David Merrill

IoT Economics: re-thinking platforms costs

Blog Post created by David Merrill Employee on Nov 8, 2016

I just got off an interesting IDC Webcast call on "Worldwide Internet of Things (IoT) 2017 Predictions". Some really good material was shown, and excellent alignment in what I am seeing with IT economics from my customers planning for on-premise IoT solutions. IDC presented material on "shifting economics" and a new "platform economy" necessary to drive IoT effectiveness. I will not re-hash the IDC material (you can watch on your own), but will share some of my own similar and supportive findings on this topic.


Point 1: IoT as we all know is relatively new, the demands on capacity, processing locale (central or edge) and rate of growth is still being forecast. But we do know that data rates are vastly different than traditional IT. My first IoT Econ observation is that the platform and infrastructure built specific for IoT has to be radically different from an economic perspective. Key point - data lake systems (nodes, storage) need to be built with 80-90% of the traditional costs taken out. In my opinion (working with clients building 1st generation IoT systems), if we do not find platforms architectures that have  a significantly lower cost footprint, the rate of IoT growth may be unsustainable for most IT budgets.


Point 2: IoT platforms placed in the data center (or the cloud) are part of a larger IoT or M2M eco-system. This simple chart below shows that eco-system, with the sensors and machine-generating sources on the left, through a network transport, through data management and then to the applications and people that can use the results for business value.


In my work, the call for the 80-90% lower cost platforms are in the 'data management' section of the picture above. And more specifically, in the data lake infrastructure. This picture below is an expanded view of the data management section, with the data lake isolated from the regular DB/processing systems.




Point 3: The data lake infrastructure is probably the most volatile in terms of capacity, rate of growth, scale up and out within the data management IT infrastructure. If we simply take existing storage, hosts, VM that exist elsewhere in the data center and make them the "data lake", the total costs will be unsustainable in a very short time. If we push these traditional systems and architecture to meet the explosive growth, the unsustainable costs may have a negative impact on the IoT system as a whole, and negative ROI impact on IoT initiative in general. That is why the nodes, storage and processing architectures of the data lake, with the data management systems, needs to be a fraction of the total cost of other hosts and storage.


In my next blog, I will present several options that are generally available today to design, build and deploy data lake IoT platforms that are economically, radically different from what we tend to build in the data center today. Determining and building to these new cost targets are imperative for IoT projects to deliver positive ROI over time.