Industrial Internet of Things - Transformation of Products to Services and new Business Models. Frank Schinzel Managing Director Accenture Digital
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1 Industrial Internet of Things - Transformation of Products to Services and new Business Models Frank Schinzel Managing Director Accenture Digital
2 Everyday physical objects are becoming uniquely identifiable and embedded with the ability to connect to other devices or networks Vision - Internet of Things and Services (IOTS) 1) Gartner 2014: The Internet of Things is the network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment; SAP 2013: Systematic use of the Internet for new ways of value creation in the services sector. We frequently called it the Internet of Services. 2
3 Everything is digital, Everything is connected bn people 0.7% connected bn people 15% connected bn people 75% connected in 2015 >10 bn devices will be connected @ 3
4 Help! My fridge is full of spam and so is my router, set-top box and console Security company says it discovered spam and phishing campaign run over Christmas, which involved internet fridge In the 'internet of things cyberattack", more than 100,000 everyday consumer gadgets were attacked, including an internet fridge. Photograph: Martin Argles for the Guardian If you thought the internet fridge was a bad idea, here's confirmation: a security company says an internet-connected fridge helped send more than 750,000 spam and phishing s over the Christmas break. Source: The Guardian, Charles Arthur 4
5 A convergence of technology forces is changing the industrial ecosystem, triggering the Digital industrial revolution or Industry 4.0 The Digital Industry Drivers for change Technology Progress + Smart Devices = Cyber Physical Systems (4 th Industrial Revolution) Connectivity Hyperscale Data Centers Analytics and Algorithms Chip Miniaturization Internet Backbone CPU Performance Software Push LTE Connected, always-on, intelligent, software & data powered autonomous devices Profound changes in the entire industrial ecosystem 5
6 Past & Present Technological progress made possible through Embedded Software & miniaturization. 6
7 As we speak, within 60 seconds 700 new Twitter accounts & 140,000 tweets 170 million s sent 700,000 Facebook status updates 700, videos uploaded search engine inquiries 7,000 pictures uploaded 370,000 Skype voice-calls Data is increasing faster than ever before! 7
8 Huge Data Lakes How is this possible? Over the past 30 years, the cost per gigabyte of hard disk data storage has halved every 14 months Cost per GB of Hard Disk in US $ US $ US $ Cost per GB of Hard Disk in US $ Copyright 2014 Accenture All rights reserved. 8
9 Who will be affected by the Internet of usual suspects? NO! No Sector will be excluded! 9
10 A sobering fact 52% of the Fortune 500 firms since 2000 are gone 10
11 And the next decade doesn't bode that well for those companies that don t adapt 11
12 12
13 A few trends that are making a big impact Shopping Watching Learning Staying Healthy Travelling Paying Working Make it mine Every product is a service in waiting Access not assets Share with strangers Copyright 2015 Accenture 13 All rights reserved. These new business models are all enabled by analytics, outsourcing, and globalisation 13
14 In 2015 Uber, the world s largest taxi company owns no vehicles S o f t w a r e Facebook the world s most popular media owner creates no content Alibaba, the most valuable retailer has no inventory Airbnb the world s largest accomodation provider owns no real estate 19
15 We believe there are 6 no-regret capabilities required to win in next few years Sense and interpret disruption Understand and leverage data Build a high Digital Quotient team Partner and build camps" Reorganise for speed Develop and launch new ideas faster 15
16 Your industry and next competitive frontier is being redefined by software NEW INDUSTRY LEADERS WILL EMERGE FROM SOFTWARE-DRIVEN BUSINESS MODELS Auto makers, for example, use their connected vehicle ecosystems to innovate with new partners. INDUSTRY EXPERTISE COMPETITIVE ADVANTAGE Software is a disruptive force in every industry. Competitive windows open and close faster than ever before. Will you take the lead, or get left behind? SOFTWARE STRATEGY 16
17 Are you ready for the high-velocity, software-driven world? BUSINESS CHALLENGES Siloed business and IT functions hinder agility Expanding business ecosystems and the Internet of Things IT CHALLENGES Weight of legacy Rising application complexity 67% 70% 50B 640,000 67% of IT budgets go to run the business Source: Figure 11, IT Key Metrics Data 2014: Key Industry Measures: Cross Industry Analysis Multiyear, Gartner, December 16, % of business transactions are still processed in COBOL 50 billion things will be connected to the internet by 2020 Partners in Microsoft s ecosystem Source: InformationWeek Source: Cisco Source: Microsoft Partner Network Guide 17
18 Example New Partnerships & Ecosystems SOURCE: 18
19 Example 3D Printing 3D printed meat production will become technically feasible and could create competition for traditional meat producers as consumers will ultimately be able to print their own meat products although much research and development still remains, say American food academics. 19
20 Example 3D Printing SOURCE: 20
21 The IoT vendor landscape has grown 3x in the last 20 months Reference IoT Landscape FirstCapital/ TechCrunch May 2013, 199 vendors December 2014, 612 vendors 21
22 Automotive Next Generation 22
23 Healthcare Next Generation 23
24 My Dad says you are spying on us online! He s not your Dad 24
25 Attacks on critical infrastructure have already begun BUSINESS SYSTEMS CENTRAL CONTROLROOM IP NETWORK REMOTE DISTRIBUTED CONTROLUNIT (DCU) WIRELESS LAN PROGRAMMABLE LOGIC CONTROLLER SENSORS ACTUATORS Application Domain Network Domain Process Domain THREATS Operating system and enterprise application vulnerabilities, and pointed attacks like social engineering allow attackers to gain access to process control systems via enterprise systems used for business operations Exploiting various vulnerabilities in the operating system and communication protocols enable the impersonation of devices or insertion of rogue devices leading to unauthorized network access ICS components are often located in geographically remote areas and can be vulnerable to physical attack. Legacy communication protocols for ICS equipment also leaves them vulnerable to man-in-themiddle (MITM), denial-of-service (DoS) and data manipulation attacks EXAMPLE In 2014, the German Federal Office for Information Security reported how a steel mill was severely damaged in a cyber attack resulting from information obtained through a spear phishing attack In 2007, a nuclear power station in Alabama was forced to shutdown by a large spike in local network traffic resulting in unresponsive control systems In 2010, the Stuxnet worm attacked industrial PLCs and manipulated pressure, vibration and rotation parameters so that destructive commands could be issued to uranium enrichment centrifuges without detection 25
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