Impact of Internet of Things (IoT) on Industry and Supply Chain

Transcription

1 Impact of Internet of Things (IoT) on Industry and Supply Chain

2 Agenda Safety Message Part One CPS Energy Story Part Two The Digital Wave and the Internet of Things (IoT)

3 CPS Energy Overview Largest municipally owned, vertically integrated electric & gas utility in the nation- 756K Electric & 334K gas customers Lowest energy rates among the top 10 largest U.S. cities Designated by Bank of America Merrill Lynch as the Premier Credit Rating in industry Innovative public private partnerships have yielded 600 jobs & $800M in economic impact to-date in local San Antonio community $11B in asset base, $2.5B in annual revenue 14% of customers are on a Demand Response program, equivalent total 135MWs San Antonio Ranks 6th in Nation for Solar Energy * Vision 2020 transitions CPS Energy from a company that is highly dependent on power from traditional generation sources to a company that provides competitively priced power based on a diverse generation portfolio. *Source :Environment Texas Research & Policy Center, April 2014

4 Why CPS Energy is changing

5 Why CPS is changing.. Declining Demand 15% 10% 5% 0% -5% U.S. Electricity Demand Growth (Annual and Moving Average in %) Three-Year Moving Average 2012 Historical Trendline Projected Latest EIA projection* Average: 0.9%/year Primary product of electric utilities continues to decline year over year Sources: *EIA, Annual Energy Outlook 2013; EIA, Monthly Energy Review (Dec. 2013); ScottMadden analysis

6 Why CPS Energy is changing. Low Barriers to Entry Share of Wallet 3% New Game Players 97% Electricity and Gas Everything Else *Table : Size of consumer unit: Annual expenditure means, shares, standard errors, and coefficient of variation, Consumer Expenditure Survey, 3rd quarter 2012 through 2nd quarter 2013 (Four Person Family) Analytics and understanding customer behavior is critical to future growth

7 Why is CPS Energy is changing. Technology Change is Inevitable OT/IT Convergence No Technology 100 years Analog 89 years Digital 10 years Emerging technologies will continue to be more automated and less invasive while providing greater value.

8 Why CPS Energy is changing. Declining Solar Costs *Source: Lawrence Berkeley National Laboratory

9 THE CPS Energy Story Interoperability by open architecture Traditional Energy System Future Energy System The Grid Interoperability between providers and customers creates most value: prosumers

10 THE CPS ENERGY STORY Adapt and Innovate Diversity of Generation Natural gas bridge fuel Incremental integration of renewables Grid of the Future Interoperability via Open Architecture Data Analytics Public Private Partnerships Technology/Innovation Economic Development / Education Human Capital Investment Training & development De-bureaucratizing

11 The Digital Wave and the Internet of Things (IoT)

12 The Digital Wave and the Internet of things (IoT).and what is IoT? IoT is basically connecting any device with an on and off switch to the internet. This includes: Cell phones Coffee makers Washing machines Wearable devices Machines Purchasing systems Grids Games And everything else

13 IoT Key Facts 4.9 billion connected things will be in use in 2015 (up 30% from 2014) By 2020, the amount of Internet-connected things will reach 50 billion, with $19 trillion in profits and cost savings coming from IoT over the next decade, according to Cisco Systems Gartner predicts 250 million connected vehicles with automated driving capabilities by 2020 Only 0.06% of things that could be connected to the Internet currently are, which means 10 billion things out of the 1.5 trillion that exist globally are currently connected. Connected homes will be a huge part of the Internet of Things. By 2019, companies will ship 1.9 billion connected home devices, bringing in about $490 billion in revenue. GE estimates that convergence of machines, data, and analytics will become a $200 billion global industry over the next three years. By equipping street lights with sensors and connecting them to the network, cities can dim lights to save energy, only bringing them to full capacity when the sensors detect motion. This can reduce energy costs by 70% to 80%.

14 The Internet of Things: 50 Billion Things by 2020 Not primarily controlled by humans Unique IP address Permanent connection to Internet Examples: Smart meter Act as gateways or aggregators Unique IP address Permanent connection to Internet Examples: Smart hub No direct connection to Internet No unique IP address Access through gateway Examples: Connected lights (mesh network) Source: Gartner

15 The Digital Wave and the Internet of things (IoT) Everyone is going digital, but what does that mean? Digital is made up of four aspects: Social Cloud Digital Mobile Big Data

16 Digital and the IoT How does this impact you? The new rule for the future is going to be, anything that can be connected, will be connected. Why should we change? Source: ITU, adapted from the Nomura Research Institute, Ubiquitous Networking: Business Opportunities and Strategic Issues, August 2004 Opens the door to a lot of opportunities Remain competitive Technology consumerization is driving transformation in the utility business model

17 Digital and the IoT impact on Supply Chain How does Digital and IoT impact supply chain organizations? Greatly broadens the number of locations along every product s value chain that will now be monitored. Dramatically improve marketers ability to sell desired products to specific customers exactly when they need or want them. Speed up the product cycle all of which will dramatically increase the pressure on supply chains to perform faster, more efficiently and at lower cost. Changing how supply chain teams need to be organized and managed Potentially changes a companies control points for managing the value chain Changes the role and value of data

18 Digital and the IoT impact on Supply Chain How are Supply Chain organizations handling digital today in general? Many are working to introduce Digital capabilities into their operations with small successes in general Welding digital capabilities onto traditional supply chain structures that combine paper-based processes and newer optimized processes Re-fitting, re-wiring and re-adapting instead of re-inventing Overall, results yield unrealized performance because of inconsistent data and a myriad of inefficiencies

19 Digital and the IoT impact on Supply Chain Where does Supply Chain go from here? The Emergence of the Digital Supply Network Social Media can help companies tap outside the walls of the organization Social Mobile Communications can provide real time support for the field Cloud Digital Mobile Analytics can help companies analyze behaviors and improve efficiency Cloud can provide remote access by experts Big Data to help organizations

20 Digital and the IoT impact on Supply Chain How does Supply Chain benefit from the Digital Supply Network? Has the power to drive the convergence of supply chain elements Help companies capture larges savings both financial and efficiency Fosters network processes optimizing the complete enterprise to include: Designers Manufacturers Suppliers Distributors Logistics Customers

21 Digital and the IoT impact on Supply Chain What are the key attributes of the Digital Supply Network? Rapid Enhanced responsiveness Proactive prevention Last mile postponement Scalable Maximum efficiency Organizational flexibility Personalized experiences Intelligent Actionable insights Automated execution Enhanced and accelerated innovation Connected Real time visibility Seamless collaboration Highly evolved operating models Source: Accenture

22 Summary Envision the Power of the Network. At the outset, it is essential to define the digital supply network vision for the organization. Forget Functional Excellence. Once the vision is defined, the next step is to conduct a value chain analysis to identify the valuecreating activities that will to be at the core of the digital supply network. Map Your Digital Journey. With the vision defined and the core activities revealed, a digital blueprint for the organization can be created

23 THANK YOU!