Business value Drivers for IoT Solutions

© 2015 IBM Corporation

IBM Analytics

The Business Drivers of IoT

April 30, 2015

Steve Shoaf, Business Unit Executive, WW Sales – Analytics Platforms

IBM Analytics © 2015 IBM Corporation2

Welcome – Today’s Agenda

Agenda

9:30 - 10:00 Arrival and Coffee

10:00 - 10:45 Business value drivers for IoT solutions - IBM

10:45 - 11:15 Implementing IoT for business value - Hildebrand

11:15 - 11:30 Break

11:30 - 12:15 Internet of Things supporting architectures / capabilities - IBM

12:15 - 12:30 Lunch

12:30 - 1:00 End-to-end solution demonstration: From concept to delivery-Intel/IBM

1:00 - 1:30 Panel discussion – Q&A


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Companies are moving to IoT because it will make them more efficient

….efficiency is a gain in productivity

….productivity creates money

Business Insider Intelligence estimates that by

2019 $1.7 Trillion of value will be added to the

world wide economy in the form of revenue

and cost savings. – this is the business value

IoT can create


The Promise of IoT

The fundamental promise of

the IoT is to enable new

business engagement

models driven by remote

connected devices, allowing

asset owners and operators

to obtain up to the minute

information about their

products’ status and key

measures, and related

conditions affecting their

operation.

These devices could also be

controlled remotely to adjust

operating parameters, update

their automation software or

even shut down in case of an

emergency.


9 billion devices around the world are currently connected to the Internet, including computers and smartphones

The number is expected to increase dramatically within the next decade, with estimates ranging

from 50 Billion devices to reaching 1 trillion

The Internet of Things has the potential

to create economic impact of $2.7 trillion to $6.2 trillion1 annually by 2025

Source: Disruptive Technologies, McKinsey Global Institute, May 2013

Connections Driven growth


Connected devices by Category

7

“There will be

212 B devices

or things

connected to

networks by

2020” - IDC

(link)

“we expect the

number of

connected

objects to

reach 50 B by

2020 (2.7% of

things in the

world).” – Cisco

(link)

http://www.idc.com/getdoc.jsp?containerId=CT04V

http://newsroom.cisco.com/feature-content?articleId=1208342


IoT Market Opportunity – 20.6% CAGR

Industry Revenue Opportunity ($B)

Market Opportunity by Sector

5 Year IoT Revenue Opportunity

Industry Revenue Opportunity ($M)

Not only is the market growing, but the forecast of market size is growing


IoT Business Value Identification

This market is developing in a recognizable pattern The Makers of Things are watching their things

perform in the field under real customer use

• Objective is to improve product quality and retain customer loyalty

The Users of Things need to integrate newly available information to deliver business results

• Objective is to reduce cost of operations while increasing business growth

The business case for IoT technologies at Makers and Users demands immediate operational improvement (productivity increase) and follow-on effective use of refined data toward the business goal of increased profitability

Bottom line for the IoT business case is “what gets measured gets managed”


IoT Opportunity by Industry


IoT Contributions by IndustryBanking Healthcare Automotive Retail Transport E&U

Monetize

Cash replacement

solutions

Mobile Banking

Paid home care

family services

Pay-per-drive car

rental

Cash

replacement

Sensor enabled

Loyalty cards

Paid Alerts to

travellers

Congestion

charging

Pay-per-use

energy

Optimize

Optimized Cash

management

ER Bed Resource

Mgmt

Component

predictive

replacement

Fleet mgmt

Delivery and

stock

replenishment

optimization

Store layout

optimization

Smart Cities

Traffic mgmt

Airport

Management

Delay non-

essential supply

during peak loads

Extend

Banking the un-

banked

Biometrics

Smarter Subsidies

Life style

monitoring

In-car Movies,

Music, Games

Highly Automated

Driving

Smart Vending

Machines

Delivery Lockers

Mobility ServicesSmart home

services

Control

Remote ATM

Management

Dynamic

Authorization

Remote Hospital

environment

Mgmt

Remote

Drive-train

optimization

Store energy

mgmt

Store parking

mgmt

Dynamic price

labels

Crowd mgmt

Timetable mgmt

Asset mgmt

Remotely control

consumer

devices


IBM Confidential05/04/15

12

4.5 million developers will drive IoT adoption

“Just like in mobile, the value will come from

an army of IoT entrepreneurs addressing

thousands of user needs” - VisionMobile


IT Spending by Industry

Source: “IT Key Metrics Data 2014”, Gartner Consulting Group, 2014

O=71%

C=29%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0%

Construction Materials and Resources

Energy

Chemicals

Food & Beverage Processing

Retail/Wholesale

Industrial Manufacturing

Consumer Products

Industrial Electronic & Equipment

Transportation

Utilities

Insurance

Life Sciences, Pharma, Medical Products

Cross Industry Average

Telecommunications

Professional Services

Education

Media & Entertainment

Banking & Financial Services

Software Publishing and Internet Services

IT spending as a percent of revenue


Cross Industry IoT Opportunity Survey

Adoption

of organizations are actively pursuing IoT

initiatives.

of respondents cite data security concerns as the

number one barrier.

14

of the average IT budgets is being allocated to IoT initiatives...

Actively Pursuing

Not Considering

61%1. Lower Operational Costs2. Better customer service

and support3. Customer

acquisition/retention4. Business process

efficiency5. Product/service

improvement and innovation

34%

6.8%

Drivers and Barriers Budgets

Source: Global Technology and Industry Research Organization, 2014

Top IoT Drivers

N=3568 (Weighted)

Considerations

Common goals of reducing costs

couple with downstream use of data

for business growth purposes

Information Security

Cross Industry Avg. IoT

Rev USD 500,000,000

IT Budget % 3.2% 6.8%

IT Budget $$ 16,000,000

Capital Budget 4,640,000

Est. IoT

Allocation 1,088,000

GBP Revenue is an example


IoT Opportunity: Retail

Adoption

of respondents are actively pursuing IoT

initiatives.

of respondents cite funding the initial investments at the scale

needed as the number one barrier.

15


Actively Pursuing

Not Considering

60%

40%

10.5%



Top IoT Drivers

N=203 (Weighted)

1. Better customer service and support

2. Lower operational costs3. Customer acquisition

and/or retention4. Product and/or service


5. Business process efficiency/operations optimization and control

TOC

Considerations

Thinning margins while competing

with Internet competitors

Customer targeted marketing

Improve Supply Chain Efficiency

Rev Source: Wikipedia, 2014

Best Buy Retail

USD Rev 40,339,000,000

IoT

Allocation

IT Budget % 1.5% 10.5%

IT Budget GBP 605,085,000


Est. IoT



IoT Opportunity: Utilities

Adoption


initiatives.

of respondents cite developing a sustainable business model/ proving ROI as the number one

barrier.

16


Actively Pursuing

Not Considering

71%

49%

6.6%



Top IoT Drivers

N=84 (Weighted)

1. Better customer service and support

2. Lower operational costs3. Business process

efficiency/operations optimization and control

4. Product and/or service improvement and innovation

5. Information Technology optimization and/or modernization

TOC

Considerations

Lower data acquisition costs

Automate contingent operations

Integration of consumer

technologies


SDG&E Utilities

GBP Rev 4,329,000,000 IoT Allocation

IT Budget % 2.8% 6.6%

IT Budget 121,212,000


Est. IoT



IoT Opportunity: Insurance

Adoption


initiatives.

of respondents cite developing a sustainable business model/ proving ROI as the number one

barrier.

17


Actively Pursuing

Not Considering

63%1. Better customer service

and support2. Customer acquisition

and/or retention3. Lower operational costs4. Product and/or service


5. Competitive differentiation

29%

6.4%



Top IoT Drivers

N=176 (Weighted)

TOC

Considerations

Significant budget invested to

reduce risk through more accurate

predictions

Linkage of premiums to claims

payment (improve the loss ratio)


Prudential Insurance/FS

Rev USD 58,527,000,000 IoT allocation

IT Budget % 3.2% 6.4%

IT Budget 1,872,864,000


Est IoT



IoT opportunity: Oil and Gas

Adoption


initiatives.

of respondents cite data security concerns as the

number one barrier.

18


Actively Pursuing

Not Considering

56%

37%

7.4%



Top IoT Drivers

N=121 (Weighted)

1. Lower operational costs2. Better customer service

and support3. Business process

efficiency/operations optimization and control

4. Competitive differentiation

5. Information Technology optimization and/or modernization

TOC

Considerations

Production, transportation and

distribution is a sensor rich

environment

Information Security


BP Oil & Gas

GBP Rev 378,083,941,112 IoT Allocation

IT Budget % 1.1% 7.4%

IT Budget GBP 4,158,923,352

Capital Budget 1,206,087,772

Est. IoT



We have built the world’s broadest and deepest

portfolio in data, analytics, and cloud.

15,000

$24 billion $17 billion

invested to date to build IBM’s

capabilities in Big Data and

analytics, with $7 billion in

organic investment

of gross spend for Big

Data and analytics,

including more than 30

acquired companies

500

Analytics consultants

and 400 mathematicians

Analytics patents

generated each year

We have significantly increased analytics and cloud revenue through strategic investments, and

new skills and capabilities.

Analytics Revenue

2013

2010

$16 billion

$11 billion

40total cloud data centers across five continents

Cloud Revenue

2013

2012

$4.4 billion

$2.6 billion


Smarter

Communications

Retail

TrackingSmarter

Energy

Key Partnerships

Connected

Home

Gateway &

Systems


IBM IoT’s Functional Architecture

Streams

Deep Analytics Zone

Device/Sensors

Smart Gateways

Sensor Analytics Zone



Connected Car

Real time data from vehicles in the field

• Predict demand for replacement parts and service

• Monetize telematics data

• Provide drivers assistance

23

IBM Analytics © 2015 IBM Corporation24 24

Dublin City Centre

Improved on-time performance

600 buses on 150 routes

50 bus locations per second

Location and stop ETA

Automatically generate routes

and stop locations

Expect increase in riders

24

IBM Analytics © 2015 IBM Corporation25© 2013 IBM

IBM Burlington

Testing POWER transistors

8.5 trillion per day

From Batch to Real Time

4 hours to minutes

25


Emory University Medical

Center gains early insight into

heart failure in critical care

patients

Need

• Provide clinic-wide situational awareness

to allow prioritization of treatment based

on real-time analysis of physiologic data

streams

Benefits

• Early warning system detects subtle

signs of Atrial Fibrillation in patients in the

Intensive Care Unit

• Enables early detection and intervention

to mitigate deterioration in the patient’s

condition

26


Hildebrand provides

intelligent solutions to clients

Benefits

• Provide real-time analytics and

insights

• Retail footfall tracking:

• 250 million data points per day

• 300,000 data points per second

• Location and Time Spent in Mall

90% reduction of Development &

Operations cost

“The potential for businesses to cut costs and increase revenues is

enormous.” – Josh Cooper, CEO, Hildebrand


Conoco Phillips uses stream

data to monitor ice-flow

movement in real time

Need

• Acquire Satellite images

• Wind and surface current forces

• Ice reflection/refraction for density

• Underwater current forces and ice

berg size

Benefits

• Expected saving USD 300 million

first year deploying second well

• Expected savings of USD 1 billion

per platform construction due to

iceberg avoidance

28

Business value Drivers for IoT Solutions

Technology

ibm corporation ibm

ibm products

iot solutions ibm

standard ibm benchmarks

use of ibm software

business drivers of

customer examples

business value drivers