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Internet of Things: More than a Trend, a Real Business Opportunity

March 26, 2014
at 10:00 am PST

We live in the age of the mega trends. You name it, from high in the Cloud, to everywhere Mobility, Big Data, Social, Analytics and more. The Internet of Things (IoT) became part of that select group of mega trends not that long ago, and its relevance, support and understanding have been growing steadily for the past couple of years.

But IoT is more than just a trend. For business it represents a huge opportunity to create and deliver new and better services to their customers. How big? It depends who you ask, but no matter which group you ask, from the most respected analyst firms to the thought leaders in the industry, they all agree that the opportunity is massive, real, and here now.

Now, from our perspective as a technology solutions company, and reflecting on the topics we are covering with our partners at the World Wide Partner Summit this week in Las Vegas, I believe the following four points can help to explain how relevant IoT is from a business perspective:

  • IoT is a Greenfield Market. The Internet of Everything (IoE) is about connecting the unconnected – People Processes, Data, and Things -- and by our estimations 99% of the Things in the world that could be connected, remain unconnected today. The first 1% is what Cisco and our partners have been working to connect for the past 3 decades. That other 99% is what is called the IoT. How is that possible? Well it’s quite simple. For the most part, the Internet as we know it is a network of computing devices (PC’s, tablets, smartphones, servers). While the IoT is a network of “things”, such as sensors, signals, meters, motors, actuators, cameras, etc. And how big is this market? Cisco estimates that the total addressable market for IoT for us and our partners will be $27B by 2016, growing at 42% CAGR. How is that for a net-new business opportunity?
  • IoT Devices are Not Computers. It is not that you can’t connect a computer to these networks (actually, sometimes you really can’t). What is different about IoT is that the rest of the devices connected to these networks are not traditional computing devices.  They are usually designed for a particular purpose only, they use different communication protocols (not IP), and they live in disparate networks (convergence has not happened here yet). The information flows on these networks are not focused on moving massive amounts of data, voice and video in an any-to-any fashion, but is focused on automation and control tasks. And most times these devices operate in hierarchical and closed-loop networks… intentionally! But in the end, these are networks, and standardization and convergence will drive BIG efficiencies and better visibility and control across the board, and the market (from the device makers all the way up to the application developers) have already recognized that. For example, according with a recent Lopez Research report, efficiency improvements of 5% in a small industrial power plant generating 15MW can save over $200,000 on average per year. These devices are often rich in data but poor in information, and they need a new level of resilience at scale. They need a new distributed computing model (Fog) and a new platform for application enablement from the core to the edge of the network. And of course they need a whole new approach to security (cyber and physical). Now think about this: by 2020 we calculate we will have over 50 Billion devices connected to the Internet, up from the nearly 7 Billion we have today. This is such a great opportunity for growth and value that can be delivered by our partners!
  • IoT Lives in “Outside”. We have been quite successful delivering solutions for the “carpeted office” for many years now. Cisco products are present today across the Data Center, the Campus and the Branch Offices of small, medium and large companies around the world. Our customers enjoy the value and reach of the networking, collaboration, security, computing and other solutions we offer with our partners. But IoT lives outside, not inside. IoT is the land of the field networks at power sub-stations and oil rigs. IoT is the essential infrastructure and services foundation for the industrial networks at manufacturing sites, refineries, and train stations and tracks. These new places in the network require a different kind of secure, manageable, scalable and reliable infrastructure that can respond to environmental (temperature, shock, vibration, dust, water, etc.), regulatory, mobility and multi-protocol (Modbus, Wireless-Hart, Zig bee, Serial, etc.), requirements that go far beyond what you need in a typical wiring closet.
  • IoT has New Decision Makers and needs an Extended Partner Ecosystem. IoT goes beyond the realm of Information Technology (IT) to address the Operational Technology (OT) space, particularly in some of the industries (like manufacturing, energy utilities, and transportation) where the technology investments are not driven by traditional IT capabilities or careabouts, but by hard business outcomes related to the direct operation of the business and its main output. These new  decision-makers are used to working with a different type of partner, one that focuses on delivering full solutions for operational technology needs where the traditional IT technology elements such as network connectivity, management, security, mobility, communications and other capabilities are embedded into a full package.  This full package for OT is often created to mask the need for any kind of IT-related technical knowledge to operate and support. Simplicity and ease of use are kings for IoT, and the new solutions required by the OT decision makers require alliances between our traditional partners and a new group of ecosystem partners. These new ecosystem partners need the expertise on information technology solutions that traditional Cisco partners have so they can deliver more powerful, converged, secure and manageable OT solutions. While Cisco’s traditional partners need the deep industry expertise that the ecosystem partners have to reach a new level of relevance for the customers they serve. Together they have the opportunity of bridging the conversation between IT and OT, defining the business and technology boundaries and establishing paths for mutual success. This is a win-win proposition for all of them.

This year’s theme for our partner summit is “Amazing Together” and that is exactly what the IoT market expects from Cisco and our partners.  We are working hard to deliver on the expectation, and then some. If you have a passion for IoT, and you are interested in sharing this journey, come and join us.

 

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19 Comments.


  1. I agree that the integration of the IT world with the OT world is just beginning. While most of the media has been focused on consumer applications for IoT, the bigger opportunity is certainly other types of devices and systems as you have mentioned. One of the key areas that MachineShop is focusing on relates to making those old-style devices and systems appear to be connected through the implementation of a subscription middleware layer that handles the communications with those endpoints and effectively allows applications to interact with them using standard RESTful API’s. Once we get to that point, I expect we will see tremendous innovation in OT/IT integration.

       1 like

    • March 26, 2014 at 1:49 pm

      Hi Greg, thanks for the comment. And you are right. Consumer oriented products get a lot of attention, and they have their own set of values (bot for the user and the companies providing those solutions). But IoT its more than that, and it will help us to go from B2B to B4B. The incredible number of opportunities that IoT can deliver in terms of automation, efficiency and control require a new model for things-to-network-to-app interactions where REST API’s and other middleware mechanisms are key for smooth, easy integration, and also to address security and privacy concerns. There is a bright future ahead for sure.

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  2. Dinesh Sharma

    Roberto, great post. I’m especially drawn to the fourth point. The collapsing of previously disparate responsibilities is going to be interesting and, potentially, challenging. Getting operational executives to comprehend the value delivered by IoT is going to require companies like SAP and Cisco to convince these executives of value-based outcomes that deliver to the bottom-line now, as well as the opportunities that will surface when IoT becomes part of the fabric of their enterprise and pervades every process and workflow they have. Looking forward to the challenge!

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    • March 28, 2014 at 9:59 am

      Thanks Dinesh. Fully agree! IoT can not only expand the reach of our partners, but I am confident it will to create incredible new opportunities for greater relevance for both IT and OT decision makers. We are very happy and excited to be partners with SAP in this journey.

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  3. @Roberto, While the IoT is a big opportunity and at the same time, one of the biggest challenges with the early adoption and proliferation of the Internet of Everything (IoE), Internet of Things (IoT), and the Industrial Internet concerns information management and legal aspects that surround the storage, distribution, and sharing of the information. Due to its sensitivity and the impact on the governments and people, the National and Internet Regulators (Aviation, Railways, Shipping, Transportation, Utilities, Healthcare, Telecom, etc.) have to work in tandem with the National Security and Intelligence Agencies to develop policies, standards, guidelines, and best practices and to enforce compliance through some kind of rating system as that of Financial Markets.

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    • March 31, 2014 at 7:06 am

      @Fasih Sandhu – Thanks for the comment, and fully agree. Security and privacy are top of mind concerns for most information technology solutions, and they have found its place as top of mind in IoE and IoT. The value and the threats do not come alone from the data, but with the capability to quickly analyze the data and correlate it in a way that will become meaningful information. We live in the age of the social networking tools, and as much as we don’t like at a personal level a lot of people has exposed to the world much more data than what the business will ever show. So from a business perspective we are starting on a playing field that is by definition more secure and private, and building on it to achieve a good level of security and privacy for IoT should take less time than doing the same at the consumer level.

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  4. Ajilon are keen to be involved. Across our industry verticals we have deep operational technology expertise. Our heritage is IT (Consulting, Implementation and Managed Services) but our daily bread is OT. We bring the discipline of IT to the OT space. The internet of things is a logical extension of our business model.

    Regards,

    Brad Parsons
    Consulting Principal

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    • March 31, 2014 at 7:08 am

      @ Brad Parsons – Thanks Brad, if you want to join us in this journey, please get in touch with your local Cisco representative. We have just announced a new ecosystem partner program and companies like you sound like the perfect fit. Thank you!

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  5. What Cisco hardware will run IOx? If we want to load our application software for an edge solution – connected grid router? others? Love to know when it’s order able.

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    • April 4, 2014 at 9:41 am

      Hi Marti O, intially we are supporting IOx in the connected grid routers and the 819 ISR. We will extend the range of products shortly. First SW version with IOx support will be available this summer. Thanks!

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  6. April 7, 2014 at 1:03 am

    It will take a tremendous effort of collaboration between different levels of the supply chain and a lot of creative thinking in the implementation to accomplish this grand vision. Especially if the contribution is from the end devices consumers are already familiar with (e.g. air conditioners in HEMS). How developers utilize this device to contribute to the integrated system automation and analytics will play a huge part in the success and growth of IoT/IoE.

    Speaking from the angle of IoT H/W solution development I found that it is also very important to wrap our heads around the fact that IoT is NOT a segment or industry but an application concept that elevates the existing applications into a cohesive service between supply chains. You don’t just slap on a WIFI dongle onto an air conditioner, connect it to the cloud for remote access using your Smart Phone and call it an IoT device. However I see a lot of end device developers itching to join the IoT/IoE world but still struggle with the concept and the implementation.

    Basically a less intelligent way to reiterate your third point that IoT lives on the “Outside” :)

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    • April 7, 2014 at 6:22 am

      Hi Randy, you are correct. The level of collaboration needed between stakeholders for the growth of IoT is not small. The consumer products angle will be one that will see many iterations of this effort given the diversity of opinion and use cases. We believe that collaboration of the interested parties in the business side of IoT is something that can be achieved faster because the applications and use cases carry individually a larger benefit, and the number of stakeholders is also smaller. And again you are correct about IoT not being on one segment or industry. The implications and opportunities for IoT are available across many industries and use cases, and go beyond connectivity. Security, management, distributed intelligence, resiliency at scale, application enablement are all key requirements for IoT. Thanks for you comments very interesting.

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  7. What we’re seeing on the ground is CEO’s being excited by the prospect of IoT and the new business it can bring while CIO’s are concerned with the complications this will bring. Our job, as parties in the networking world, to make sure the CIO’s have the tools to support their businesses through this transition and beyond.

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    • April 14, 2014 at 8:46 am

      @ Yonadav. I can certainly see how CIO’s can be concerned about the IoT implications. It seems that they just came up to breath after the whole BYOD implementation, and now this new area is emerging. Bringing IT and OT together, and helping to define the technology and business process boundaries, and finding mutual paths for success will be critical for successful implementations of IoT solutions, and for the growth of their companies.

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  8. More great discussions on what’s here and now for the last 2 years.

    Have been connection to things (pressure transmitters, level transmitters and smart gear for recycled water processes including web cameras and operating off the iPads as soon as they had 3G connectivity. What a difference to operator involvement and productivity with huge reductions in call outs and the mantra the “Operators Live a normal Life” being realized – have some great stories about convincing management it’s not an overkill – they saw it as “connecting computers” not the brains of the instrumentation on the iPad

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  9. What are the main factors that will affect IoE in the wake of Cisco’s vision for IoE in the nearest future?

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    • May 14, 2014 at 7:40 am

      @ Noah – Thanks for the question! I believe that IoE implies a solutions-centric approach to deliver value, directly tied to business relevants outcomes, as such it should be understood in terms of a business-level discussion, not a technology discussion. Making clear the benefits of IoE to LOB decision makers and focusing on the outcomes and measures of success and not in the components and technologies involved will be a major factor to deliver on the vision we have outlined. And we are working hard to make it happen!

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  10. April 22, 2014 at 10:21 pm

    Thanks for your comments. IoT will certainly open interesting opportunities for consumer markets and devices. At the core of those great experiences we need to enable a smarter infrastructure and application platform that leverage secure presence and location information services, and can gather the massive amounts of data that the devices create and turn it into useful insight. Only then these mobile experiences we can enjoy today will be enabled to take a leap and achieve the next level of sophistication and automation that users are craving to have.

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