The Internet of Things: Are Organizations Ready For A Multi-Trillion Dollar Prize?

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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


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

@ @


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


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


… with significant differences looking at maturity in different industries

6

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



But there is a catch, 70% do not generate service revenues from their IoT solutions

7

“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


Essentially it is about a company’s ability in selling services instead of products …

8

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


New capabilities are needed to take position in IoT

9

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



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

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