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_ecosystemTRANSCRIPT
The Internet of Things ecosystem: The quest for valuePresenters: Craig Wigginton, Vice Chairman and U.S. Telecommunications leader, Deloitte & Touche LLPJohn Hagel, Co-Chairman, Deloitte LLP’s Center for the Edge
Host: Eric Openshaw, Vice Chairman and U.S. TMT leader, Deloitte LLP
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
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. 20132) IDC, Oct. 20133) The Economist, Oct. 2013x
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
ProvidersCloud
Service Providers
(CSP)
Hardware Makers
Device Manu-
facturers
IT services vendors
Middlewarevendors
Softwarevendors
Standards Bodies
Industry Groups
Regulators/Govt.
IoT Provider Ecosystem
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 OperatingMetrics
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
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• 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
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
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
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
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
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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
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Focus on “Metrics That Matter”Target early deployments 3
Ecos
yste
m
Organization
Employe
es
Manag
ers
Execu
tive
Financial metrics
Operating metrics
Frontline metrics
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
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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
Com
plex
ityH
ig h
HighLow
E-mailText
Messages
Social Media Interactions
M2M/IOT InteractionsMovies/
Videos
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 DataTravel
Bookings
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
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
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• 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
Copyright © 2014 Deloitte Development LLC. All rights reserved.
Category Sample S&P ConcernsHealth 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 ConcernsTelematics • 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
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
Copyright © 2014 Deloitte Development LLC. All rights reserved.
John [email protected]
@jhagel
Craig [email protected]
@craigwigginton
Eric [email protected]
@eopenshaw
Contact info
About DeloitteDeloitte 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.
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