Driving IOT Innovations Delivering the connected experienceMay 2015

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Pari Natarajan and Hardik Tiwari - Zinnov LLC

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As the next evolution of computing, the Internet of Things market is becoming bigger than all the previous technology markets

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In 2020 there will be ~50 Billion devices connected to the internet

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2010 2020

... And a 50 times growth in digital universe of Businesses and “Things”

x 50

0.8 ZB

2010 2020

€6.3TNMARKET IN 2020

Creating a behemoth market of“INTERNET of THINGS”

Miniaturization and decreasing cost of Sensors

China and India ecosystemInexpensive and ubiquitous connectivity

Ever-increasing network capacity 

Emergence of new IPV6 protocol

Rise of affordable, high-performance computing

NOWWHY

Source: Ericsson IoT study | IDC market Study

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And the IoT early adopters are building products that offer higher reliability, better asset utilisation and newer functionalities to drive new revenue streams

GEIncreased Efficiency

Additional Revenues

€1 Billion Revenues in 2014 from IoT

€6.4 Billion Worth Efficiency gains for customers

 50 million pieces of data from 10 million sensors, off equipment worth $1 trillion across1.4 million pieces of medical equipment and 28,000 jet engines

Connected Factories

Structural Health Monitoring of Engines

Connected Medical Devices

GridIQ solutions

Source: GE Annual Report | CXO Interviews

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… and also enhance the customer experience by delivering better and faster product support and services

Performance Tuning meets IoTTesla has fundamentally changed the way you can fine-tune

the performance of your car; what once took an expensive and long trip to the garage is now being delivered via over-

the-air software updates

Update your car, while its parked in your garage.

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vs

A tale of two recalls

US Govt. orders recall for both

GM prepares dealerships and shops to take in a large number of cars for fixes

Tesla engineers prepare software

update that can fix the problem

Tesla performs fix overnight

GM bears enormous cost

– the recall hurts annual

revenue projections

Tesla makes the fix available

overnight – all cars fixed in 1

week at 0 cost

Source: Market Releases

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Enterprises are building connected and smarter products with diverse maturity levels and functionalities to deliver more value to the customer

Valu

e

Cre

ati

on

Functionality

MONITOR

CONTROL

AUTONOMOUS

OPTIMISE

Continuous Glucose Monitor

Predictive Maintenance Solution

Autonomous Haul System (ahs)

Home Automation Solution

Schneider Remote Asset monitoring

Phillips Wireless Lighting

Nest Cam

GE Predictivity

Airbus Structural Health Monitoring

Google Car

Autonomous Drones

Source: Zinnov Research and Analysis | HBR review

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As a result of rapid adoption of IoT across verticals, Enterprises are forced to undergo and manage change across multiple dimensions

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Changing Customer Demands/ Behaviour

Changing Skill Requirements

Changing Business Models

Changing Development Processes

Changing Supplier Landscape

5 dimensions of Change

Customer requirement changing from faster or Fuel efficient cars to better in-car experience

Business model moving from Ownership to On-Demand – Need for newer sales partners

Emergence of Software Suppliers – Google, Apple, Elektrobit etc.

Hardware development and Manufacturing cycle to Agile Software development cycle

Need for newer skills- Data Scientists, Mobility, UI etc.

Case in PointAutomotive

Source: Zinnov Research and Analysis

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And amidst the change, Enterprises are facing competition from newer set of peers- The Chinese Enterprises

Chinese enterprise are using their cost innovation model to compete with the commoditized product lines of companies in developed countries.

4th Largest internet

Company

150 MNInternational

customers

USD 45 BN Valuation

5000 unitsSold in 8 min on first launch outside China

1st In PC Sales

Global PC Market Share

16.7%

1st TEM provider

Global Revenue

40 BN

Ma Huateng Lei Jun Liu Chuanzhi Ren Zhengfei

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The biggest challenge is Newer and Nimbler competition that is threatening to disrupt the “Technology Elephants”

SWARM of BEES UnicornsELEPHANT

Source: Zinnov Research and Analysis

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Enterprises need to restructure 5Ps of their organization to drive IOT innovations

• Feature prioritization• Monetization and business models • Device vs Cloud

• Reduction in product development cycle• Changes to team structure

• Open vs Closed systems• Platform selection: Flexible, Scalable and Stable

HOW Do I shape my Organization’s Strategy amidst the IOT Disruption

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• Internal skill pool vs leveraging external ecosystem • Global talent hot spots

Source: Zinnov Research and Analysis | HBR review

• Outsourcing partnerships• Channel disintermediation

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Enterprises need to conduct a Value-Complexity optimization analysis to define the product strategy for IoT product lines

Val

ue

Cre

ated

Ease of Feature Development

Feature B

Feature I

Feature C

Feature H

Feature G

Feature F

Feature A

Feature D

• What set of connected features to build ?

• Should the company invest in building Greenfield solutions or explore brownfield opportunities?

Ease of Feature Development

• Manufacturability of products• Capability of feature development- Internal vs

Partners• Availability of the right talent / ease of

bringing in talent• Supplier base for new features• Product support for new feature• Infrastructure availability

• Should the company expand its offerings to deliver new features?

Value Created

• Revenues from new features• Newer business stream from new

features( Entry to Services) • Increased Process Efficiencies• Increased Customer satisfaction• Entry into newer segments in market value chain• Enhanced stickiness with customers

IoT PRODUCT FEATURE SELECTION

RODUCTSP

Source: Zinnov Analysis

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• Data Analytics• Software Product development

• Data Analytics• Platform Expertise

• UI/UX• Multimedia (Audio & Visual) Skills

• Software Product development• Architect Design

• Mobility• Software Product development

• Network Management• WAN/LAN understanding

Certain skillsets in the IoT value chain are radically different from the traditional engineering skillsets and may not exist with in the current engineering teams

Data Scientists/Architects

Mobility Experts

UI/UX Designers

IoT Product Managers

NEWER SKILLS• Software Product development

• Agile Methodologies

• Business Knowledge• Communication Skills

NEWER ROLES

• Machine Learning & Big Data

Network Engineers

Cloud Experts

Scrum Masters• Mobility

• UI/UX

EOPLEP

Source: Zinnov Analysis

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Bay Area, Shenzen and Bangalore have the highest concentration of IoT specific talent owing to the presence of product companies, top universities and Startups

City Legend

High

Medium-to-High

Medium

Low

Companies with IoT / innovation labs

San Francisco Bay Area

New York City TorontoPrague

Bangalore

Beijing

BoschTexas Instruments

IBMCisco

GEMicrosoft

Ford DellIntel

Baidu

Big Data, Machine Learning & NLP218 K

Mobility312 K

User Experience Design220 K

2013 2020 2025 2030

Global Talent Pool*

1250K

1850K

2850K

750K

Shenzen

HuaweiEMC

IntelMicrosoft

Israel

EOPLEP

BoschVolkswagen

Germany

Source: Zinnov Annual Talent Study

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Existing product development processes and methods are not well suited for the rapid product development of IoT products

Waterfall Method V Method

―ITERATIVE PROTOTYPING

―INCREMENTAL AGILE

ROCESSP

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Prioritized IoT solutions should implemented in an iterative and incremental manner

People

Tech

Implementation Complete

IoT Solution 1

IoTSolution 2

IoTSolution 3

IoTSolution 4

Implementation in process

Agile methodology is used in the development of the IoT

solutions

IoT Priorities

Update Product Backlog

AGILE DEVELOPMENT

Create Sprint

Backlog

Prepare People, Technology & Org

Structure feature by feature

Implement IoT Solution incrementall

y and iteratively feature by

feature

Sprint Review

Working Solution

Prioritized bucketlist of

features, bugs and

development work by the

Product Manager

A list of prioritized

features to be built for the next sprint

IoT Capabilities should be augmented

incrementally to enable the

implementation of the feature being currently

built

Review for early warning of

broken/ incompatible

features

Incremental execution of prioritized IoT Solution solutions

Process

Continuous Tracking

The Product Development should be executed incrementally and iteratively using Agile methodology ROCESSP

Source: Zinnov Analysis

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New Age platforms are emerging across the IoT horizontals, and Enterprises need to partner with the right platform to build connected products

External Data Sources

Security and Privacy

Product Software

Product Hardware

NetworkCommunication

Data Platforms

ApplicationPlatform

Analytics Platforms

Smart Product Applications

CONNECTIVITY

PRODUCT CLOUD

Integration with Business Systems

Information from external sources such as Location Intelligence,Weather Data, APIs

Connections to existing Enterprise applications-ERP, EAM, PLM, CRM etc.

IoTPlatfor

ms Stack

LATFROMSP

Source: Zinnov Analysis | HBR review

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Enterprises need to establish partnerships across the ecosystem in order to leverage their talent, technologies, expertise and services

1 2 3 4 5Engineering Partners GTM Partners Data PartnersPlatform PartnersInfrastructure Partners

Service Providers with strong product development capabilities. Partner to :• Accelerate Product Development• Complementary skillsets• Domain Expertise

Partners providing sales channels and after sales support including• Channel partners• Managed Services

Vendors• Servicing Partners• OTA upgrade partners

Partnership with infrastructure companies including:• Connectivity Service Provides• Cloud Vendors• Data Centers • IT infra vendors etc.

Technology vendors across the IoT tech stack

Build Open products to communicate with Data and APIs from multiple sources including:• Customer Usage data• Social Data• Public data sources such as location

data, weather data

ARTNERSHIPSPFORGE PARTNERSHIPS ACROSS THE VALUE CHAIN

Source: Zinnov Analysis

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Success stories around restructuring organizations for the connected world reinforce the fact that times are changing, and it is imperative to transform rather than perish!

• Carved out an IoT focussed Business unit • Has setup geographically distributed team focussed on IoT – Bangalore, Germany & Switzerland• Partnered with Institute for Technology Management (ITEM) at the University of St. Gallen since

2012 for developing IoT products

Siemens has restructured its closed system policy to a more open and connected outlook;• Siemens has partnered with SAP HANA Cloud Platform to build the Siemens Cloud for Industry

powered by SAP HANA Cloud Platform as an open cloud platform for analyzing large datasets in the industry

• Siemens plans to create an open IT ecosystem for OEMs and application developers based on SAP HANA Cloud platform.

• Last year launched a new, $100 million fund to back early-stage startups working in the areas of Industrial IoT

Source: CXO Interviews and Company Annual reports

• Revenues of ~1 billion through IoT software business, the fastest a G.E. business has hit the $1 billion mark

• Will open GE predix platform for other device manufacturers allowing companies to build and deploy their own customized software applications on Predix

• Partnering with platform companies throughout the value chain including AT&T, Cisco ,Accenture etc.

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How Zinnov can help you redefine your “Connected World” strategy

ZINNOV IMMERSION WORKSHOPS

HOW Do I shape my Organization’s Strategy amidst the IOT Disruption

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PLATFORMSMeet us to know more

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