the industrial age production
line. Developed by M.E. Porter in 1985.
Such a mechanistic model is simply
inadequate to understand the complexities
of value in the knowledge economy.
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Materials Manufacturer
© Siemens Osakeyhtiö, 2003
Distribution
End User
Value Network
 A value network is an enlarged view of value
chains as they come together to form complex
networks
 A value network is a web of relationships that
generates economic value and other benefits
through complex dynamic exchanges between
two or more individuals, groups or
organizations
 The Value network, its different entities and
their relationships can be defined in different
resolution
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Value Network in Mobile Services
Business
 An example of a value network: value network in mobile
services business from a study by Finnish ministry of
transportation and communication
Network
Software
developer
Media
Owner
Content
Provider
Mobile
Content
Provider
Device
Manufacturer
Technical
Integrator
Service Provider/
Content Integrator /
Mobile Portal
Operator
Advertising
Agency /
Advertiser
http://www.mintc.fi/www/sivut/dokumentit/julkaisu/julkaisusarja/2001/3_1_22.pdf
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More detailed value network in
Medical business
http://www.vernaallee.com/primary%20pages/Understanding%20Value%20Networks.html
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Customer interface in value network
 Value network can be complex, but basically
only one company acts in customer interface
 Gatekeeper
 ”Gatekeeper” owns the customer
Supply action
in the
value chain
Supply action
in the
value chain
,
Supply action
in the
value chain
Supply action
in the
value chain
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”Gatekeeper”
owns the
customer
End user /
Customer
© Siemens Osakeyhtiö, 2003
Value networks in Telematics business
 Finding successful business models and wellmanaged value chains is probably the most
difficult part of M2M business.
– Partnerships and alliances are favoured in order to
reach this goal
 Value Networks in wireless telematics
business are fragmented
 Who owns the customer?
 A single company can not cover the whole
value network
 Too many players in the value network will eat
the profit
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M2M Value Network
5.
End User /
Customer
4.
2.
Network Operator
&
Service Provider
1.
1.
System
Integrator
&
Application
Provider
User of the M2M system asks the System
Integrator for a solution to a problem.
2.
System Integrator optimizes the
telecommunications solution according to the
environment and available telecommunications
3.
services.
3.
Device
Manufacturer
System Integrator builds the applicable devices
and controls for the user systems
4.
M2M system is integrated with the systems of the
user
5.
User purchases the defined telecommunications
services from the Network Operator
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Big role of the integrator in M2M value
network
System Integrator
Service
Provider
Operator
M2M
Platf
orm
Integrated
Device
Wireless
Module
Applications
,
Segment A
Segment B
App …
. A1
App
. B1
App
. A9
… App
. B9
…
Segment Z
App … App
. Z1
. Z9
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Case study: M2M in industrial automation
 Industrial automation seems to be the most
interesting market area in M2M business in the
short-term because
– industrial companies are fast to adopt new
technologies, like wireless telematics,
– wireless automation is a natural continuation for wired
automation
– wireless modules are easy to integrate with
automation logics
 Major driver for M2M is cost reduction
– remote control and maintenance
– also emerging service business
 Automation companies strong candidates for
integrator role in the value network
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Case study: M2M in industrial automation
(2)
Needs connectivity between
machines and business systems
Industrial
User
Integrator builds
the system
for the user
Business
Process
Consultant
Consultants integrate M2M
system to business
processes
System
Integrator
Automation
Provider
Automation company
provides the possible
logic updates needed
for M2M connectivity
,
Telecom
Operator
Operator provides network
connections according to
spesifications made by
integrator.
HW & SW
Providers
HW & SW Providers act as
subcontractors
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Case study: Integration of M2M with
business processes
 Machines can be linked wirelessly to business
processes and applications (like ERP), and
thus the machines and the company can be
managed more efficiently.
 Already happening in wired automation.
Wireless connection does not add complexity
to the integration from business application
5. Bill
point of view
Intelligent
Machine
1. State
report
2. Service
request
Monitoring
ERP /
Maintenance
system
3. Service order
Maintenance
4. Remote maintenance /
maintenance visit
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Case study: Integration of M2M with
business processes (2)
 Wireless telematics brings more machines
available for business process integration
 Businesses like vending, can be operated
more efficienty when the machines are linked
wirelessly to the business processes of the
company
 Also tasks in service management can be
automized
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Case study: Integration of M2M with
business processes (3)
Needs connectivity between
machines and business systems
Industrial
User
Telecom
Operator
System
Integrator &
Business
process
consultant
Operator provides network
connections according to
spesifications made by
integrator.
Integrator & Business consultant builds
the system for the user and integrates
to costomers business processes
Automation
Provider
Automation company
provides the possible
logic updates needed
for M2M connectivity
,
HW & SW
Providers
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HW & SW Providers act as
subcontractors
© Siemens Osakeyhtiö, 2003
Conclusions (1)
 An essential conclusion about M2M value
networks is the importance of defining and
managing them
– value network is the basis for business strategy
 The key finding of this thesis is that the value
network in wireless telematics business is
dominated by a M2M system integrator.
 Industrial automation seems to be the most
interesting application area of wireless
telematics in the short run
 Integrating M2M with business processes will
be increasingly important in the future
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Conclusions (2): Issues for further
research
 There is a need for further research in studying
the value network in several different
application areas of wireless telematics
business.
 M2M application cases from technical point of
view
 Product and consulting -based approaches on
wireless telematics business and their
influence on the M2M value network
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