Acquisition Integrations and the IoT 

 January 24, 2016

By  Steve Nunn

One of the biggest changes that will happen to society, in my opinion, is the increased amount of information that is available to us. Not just YouTube videos, but useful, practical information that helps people in their personal and business life. For example, you’re in the car and your destination is a car park. It would be useful to have a good estimate of how many parking spaces are likely to be in the car park at the time you get to your destination.

McKinsey white paper

I am not often a fan of white papers written by large consulting firms. The intention to demonstrate that they’re a thought leader: they know what they’re talking about, and they can help you with your specific needs.  Unfortunately the majority of papers that I’ve read from consulting firms are a summary review of a survey, and they don’t add much insight.

Saying that, I really like the following article from McKinsey & Company  on unlocking the potential of the Internet of Things (IoT). For those that don’t know the phrase, IoT is a catch-all term for devices that monitor situations, e.g. if a warm object moves past an infrared camera, or a Fitbit is moved by the person wearing it, or a bridge beam deflects when a heavy load goes over it. Usually the internet is how this data is transmitted to a place where it can be analyzed, hence Internet of Things.

We’ve had real-time monitoring of assets since the 1960’s, so what’s different? Well the IoT is about recording more things more easily, and making intelligent sense of the huge amounts of data collected. The IoT is all about turning data into useful information.

Acquisition Integrations

So if my focus is on integrating acquired businesses why am I writing about this?
The IoT is changing the way that businesses work, and with that comes some interesting integration scenarios.

IoT Installation

Extensys Inc (https://extensysinc.com/internet-things-iot/ ) is a South Florida IT company that had opportunities to do cable installations for massive wireless customers and data center builds. To fill this need they acquired a low voltage wiring contractor in 2008. The integration approach was to immediately merge the Back Office (administration, invoicing, benefits etc.), and keep the IT and EC Front Office businesses separate.

However they still were not licensed to do installations. So to complete the integration strategy they hired a master electrician, and became a licensed Electrical Contractor (EC).

Around 2014 they saw opportunities to enhance life safety systems in schools, which started their move into IoT. The move required a fusion of the EC business with the IT business: you need to know both to get IoT products embedded into buildings to make them smarter and safer.  The life safety is equally as important to healthcare facilities.  Their expertise often has them educate Building Electrical designers on how to take advantage of IoT, so that their EC can install better value and safer systems.

As Extensys grows their IoT businesses and more knowledge exchange is needed between the IT and EC teams, I expect that they’ll slowly bring the two teams together.

The 2008 integration strategy was right for that time, but market opportunities have changed the strategy to move the teams together years later. It’s the right way for them to merge this acquisition.

IoT Platforms

Making the most of IoT will required extracting information from data that comes from different sources, and probably stored in different servers. Interoperability is key and it is going to be extremely difficult in some areas. There are a number of technology companies out there trying to be the IoT platform of the future. Each has its own way of storing data and while the market grows they’re in a land grab for market share. It’s the Wild West of IoT, and there isn’t much need to collaborate with competitors.

There will be consolidation of this market, which is likely to see tech companies acquiring competitors to gain market share. Their integration strategy will be to increase their IoT offerings to the market, either by merging the technologies together or offering more solutions. For example Dialog Semiconductor acquired chipmaker Atmel for $4.6bn to offer a better product portfolio for the Internet of Things. Jalal Bagherli, who’ll lead the enlarged company, said in a phone interview. “Companies are trying to position themselves.”

When a company acquires a product or market that they’re already in, the most common integration approach is to absorb the business of the target company into the parent company, merging these technical products.  As you’d expect, watch out for the cultural integration on these. Expertise is in short supply, so acquiring companies should ensure that their strategy has a focus on staff retention.

IoT: everyone agrees that we’re just getting started. Watch out for more acquisitions and integrations from this space.

Change is coming.

Here’s the 24 page executive summary http://www.slideshare.net/OptimediaSpain/unlocking-the-potentialoftheinternetofthingsexecutivesummary
Here’s the 144 page full report http://www.slideshare.net/polenumerique33/mckinsey-unlocking-the-potential-of-the-internet-of-things-iot


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