Streamline IoT Solutions Using Aggregation and Coopetition

With the emergence of new business and customer segments in today’s rapidly changing markets, fragmentation is inevitable, given the proliferation of each segment’s own distinct needs and preferences. In other words, now more than ever, a multitude of customers are choosing among an abundance of products and services provided by an increasing number of vendors.

Market fragmentation in itself is not necessarily negative; in fact, it's typically a sign of customer choice and healthy competition. Nevertheless, fragmentation often adds a burden for end users of IoT solutions who may be perplexed as they negotiate the complexities of disparate technologies. In particular, the excessive accumulation of log-in procedures required for employees to conduct everyday tasks can be frustrating, especially if apps are redundant or, worse, poorly integrated.

This super-saturated technological landscape is aggravated by what we might call the “pendulum of technology buying.” That is, the purchasing pattern of most companies swings between adopting one enterprise system from a primary vendor and selecting discrete best-of-breed solutions from secondary vendors that excel at meeting one specific need.

When customers prefer a different best-of-breed solution for every use case, the number of apps accrue end to end for all their supply chain operations — from production processes and shipping logistics to condition monitoring and integrated business planning. Unfortunately, this purchasing strategy usually results in a disjointed experience for users that, in turn, leads to inevitable mistakes and a toll on operational efficiency.

For the remainder of this post, we take a look at two tactics that can help resolve unwanted user disorientation brought on by the unnecessary buildup of apps and the clumsy integration of overlapping technologies:

• Aggregation: a strategy that improves the user experience by reducing the number of apps needed to access critical data across the supply chain
• Coopetition: an approach that achieves increased interoperability within a company’s tech ecosystem and, consequently, greater customer satisfaction
  
  

IoT Aggregation: fewer apps, more information

Aggregation refers to the process of integrating multiple operations into a cohesive, streamlined service. This strategy creates a more efficient, cost-effective, and resilient supply chain by harmonizing its multiple links — such as manufacture, transportation, and storage — under a single umbrella.

Without aggregation, management and staff must use a different app for each provider, which complicates visibility and obscures transparency. With aggregation, companies enjoy the following key benefits:

• More efficiency at less cost: By consolidating various supply chain functions, businesses can eliminate redundancies, streamline operations, and maximize resources (e.g., reducing idle time in warehousing and optimizing transportation routes), which in turn can lead to substantial cost savings.
• Better service quality: A unified supply chain provides greater control over each step of the process, thereby ensuring more reliable delivery times, higher product quality, and improved customer satisfaction.
• Data-driven insights and strategic decision-making: Using data analysis, businesses can gain insights into customer behavior and demand patterns, react to current market conditions, and anticipate future trends and challenges to make informed decisions about inventory management, resource allocation, and future investments.
• Scalability and flexibility: Aggregation allows businesses to flexibly scale their operations up or down quickly in response to market demands — which is particularly important when handling seasonal fluctuations, sudden market shifts, or unexpected disruptions. 
  
  

Implementing IoT Aggregation

Business leaders considering an aggregation strategy should take the following initial steps before implementation:

IoT Coopetition: more interoperability, less redundancy

As technology customers require more integration capabilities among their purchased solutions, technology providers are challenged to collaborate in mutually beneficial relationships.

Coopetition is the act of cooperation between competing companies — particularly software and hardware firms producing complementary or related products — by forming a strategic alliance designed to profit both companies. Coopetition fuels open technology environments by streamlining solutions markets and ensuring value for customers and users.

By developing a business environment with standard protocols, open APIs, and sophisticated certification programs, coopetition can ease the agreement process for technology vendors while maximizing the existing investments of customers. Shared standards support healthy market competition and give customers more choice, which in turn motivates IoT solution providers to innovate and provide exceptional customer experiences.

Implementing IoT Coopetition

To develop a competitive advantage, even end-to-end providers of supply chain technology solutions should consider specializing in only one or two capabilities. With a focus on these specialties, executives can then examine other solution providers in the space and identify opportunities for integration. Three potential levels of “capability overlap” inform how a technology company can best approach a coopetition partnership.

1) Model partnership (100% complementary capabilities)
In this ideal scenario, customers need both vendors working in tandem to satisfy their operational needs. Importantly, the potential partner poses no strong direct competition. If that’s the case, frictionless integration can only add value for customers. Furthermore, engaging in co-marketing opportunities and mutual referrals will make sense for both companies as they educate their customers on the efficiencies of purchasing and implementing both solutions.

2) Negotiated Partnership (partially overlapping capabilities)
In this scenario, one of the solution providers develops a capability similar but not identical to one of the partner’s capabilities. Initially, coopetition may continue until one of the partners develops that capability to the point where they cross a competitive boundary. Each partner’s tolerance for overlap will then determine how long the partnership can prosper.

3) Redundant Partnership (100% overlapping capabilities)
In this undesirable scenario, one of the partners in the coopetition develops the same core capability as the other with complete overlap. Partnership no longer makes sense for the competitors (who need to increase their market share) or the customers (who need to aggregate their tech stack). Direct competition of core competencies therefore necessitates termination of the partnership.

When deployed strategically, aggregation and coopetition can reduce the cut-throat market competition and user dissatisfaction that are unfortunate side effects of market fragmentation. What it ultimately comes down to is choosing a partner you can trust to provide the best solution that complements your overall enterprise system.