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The Internet of Things ecosystem:
The quest for value
Presenters:
Craig Wigginton, Vice Chairman and U.S. Telecommunicatio...
Copyright © 2014 Deloitte Development LLC. All rights reserved.
Internet of Things (IoT) Definition and Projections
IoT Bu...
Copyright © 2014 Deloitte Development LLC. All rights reserved.
• The desired outcome is an
ecosystem where everyone
benef...
Copyright © 2014 Deloitte Development LLC. All rights reserved.
The projected adoption of IoT technologies and solutions w...
Copyright © 2014 Deloitte Development LLC. All rights reserved.
• To date, the primary value driver
– 22% of use cases foc...
Copyright © 2014 Deloitte Development LLC. All rights reserved.
• Nearly 75% of companies
express interest in new business...
Copyright © 2014 Deloitte Development LLC. All rights reserved.
Explore revenue and innovation potential
Focus on product ...
Copyright © 2014 Deloitte Development LLC. All rights reserved.
Inputs
• Customer visits
• Buying behavior
• Payment modes...
Copyright © 2014 Deloitte Development LLC. All rights reserved.
• Real-time data
• “Mash-ups” for context
• Predictive ana...
Copyright © 2014 Deloitte Development LLC. All rights reserved.
• Number and types of 3rd parties were found to
be the #1 ...
Copyright © 2014 Deloitte Development LLC. All rights reserved.
• Number and types of 3rd parties
• Intra-company vs. Inte...
Copyright © 2014 Deloitte Development LLC. All rights reserved.
Category Sample S&P Concerns
Health
Monitoring
• HIPPA com...
Copyright © 2014 Deloitte Development LLC. All rights reserved.
The Internet of Things
Ecosystem: Unlocking the
business v...
Copyright © 2014 Deloitte Development LLC. All rights reserved.
John Hagel
jhagel@deloitte.com
@jhagel
Craig Wigginton
cwi...
About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarant...
Internet of things ecosystem: The quest for value
Internet of things ecosystem: The quest for value
Internet of things ecosystem: The quest for value
Internet of things ecosystem: The quest for value
Internet of things ecosystem: The quest for value
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Internet of things ecosystem: The quest for value

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As the confluence of several mature and emerging technologies, the Internet of Things (IoT) is rapidly developing into a vibrant new marketplace. What are important considerations for technology, media, and telecom (TMT) companies as they compete for opportunities? This presentation covers:

• Questions TMT executives should be asking about impacts of IoT technologies, performance improvement opportunities, and where value can be generated.
• Building an IoT ecosystem where all players benefit – defining different players' roles and relationships, and already-successful tactics.
• Security and privacy challenges, including how data protection responsibility is assigned and monitored, and defining appropriate security and privacy standards.

Explore this quickly developing new opportunity for TMT companies.

Get more IoT insights: http://www.deloitte.com/us/iot_ecosystem

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Transcript of "Internet of things ecosystem: The quest for value"

  1. 1. The Internet of Things ecosystem: The quest for value Presenters: Craig Wigginton, Vice Chairman and U.S. Telecommunications leader, Deloitte & Touche LLP John Hagel, Co-Chairman, Deloitte LLP’s Center for the Edge Host: Eric Openshaw, Vice Chairman and U.S. TMT leader, Deloitte LLP
  2. 2. Copyright © 2014 Deloitte Development LLC. All rights reserved. Internet of Things (IoT) Definition and Projections IoT Business Value Framework Strategies to Unlock IoT’s Business Value Overcoming the Security and Privacy Challenge Agenda
  3. 3. Copyright © 2014 Deloitte Development LLC. All rights reserved. • 26 billion connected devices by 2020(1) • $1.9 trillion global economic value-add by 2020(1) • $9 trillion in annual sales by 2020(2) • 75% of executives exploring/adopting IoT(3) Everyday objects’ network connectivity to each other and/or to humans, allowing them to send and receive data and perform a corresponding action. What is Internet of Things (IoT)? Sources: 1) Gartner, Nov. 2013 2) IDC, Oct. 2013 3) The Economist, Oct. 2013x
  4. 4. Copyright © 2014 Deloitte Development LLC. All rights reserved. • The desired outcome is an ecosystem where everyone benefits – Standards – Security – Interoperability – Breakdown of silos – Horizontal layers – Data commons with open access The IoT ecosystem is in its early stages of evolution and is characterized by a high degree of complexity IoT Ecosystem Network Service Providers Cloud Service Providers (CSP) Hardware Makers Device Manu- facturers IT services vendors Middleware vendors Software vendors Standards Bodies Industry Groups Regulators /Govt. IoT Provider Ecosystem
  5. 5. Copyright © 2014 Deloitte Development LLC. All rights reserved. The projected adoption of IoT technologies and solutions will depend on executives finding ways to monetize on the investments IoT Business Value Framework Focus on Financial Metrics Focus on Operating Metrics Transition from “Transaction” to “Relationship” • Increase in revenues • Decrease in cost/expenses • Reduction and improvement in asset utilization • Improvements in: – Facilities/asset lifecycle – Product lifecycle – Customer lifecycle • Holistic approach to past and future transactions with an entity with focus on the relationship
  6. 6. Copyright © 2014 Deloitte Development LLC. All rights reserved. • To date, the primary value driver – 65% of use cases focused on cost reduction(1) • Transaction-based • Facility/asset lifecycle focused • Examples: – Process inefficiencies – Human errors – Lost/stolen assets Case Study: Cost Reduction Asset Tracking in the Oil Fields • Oil rental equipment provider • Sensors on machinery send alerts with data for technicians to troubleshoot/fix remotely • Results – 50% decrease in site visits – Reduced labor, vehicle and fuel costs – Decrease in time required for diagnostics and repair, less machine downtime Sources: (1) Deloitte analysis based on information from 20 IoT providers and 89 IoT implementations
  7. 7. Copyright © 2014 Deloitte Development LLC. All rights reserved. • To date, the primary value driver – 22% of use cases focused on risk management(1) • Transaction-based • Facility/asset lifecycle focused • Examples: – Workforce safety in remote locations – Track/restrict movements of assets – Preempt/lower fraud Case Study: Risk Management Fleet Maintenance • Crane and heavy truck fleet operator • Sensors on tires measure and alert for changes in tire pressure • Results • Preemptive maintenance • Decrease in accidents related to malfunctioning fleet • Increase in workforce safety Sources: (1) Deloitte analysis based on information from 20 IoT providers and 89 IoT implementations
  8. 8. Copyright © 2014 Deloitte Development LLC. All rights reserved. • Nearly 75% of companies express interest in new business opportunities/fortify existing products but only 13% of use cases are focused on revenue generation(1) • Revenue/innovation value driver has the largest potential with increasing returns over time • Potential for “relationships” rather than transactions • Product and customer lifecycle focused • Disruptive potential Case Study: Revenue and Innovation Quantified Self Movement • Individuals (not health care providers) capture, analyze and share data through wearables • Results: – Health and wellness providers offer more personalized treatments based on the data – Individuals connect with a diverse ecosystem of wellness providers and get more value and insight – Role of traditional health care providers changes significantly Sources: (1) Deloitte analysis based on information from 20 IoT providers and 89 IoT implementations
  9. 9. Copyright © 2014 Deloitte Development LLC. All rights reserved. Explore revenue and innovation potential Focus on product and/or customer lifecycles Target early deployment to maximize impact Use data (data mash-ups) to build relationships Maximize transparency to enhance human trust Develop security that is both preventative and responsive Select Strategies to Unlock Value in IoT 1 2 3 4 5 6
  10. 10. Copyright © 2014 Deloitte Development LLC. All rights reserved. Elevate the conversation and include a broad range of stakeholders in addition to the CIO Revenue and innovation focus • From an economic perspective, what does IoT technology do for the enterprise? • How can real-time monitoring and predictive analytics lead to product or process innovations? • How can assets be better deployed to expand business into new customer segments or regions? • How can connection and real time context support more effective marketing? • How can connectivity between a mobile workforce shorten the sales cycle? 1
  11. 11. Copyright © 2014 Deloitte Development LLC. All rights reserved. Inputs • Customer visits • Buying behavior • Payment modes • Inventory Move beyond facility lifecycle management to product and customer lifecycle management Customer and product lifecycle focus 2 Outputs • Increased sales • Improved customer loyalty • Improved merchandise/inventory management
  12. 12. Copyright © 2014 Deloitte Development LLC. All rights reserved. Focus on “Metrics That Matter” Target early deployments 3 Ecosystem Organization Financial metrics Operating metrics Frontline metrics
  13. 13. Copyright © 2014 Deloitte Development LLC. All rights reserved. • Real-time data • “Mash-ups” for context • Predictive analytics • Visualization Use readily available sensor data to understand the context and build a relationship Use data to build relationships 4
  14. 14. Copyright © 2014 Deloitte Development LLC. All rights reserved. Define: • Minimum set of information needed to deliver customer value • Allow users to select that data they want to share • Define how and when different apps get access to what information — based on the needs of the app provider and resulting benefits to users Maximize data transparency Scale ComplexityHig h HighLow E-mail Text Messages Social Media Interactions M2M/IOT InteractionsMovies/V ideos Customer Calls Digital Images Search Engine Data Traffic Data Customer Location Data Weather Data Company Financial Data Procurement System Data Point-of- Sale Data Stock Market Transactions Retail Data Travel Booking s Credit Card Transactions Employee Data Bank Account Data In data analytics, different categories of data have varying complexities and require different levels of access and controls — and M2M/IOT is one of the most complex categories 5
  15. 15. Copyright © 2014 Deloitte Development LLC. All rights reserved. • Number and types of 3rd parties were found to be the #1 top vulnerability — and IoT by definition is made up of numerous 3rd parties • Privacy is another people-related challenge exacerbated by mobile and cloud. Yet, only 64% of TMT organizations currently have a privacy program in place “Last year, security-related regulatory compliance was one of the top three security initiatives. This year, compliance did not even make the top 10. Organizations now recognize how crucial information security is to heir business success and are investing in it because it’s smart business, not just because regulations require it.” Preventive and responsive security Impact of the information security breaches in past 12 months Top vulnerabilities 6
  16. 16. Copyright © 2014 Deloitte Development LLC. All rights reserved. • Number and types of 3rd parties • Intra-company vs. Inter-company security considerations • Rapid proliferation of number, types and capabilities of IoT connected devices • Geographic disparity, device disparity, operating system disparity, number of devices, different data types • Lack of awareness of, and capabilities within security for many smaller IoT startups • Non-computing devices becoming computing and communications devices (e.g., cameras, refrigerators, washing machines) — something they were never intended to be • Focus on solution and capability first, security…tenth?? “With more than 30 billion devices expected to be wirelessly connected to the IoT by 2020, imagine again what the lack of a robust security infrastructure would mean for that M2M- enabled car you might be driving” — ZDNet, 2014 Security and Privacy Challenges in IoT 6
  17. 17. Copyright © 2014 Deloitte Development LLC. All rights reserved. Category Sample S&P Concerns Health Monitoring • HIPPA compliance • Opt-in, Opt-out criteria • Hacking biomedical devices (e.g., pacemakers) POS/Vending • Payment transaction security • External, distributed physical links to internal corporate systems Smart Grid & Utilities • Power grid attacks, vulnerability • National security implications Category Sample S&P Concerns Telematics • Vehicle/Location tracking • Unauthorized vehicle access • Self-driving vehicles (and impacts of malicious intent) Home Automation • Unauthorized home access • Privacy issues if video links are misused/hacked • Baby monitor hacking Insurance • Privacy of loss history • Anonymization of data for statistical analysis Examples of S&P Concerns in IOT 6
  18. 18. Copyright © 2014 Deloitte Development LLC. All rights reserved. The Internet of Things Ecosystem: Unlocking the business value of connected devices The Internet of Things (IoT) has the potential to offer business value that goes beyond operational cost savings. Providers in the IoT ecosystem have a largely unexplored opportunity to develop compelling IoT solutions that explore how the ability to collect and analyze disparate data, in real-time and across time, might transform the business. These developments will play out within and across enterprises, offering opportunities for sustained value creation and even disruption for those who can imagine possibilities beyond the incremental. Learn more: www.deloitte.com/us/iot_ecosystem Want more? Download our new report
  19. 19. Copyright © 2014 Deloitte Development LLC. All rights reserved. John Hagel jhagel@deloitte.com @jhagel Craig Wigginton cwigginton@deloitte.com @craigwigginton Eric Openshaw eopenshaw@deloitte.com @eopenshaw Contact info
  20. 20. About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a detailed description of DTTL and its member firms. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright © 2014 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited

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