IoT Took My Money: The business case for IoT

Jaakko Kankaanpää, Mindtrek IoT Event 18.10.2016

My dream: From this...

The tech is already hereFROM MINORITY REPORT TO BURBERRY

http://nordicapis.com/20-emotion-recognition-apis-that-will-leave-you-impressed-and-concerned/

…to this:

Things just happen when or prior to when I need them and the whole purchasing & payment process is somewhere in the background.

I will not even have to make the conscious decision to buy – things just happen in one smooth flow.

IoT took my money.

Case #2: Flat tire

“Dear driver my tire broke. In 2 km I will steer to the next rest zone by the road and help will arrive in 15 minutes. I have also updated your calender, renewed the tickets for the next show and notified your friends.“

We all know the story….

By Sonera

Getting the data is not enoughIt’s not true IoT before you act & automate!

Sense & Connect

Aggregate & Analyze

Act & Automate

• Sensors & modern hardware (pre & retro fit)

• Connectivity & software management

• Device management

• Data aggregation and management for customers (i.e. dashboards, reporting, tools)

• Custom analytics• Data Quality & Privacy

management

• Predictive maintenance & Asset management

• Convergent charging• Real-time offer

management

From data collection to business innovation through IoT

(The tech is easy)

(Best practices and methodology are readily available)

And we have Lean to run our development

30.9.2013 www.ambientia.net 15

Even large organizations have undergone their pilots and POCs

Customers don’t call them Internet of Things applications.”

The people that will benefit the most from these concepts are the end users. They will be the people to drive the need and demand for this technology.http://www.automationworld.com/its-not-internet-things-its-business-case

Are we ready to stop tinkering and start being serious?

What is the true business effect of IoT / digitalization?

Esittely

The inherit Claim #1: IoT is not a technical project

Tech is nothing if not combined with business strategy

Digitalization is actually not just one thing…it’s a convergence of trends and developments in technology

Smart / Connected devices

Advanced integration

Data visualizationMesh Networks: sensors

Prescriptive algorithms

3D printing Mass Customization

Autonomous vehicles

Cognitive Automation

Content Analytics

Machine to Machine communication

Predictive and content analytics

Internet of Things / internet of everything

Consumer telematics

AI

Crowdsourcing

Location intelligence

Big Data

Open Data

Machine learning

The 8 game changers (P. Diamandis)

1. Computation2. Internet of Things (Sensors & Networks)3. Robotics/Drones4. Artificial Intelligence5. 3D Printing6. Materials Science7. Virtual/Augmented Reality8. Synthetic Biology

Information is the key driver

“Information is the oil of the 21st century, and analytics is the combustion engine”Peter Sondergaard, Gartner

© Cyclecious

© McKinsey 21

How will digitalization proceed and what is the scale?

Let’s take a look at (the winners of) the internet revolution:

Fabrizio Loncini

From CD’s to Ipod

http://expandedramblings.com/index.php/airbnb-statistics/

This year 2 million listings in 192 countries and 57.000 cities –that’s some hotel chain!

500.000 customers / night

Wayfair: reaching 1 billion sales by selling furniture utilizing state of the art algorithms

www.ambientia.net 26

Where will Apple grow next? Revenue- Devices- Software- App Store (3rd parties

included)kset)- Content- Perfect ecosystem

control

Over 800 million credit cards

© Asymco

2012: 43.62%2013: 9.55%2014: 7.24%, 2015: 28.22%

This is the growth rate in Apple’s revenues over the last four years, for an annual average of 21.7%. In 2015, the company racked up more than $231 billion in sales.

High rates of growth aren’t typically associated with such a large revenue base, yet Apple has defied convention.

Growing revenue by just 10% in 2016 would require finding a new $23 billion business.

To put that in perspective, that’s more than Time Warner Cable made in all of 2014.

mattcollinsblog.com/

Claim #2 In (almost) any business the next phase is to focus on combining the digital and physical to create new value chains

The big boys lead the way….Sensors, Automation, A.I., Robotics = physical

By Sam Churchill

4 pillars of Amazon (Bryan Eisenberg)

• Customer Centricity• Culture of optimization• Culture of innovation• Culture of agility

“We are not in the business of selling books, but of helping our customers buy books.”

Jeff Bezos

The home front

33

We already have our own trailblazers

Example of how to expand strategically: who owns IoT

www.ambientia.net 35

Other IoT effects: Smart & evolving products

Could the price of a used car actually rise?

Marketing and other functions will be affectedas well

Virtual reality + buying shoes + charity + emotion = unforgettable shopping & brand connection

© The Digital Enterprise

Why this (digitalization driven) disruption is different? by james mcquivey

The world of unexpected convergent consequenses

• The combined disruptive effect creating and transforming business & value chains

• Very difficult to predict based on current experiences and models

And it’s faster and do or die: The Accenture Shark Fin model: The age of binary success

Digital disruption is speeding up innovation and changing traditional industry models from years to weeks

• Volatile• Complex• Fasthttp://zafin.com/our-articles/infographic-shark-fin-model-digital-disruption/

Lack of speed: From eagle to pigeon – missing free-to-play

Global Institute research supports that belief, estimating that the impact of the Internet of Things on the global economy might be as high as $6.2 trillion by 2025.

$6.2 trillion

The ballpark?

Even the modest estimates are in the 100’s of billions for EU alone

No field of business will escape

The hype!

The view of the World Economic Forum

By Blesblov & Pascal Charest

Could this really happen (again)?

Claim #3: This 4th revolution will demonetize and deconstruct the current value chains significantly

• It is not enough to utilize IoT in one function or process or value chain element – the whole chain has to be retooled

• The “old” laws of entering the field don’t apply• New competitors and completely retooled old competitors have

the edge • Still “old” players who cover an industry/value chain end to end

have an advantage at least if reacting first

“Demonetizing & dematerializing are the key activities of disrupting business in the age of zero marginal cost” @PeterDiamandis

Not just us -> ATKerney: recommendations

• Develop IoT objects and use cases in close cooperation with the customer and a firm understanding of the value chain

• Bring IoT solutions to market in a way that maximizes their chance for adoption

• Extend the customer relationship throughout the life cycle• Navigate the regulatory environment and public perceptions to avoid

IoT being viewed as an intruder of privacy• Contribute to powerful industry relationships to ensure openness. https://www.atkearney.com.tr/strategic-it/ideas-insights/article/-/asset_publisher/LCcgOeS4t85g/content/the-internet-of-things-a-new-path-to-european-prosperity/10192?inheritRedirect=false&redirect=https%3A%2F%2Fwww.atkearney.com.tr%2Fstrategic-it%2Fideas-insights%2Farticle%3Fp_p_id%3D101_INSTANCE_LCcgOeS4t85g%26p_p_lifecycle%3D0%26p_p_state%3Dnormal%26p_p_mode%3Dview%26p_p_col_id%3Dcolumn-4%26p_p_col_count%3D1

Gartner’s example: The digital edge – implementing digital (The Digital Edge / © Gartner)

From context and outcomes to digital From tech to outcomes

There are loads of great tools for the job

30.9.2013 51

A model to map and plan implementig the digital dimension (The Digital Edge / © Gartner)

Examining the cooperation of digital and physical(The Digital Edge / © Gartner)

How it should be viewed : (Mark P. McDonald) – Let’s not develop an electric patient treatment card but the whole smart hospital

http://blogs.gartner.com/mark_mcdonald/2013/01/23/digital-strategy-or-digital-tragedy/

Digitalization conjures forth completely new networks and value chains

Claim #4 Developing a single process or plain optimization is not enough – the whole strategy must be viewed through the new paradigm

© linh.ngân

55

Why everyone is forced to act or die:A comparison to eCommerce

Amazon Walmart Safeway0

100000

200000

300000

400000

500000

600000

Turnover/ employee (dollars)

AmazonWalmartSafeway

Comparison (from Finland): Trad. vs. omnichannel cost structure -> 40 % VS 13 %

56

GE: Evolution Series-veturiJaksaa vetää 170:tä Boeing 747 -jumboa vastaavan painon

Leikanneet polttoaineen kulutusta

-6,3%

Nostaneet nopeutta

10-20%

GE Trip Optimizer

To compete everyone will have to utilize similar tech

By Andrew Morrell

A 1 percent change in fuel burn for an airline is worth hundreds of millions of dollars.” – Jeff Immelt

We will experience the two of the most amazing events in human history: the creation of true machine intelligence and the connection of all humans via a common digital network, transforming the planet’s economy

The Second Machine Age, Erik Brynjolfsson and Andrew McAfee

2 timelines for the benefits…

What about the deep end: The moonshots (10 X instead of +10%):

• Should we tinker in the world where these companies already operate?

• All these companies already have significant funding

Furthering our lifespan: the 72 is the new 30

Between 1910 and 2010 improvements in medicine and sanitation increased the human lifespan by 50 percent from 50 to 75 years. Today with the emergence of exponential technologies such as those being pioneered and advanced by HLI we have the potential to meaningfully extend the lifespan even further.

Mining asteroids

Even if we tone it down a notch…

And it’s working

To recap:

IoT is not a tech project

&

The relationship between business strategy and digitalization

• They should not be separate things but digitalization should be an integral part of the actual strategy

© LuAnn Snawder

Strategic agility is the most crucial competitive advantage today.