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Unlocking Intelligence

IoT software and analytics are unlocking the value of big data, driving consolidation and competition for leading platforms.
By Chase Sanders, Matt Kessler and Joel Cohen
Jun 11, 2017

As digitalization has taken hold across different industries, there has been an assumption that great knowledge would come from new data being collected. But data collection and reporting in and of itself was only mildly helpful. There was still a lot of noise and not a lot of value.

Today, that challenge is beginning to fade as sophisticated software and systems connect disparate devices and collect, verify and cleanse data from these devices, facilitating analysis and application of the information into actionable intelligence. The so-called Internet of Things revolution is quickly catching up to its hype, dramatically transforming businesses across many sectors. Whether it's a manufacturing company looking to optimize operations or a building-management company looking to reduce energy usage, the value of this technology has become imperative. That demand is fueling tremendous acquisition interest from a diverse range of buyers, pushing competition higher and accelerating consolidation in the space.

Left to right: Chase Sanders, Matt Kessler and Joel Cohen
Proliferation of the IoT
The proliferation of the IoT has enabled more connected devices. By 2020, it is expected that there will be up to 50 billion connected units. This tremendous growth in adoption has been fueled by several factors. First, the price of sensors and controls enabling these connected devices has been falling, making them more cost-effective to implement in more places. Additionally, whether coming from shareholders, regulators or other market forces, there is increasing pressure on businesses to drive higher productivity and greater efficiency in their operations—to look for ways to reduce resources while delivering just as much, if not more, of its product or service.

With enhanced connectivity across sensors and controls, businesses receive more transparency and actionable data to more intelligently manage resources. The predictive analytics of IoT-enabled software provides actionable intelligence, facilitates machine learning and makes businesses better consumers of resources. Additionally, there are now many cloud-based software-as-a-service (SaaS) platforms that go a step beyond previous offerings by providing more predictive analytics and automated control, rather than simply data analysis, dashboards and reporting. These platforms represent scalable solutions upon which new analytics can be added over time.

Consolidation and Competition
Consolidation is accelerating as these IoT-enabled companies continue to grow. Baird is seeing strong interest from a wide variety of buyer groups. Traditional software players are often looking for strategic opportunities to add to their platforms; however, less traditional buyers, including global industrial companies, cable and telecom providers, energy products and services providers, building and facility managers and services providers, and even energy and power suppliers, have also been active in the space.

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