Transform to the power of digital
The Internet of Things: Are Organizations Ready For A Multi-Trillion Dollar Prize?
TeliaSonera M2M SymposiumKarl Bjurström, Capgemini ConsultingStockholm, 18 November
Copyright © 2011 Capgemini Consulting. All rights reserved.
The potential of IoT is immense, with a trillion dollar potential
2
A staggering potential... ...that companies want to seize
IoT has the potential to generate
$19 trillion of value over the coming years1
68% of companies are already
investing in IoT2
96% of companies will be using the IoT in some way within the next three years2
Source: Cisco, PSFK, Capgemini Consulting
Copyright © 2011 Capgemini Consulting. All rights reserved.
Gartner predicts the lion part of the IoT market to come from Apps and Analytics
@
Things "Hardware"
Apps, Services, Analytics
Compute, Storage, Networking
80%
11%
9%
Source: Gartner, Capgemini Consulting
@ @
Copyright © 2011 Capgemini Consulting. All rights reserved.
Players will need to find their positioning and business models in a changing environment
• Windows
• Office
• HD, processor, network
Platform
Apps
Infrastructure
New entrants
Current leaders
New business models
Software
Hardware
$
Revenue growth
Profit squeeze
New battlefield
New playersNew business
processes
New FS-related services e.g. insurance, payments
Vehicles and machines to become software-defined – opportunity & potentially disruptive
50 Bn
500 Bn
People(things)
Things (people)
Approx. 20 Bn devices
Business model:• Data• Eye balls
Business model:• Data• Computations• Priority
Time20202014
Connections
2050
Internet of Things
With the Internet of Things, business models likely to shift towards data, computations, priority
Digitization will spur competition – and collaboration – on system and platform levelNeed to decide which ecosystem to take part in and in what capacity/position
4Copyright © 2014 Capgemini Consulting. All rights reserved.
Source: Ericsson, Capgemini Consulting
Copyright © 2011 Capgemini Consulting. All rights reserved.
But for most organizations, these are early days in the adoption of advanced IoT Solutions
5
Monitoring(Basic Information)
Control (Remote Operability)
Optimization (Performance Improvement)
Delivery of alerts and notifications on product status
Ability to be controlled and configured remotely
Predictive maintenance and productivity enhancement insights based on sensor data
58%
27%
34%
AutonomyCombining monitoring, control, and optimization allows:
• Autonomous product operation• Self-coordination of operation with other
products and systems• Autonomous product enhancement and
personalization• Self-diagnosis and service
<10% trials
Levels of Maturity for IoT Solutions
Source: Capgemini Consulting
Copyright © 2011 Capgemini Consulting. All rights reserved.
… with significant differences looking at maturity in different industries
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Low Maturity : <40% of firms provide IoT solutions that support the feature
Medium Maturity : 40-60% of firms provide IoT solutions that support the feature
High Maturity : >60% of firms provide IoT solutions that support the feature
Industry Monitor Control Optimize Autonomy
Industrial manufacturing
Medical devices
Utilities
Automotive
Insurance
Home appliances
Pharmaceuticals
Maturity of IoT Solutions by Industry
Source: Capgemini Consulting
Copyright © 2011 Capgemini Consulting. All rights reserved.
But there is a catch, 70% do not generate service revenues from their IoT solutions
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“Offering the telematics hardware for free with
the car is not a sustainable option. We need to
have a clear strategy to generate revenues from
services.”
Leading car manufacturerToday
~2 Trillion
2020
10-20 Trillion
GAP
What does it take to address the market and close the gap?
Source: Capgemini Consulting
Copyright © 2011 Capgemini Consulting. All rights reserved.
Essentially it is about a company’s ability in selling services instead of products …
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Low Medium High
Customer relationship
Transactional
Relational
Collaborative
Hardware premium
Service revenue
Data revenue
Ecosystem building
Convert traditional product into a service incl. monetization model
Generate revenue by selling packaged data gathered from sensors
In this model, organizations create a platform where they ideally make money from both other product vendors and end consumers
Simplest model where organizations charge a price-premium for the product’s connected features
Subscription model
Pay-as-you-go model
Outcome/results-based
Freemium model
One time charge
Transactions based fee
Revenue share
Fixed fee
Type of offering and position Type of monetization
Often part of ecosystem offering
ComplexitySource: Capgemini Consulting
Copyright © 2011 Capgemini Consulting. All rights reserved.
New capabilities are needed to take position in IoT
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MAKE 10% have developed open platforms or APIs
PARTNER57% of organizations are using partnerships as a viable approach to develop IoT solutions
BUY 10% have made acquisitions
Capabilities needed Methods of capability build-up
Marketing Sales Service
Product mgmt
Data Analytics
Augment Product Management Capabilities with Services Expertise and Emphasize Ease-of-Use in Product Design
Develop Customer Support Capabilities to Drive Real-Time Quality mgmt and Issue Resolution
Today’s Product-Focused Sales Force is not Equipped to Sell IoT Services
Traditional Product-Centric Organizations Lack Capabilities for Marketing Internet of Things Services
Organizations Lack ability to Effectively Interpret Sensor Data. Put the Right IT Infrastructure in Place and Acquire Data Analytics Capabilities
Source: Capgemini Consulting
Copyright © 2011 Capgemini Consulting. All rights reserved.
Leaders are now investing in becoming data driven enterprises – IoT bring enablers across an organization
How to engage customers
How to work and operate
How to generate revenues
BUSINESS MODEL
CUSTOMER-FACING PROCESSES OPERATIONAL PROCESSES
Social MediaInternal
Collaboration
Mobile Channel
CustomerExperience
Process Digitalization
Data Integration
Sensors
Analytics
Investment characteristics of digital leaders
Companies to use IoT as an enabler for radical improvements in customer experience and operational excellence, and new revenues and business models
Source: Capgemini Consulting, MIT