The Possibilities of The Internet of Everything Economy #IoE
The only constant is change – and companies that do not change get left behind. My perspective is that it’s best to accept change as inevitable – to embrace it, lead it, and use it to shape desired outcomes. As I discussed previously, many of today’s leading trends –what I call market transitions – are combining into the Internet of Everything, which we define as the intelligent connection of people, processes, data, and things.
Disruptive innovation is fueling the emergence of the Internet of Everything. I attended the World Economic Forum recently and much of the discussion in Davos focused on the state of innovation. At Cisco, we believe the world has never been more innovative, and this is reinforced in our ongoing discussions with many business and technology leaders.
In an effort to better understand the extent of the opportunity for our customers presented by increasing connectedness, Cisco has conducted analysis on the potential economic impact of the Internet of Everything, the findings of which we’re releasing today. Our analysis indicates that there is as much as $14.4 trillion of potential economic “value at stake” for global private-sector businesses over the next decade, as a result of the emergence of the Internet of Everything.
We define the potential value at stake to be a combination of net new economic value created as a result of the Internet of Everything, as well as value that will migrate from lagging companies and industries to those that take advantage of new innovations — minus the cost of implementation. Based on our analysis, the Internet of Everything has the potential to increase global corporate profits by approximately 21% in aggregate over the next 10 years.
I believe that businesses and industries that quickly harness the benefits of the Internet of Everything will be rewarded with a larger share of that increased profitability. This will happen at the expense of those that wait or don’t adapt effectively. That’s why the value is “at stake” – it’s truly up for grabs.
Our economic analysis uses a “bottom up” approach that analyzes use cases in which data is available, as opposed to a “top down” approach that relies heavily on broad assumptions in terms of productivity improvements and GDP growth. Some of the use cases, such as the adoption of collaboration technologies and increased teleworking, span across industries, while others are specific to a certain industry.
It’s important to keep in mind that this analysis focuses solely on the value at stake for private-sector businesses worldwide. When, on top of this, you factor in societal benefits to citizens, communities and countries, as well as consumer benefits, you begin to get a sense for the Internet of Everything’s potential to enable improved quality of life, richer experiences, new capabilities and increased economic value.
We’re committed to understanding how this increasing connectedness will impact our customers. We’ve begun with this economic analysis on the opportunity for global business over the next decade. We will follow that up with additional research later this year that will provide insight into the current state of connectedness among businesses worldwide in 2013. This information will allow business leaders to understand the progress they are making toward capturing their share of the $14.4 trillion potential value at stake.
Along with great opportunity, the emergence of the Internet of Everything will present technology, organizational, process, regulatory, cultural, and other challenges. We need to collectively solve them because the benefits of increased connectedness, to business and society alike, far outweigh these challenges. We also need to work to protect the privacy and security of individuals and organizations of all kinds, giving them the power to choose and control how their information is shared. We need to reinvent education and training to address the changing needs of our world.
Change is inevitable and uncertain – it involves innovation and courage. Cisco is committed to not only changing the way the world lives, works, plays and learns, but to changing it for the better.
(Editor’s Note: More details on the methodology used in the analysis, the included use cases, and breakdowns of the value at stake by geography, industry, and business focus areas – such as enhancing customer experiences or improving productivity and asset utilization – are found in the full-length white paper and our Frequently Asked Questions document. Additional information about Cisco’s efforts in “Internet of Everything” can be found here.)