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

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.