Driving IOT Innovations Delivering the connected experience May 2015 1 Pari Natarajan and Hardik Tiwari - Zinnov LLC
Aug 14, 2015
Driving IOT Innovations Delivering the connected experienceMay 2015
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Pari Natarajan and Hardik Tiwari - Zinnov LLC
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As the next evolution of computing, the Internet of Things market is becoming bigger than all the previous technology markets
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In 2020 there will be ~50 Billion devices connected to the internet
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2010 2020
... And a 50 times growth in digital universe of Businesses and “Things”
x 50
0.8 ZB
2010 2020
€6.3TNMARKET IN 2020
Creating a behemoth market of“INTERNET of THINGS”
Miniaturization and decreasing cost of Sensors
China and India ecosystemInexpensive and ubiquitous connectivity
Ever-increasing network capacity
Emergence of new IPV6 protocol
Rise of affordable, high-performance computing
NOWWHY
Source: Ericsson IoT study | IDC market Study
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And the IoT early adopters are building products that offer higher reliability, better asset utilisation and newer functionalities to drive new revenue streams
GEIncreased Efficiency
Additional Revenues
€1 Billion Revenues in 2014 from IoT
€6.4 Billion Worth Efficiency gains for customers
50 million pieces of data from 10 million sensors, off equipment worth $1 trillion across1.4 million pieces of medical equipment and 28,000 jet engines
Connected Factories
Structural Health Monitoring of Engines
Connected Medical Devices
GridIQ solutions
Source: GE Annual Report | CXO Interviews
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… and also enhance the customer experience by delivering better and faster product support and services
Performance Tuning meets IoTTesla has fundamentally changed the way you can fine-tune
the performance of your car; what once took an expensive and long trip to the garage is now being delivered via over-
the-air software updates
Update your car, while its parked in your garage.
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vs
A tale of two recalls
US Govt. orders recall for both
GM prepares dealerships and shops to take in a large number of cars for fixes
Tesla engineers prepare software
update that can fix the problem
Tesla performs fix overnight
GM bears enormous cost
– the recall hurts annual
revenue projections
Tesla makes the fix available
overnight – all cars fixed in 1
week at 0 cost
Source: Market Releases
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Enterprises are building connected and smarter products with diverse maturity levels and functionalities to deliver more value to the customer
Valu
e
Cre
ati
on
Functionality
MONITOR
CONTROL
AUTONOMOUS
OPTIMISE
Continuous Glucose Monitor
Predictive Maintenance Solution
Autonomous Haul System (ahs)
Home Automation Solution
Schneider Remote Asset monitoring
Phillips Wireless Lighting
Nest Cam
GE Predictivity
Airbus Structural Health Monitoring
Google Car
Autonomous Drones
Source: Zinnov Research and Analysis | HBR review
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As a result of rapid adoption of IoT across verticals, Enterprises are forced to undergo and manage change across multiple dimensions
PP
P
EOPLE
ROCESS
ARTNERSHIPS
PRODUCTS
PLATFORMS
Changing Customer Demands/ Behaviour
Changing Skill Requirements
Changing Business Models
Changing Development Processes
Changing Supplier Landscape
5 dimensions of Change
Customer requirement changing from faster or Fuel efficient cars to better in-car experience
Business model moving from Ownership to On-Demand – Need for newer sales partners
Emergence of Software Suppliers – Google, Apple, Elektrobit etc.
Hardware development and Manufacturing cycle to Agile Software development cycle
Need for newer skills- Data Scientists, Mobility, UI etc.
Case in PointAutomotive
Source: Zinnov Research and Analysis
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And amidst the change, Enterprises are facing competition from newer set of peers- The Chinese Enterprises
Chinese enterprise are using their cost innovation model to compete with the commoditized product lines of companies in developed countries.
4th Largest internet
Company
150 MNInternational
customers
USD 45 BN Valuation
5000 unitsSold in 8 min on first launch outside China
1st In PC Sales
Global PC Market Share
16.7%
1st TEM provider
Global Revenue
40 BN
Ma Huateng Lei Jun Liu Chuanzhi Ren Zhengfei
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The biggest challenge is Newer and Nimbler competition that is threatening to disrupt the “Technology Elephants”
SWARM of BEES UnicornsELEPHANT
Source: Zinnov Research and Analysis
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Enterprises need to restructure 5Ps of their organization to drive IOT innovations
• Feature prioritization• Monetization and business models • Device vs Cloud
• Reduction in product development cycle• Changes to team structure
• Open vs Closed systems• Platform selection: Flexible, Scalable and Stable
HOW Do I shape my Organization’s Strategy amidst the IOT Disruption
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P
EOPLE
ROCESS
ARTNERSHIPS
PRODUCTS
PLATFORMS
• Internal skill pool vs leveraging external ecosystem • Global talent hot spots
Source: Zinnov Research and Analysis | HBR review
• Outsourcing partnerships• Channel disintermediation
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Enterprises need to conduct a Value-Complexity optimization analysis to define the product strategy for IoT product lines
Val
ue
Cre
ated
Ease of Feature Development
Feature B
Feature I
Feature C
Feature H
Feature G
Feature F
Feature A
Feature D
• What set of connected features to build ?
• Should the company invest in building Greenfield solutions or explore brownfield opportunities?
Ease of Feature Development
• Manufacturability of products• Capability of feature development- Internal vs
Partners• Availability of the right talent / ease of
bringing in talent• Supplier base for new features• Product support for new feature• Infrastructure availability
• Should the company expand its offerings to deliver new features?
Value Created
• Revenues from new features• Newer business stream from new
features( Entry to Services) • Increased Process Efficiencies• Increased Customer satisfaction• Entry into newer segments in market value chain• Enhanced stickiness with customers
IoT PRODUCT FEATURE SELECTION
RODUCTSP
Source: Zinnov Analysis
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• Data Analytics• Software Product development
• Data Analytics• Platform Expertise
• UI/UX• Multimedia (Audio & Visual) Skills
• Software Product development• Architect Design
• Mobility• Software Product development
• Network Management• WAN/LAN understanding
Certain skillsets in the IoT value chain are radically different from the traditional engineering skillsets and may not exist with in the current engineering teams
Data Scientists/Architects
Mobility Experts
UI/UX Designers
IoT Product Managers
NEWER SKILLS• Software Product development
• Agile Methodologies
• Business Knowledge• Communication Skills
NEWER ROLES
• Machine Learning & Big Data
Network Engineers
Cloud Experts
Scrum Masters• Mobility
• UI/UX
EOPLEP
Source: Zinnov Analysis
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Bay Area, Shenzen and Bangalore have the highest concentration of IoT specific talent owing to the presence of product companies, top universities and Startups
City Legend
High
Medium-to-High
Medium
Low
Companies with IoT / innovation labs
San Francisco Bay Area
New York City TorontoPrague
Bangalore
Beijing
BoschTexas Instruments
IBMCisco
GEMicrosoft
Ford DellIntel
Baidu
Big Data, Machine Learning & NLP218 K
Mobility312 K
User Experience Design220 K
2013 2020 2025 2030
Global Talent Pool*
1250K
1850K
2850K
750K
Shenzen
HuaweiEMC
IntelMicrosoft
Israel
EOPLEP
BoschVolkswagen
Germany
Source: Zinnov Annual Talent Study
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Existing product development processes and methods are not well suited for the rapid product development of IoT products
Waterfall Method V Method
―ITERATIVE PROTOTYPING
―INCREMENTAL AGILE
ROCESSP
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Prioritized IoT solutions should implemented in an iterative and incremental manner
People
Tech
Implementation Complete
IoT Solution 1
IoTSolution 2
IoTSolution 3
IoTSolution 4
Implementation in process
Agile methodology is used in the development of the IoT
solutions
IoT Priorities
Update Product Backlog
AGILE DEVELOPMENT
Create Sprint
Backlog
Prepare People, Technology & Org
Structure feature by feature
Implement IoT Solution incrementall
y and iteratively feature by
feature
Sprint Review
Working Solution
Prioritized bucketlist of
features, bugs and
development work by the
Product Manager
A list of prioritized
features to be built for the next sprint
IoT Capabilities should be augmented
incrementally to enable the
implementation of the feature being currently
built
Review for early warning of
broken/ incompatible
features
Incremental execution of prioritized IoT Solution solutions
Process
Continuous Tracking
The Product Development should be executed incrementally and iteratively using Agile methodology ROCESSP
Source: Zinnov Analysis
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New Age platforms are emerging across the IoT horizontals, and Enterprises need to partner with the right platform to build connected products
External Data Sources
Security and Privacy
Product Software
Product Hardware
NetworkCommunication
Data Platforms
ApplicationPlatform
Analytics Platforms
Smart Product Applications
CONNECTIVITY
PRODUCT CLOUD
Integration with Business Systems
Information from external sources such as Location Intelligence,Weather Data, APIs
Connections to existing Enterprise applications-ERP, EAM, PLM, CRM etc.
IoTPlatfor
ms Stack
LATFROMSP
Source: Zinnov Analysis | HBR review
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Enterprises need to establish partnerships across the ecosystem in order to leverage their talent, technologies, expertise and services
1 2 3 4 5Engineering Partners GTM Partners Data PartnersPlatform PartnersInfrastructure Partners
Service Providers with strong product development capabilities. Partner to :• Accelerate Product Development• Complementary skillsets• Domain Expertise
Partners providing sales channels and after sales support including• Channel partners• Managed Services
Vendors• Servicing Partners• OTA upgrade partners
Partnership with infrastructure companies including:• Connectivity Service Provides• Cloud Vendors• Data Centers • IT infra vendors etc.
Technology vendors across the IoT tech stack
Build Open products to communicate with Data and APIs from multiple sources including:• Customer Usage data• Social Data• Public data sources such as location
data, weather data
ARTNERSHIPSPFORGE PARTNERSHIPS ACROSS THE VALUE CHAIN
Source: Zinnov Analysis
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Success stories around restructuring organizations for the connected world reinforce the fact that times are changing, and it is imperative to transform rather than perish!
• Carved out an IoT focussed Business unit • Has setup geographically distributed team focussed on IoT – Bangalore, Germany & Switzerland• Partnered with Institute for Technology Management (ITEM) at the University of St. Gallen since
2012 for developing IoT products
Siemens has restructured its closed system policy to a more open and connected outlook;• Siemens has partnered with SAP HANA Cloud Platform to build the Siemens Cloud for Industry
powered by SAP HANA Cloud Platform as an open cloud platform for analyzing large datasets in the industry
• Siemens plans to create an open IT ecosystem for OEMs and application developers based on SAP HANA Cloud platform.
• Last year launched a new, $100 million fund to back early-stage startups working in the areas of Industrial IoT
Source: CXO Interviews and Company Annual reports
• Revenues of ~1 billion through IoT software business, the fastest a G.E. business has hit the $1 billion mark
• Will open GE predix platform for other device manufacturers allowing companies to build and deploy their own customized software applications on Predix
• Partnering with platform companies throughout the value chain including AT&T, Cisco ,Accenture etc.
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How Zinnov can help you redefine your “Connected World” strategy
ZINNOV IMMERSION WORKSHOPS
HOW Do I shape my Organization’s Strategy amidst the IOT Disruption
PP
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ROCESS
ARTNERSHIPS
PRODUCTS
PLATFORMSMeet us to know more
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