IoT_NZ_19112014_Conferenz Presentation

Auckland, New ZealandNovember 19th, 2014

Patrick Spencer (Canada)

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Agenda

Internet of Things (IoT) Definition and Context

Opportunities and Challenges

IoT Snapshots (by key verticals)

Getting Started

Some Key Takeaways

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What is the Internet of Things (IoT)?IoT is defined in different ways

► Definition: “The Internet of Things connectsdevices such as everyday consumer objects andindustrial equipment onto the network, enablinginformation gathering and management of thesedevices via software to increase efficiency,enable new services, or achieve other health,safety or environmental benefits”.(Goldman Sachs)

http://www.goldmansachs.com/our-thinking/outlook/internet-of-things/iot-report.pdf http://blog.surveyanalytics.com/2014/09/top-5-infographics-of-week-internet-of.html

By definition, the IoT has enormous breadthand it can be difficult to get one’s arms around it.

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IoT – Interest Over Time2005-Present (Source: Google Trends)

http://www.google.com/trends/explore#q=internet%20of%20things&cmpt=q

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Gartner’s Top 10 Strategic Technology Trends for 2015Internet of Things @ #2

http://www.theguardian.com/technology/2014/aug/12/internet-of-things-most-over-hyped-technology?CMP=twt_gu#ptlink.fid=5086&isc=1&did=bookmark.54cbabf48a1a0530c0882f1bc0da9aad5077fb6b&ctp=article

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There were some important people (and projects) that helpedmove IoT from its first glimpses into today's trending topic

"When wireless is perfectly applied the whole earth willbe converted into a huge brain, which in fact it is, allthings being particles of a real and rhythmic whole …and the instruments through which we shall be able to dothis will be amazingly simple compared with our presenttelephone. A man will be able to carry one in his vestpocket.”

http://postscapes.com/internet-of-things-history

Nikola Tesla – interview with Colliers magazine in 1926

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The Phrase Internet of Things was First Coined in 1999

► IoT is a hot topic today but it’s not a new concept.► The phrase Internet of Things was first coined by Kevin Ashton in 1999 when

he was at MIT. The concept was relatively simple but quite powerful.

… If we had computers that knew everything there was to know about things—using datathey gathered without any help from us—we would be able to track and count everything,and greatly reduce waste, loss and cost. We would know when things needed replacing,repairing or recalling, and whether they were fresh or past their best. The Internet ofThings has the potential to change the world, just as the Internet did. Maybe even moreso.

—Kevin Ashton, "That 'Internet of Things' Thing", RFID Journal, July 22, 1999

http://www.rfidjournal.com/articles/view?4986

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Challenges to the Vision

Unfortunately, there were more questions than answers to IoT conceptsback in 1999.► How to connect everything on the planet?► What type of wireless communications could be built into devices?► What changes would need to be made to the existing Internet infrastructure

to support billions of new devices communicating?► What would power these devices?► What must be developed to make the solutions cost effective?

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Many of these initial obstacles have been addressed

► The size and cost of wireless radios has droppedtremendously.

► IPv6 makes it possible to assign a communicationsaddress to billions of devices. Electronics companiesare building Wi-Fi and cellular wireless connectivityinto a wide range of devices (e.g. billions of wirelesschips).

► Mobile data coverage has improved significantlywith many networks offering broadband speeds.

► While not perfect, battery technology has improvedand solar recharging has been built into numerousdevices.

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Other Enablers of IoT: A number of significant technologychanges have come together to enable the rise of the IoT

http://www.goldmansachs.com/our-thinking/outlook/internet-of-things/iot-report.pdf

Enablers Description

Cheap Sensors Sensor prices have dropped to an average 60 cents from $1.30 in the past 10years.

Cheap bandwidth The cost of bandwidth has declined by a factor of nearly 40X over the past 10years.

Cheap Processing Processing costs have declined by nearly 60X over the past 10 years.

Smartphones Smartphones are now becoming the personal gateway to the IoT (remotecontrol or hub for the connected home and car, or the health/fitness devicesconsumers are increasingly starting to wear).

Ubiquitous wirelesscoverage

With Wi-Fi coverage now ubiquitous, wireless connectivity is available for freeor at a very low cost (Wi-Fi utilizes unlicensed spectrum).

Big Data IoT will by generate voluminous amounts of unstructured data and theavailability of big data analytics is a key enabler.

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Opportunities and Challenges

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The IoT/Internet of Everything (IoE) Opportunity

Source; Cisco IBSG

It is estimated that 50 billion devices and objects will be connected to theInternet by 2020. Yet today, more than 99 percent of things in the physicalworld remain unconnected

The consumer segment accounts for the vast majority of “things” in the world

On average, there are about 200 “things” per person in the world; nearly 2/3of the total number of “things” are in developed countries, althoughthese countries account for only 14% of the global population

99.4%of “things” areunconnected

96.5%of things are consumer

objects

64%of things are in

developed economies

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The Internet of Things is Already Here

Source: Cisco IBSG. 2011

2003 2010 2015 2020

500 Million 12.5 Billion 50 Billion25 BillionConnected Devices:

Connected Devices PerPerson

0.08 1.84 6.583.47

World Population: 6.3 Billion 6.8 Billion 7.6 Billion7.2 Billion

Moreconnected

devices thanpeople

Cow transmits200 MB per year

Connected shoe

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Fast CompanyWorld’s Top 10 Most Innovative Companies in the IoTs

1. NEST (GOOGLE)2. PHILIPS3. QUIRKY4. JAWBONE5. SMARTTHINGS6. WITHINGS7. BELKIN8. INTEL9. LOGMEIN10. R/GA

http://www.fastcompany.com/most-innovative-companies/2014/industry/the-internet-of-things

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What is the Value at Stake?Depends who you ask… but it’s a really big number

► McKinsey: McKinsey estimates that IoT has the potential to create economicimpact of $2.7T to $6.2T annually by 2025. Across health-care ($1.1T to$2.5T per yr by 2025).

► Gartner: Gartner puts the ‘IoT' market opportunity at $1.9T by 2020.► IDC: IDC expects IoT technology and services revenue to expand from $4.8T

in 2012 to $7.3T by 2017 (8.8% CAGR), with the greatest opportunity initiallyin the consumer, discrete manufacturing, and government vertical industries.

► Cisco: When the $4.6T in potential public sector value is combined with the$14.4T of potential value at stake for the private sector, Internet ofEverything (IoE) is a $19T opportunity for businesses & governmentsglobally 2013-2022.

http://postscapes.com/internet-of-things-market-size

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Cisco’s Internet of Everything (IoE)People-to-People + People-to-Machine + Machine-to-Machine

Cisco IBSG

Delivering the rightinformation to the right

person (or machine) at theright time

ProcessLeveraging data into more

useful information fordecision making

DataPhysical devices and objectsconnected to the Internet and

each other for intelligentdecision making

ThingsConnecting people in

more relevant,valuable ways

People

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Unpacking the NumbersCisco’s 14.4T Private Sector Value at Stake

Source: Cisco IBSG

• SG&A and CoGS reduction from improved businessprocess execution

• Improved capital efficiency

• Improved labour efficiency• Fewer or more productive person-hours

• Improved customer lifetime value• Additional market share (more customers)

• Improved RD&E speed, reduced Time to Market (TTM)• New business models and new sources of revenue

• Improved process efficiency• Reduced waste in supply chain

Cisco’s IoEValue at

Stake: $14.4T

(2013-202210-year NPV*)

* Net present value

1. Asset utilization: $2.5T

4. Improved customerexperience: $3.7T

3. Supply-chain / logisticsefficiency: $2.7T

5. Innovation: $3.0T

2. Employee productivity: $2.5T

Use

Cas

es

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Unpacking the NumbersCisco’s 4.6T Public Sector Value at Stake

Source: Cisco IBSG

18

41

69

125

146

258

1500

2453

0 500 1000 1500 2000 2500 3000

Road Pricing

Smart Parking

Gas Monitoring

Telework

Chronic Disease Management

Connected Learning

Connected Militarized Defence

Other

$B

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Gartner Hype CycleThe IoT is the most over-hyped technology (Gartner)► IoT is 5-10 years from actual productivity.► Gartner highlights a lack of standardisation in the area (data standards, wireless

protocols, technologies), as well as the changing nature of the technology itself.

http://www.theguardian.com/technology/2014/aug/12/internet-of-things-most-over-hyped-technology?CMP=twt_gu#ptlink.fid=5086&isc=1&did=bookmark.54cbabf48a1a0530c0882f1bc0da9aad5077fb6b&ctp=article

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Top Perceived Challenges in Realizing the Value of IoE(Source: Cisco)

http://internetofeverything.cisco.com/explore/trends#benefit-areas

43

38

36

34

30

28

26

25

0 5 10 15 20 25 30 35 40 45 50

Ability to invest in Technology Infrastructure

Integrating New Technologies with Legacy IT Environment

Updating Processes to Absorb New Technologies

Strengthening Employees' Inter-Personal and Collaboration Skills

Recruiting Workers with Specialized Skills

Making Sense of the Growing Volume of Data

Achieving Real-Time, Data-Driven Operations

Cultivating a More Collaborative Business Culture

%

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Top Perceived Downsides of the Internet of Everything(Source: Cisco)

Presentation title

0 5 10 15 20 25 30 35 40 45

Job Losses Due to Moving Jobs Overseas or Automation of Work

Greater Price Transparency/Lower Profit Margin

Competition from New Rivals

Regulatory or Compliance Challenges

Inability of IT Systems to Keep Pace with Change

Threats to Data or Physical Security

25

25

28

32

38

42

%

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Security remains a significant IoT challengeSecurity concerns are developing faster than the IoT

► Privacy, authorization,encryption…

► Issues around mobilesecurity are already achallenge.

► Think how much greaterthose challenges will be ifan organization has 10 IoTconnected devices, forexample.

http://www.cmswire.com/cms/internet-of-things/top-5-internet-of-things-security-concerns-026043.php

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Where’s the Money!Executives have heard of IoT but they’re suspicious of all the hype

► Where and how will this newtechnology generate meaningfuleconomic value for the enterprise?

► Improving asset productivity benefitsthe bottom line (current focus)

► Untapped opportunities for economicimpact are in finding creative ways todeploy the technology to drive top-linerevenue growth and expensereduction. So far, these have receivedlimited attention.

https://hbr.org/2014/11/the-internet-connected-engine-will-change-trucking

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Business Models - IoT Requires a Mindset ShiftValue will be Created/Captured Differently

https://hbr.org/2014/07/how-the-internet-of-things-changes-business-models/

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IoT Snapshots (by key verticals)

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The IoT LandscapeKey Verticals of Adoption

http://www.goldmansachs.com/our-thinking/outlook/internet-of-things/iot-report.pdf

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TransportationThe Internet-Connected Engine Will Change Trucking

► In 2013, Daimler released a service called VirtualTechnician (VT) . “… combines telematics,mobility, central mission control, big dataanalytics, and a seamless process from thetruck to the driver, fleet manager, andultimately to an authorized service outlet.”

► 100,000+ trucks have activated the VT service.► Opportunity – Could offer these services to

commercial drivers and fleet managers in otherparts of the world. Could extend its engine-focused service to other parts of the truck, likewheels or suspensions.

https://hbr.org/2014/11/the-internet-connected-engine-will-change-trucking

85%+ of usershave alreadyreceived a

notification ofneeded services,

and 98% weresatisfied

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HealthcareNew IoT tools/devices are revolutionizing the health sector

► Infant Monitors - Mimo developed an infantmonitor that sends parents real-time informationon their baby’s breathing, skin temperature,sleeping position, and activity level. Mimo sendsbaby’s sleep data straight to the parents’smartphones.

► Diapers - Pixie Scientific developed smartdiapers that analyze patients’ urine to checkhydration levels and identify signs of urinarytract infections. The diaper data is thenautomatically sent to a caregiver’s smartphoneafter she/he scans a QR code on the diaper.

http://www.forbes.com/sites/85broads/2014/03/26/4-ways-the-internet-of-things-is-transforming-healthcare/

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Connected CitiesSmart Parking, Smart Roads, Smart Lighting…

Presentation title

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Connected CitiesNext-Generation Street Lights - Philips and Others

► Beyond smart LED, city leaders and streetlighting vendors are envisioning streetlights as a multi service platform.

► Street lights are everywhere and onceconnected to power and network they couldhost many services: sensors, wirelesstransceiver (wifi, PAN, small cell), digital signs,communication, etc.

► However average lifespan of a street lightpole is 30 to 40 years. Replacing all lightpoles with next-generation street lights is along term process.

Source: Cisco IBSG

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Connected CitiesNext Generate Waste Containers

► Pilot: fill sensor installed on 15 recyclingcontainers (paper/glass) at a cost of 250euros/sensor with installation).

► Sensor measures the fill level andtemperature (fire detection).

► Sensors run on battery for 8 years► Sensors uses 802.15.4 mesh network

common to other services (parking,environment).

► Data is collected in city data center to beanalyzed.

Source: Cisco IBSG

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Connected CitiesConnected Bus Stop

Source: Cisco IBSG

Wi-Fi HotspotInternet access

AdvertisingPeople counting

Noise SensorVandalism trackingAmbience tracking

IP CameraSecurityAnalyticsAir, Temp, Rain Sensor

Rain trackingTemp tracking

Interactive Touch screen+ Camera

City informationRemote Expert

Public transport statusAdvertising

Smart LightingDynamically adjusts lux scenes

(illumination) for advertisingseasonal scenes

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Connected HomesVivent and Analytics

► Vivint is a leading provider of hometechnology services.

► Vivint offers home security, energymanagement, home automation, localcloud storage, and high-speed Internetsolutions to more than 850,000 customersthroughout the US and Canada.

► Vivint uses Cloudera Enterprise Datafor analytics -- 100,000+ data pointsfrom smart sensors embedded indevices are now visible with Cloudera.

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Connected CarsBig Opportunity Because We Spend so Much Time in Cars

Source: US Bureau of Labor Statistics; Business Intelligence

5%

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Connected CarsA natural extension of our digital livesProviding in-car connectivity is going to be essential for every automaker in the future;however, the industry is still looking for viable business models.

► Equipped with internet access cars will be able to shareInternet access with other devices both inside and outsidethe vehicle.

► Enabled with special technologies that utilize internetaccess or wireless LAN and provide additional benefitssuch as automatic notification of crashes.

► Latest development is the autonomous car or driverlesscars capable of sensing the environment and navigatingwithout human input.

► Smartphone to Vehicle and vice versa, Smartphonessensors for driving insights, On-Board Diagnostics foron-device analytics…

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Connected CarsTesla

► Tesla owners received a recall notice fromthe National Highway Traffic SafetyAdministration alerting them that a chargerplug needed to be fixed (cause for fires).

► Tesla completed the fix for its 29,222vehicle owners via software update.

► Earlier, Tesla used software updates tochange suspension settings (to give its carsmore clearance at high speeds, due toissues that had surfaced in certaincollisions).

http://www.wired.com/2014/02/teslas-air-fix-best-example-yet-internet-things/

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WearablesIt's not about the device you buy. It’s about the data it produces.

► 18 percent of the population in theUS & UK are using wearables today(Rackspace).

► The wearable market could reach130 million units sold with amarket value of $6 billion by 2018(IDC).

► 1/3 of wearable device ownersabandon their gadget after a year.

► It’s about both the product and theservice.

http://www.rackspace.co.uk/sites/default/files/whitepapers/The_Human_Cloud_-_June_2013.pdf;http://www.cnet.com/news/wearable-tech-most-important-race-turning-heartbeats-into-cash/

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The IoT Landscape is Changing

http://mattturck.com/2014/01/28/introduction-to-the-internet-of-things-slides/

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And Changing…Still lots of room to participate

http://mattturck.com/2014/01/28/introduction-to-the-internet-of-things-slides/

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How to Get Startedand Some Key Takeaways

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How to Get StartedIoT is enabling new possibilities for digital transformation in every industry

► Take a look at your organization (public, private or NGO). What can youdo that you couldn’t do before? Start to do it now, before someone elsedoes. “Act” rather than “react”.► Determine which IoT capabilities your organization has today.► Harness the complementary insights of both service and IT leaders.► Identify major IoT opportunity areas and establish an IoT vision/strategy and

roadmap.► Build an “IoT culture” by helping employees imagine the possibilities of

connecting the unconnected.

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How to Get StartedKey Questions to Ask

► How will IoT change the basis of competition?► How will you delight customers as everything gets connected?► Do your business plans reflect the full potential of IoT?► Are your technology investments aligned with opportunities and threats?► How will IoT improve your agility?► Do you have the capabilities to deliver value from IoT?► What is your accountability and governance structure/model for IoT execution?► How are the risks associated with IoT being addressed?► How do you communicate about IoT to stakeholders?

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Some Key Takeaways

► Hope and challenge: IoT connects stuff and people leading to greaterfragmentation of software and hardware amidst an explosion of data.

► Many key obstacles have been addressed: the cost of connectivity hasdeclined at the same time that new ways to analyze mountains of data havedeveloped.

► Software is a big part of IoT: IDC estimates that 1/5th of the money spent onIoT will go towards software.

► Lots of room to participate: There will be a series of new businesses -- expand the Internet “pipes”- analyze the reams of data- make new things

http://www.goldmansachs.com/our-thinking/outlook/internet-of-things/iot-report.pdf

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Some Key Takeaways

► IoT standards: Companies are already gathering in competing alliances toset IoT standards such as the Industrial Internet Consortium (IIC) founded byAT&T, Cisco, GE, Intel and IBM (founded in 2014).

► Privacy and Security are big issues: A recent study found 70% of the mostcommonly used IoT devices contain security vulnerabilities.

► New IoT Revenue Models: Many signs point to a bright future for IoT relatedsubscriptions (health-related, auto-related and home-related services).

► Winners and losers: In an IoT world there will be winners and losers, just aswith the first two waves of the Internet (e.g. book publishing).

http://www.goldmansachs.com/our-thinking/outlook/internet-of-things/iot-report.pdf

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What Differentiates EY?

End-to-end Digital Strategy andInnovation offerings

► Including but not limited to: Digital Tax, Law, Risk, Business strategy, Innovation center, Userexperience design, Technology strategy, and IoT.

Dedicated Digital Strategy andInnovation Practice

►Practitioners are focused on not only solving client’s specific digital challenges but also helpingthem emerge as leaders in this dynamic era.

Leader in Security andCompliance

►Security and compliance is embedded in EY culture. With that DNA, EY’s Digital Strategy andInnovation practice lays special emphasis on IoT, mobile and cloud security.

Thorough understanding ofglobal regulations

►Digital breaks geographical barriers and forces organizations to understand internationalregulations. EY’s clients benefit from our international presence and a deep understandingof regulations across the globe.

Vendor agnostic ►EY is vendor agnostic, and therefore advises clients on the best of breed solutions without anyconflict of interest.