Transformational characteristics of IoT solutions for enterprises and smart cities

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1 Machina Research Transformational characteristics of IoT solutions for enterprises and smart cities Andy Castonguay, Principal Analyst August 2015

2 Connections (billion) Smarter connected devices reach close to 39.2 billion connections by 2024 Global M2M and PC, tablet and handset connections, Source: Machina Research % 35 70% 30 60% 25 50% 20 40% 15 30% 10 20% 5 10% 0 0% All M2M PCs, Tablets & Handsets % M2M Machina Research 2

3 Traditional M2M markets are changing to support an emerging IoT world Traditional M2M markets Solutions were designed to monitor hundreds and thousands of remote assets Solutions were structured as vertical stovepipes : typically standalone developments Application development required developers to consider the entire functionality stack Emerging IoT world Solutions will be required to monitor, manage and actuate millions of remote assets and devices Solutions will be designed with shared functionalities in mind to enable multiple uses Developers will focus on applications, requiring access to more off the shelf enabling functionality Machina Research 3

4 Enterprise IoT is fundamentally changing the business of companies Products Isolated Operational Technology Service Innovation Smarter Products Connected OT + IT Convergence Servitisation Embedded and enhanced processing power Greater data capabilities Bi-directional communications Pervasive coverage and greater bandwidth Multiple technologies Real time communications Applications and data Integrated/advanced analytics Shift in traditional product design Products designed with integrated services New business models Competitive Advantage Machina Research 4

5 Four Enterprise IoT service opportunities that have really started to change relations Predictive maintenance Ongoing customer relations Business models Data sharing Connected devices provide real-time performance data enabling advanced predictive analytics Connected devices provide manufacturers with ongoing relations with end users through their products Connected devices enable usage monitoring of machines and pay as you use models Range of different connected devices will provide a steady stream of data Reducing potential downtime and lost production Brand strengthening and long tail sales Competitive pricing models for end customers Opportunity to design new products and services e.g. engine maintenance, manufac turing, etc. e.g. connected car, white goods, etc. e.g. car sharing schemes Zipcar, City Car Club, etc. e.g. smart cities Machina Research 5

6 Enterprise IoT opens new service opportunities for companies and changes business models here are a few examples Performance Analytics Product & Service Development Asset & Inventory Management Customer Experience Preventive Maintenance & Warranty Management Workflow optimisation Usage billing Machina Research 6

7 Enterprise IoT will require companies to adapt to a new business environment Scalability Machines Applications Data Agility Dynamic objectives Changing requirements Developing opportunities Enterprise IoT Flexibility Open & Closed Systems Partnerships and Collaborations Business models Modularity Reusable software building blocks Uncertainty Unpredictability Strategic rather than operational decision Machina Research 7

8 Connecting medical machines raises reliability while lowering risk and costs Swedish medical device, Elekta, manufactures capital intensive radiation machines for cancer treatments Cancer therapies represent one of the largest revenue generating services for hospitals, with machines often treating 40+ patients per day Connected radiation machines and components generate more than 1 billion data points for performance analysis and integration to Salesforce.com, improving customer service Through analytics of performance data, Elekta has reduced unscheduled on-site maintenance visits by 30% and created new preventive maintenance capability Source: Machina Research, Elekta

9 Masternaut s service reduces costs, eco footprint and errant driver behavior UK-based Masternaut is one of the largest European telematics service providers. Masternaut s platform data enables comprehensive analysis of fleet condition, route optimization, driver behavior and delivery Leading security firm, G4S, saved GBP1.1m in fuel due to improved analytics of driver behavior and vehicle performance Business impact of Masternaut s telematics service includes fuel savings (typically in the 10-15% range) and route optimization (reducing delivery times by 10%) Source: Machina Research, Masternaut

10 Maersk modernizes global cold chain fleet through wireless connectivity Source: Machina Research, Maersk Line International shipping competition requires unique and global level of container monitoring and data analytics Comprehensive wireless design integrates short range, mobile network and satellite technologies to provide top level of cold container performance monitoring Performance monitoring of its shipping fleet has

11 Recommendations and Conclusions for Enterprises Prepare to change minds in the organisation Plan an IoT roadmap by identifying and prioritising Enterprise IoT opportunities Ensure that the IoT roadmap is consistent with corporate strategy and IT infrastructures Invest as you go Recognize collaborative advantage may now displace competitive advantage Machina Research 11

12 Drivers for the smart city Urbanisation: >50% of the world s population now lives in cities Relieving pressure on finite resources and capacity Achieving operational efficiency Residents are more aware of their surroundings and readily have access to information Reducing carbon footprint and improving sustainability Pervasive connectivity technologies Government push (including stimulus plans) Improving living & working conditions to attract investment Machina Research 12

13 Key themes emerging in smart city solutions Cost saving initiatives are leading the charge (e.g. smart street lighting) Green initiatives are gaining momentum Comprehensive network infrastructure makes life a lot easier Strong leadership is needed to manage and drive the smart cities agenda Open standards are a must Contactless payment systems are fast becoming a must for public transport A long term framework for smart cities is needed, and it should include implementation plan for city platform Machina Research 13

14 Total revenues (USD bn) Total connections (bn) The supply side opportunity is significant - here we highlight 4 application groups Smart city connections, worldwide Source: Machina Research, The Road Traffic Management application will generate the most connections within Smart Cities over for next 10 years #REF! Road Traffic Management #REF! Public Transport However the application with the most expected revenue is Environment & Public Safety until 2021 Clearly the revenue/connection for this application is higher compared to traffic management Smart city revenues, worldwide (USD bn) Source: Machina Research, Machina Research #REF! Road Traffic Management #REF! Public Transport

15 Drancy: a successful CCTV deployment Population of 80,000, region of Paris Deployed 300 CCTV around the city Cloud based solution Crime rate reduced by 30%, attracted new investment from the business community creating new jobs as well as retaining residents New fibre network was installed to support the service. 45km of fibre was laid The city was able to replace old analogue telephony with IP based equipment, substantially reducing operating costs Residents enjoyed high bandwidth at home due to the new fibre network Plan to improve video quality from HD to 4K within the next couple of years Machina Research 15

16 Dynamic public transport project saved Helsinki City 4.6m annually Helsinki partnered with Mattersoft to wirelessly connect vehicles and trams, monitor performance, and integrate vehicle data with traffic light controls. Pilot program launched in 2006, resulting in 4.6m in cost savings in 2008, and led to full roll-out in 2011 Traffic lights prioritization resulted in route completion time savings of % and improving fuel efficiency due to less idling time Platform now combines telematics integration, on-vehicle Wi-Fi, real-time digital information displays for riders, mobile apps and third-party development platform

17 SFpark reimagines city parking dynamics through wireless connectivity Uniquely pairs public demand for parking with real-time parking availability, location and pricing Parking data analytics creates platform for dynamic pricing capabilities On-street meter pricing reduced by 11 cents, offstreet garage pricing decreased by 42 cents Vehicle miles traveled and gas emissions reduced by 30% as a result of less circling in search of parking Time to find parking decreased by 43% Traffic volumes decreased by 8% in areas where SFpark improved parking availability and double parking was cut by 22%

18 Smart cities are a compelling but complex opportunity A city manager s goals are much more complicated than an industrial commercial manager s goals Currently most smart cities thinking is supply side oriented Point applications should be deployed with a view to future IoT solutions Each city is unique and should be treated as such, with a uniquely optimised implementation plan Machina Research 18

19 Thank you. Andy Castonguay Principal Analyst Mobile: Machina Research

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