Cisco Expo 2011
THE FUTURE WILL BE

DIFFERENT
Jožek Gruškovnjak
Director, Cisco IBSG
© 2010 Cisco and/or its affiliates. A...
"Prediction is very difficult, especially
about the future." Niels Bohr, Nobel
Laureate
"There is no reason anyone would w...
Exponential
times

Mega-trends
and megachallenges

The role of
IT…

The future will
be different…

Shaping the
past, prese...
Exponential times
Bell Labs, 9/2009
15.5 Tbps
400 DVD/sec, 7000 km

2000 Download
Time

2009
Download
Time

4 GB DVD
Movie...
Exponential times
Core i7 i980
1,17B transistors,
147,600 MIPS

160,000
Interactive gaming, …

Quad 2 Duo
quad core

140,0...
Exponential times
Core i7 i980
1,17B transistors,
147,600 MIPS

160,000
Interactive gaming, …

Quad 2 Duo
quad core

140,0...
Exponential times

Movable type.
Johannes Gutenberg

Print in digital format.

Text. Photos. Audio.
Video. Together.

1439...
Entertainment
Central living
device

Changing media
consumption
and distribution
Providing
relevant
information

Communica...
Exponential times

Members (millions)

600

• Facebook: 4th most popular web site

500

500M+ unique visitors 3rd most pop...
Exponential times
• Driven by consumers…
79% of global IP traffic in 2009

60,000
PB per month

70,000

forecasted to grow...
Exponential times

Digital Universe - exabytes

Digital data is increasing 10 x every 5 years

40,000
35,000
30,000
25,000...
Web 4.0
Individual and Group Productivity

2020–2030
Agents and
reasoning

Semantic
Web

Web 3.0
2010–2020
Semantic
search...
Exponential times

18,000

Global Exports (B$)

16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
1950

1960

1970

1980...
Exponential times

8.0
6.0

More developed regions

2050

2045

2040

2035

2030

2020

2015

2010

2005

2000

1995

1990...
Exponential times

8.0
6.0

2000

1900

1800

1700

1600

1500

1300

1200

1100

1000

900

800

700

600

500

200

100
...
Exponential times
300

200
(2005 = 100)

Commodity prices index

250

150
100
50
0

Fuel / Energy

Food

Industrial Inputs...
Exponential times
90,000

10.0%

80,000

8.0%

70,000

6.0%
4.0%

60,000

2.0%

50,000

0.0%
40,000

-2.0%

30,000

-4.0%
...
NEW NORMAL

© 2010 Cisco and/or its affiliates. All rights reserved.

Internet Business Solutions Group

Cisco Confidentia...
Exponential
times

Mega-trends
and megachallenges

The role of
IT…

The future will
be different…

Shaping the
past, prese...
Mega-Trends

Globalisation

Aging Population

© 2010 Cisco and/or its affiliates. All rights reserved.

Increased Asian
co...
Superior Customer Experiences and the Borderless Organization

Mega-Challenges

Business Transformation Models

INNOVATION...
Value is maximized when both areas are pursued on intra
and inter-company level
Value

Innovation

Innovation2

Innovation...
Controlling Efficiency
Is Commonplace
Productivity / Impact

Process automation and
re-engineering are
important, but not
...
“People” costs: 84%
Other costs: 16%

© 2010 Cisco and/or its affiliates. All rights reserved.

Internet Business Solution...
Controlling Efficiency
Is Commonplace

Optimizing Human
Interactions

Productivity / Impact

Process automation and
re-eng...
Web 2.0
Collaboration
Solutions

1.1 B$

Web 1.0
Internet
Solutions

3.3 B$

Information sharing
1995

Transactions
2000

...
Cisco Benefits: $1.05B* Net, 4.9% Productivity Increase
$486M
• Reduce real estate
• Avoid travel

$85M
• Create new
reven...
Exponential
times

Mega-trends
and megachallenges

The role of
IT…

The future will
be different…

Shaping the
past, prese...
“Old world”

“New Normal”

Corporate ‘lab’ innovation approach

Open innovation (suppliers/partners/customers)

Efficient ...
Core question: what is your IT budget balance?

Innovation and business
transformation

Infrastructure operations
“Keeping...
Need to rebalance – business alignment and
transformation are key

Innovation and business
transformation

Infrastructure ...
Cloud computing

Infrastructure
costs

Actual demand
CAPEX
Large capital
expenditure

Getting started tax
Wasted
money

Lo...
CIO of Fortune 500 Pharmaceutical Company
© 2010 Cisco and/or its affiliates. All rights reserved.

Internet Business Solu...
Internet Companies
(“OTT”)

Service
Providers

Systems Integrators &
Server Vendors

Typical
Players

Unique
Assets
Compet...
Global Telecommunications Market Capitalization

4

Wave 1

US$Trillions

Wave 3

PTT

Web 1.0

Deregulation

Basic Intern...
Exponential
times

Mega-trends
and megachallenges

The role of
IT…

The future will
be different…

Shaping the
past, prese...
Some statements CEOs agree with
• The correction will impact advanced economy consumer

spending for several years to come...
Spending more on new investments
By how much, if at all, do you expect your organization’s IT budget for
operating expense...
Five areas where
the CIO is key
to drive business value
1.

Secure alignment between business transformation and technolog...
© 2010 Cisco and/or its affiliates. All rights reserved.

Internet Business Solutions Group

Cisco Confidential

41
There is no challenge without
crisis.
A crisis can be a real blessing to
any person, to any nation, for all
crises bring p...
© 2010 Cisco and/or its affiliates. All rights reserved.

Internet Business Solutions Group

Cisco Confidential

43
Thank you.

© 2010 Cisco and/or its affiliates. All rights reserved.

Internet Business Solutions Group

Cisco Confidentia...
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The future will be different cisco expo slovenia 2011, 20110310 v1.1 jg

  1. 1. Cisco Expo 2011 THE FUTURE WILL BE DIFFERENT Jožek Gruškovnjak Director, Cisco IBSG © 2010 Cisco and/or its affiliates. All rights reserved.
  2. 2. "Prediction is very difficult, especially about the future." Niels Bohr, Nobel Laureate "There is no reason anyone would want a computer in their home." Ken Olson, founder of Digital Equipment Corporation "Who wants to hear actors talk?" H.M. Warner, cofounder of Warner Brothers, 1927 "The wireless music box [radio] has no imaginable commercial value." Said to David Sarnoff, founder of NBC "This 'telephone'... is inherently of no value to us." Western Union memo, 1876 © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 3
  3. 3. Exponential times Mega-trends and megachallenges The role of IT… The future will be different… Shaping the past, present and future How do deal with the “new normal” … and opportunities for service providers … and will favor the brave. © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 4
  4. 4. Exponential times Bell Labs, 9/2009 15.5 Tbps 400 DVD/sec, 7000 km 2000 Download Time 2009 Download Time 4 GB DVD Movie 3 days 2 hours 3 MB MP3 Audio 3 minutes 5 seconds 1MB Email 1 minute 2 seconds Speed / Bandwidth Activity Ethernet Protocol Standardized AT&T’s Bell 103 modem 300 bps 1962 9,600 bps 1980 100 Gigabit Ethernet 100 Gbps 10 Gigabit Ethernet 10 Gbps Gigabit Ethernet 1 Gbps Fast Ethernet 100 Mbps Ethernet 10 Base T 10 Mbps 28,800 56,600 bps bps 1989 1990 1995 1998 2003 2010 Sources: http://en.wikipedia.org/wiki/IEEE_802.3; http://en.wikipedia.org/wiki/List_of_device_bit_rates © 2010 Cisco and/or its affiliates. All rights reserved. 1984 Internet Business Solutions Group 1997 2006 Cisco Confidential 5
  5. 5. Exponential times Core i7 i980 1,17B transistors, 147,600 MIPS 160,000 Interactive gaming, … Quad 2 Duo quad core 140,000 Performance (MIPS) Launches the content & video boom 820 transistors, 59.455 MIPS 120,000 Launches the laptop boom Core 2 Duo 100,000 291M transistors, 27,709 MIPS Launches the Internet boom 80,000 Launches the PC boom 60,000 Pentium M 80286 40,000 55M transistors, 5,935 MIPS Pentium 3.1M transistors, 112 MIPS 123k transistors, 2.66 MIPS` 20,000 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 Sources: Intel Corporation, 2010; Dr. Steve Reyer; http://en.wikipedia.org/wiki/List_of_Intel_microprocessors © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 6
  6. 6. Exponential times Core i7 i980 1,17B transistors, 147,600 MIPS 160,000 Interactive gaming, … Quad 2 Duo quad core 140,000 Performance (MIPS) Launches the content & video boom 120,000 Launches the laptop boom Launches the Internet boom Core 2 Duo 27,709 MIPS ARM processor architecture Pentium M ≈55M transistors, 1,600 DMIPS @ 800 MHz Pentium 80286 40,000 Apple iPhone 4 • Apple A4291M transistors, processor 100,000 80,000 Launches the PC boom 60,000 820 transistors, 59.455 MIPS 5,935 MIPS • 512 MB RAM 3.1M transistors, 112 MIPS 123k transistors, 2.66 MIPS` • 16 or 32 GB flash drive 20,000 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 Sources: apple.com, http://en.wikipedia.org/wiki/ARM_architecture Intel Corporation, 2010; Dr. Steve Reyer; http://en.wikipedia.org/wiki/List_of_Intel_microprocessors © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 7
  7. 7. Exponential times Movable type. Johannes Gutenberg Print in digital format. Text. Photos. Audio. Video. Together. 1439 2007 2010 © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 8
  8. 8. Entertainment Central living device Changing media consumption and distribution Providing relevant information Communication Media Computing Transportation Information Entertainment and group communication Main creation device Mobile communication platform? …living the six-screen life © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 9
  9. 9. Exponential times Members (millions) 600 • Facebook: 4th most popular web site 500 500M+ unique visitors 3rd most populous nation worldwide 60% USA retailers maintain fan page 400 50% users log-in every day 30B photos uploaded to Facebook in 2010 300 • Visits to social shopping sites ↑ 244% 200 Etsy, kaboodle, Crowdstorm 100 >25% adults posted product reviews 2004 2005 2006 2007 2008 2009 2010 • 126M blogs on the WW internet • 90M+ Tweets on Twitter per day • 82% of Internet users view videos online Sources: Facebook, 1/2011; techcrunch.com; • Interactive gamers purchase real goods © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 10
  10. 10. Exponential times • Driven by consumers… 79% of global IP traffic in 2009 60,000 PB per month 70,000 forecasted to grow to 87% by 2014 50,000 • … by video 40,000 growing from 38% of all IP traffic in 2009 to 55% in 2014 30,000 20,000 • … and mobile data 10,000 growing with 108% CAGR between 2009 and 2014 increasing 39 x 2009 2010 Consumer IPTV/CATV Consumer Internet Video Business Internet © 2010 Cisco and/or its affiliates. All rights reserved. 2011 2012 2013 2014 Consumer Internet Data Business Managed IP Mobile Data Internet Business Solutions Group Cisco Confidential 11
  11. 11. Exponential times Digital Universe - exabytes Digital data is increasing 10 x every 5 years 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 - 2020 2018 2019 2017 2015 2016 2014 2012 2013 2011 2009 2010 2007 2008 Source: The Digital Universe Decade – Are You Ready?, IDC, May 2010 © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 12
  12. 12. Web 4.0 Individual and Group Productivity 2020–2030 Agents and reasoning Semantic Web Web 3.0 2010–2020 Semantic search Web 2.0 Naturallanguage search 2000–2010 Web 1.0 1990–2000 Keyword search PC Era 1980–1990 Websites, email, directories The Web OS Tagging and folksonomies World Wide Web Folders, databases, lists Desktop Size of Data, Size of Groups Sources: Radar Networks and Nova Spivack, 2007; Cisco IBSG, 2008 © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 13
  13. 13. Exponential times 18,000 Global Exports (B$) 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 1950 1960 1970 1980 1990 2000 2010 Source: World Trade Organization Statistical Database, March 2011 © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 14
  14. 14. Exponential times 8.0 6.0 More developed regions 2050 2045 2040 2035 2030 2020 2015 2010 2005 2000 1995 1990 1985 1970 1965 1960 1955 1950 0.0 1980 2.0 2025 4.0 1975 Population (billions) 10.0 World Source: World Population Prospects: The 2008 Revision, UNDESA, online database: http://esa.un.org/unpp/index.asp © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 15
  15. 15. Exponential times 8.0 6.0 2000 1900 1800 1700 1600 1500 1300 1200 1100 1000 900 800 700 600 500 200 100 0 0.0 400 2.0 1400 4.0 300 Population (billions) 10.0 World Source: World Population Prospects: The 2008 Revision, UNDESA © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 16
  16. 16. Exponential times 300 200 (2005 = 100) Commodity prices index 250 150 100 50 0 Fuel / Energy Food Industrial Inputs Source: Index Mundi © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 17
  17. 17. Exponential times 90,000 10.0% 80,000 8.0% 70,000 6.0% 4.0% 60,000 2.0% 50,000 0.0% 40,000 -2.0% 30,000 -4.0% 20,000 -6.0% 10,000 -8.0% - -10.0% 1980 1985 1990 World GDP Advanced Economies Slovenia 1995 2000 2005 2010 2015 World Emerging and developing economies Source: World Economic Outlook database, October 2010, International Monetary Fund © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 18
  18. 18. NEW NORMAL © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 19
  19. 19. Exponential times Mega-trends and megachallenges The role of IT… The future will be different… Shaping the past, present and future How do deal with the “new normal” … and opportunities for service providers … and will favor the brave. © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 20
  20. 20. Mega-Trends Globalisation Aging Population © 2010 Cisco and/or its affiliates. All rights reserved. Increased Asian competition Sustainability: environmental and economic Innovation Efficiency ”Personalisation” Effectiveness Rapid customer adoption of new technologies Mega-Challenges Productivity Internet Business Solutions Group Cisco Confidential 21
  21. 21. Superior Customer Experiences and the Borderless Organization Mega-Challenges Business Transformation Models INNOVATION: Improve innovation to provide your company with differention and a competitive edge in the eyes of customers Revenue & PRODUCTIVITY: Improve productivity through cross-functional collaboration (including partners) © 2010 Cisco and/or its affiliates. All rights reserved. Profits Opex Internet Business Solutions Group Cisco Confidential 22
  22. 22. Value is maximized when both areas are pursued on intra and inter-company level Value Innovation Innovation2 Innovation Inter-organization + Productivity Intra-organization Productivity © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Productivity2 Technology Leverage Cisco Confidential 23
  23. 23. Controlling Efficiency Is Commonplace Productivity / Impact Process automation and re-engineering are important, but not enough… Information sharing 1990 © 2010 Cisco and/or its affiliates. All rights reserved. Transactions 2000 Interactions 2005 Internet Business Solutions Group Cisco Confidential 24
  24. 24. “People” costs: 84% Other costs: 16% © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 25
  25. 25. Controlling Efficiency Is Commonplace Optimizing Human Interactions Productivity / Impact Process automation and re-engineering are important, but not enough… Today’s environment requires collaboration as an organizational competency to empower employees Workforce productivity achieved with employees, ecosystem, and customers Information sharing 1990 © 2010 Cisco and/or its affiliates. All rights reserved. Transactions 2000 Interactions Collaboration 2005 Internet Business Solutions Group Cisco Confidential 26
  26. 26. Web 2.0 Collaboration Solutions 1.1 B$ Web 1.0 Internet Solutions 3.3 B$ Information sharing 1995 Transactions 2000 Interactions 2005 Collaboration 2008 2009 Source: Cisco IBSG, 2009 © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 27
  27. 27. Cisco Benefits: $1.05B* Net, 4.9% Productivity Increase $486M • Reduce real estate • Avoid travel $85M • Create new revenue streams • Scale expertise • Increase customer intimacy • Enhance executive communication Reduce costs to improve profitability Transform business to increase growth * Based on $1.168 billion gross contribution minus costs of $116 million $483M Save time to increase efficiency Speed process to increase agility • • • • Reduce travel Reduce commuting Find people faster Find information faster $115M • Shorten sales cycle • Speed time to market • Reduce decision-making delays Source: Cisco IBSG, 2009 © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 28
  28. 28. Exponential times Mega-trends and megachallenges The role of IT… The future will be different… Shaping the past, present and future How do deal with the “new normal” … and opportunities for service providers … and will favor the brave. © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 29
  29. 29. “Old world” “New Normal” Corporate ‘lab’ innovation approach Open innovation (suppliers/partners/customers) Efficient consumer transactions Personalized interactions, real-time dialogue Business mainly inside corporation External collaboration becomes commonplace Workforce primarily in-house Flexible, remote workers (home, on the road) Capex financing, manage utilization Opex, avoid unnecessary cost, ‘pay as you go’ Sustainability lower priority Sustainability: business as usual Standard devices, basic capabilities Multiple (PC/Mac, iPhone/BB), video-enabled Consistent user experience is needed Intra-company PC. laptop Any device Text Any media In house © 2010 Cisco and/or its affiliates. All rights reserved. Inter-company Any location Internet Business Solutions Group Cisco Confidential 30
  30. 30. Core question: what is your IT budget balance? Innovation and business transformation Infrastructure operations “Keeping the lights on” 70% of the IT Budget for Maintenance, 30% Available for Innovation* *Source: Gartner - IT Infrastructure, And The Shift To “Real-Time” © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 31
  31. 31. Need to rebalance – business alignment and transformation are key Innovation and business transformation Infrastructure operations “Keeping the lights on” Allows innovation & drives competitive advantage Creates flexibility & reduces costs *Source: Gartner - IT Infrastructure, And The Shift To “Real-Time” © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 32
  32. 32. Cloud computing Infrastructure costs Actual demand CAPEX Large capital expenditure Getting started tax Wasted money Lost customers and/or lost revenue Time Source: Cisco Services, 2010 © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 33
  33. 33. CIO of Fortune 500 Pharmaceutical Company © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 34
  34. 34. Internet Companies (“OTT”) Service Providers Systems Integrators & Server Vendors Typical Players Unique Assets Competitive Advantage • Global Footprint • Massive Scale • Fast Moving • Stability Concerns Challenges • Security & privacy • End-to-End Network/IT • Strong SI Capability • Security & SLAs • Enterprise Trust • Application QoS to CPE • SMB Channels/Brand • Priced higher than OTTs • Professional service capabilities vs. large SIs • No End-to-End Control • Business agility Source: Cisco IBSG SP © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 35
  35. 35. Global Telecommunications Market Capitalization 4 Wave 1 US$Trillions Wave 3 PTT Web 1.0 Deregulation Basic Internet POTs Mobile voice TDM 3 Wave 2 TDM / IP Web 2.0 Broadband, video, mobile data, network as a platform, IP 2 ? 1 0 92 94 96 98 00 02 04 06 08 Year Source: Dow Jones Global Telecoms Index, to June 3, 2009; Cisco IBSG, 2009 © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 36
  36. 36. Exponential times Mega-trends and megachallenges The role of IT… The future will be different… Shaping the past, present and future How do deal with the “new normal” … and opportunities for service providers … and will favor the brave. © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 37
  37. 37. Some statements CEOs agree with • The correction will impact advanced economy consumer spending for several years to come (5.34) • IT-enabled changes will be a key element of our post recession strategy (5.13) • Emerging economies are poised for am multiyear period of rapid growth and a rising standard of living (4.96) • The next decade will be far more volatile and unpredictable than the last (4.95) • There will be a major wave of merger-and-acquisition (M&A) activity in 2010/2011 (4.95) • Many companies and industries will have to redesign their business models (4.90) Source: Gartner CEO & Business Executive Survey 2010 © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 38
  38. 38. Spending more on new investments By how much, if at all, do you expect your organization’s IT budget for operating expenses and new investments will change in 2010? Source: McKinsey Global Survey results: IT in the new normal, McKinsey & Company, 2009 © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 39
  39. 39. Five areas where the CIO is key to drive business value 1. Secure alignment between business transformation and technology architectures 2. Evolve IT team skills e.g. architecture, risk management, business understanding 3. Substantiate the business impact of IT 4. Actively participate in cross-functional initiatives 5. Pilot new technologies The winning CIO in the New Normal must think like an entrepreneur. © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 40
  40. 40. © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 41
  41. 41. There is no challenge without crisis. A crisis can be a real blessing to any person, to any nation, for all crises bring progress. The true crisis is the crisis of incompetence. Albert Einstein © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 42
  42. 42. © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 43
  43. 43. Thank you. © 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Cisco Confidential 44

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