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

The potential of IoT is immense, with a trillion dollar potential. Gartner predicts the lion part of the IoT market to come from Apps and Analytics. New capabilities are needed to take position in IoT. Leaders are now investing in becoming data driven enterprises – IoT bring enablers across an organization.

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

  1. 1. The Internet of Things: Are Organizations Ready For A Multi- Trillion Dollar Prize? Transform to the power of digital TeliaSonera M2M Symposium Karl Bjurström, Capgemini Consulting Stockholm, 18 November
  2. 2. 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 trillionof 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
  3. 3. Gartner predicts the lion part of the IoT market to come from Apps and Analytics Apps, Services, Analytics Compute, Storage, Networking Copyright © 2011 Capgemini Consulting. All rights reserved. @ Things "Hardware" 80% 11% 9% Source: Gartner, Capgemini Consulting @ @
  4. 4. Players will need to find their positioning and business models in a changing environment Vehicles and machines to become software-defined – opportunity & potentially disruptive • Office • Windows • HD, processor, network New entrants Apps Platform Infrastructure Current leaders Revenue growth Copyright © 2011 Capgemini Consulting. All rights reserved. New players New business models Software Hardware $ Profit squeeze New battlefield New business processes New FS-related services e.g. insurance, payments With the Internet of Things, business models likely to shift towards data, computations, priority 50 Bn 500 Bn People (things) Things (people) Approx. 20 Bn devices Business model: • Data • Eye balls Business model: • Data • Computations • Priority 2014 2020 Time Connections 2050 Internet of Things Digitization will spur competition – and collaboration – on system and platform level Need to decide which ecosystem to take part in and in what capacity/position 4 2014 Source: Ericsson, Capgemini Consulting
  5. 5. But for most organizations, these are early days in the adoption of advanced IoT Solutions Copyright © 2011 Capgemini Consulting. All rights reserved. 5 Control (Remote Operability) Ability to be controlled and configured remotely Monitoring (Basic Information) Optimization (Performance Improvement) Delivery of alerts and notifications on product status Predictive maintenance and productivity enhancement insights based on sensor data 58% 27% 34% Autonomy Combining 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
  6. 6. Maturity of IoT Solutions by Industry Industry Monitor Control Optimize Autonomy Copyright © 2011 Capgemini Consulting. All rights reserved. … 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 Industrial manufacturing Medical devices Utilities Automotive Insurance Home appliances Pharmaceuticals Source: Capgemini Consulting
  7. 7. But there is a catch, 70% do not generate service revenues from their IoT solutions Copyright © 2011 Capgemini Consulting. All rights reserved. 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 manufacturer Today ~2 Trillion 2020 10-20 Trillion GAP What does it take to address the market and close the gap? Source: Capgemini Consulting
  8. 8. Essentially it is about a company’s ability in selling services instead of products … Type of offering and position Type of monetization Fixed fee Transactions based fee Revenue share Outcome/results-based Pay-as-you-go model Freemium model Copyright © 2011 Capgemini Consulting. All rights reserved. 8 Low Medium High Customer relationship Collaborative Relational Transactional 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 One time charge Often part of ecosystem offering Complexity Source: Capgemini Consulting
  9. 9. Capabilities needed Methods of capability build-up Copyright © 2011 Capgemini Consulting. All rights reserved. New capabilities are needed to take position in IoT 9 MAKE 10% have developed open platforms or APIs PARTNER 57% of organizations are using partnerships as a viable approach to develop IoT solutions BUY 10% have made acquisitions Product mgmt Augment Product Management Capabilities with Services Expertise and Emphasize Ease-of- Use in Product Design Marketing Sales Service Data Analytics 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
  10. 10. Leaders are now investing in becoming data driven enterprises – IoT bring enablers across an organization Internal Collaboration Copyright © 2011 Capgemini Consulting. All rights reserved. Investment characteristics of digital leaders Social Media Customer Experience Mobile Channel How to engage customers How to work and operate How to generate revenues BUSINESS MODEL Process Digitalization Analytics Data Integration Sensors CUSTOMER-FACING PROCESSES OPERATIONAL PROCESSES 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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