A Manufacturing Company How An Industry View Big Data Analytics & Disruptive Technology Chris Ha Caterpillar Inc.
Overview Caterpillar Who we are Big Data Analytics Emerging/Innovative Technology for Disruption Caterpillar s View * Harvard Business Review Online, April 2, 2014 by Eric Night
Overview Caterpillar Who we are Big Data Analytics Emerging/Innovation Technology for Disruption Caterpillar s View * Harvard Business Review Online, April 2, 2014 by Eric Night
Who We Are World s largest manufacturer of construction and mining equipment A leader in diesel and natural gas engines and industrial gas turbines A leading U.S. exporter ($16.6 B) 2014 sales and revenues of $55.1B - 2/3 sales outside of U.S. Global team of more than 114,000 Caterpillar Employees Nearly 500 locations in 50 countries. Over 3 millions products at work in more than 180 countries around the world Dow Jones 30 Index Company $6.25 EPS and 17% dividend increase in 5 years Industries we serve Mining Quarry & Aggregates Large Contractor Waste Industrial Local Contractor Forestry Governmental Paving Electric Power Industrial Power Marine Oil & Gas Rail Data based on year-end 2014
$5M 400 ton payload 4m diameter tire 20 days to assemble
Extended Caterpillar Enterprise Primary distribution is through independent dealers 177 dealers serving 182 countries Dealers develop and support lifelong relationships with customers Dealer financial strength is a competitive advantage ($23.4B) Strategic supplier collaboration Our supply chain: More than 28,000 Suppliers Located in 90 Countries Direct suppliers = 72% Indirect suppliers = 28% Data based on year-end 2014
Investing in Technology and Innovation Rich Technical Expertise 11,000 engineers and technologists 1,103 patents granted 7,833 active patents worldwide Over $2.1B investing in Technology and Innovation Data based on year-end 2014
Overview Caterpillar Who we are Big Data Analytics Innovative/Emerging Technology for Disruption Caterpillar s View * Harvard Business Review Online, April 2, 2014 by Eric Night
Big Data Over 90% of all data exist in the world was create in the past 2 years* Ref: http://www-01.ibm.com/software/data/bigdata/what-is-big-data.html
Big Data Interesting Facts - Every minute 204,000,000 emails 2,400,000 search queries in Google 278,000 tweets 200,000 photos uploads in Facebook 100 hours video uploaded in Youtube (15 years to watch) Industry Impact - Estimation Big Data Industry expected to double every year Healthcare industry can save $300 billion/year RFID tags expect to increase 20,000x in 10 years Retail industry could increase 60% of profit margin 2 million IT jobs created in last 2 years for big data. 6 million total jobs created. Ref: Bernard Marrs Best Selling Authors of Big Data
What is Analytics? *Analytics is the discovery and communication of meaningful patterns in data. Especially valuable in areas rich with recorded information, analytics relies on the simultaneous application of statistics, computer programming and operations research to quantify performance. Analytics often favors data visualization to communicate insight * Wikipedia
Big Data Analytics Ref: http://www.dsssolutions.com/solutions/bigdataanalytics
Overview Caterpillar Who we are Big Data Analytics Emerging/Innovative Technology for Disruption Caterpillar s View * Harvard Business Review Online, April 2, 2014 by Eric Night
What is Common Among These Companies Group A Group B Group C
Business Is Changing Classifieds Record Stores Long Distance Research/Libraries Book/Retail Stores Why?: The cost of replicating digital material is effectively zero.
Time To Be A Billion Dollar Company
How and Why It Is Possible? Internet startup What advantage Start Ups has over Big Company?
Disruptive Technologies Mobile Internet Augmented/Virtual Reality Automation of Knowledge Worker Advanced Materials Internet of Things Advanced oil and gas recovery Cloud Technology Renewable energy Advanced Robotics Autonomous and Near Autonomous Vehicles Genomics Energy Storage 3D Printing Which industry will this disrupt? Ref: McKinsey - http://www.mckinsey.com/insights/business_technology/disruptive_technologies
Innovation Innovation* is a new idea, more effective device or process. Innovation can be viewed as the application of better solutions that meet new requirements, in-articulated needs, or existing market needs. This is accomplished through more effective products, processes, services, technologies, or ideas that are readily available to markets, governments and society. The term innovation can be defined as something original and more effective and, as a consequence, new, that "breaks into" the market or society Company that must co-survive with its biggest competitor Company that owns most real-estate in the world Company with first voice mail and one of first to have global presence Company that owns no assets of its own industry * Wikipedia
Ten Types of Innovation Ref: http://www.doblin.com/tentypes/
Overview Caterpillar Who we are Big Data Analytics Emerging/Innovative Technology for Disruption Caterpillar s View * Harvard Business Review Online, April 2, 2014 by Eric Night
Corporate Endurance Average lifespan of S&P 500 is shrinking* - 1958: 61 years 2011: 18 years In 10 yrs, % 40 of Fortune 500 co. will not exist** In 2027, % 75 of S&P 500 co. will not exist* 100 year old companies are extremely rare - Caterpillar is 90 years old - Caterpillar is one of the few manufacturing companies in Fortune 100 * Harvard Business Review Online, April 2, 2014 by Eric Night ** Babson Olin School of Business, Fast Company April 2011, page 121
Caterpillar Must Innovate Itself or Die
Ten Types of Innovation Ref: http://www.doblin.com/tentypes/
What Are Caterpillar s Competitors Doing?
Analytics Drives Value
Internet of Things and Analytics Network of objects with sensors, software and connectivity Predictive Maintenance and Repair Equipment Care Advisor Manufacturing Efficiency Digital Manufacturing
Big Data and Analytics Video, Images and Audio Video Analytics Operator Fatigue Analysis Image/Lidar Analytics Terrain Analysis Autonomous Truck
Augmented/Virtual Reality/Simulation Augmented Reality Product Catalogue Mine Expo 2012 Virtual Reality Serviceability Audit Factory Layout Machine Simulation Product Development
Caterpillar is Changing Recent Example Data Innovation Lab Exploration of Emerging and Disruptive Technologies Uptake Partnership Predictive Diagnostic Tool through webbased and mobile device YARDCLUB Investment - Peer-to-peer equipment rental startup Caterpillar Creates New Analytics and Innovation Division Product plus Service/Solution based Innovation
Key Takeaways Be Innovative THINK OUTSIDE THE MACHINE Be Adaptive Speed is Key Analytics enables business models that disrupt and drives value Disrupt or be disrupted
Thank you
Back Up Slides
Linear vs. Exponential Linear Vs. Exponential Growth 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 Exponential Trend Linear Trend (Deceptive) Knee of Curve (Disruptive) 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Linear vs. Exponential Why does this matter? EVERYTHING and ANYTHING that is information based or information enabled (digitized) will follow the exponential trajectory regardless of what is happening in the world