Build or Buy? An Executive’s Guide to IoT Platforms

While some amount of custom development is inevitable when building out an IoT environment, companies should be wary of the drawbacks of building a platform from scratch.

But despite the plethora of options available on the market, a significant number of companies are developing their own IoT platforms.

Informa recently surveyed people whose companies have deployed IoT projects at production scale. While 30% of respondents said they purchased a single off-the-shelf platform, 24% said they developed one in-house.

“What’s interesting is that what I’ve heard from speaking to vendors is that build-your-own is their number one competitor,” said Jessica Groopman, industry analyst and founding partner, Kaleido Insights. “The nature of IoT is such that, in a word, it’s heterogeneous,” Groopman said. She explained that the IoT projects make use of a plethora of sensors, all with different power, connectivity and security requirements.

While most IoT platforms were created to support such diversity, many companies “end up building their own or deploying a hybrid solution,” Groopman said.

Nomenclature further complicates matters, according to Dilip Sarangan, global research director for IoT, Frost & Sullivan. “Calling something a platform is misleading because it makes everyone think that this will manage every device and every system I put on there. Not always,” he explained. While Sarangan said that 450 to 500 vendors claim to offer an IoT platform, “only 30-40 offer true platform capabilities.” He continued: “A platform is not a one-dimensional software solution.” Conversely, it is a layered technology with support for a variety of capabilities and technology providers. Ultimately, an IoT platform is “seamlessly integrated so that data moves between operators and solution providers,” Sarangan said.

“Ultimately, the value is in the interoperability and different data sets and feeds talking to each other,” Groopman said. “That’s the core enabler for the whole downstream data value proposition: how do we connect data so we have greater visibility than we have today?”

Steve Hilton, an analyst and the president of MachNation, which runs an IoT performance test lab, frequently hears about IoT implementers interested in forging their own platform path. “One of the things we’ve found is that some place along the decision-making process, someone always says, ‘We’ll just build our own platform.’ People always think it will always be cheaper to build their own,” he said. However, that’s not necessarily the case.

To build an IoT platform, companies need development resources. “This can be a problem. You need to keep developers around to add capabilities to the platform but have enough work to keep them employed,” Sarangan said. “The cost is significant but there’s also the issue of availability of resources. There’s only a finite universe of developers out there.”

There’s also the challenge of flavor-of-the-month coding languages. “Whatever coding language you use today might become outdated, and you’ll need to completely overhaul the IoT platform or migrate to something else. Organizations aren’t necessarily thinking about these things when they develop in-house,” Sarangan said.