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)

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 Industry
Banking 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 Services
Smart 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

14
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
NotConsidering
61%
1. Lower Operational Costs
2. Better customer service
and support
3. Customer
acquisition/retention
4. Business process
efficiency
5. 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

15
IoT Opportunity: Retail
Adoption
of respondents are
initiatives.
of respondents cite funding the
initial investments at the scale
needed as the number one
barrier.
15
Actively Pursuing
NotConsidering
60%
40%
10.5%
Top IoT Drivers
N=203 (Weighted)
and support
2. Lower operational costs
3. Customer acquisition
and/or retention
4. Product and/or service
improvement and
innovation
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

16
IoT Opportunity: Utilities
Adoption
of respondents are
initiatives.
of respondents cite developing
a sustainable business model/
proving ROI as the number one
barrier.
16
Actively Pursuing
NotConsidering
71%
49%
6.6%
Top IoT Drivers
N=84 (Weighted)
and support
3. Business process
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

17
IoT Opportunity: Insurance
Adoption
of respondents are
initiatives.
of respondents cite developing
a sustainable business model/
proving ROI as the number one
barrier.
17
Actively Pursuing
NotConsidering
63%
and support
2. Customer acquisition
and/or retention
improvement and
innovation
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

18
IoT opportunity: Oil and Gas
Adoption
of respondents are
initiatives.
of respondents cite data
security concerns as the
number one barrier.
18
Actively Pursuing
NotConsidering
56%
37%
7.4%
Top IoT Drivers
N=121 (Weighted)
and support
3. Business process
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
40
total cloud data centers across five continents
Cloud Revenue
2013
2012
$4.4 billion
$2.6 billion

Smarter
Communications
Retail
Tracking
Smarter
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

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 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

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