Cisco IoE Value Index event presentation - 19 june 2013
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Slides from global media and analyst roundtable with Cisco President Rob Lloyd and Cisco Consulting GM Joseph Bradley.
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Cisco IoE Value Index event presentation - 19 june 2013
- 1. Cisco Confidential 1© 2013 Cisco and/or its affiliates. All rights reserved. The Internet of Everything (IoE) Value Index www.InternetofEverything.com #IoE June19,2013
- 2. © 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 2 Rob Lloyd, Cisco President of Development and Sales Joseph Bradley, General Manager, Cisco Consulting Services Cisco Presenters:
- 3. © 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 3 INTELLIGENT CONNECTIONS Email Web Browser Search E-commerce Digital Supply Chain Collaboration Social Mobility Cloud Video Connecting: People Process Data Things Internet of Everything Digitize the World Immersive Experiences Digitize Interactions (Business & Social) Networked Economy Digitize Business Process Connectivity Digitize Access to Information BUSINESSANDSOCIETALIMPACT
- 4. © 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 4 The Opportunity Ahead and Where It Stands Today: THE DEFINITION: The Internet of Everything is the networked connection of people, process, data and things. The benefits of IoE are derived from the compound impact of connecting people, data, process and things, and the value this increased connectedness creates as “everything” comes online. IoE has the potential to increase global corporate profits by about 21 percent OVER THE NEXT DECADE (2013-2022) FOR A TOTAL VALUE OF $14.4 trillion (net profit) The Internet of Everything (IoE) will enable global businesses to generate at least $613 BILLION in Global Profits in 2013
- 5. © 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 5 The Internet of Everything Value Index
- 6. © 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 6 • SG&A and CoGS reduction from improved business process execution • Improved capital efficiency • Improved labor efficiency • Fewer or more productive man-hours • Improved customer lifetime value • Additional market share (more customers) • Improved RD&E speed, reduced TTM • New business models and new sources of revenue • Improved process efficiency • Reduced waste in supply chain IoE Value at Stake: $14.4T (2013-2022 10-year NPV)* * Net present value Asset utilization: $2.5T Improved customer experience: $3.7T Supply-chain / logistics efficiency: $2.7T Innovation: $3.0T Employee productivity: $2.5T 21usecases
- 7. Study executed by the CISCO CONSULTING SERVICES RESEARCH & ECONOMICS PRACTICE with advice on questionnaire development provided by the MIT Center for Digital Business Fielded in 12 OF THE LARGEST GLOBAL ECONOMIES (70% of worldwide GDP): Australia, Brazil, Canada, China, France, Germany, India, Japan, Mexico, Russia, U.K., and U.S. ESTIMATES ACTUAL VALUE REALIZED BY FIRMS IN 2013 as a share of potential Value at Stake; explores key IoE enablers (people, process, data, things) that drive value Conducted ground-breaking online survey of 7,501 BUSINESS AND IT DECISION-MAKERS, split between enterprises and mid-sized companies © 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 7
- 8. © 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 8 Global Value at Stake 2013-2022 (10-year total) $14.4T* 2013 $1.2T Value at Stake 2013 (Jan. – Dec.) $1.2T Value realized in 2013 IoE Value Index $613B (53%) $544B (47%) Value “left on table” in 2013 Note: chart is not to scale * $14.4T is conservative because it is based on a set number (21) of private-sector use cases and discounts future cash flows due to uncertainty around privacy and regulatory issues.
- 9. • IoE will generate at least $613 BILLION IN GLOBAL PROFITS IN 2013 with another $544 billion available if companies adjust strategies. • The United States ($253 BILLION), China ($76.9 BILLION) and Germany ($54.4 BILLION) are realizing the greatest absolute value in 2013. • Firms in developed markets are now realizing the greatest share of IoE value. However, the narrow range (15.2 PERCENT) between the top and bottom countries, highlights the parity among firms worldwide. • Business leaders in Emerging Countries clearly expect to Leverage IoE to their advantage. • The key drivers of the Internet of Everything value in 2013 are supply chain, at $158.7 billion, and customer experience, at $145.2 BILLION. • IoE-generated profits underscores that Size of Company Is Not an Indicator of who will best leverage the Internet of Everything. • Many business leaders around the globe believe that IOE WILL HELP DRIVE Higher Wages, Job Growth and Improvement in Information Security. © 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 9
- 10. © 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 10 To Capture More Value in The IoE Economy, Companies Must: Invest In High-quality Technology Infrastructure and Tools Adopt and Follow Inclusive Practices. Develop Effective Information- Management Practices
- 11. © 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 11 To Maximize Value from IoE, Firms Should Focus on the IoE-Driven Capabilities that will Benefit Their Industries Most: MANUFACTURING FIRMS: real-time, multidimensional data analysis; integrated video collaboration; remote tracking of physical assets. ENERGY FIRMS: integration of sensor data; ability to locate experts; predictive analytics. RETAILERS: data visualization and predictive analytics; BYOD; location- based marketing.
- 12. © 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 12 • The Internet of Everything is the networked connection of people, data, process and things. • IoE is poised to generate at least $613 billion in profits in 2013 by creating greater efficiencies and better customer experiences. • Many business leaders around the globe believe that IoE will help drive higher wages and job growth, and improvement in information security.
- 13. © 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 13 Jeff Hagins, CTO, SmartThings Guest Presenters: Bruno Magrani, Researcher, Center for Technology and Society at the School of Law of the Rio de Janeiro Getulio Vargas Foundation (FGV)
- 14. © 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 14 SmartThings: “Conceptual Layers of the IoE” Connected Devices Connectivity, Transport, & Event Routing Physical Graph User-Managed Security Accessibility & Control Application (Intelligence & Predictability) User Experience
- 15. © 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 15 Q&A Please visit www.InternetOfEverything.com
- 16. Thank you.
Editor's Notes
- The World is Changing… again… The only constant is changeOver the past six years business demands for productivity, increasing globalisation and the consumerization of IT have changed dramatically.For organizations of all sizes, this means new growth opportunities with advances in productivityCompanies and organizations are being faced with the demand for technology as a service inside the Enterprise. Employees want the ability to access any application, any time, anywhere – from the device of their choice. It means employees are demanding the same technology experience expectations in their workplace that they have in their personal lives (Amazon.com, Online banking, etc.)And the emergence of new business modelsIncreasing expectations from users around the world with security, regulation and compliance requirementsAll of these changes require the next evolution of the InternetEvolution of the InternetSee networking in four distinct waves, each phase with a more profound effect on business and society.4 Phases:Connectivity - Digitize Access To InformationNetworked Economy - Digitize Business ProcessesImmersive Experiences - Digitize Interactions (Business & Social)Internet of Everything - Digitize the WordEach phase built on the previous one… to create more value for businesses, governments and society in general.The first phase – maybe 20 years ago – was the connectivity phase – just getting connected to the online world was miracle enough.A lot of people here helped create the next wave – the Networked Economy, which was characterized by the development of things like eCommerce and digitally connected supply chainThat’s when the value of analytics peaked.Connecting unconnected – consolidating OSI stackThe phase we are in now is the Immersive Experiences– dominated by things like Social Media, collaboration and widespread mobility on a variety of devices.So the current phase is about digitizing the interactions, the next phase is about connecting the 99.4% of objects that were previously unconnected, and this is primarily Things. We’re going to digitize the remainder of society’s nervous system to the point that some philosophers are talking about a singularityBut, as we’ve talked about in conjunction with the brand campaign launch… we are also entering into a new phase – the Internet of Everything wave – where there’s intelligence everywhere. It is immersive and will enable things we never dreamt were possible. 99% of things are unconnected. The next phase is about connecting people, process, data and things.
- Rob to set the stage and recap previous research from Cisco:The Internet of Everything is the networked connection of people, process, data and things.The benefit of the IoE is derived from the compound impact of connecting people, process, data and things, and the value this increased connectedness creates as “everything” comes online.IoE is creating unprecedented opportunities for organizations, individuals, communities and countries to realize dramatically greater value. In Dec. 2012, Cisco launched the IoE Economy Project, a thought-leadership initiative to help our customers understand the business opportunity available to those who embrace IoE.The Project’s first piece of research – our Value at Stake white paper – estimated that IoE has the potential to increase global corporate profits by about 21 percent over the next decade (2013-2022). In other words, between 2013 and 2022, $14.4 trillion of value (net profit) will be “up for grabs” for enterprises globally — driven by IoE. Today, we are releasing the next phase of research – the IoE Value Index. According to the Index, IoE will enable global businesses to generate at least $613 billion in global profits in 2013.
- Cisco Consulting Services used the latest, most sophisticated techniques to interview respondents and conduct analysisContacted tens of thousands of executives across 12 countries – selecting the 7,501 most qualified based on their industry, line of business, knowledge of IoE value drivers Ambitious survey design possible only through online survey techniques, global network of partners, innovative quota tracking developed by Cisco Consulting ServicesComparison: IBM CEO survey done once every 2 years, has only 1,700 respondentsFor analysis, used R, open source statistical software that includes analytics and machine learning from the most innovative minds in statistics and data analytics – years before they are available in expensive “off the shelf” softwareUsed exhaustive search multiple regression to determine which factors best predict a company’s ability to realize value from IoE. In essence, we let the IoE tell us about itself…
- There are five main drivers of the $14.4 trillion in IoE Value at Stake. These findings allow business leadership to begin planning how they can benefit from IoE. The amount of Value at Stake is somewhat evenly distributed across each of the five drivers.Asset utilization ($2.5 trillion in Value at Stake) – IoE reduces selling, general, and administrative (SG&A) expenses and cost of goods sold (CoGS) by improving business process execution and capital efficiency. Employee productivity ($2.5 trillion in Value at Stake) – IoE creates labor efficiencies that result in fewer or more productive man-hours. Supply-chain / logistics efficiency ($2.7 trillion in Value at Stake) – IoE eliminates waste and improves process efficiencies. Improved customer experience ($3.7 trillion Value at Stake) – IoE increases customer lifetime value and grows market share by adding more customers. Innovation ($3.0 trillion Value at Stake) – IoE increases the return on R&D investments, reduces time to market, and creates additional revenue streams from new business models and opportunities. The fact that each of these areas has roughly the same amount of Value at Stake suggests that firms must examine how IoE can impact every aspect of their business processes. To reiterate an earlier point, IoE initiatives that involve both cost-cutting and revenue-raising activities need to be considered.In addition, to benefit from IoE, firms must combine technology-enabled security capabilities (both logical and physical) with policies and processes designed to protect the privacy of company and customer information. IoE’s growth potential in the private sector over the next decade will rely heavily upon the success of companies’ security and privacy efforts.
- Cisco Consulting Services used the latest, most sophisticated techniques to interview respondents and conduct analysisContacted tens of thousands of executives across 12 countries – selecting the 7,501 most qualified based on their industry, line of business, knowledge of IoE value drivers Ambitious survey design possible only through online survey techniques, global network of partners, innovative quota tracking developed by Cisco Consulting ServicesComparison: IBM CEO survey done once every 2 years, has only 1,700 respondentsFor analysis, used R, open source statistical software that includes analytics and machine learning from the most innovative minds in statistics and data analytics – years before they are available in expensive “off the shelf” softwareUsed exhaustive search multiple regression to determine which factors best predict a company’s ability to realize value from IoE. In essence, we let the IoE tell us about itself…
- Businesses in the United States, China and Germany are poised to realize the greatest level of profits through leveraging IoE. The rankings of profits within companies from IoE in 2013: BillionsUnited States $252.8China $79.9Germany $54.4Japan $41.0Australia $35.6France $32.2Canada $30.2United Kingdom $28.4India $18.2Brazil $17.3Russia $17.0 Mexico $9.2Business leaders in emerging countries clearly expect to leverage IoE to their advantage.According to the research, these executives are the most bullish on capturing value (on a scale of 1-10):India: 8.2China: 8.0Brazil: 7.9Mexico: 7.4Russia: 7.2Non-emerging countries: 6.7 Going forward, business leaders said that accelerating the pace of innovation, satisfying customer demand for new ways to interact and the need to automate business processes would drive IoE. Drivers of IoE:Supply Chain: $158.7 billionCustomer Experience: $145.2 billionInnovation: $110.5 billionAsset Utilization: $109.7 billionEmployee Productivity: $89.3 billionMidsize firms (500-1,999 employees) are actually capturing slightly more Value at Stake on a percentage basis than large enterprises with at least 10,000 employees — 54.1 percent versus 52.4 percent.Many business leaders around the globe believe that IoE will help drive higher wages and job growth, and improvement in information security. Among business leaders who participated in the IoE Value Index:69% responded that they thought the global job market would stay the same or improve due to IoE (33% said IoE will lead to higher employment levels in their firms; 28% think job losses are more likely)89% thought wages would improve or stay the same (47% said they expect higher wages while 42% said it would have no change)50% believe that IoE will help drive better information security (26% thought there would be no change)
- Cisco Consulting Services used the latest, most sophisticated techniques to interview respondents and conduct analysisContacted tens of thousands of executives across 12 countries – selecting the 7,501 most qualified based on their industry, line of business, knowledge of IoE value drivers Ambitious survey design possible only through online survey techniques, global network of partners, innovative quota tracking developed by Cisco Consulting ServicesComparison: IBM CEO survey done once every 2 years, has only 1,700 respondentsFor analysis, used R, open source statistical software that includes analytics and machine learning from the most innovative minds in statistics and data analytics – years before they are available in expensive “off the shelf” softwareUsed exhaustive search multiple regression to determine which factors best predict a company’s ability to realize value from IoE. In essence, we let the IoE tell us about itself…