Driving IOT Innovations

Delivering the connected experience

May 2015

Pari Natarajan and Hardik Tiwari - Zinnov LLC

1
 As the next evolution of computing, the Internet of Things market is becoming bigger
than all the previous technology markets

In 2020 there will be ~50 Billion Creating a behemoth market of

... And a 50 times growth in digital universe
devices connected to the internet “INTERNET of THINGS”
of Businesses and “Things”

9 50
0.8 ZB
€6.3TN
MARKET IN 2020
x 50
2010 2020 2010 2020

WHY NOW
Rise of affordable, high- Miniaturization and decreasing
Ever-increasing network capacity
performance computing cost of Sensors

Inexpensive and ubiquitous Emergence of new IPV6 protocol China and India ecosystem
connectivity
Source: Ericsson IoT study | IDC market Study 2
 And the IoT early adopters are building products that offer higher reliability, better
asset utilisation and newer functionalities to drive new revenue streams

GE
Increased Efficiency

Additional Revenues Structural Health Monitoring of Engines

€1 Billion Connected Medical Devices

Revenues in 2014 from IoT

GridIQ solutions

€6.4 Billion
Worth Efficiency gains for Connected Factories
customers

50 million pieces of data from 10 million sensors, off equipment worth $1 trillion across1.4
million pieces of medical equipment and 28,000 jet engines
Source: GE Annual Report | CXO Interviews 3
 … and also enhance the customer experience by delivering better and faster product
support and services

Update your car, while its parked in your vs

garage.
A tale of two recalls

GM prepares Tesla engineers

dealerships and prepare software
shops to take in update that can
a large number of
US Govt. orders fix the problem
cars for fixes recall for both

GM bears Tesla makes the

enormous cost – fix available
Performance Tuning meets IoT the recall hurts
Tesla performs fix
overnight – all
annual revenue cars fixed in 1
Tesla has fundamentally changed the way you can fine-tune the projections overnight week at 0 cost
performance of your car; what once took an expensive and long trip
to the garage is now being delivered via over-the-air software 11

updates
Source: Market Releases 4
 Enterprises are building connected and smarter products with diverse maturity levels
and functionalities to deliver more value to the customer

AUTONOMOUS

OPTIMISE

CONTROL
Value Creation

Autonomous Haul System (ahs)

MONITOR Predictive Maintenance

Solution
Home Automation Solution
Google Car

Continuous Glucose Monitor Phillips Wireless GE Predictivity

Lighting
Autonomous
Drones

Schneider Remote Nest Cam Airbus Structural Health

Asset monitoring Monitoring

Functionality
Source: Zinnov Research and Analysis | HBR review 5
 As a result of rapid adoption of IoT across verticals, Enterprises are forced to undergo
and manage change across multiple dimensions
5 dimensions of Change Case in Point
Automotive

Changing Customer
Demands/ Behaviour
PRODUCTS
Customer requirement changing from faster or Fuel
efficient cars to better in-car experience

Changing Skill
Requirements
PEOPLE
Need for newer skills- Data Scientists, Mobility, UI etc.

Changing
Development
Processes PROCESS Hardware development and Manufacturing cycle to
Agile Software development cycle

Changing Supplier
Landscape PLATFORMS
Emergence of Software Suppliers – Google, Apple,
Elektrobit etc.

Source: Zinnov Research and Analysis

Changing Business
Models PARTNERSHIPS Business model moving from Ownership to On-
Demand – Need for newer sales partners
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 And amidst the change, Enterprises are facing competition from newer set of peers- The
Chinese Enterprises

Chinese enterprise are using their cost innovation model to compete with the commoditized product
lines of companies in developed countries.

Ma Huateng Lei Jun Liu Chuanzhi Ren Zhengfei

4th USD 45 BN 1st 1st

Largest internet
Valuation In PC Sales TEM provider
Company

150 MN 5000 units 16.7% 40 BN

International Sold in 8 min on first Global PC
customers launch outside China Market Share Global Revenue

7
 The biggest challenge is Newer and Nimbler competition that is threatening to disrupt
the “Technology Elephants”

ELEPHANT SWARM of BEES Unicorns

Source: Zinnov Research and Analysis 8

 Enterprises need to restructure 5Ps of their organization to drive IOT innovations

P RODUCTS
•
•
•
Feature prioritization
Monetization and business models
Device vs Cloud

P EOPLE
• Internal skill pool vs leveraging external ecosystem
• Global talent hot spots

HOW P
Do I shape my ROCESS
• Reduction in product development cycle
• Changes to team structure
Organization’s Strategy

P
amidst the IOT Disruption

LATFORMS
• Open vs Closed systems
• Platform selection: Flexible, Scalable and Stable

P ARTNERSHIPS
Source: Zinnov Research and Analysis | HBR review
• Outsourcing partnerships
• Channel disintermediation
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 Enterprises need to conduct a Value-Complexity optimization analysis to define
the product strategy for IoT product lines P
RODUCTS

IoT PRODUCT FEATURE SELECTION Feature F

Feature A
Value Created

• Revenues from new features

Value Created
Feature B Feature G
• Newer business stream from new features(
Entry to Services) Feature H

• Increased Process Efficiencies Feature D

• Increased Customer satisfaction
• Entry into newer segments in market value chain
• Enhanced stickiness with customers
Feature I

Feature C
Ease of Feature Development

• Manufacturability of products Ease of Feature Development

• Capability of feature development- Internal vs
Partners
• Availability of the right talent / ease of bringing in
talent • What set of connected features to build ?
• Supplier base for new features • Should the company expand its offerings to deliver
• Product support for new feature new features?
• Infrastructure availability • Should the company invest in building Greenfield solutions or
explore brownfield opportunities?
Source: Zinnov Analysis 10
 Certain skillsets in the IoT value chain are radically different from the traditional
engineering skillsets and may not exist with in the current engineering teams P
EOPLE

NEWER NEWER
ROLES SKILLS
IoT Product Managers •
•
Software Product development
Agile Methodologies
•
•
Business Knowledge
Communication Skills

•
Data Scientists/Architects •
Data Analytics
Platform Expertise
• Machine Learning & Big Data

• UI/UX
UI/UX Designers • Multimedia (Audio & Visual) Skills

• Mobility
Mobility Experts • Software Product development

• Data Analytics • Mobility

Scrum Masters • Software Product development • UI/UX

Network Engineers •
•
Network Management
WAN/LAN understanding

Cloud Experts •
•
Software Product development
Architect Design

Source: Zinnov Analysis 11

 Bay Area, Shenzen and Bangalore have the highest concentration of IoT specific
talent owing to the presence of product companies, top universities and Startups P
EOPLE

Germany

San
Francisco Toronto Bosch
New York City
Bay Area Prague Texas Instruments
Israel IBM Beijing
Bosch Cisco
Volkswagen
Ford
Dell
Intel GE Shenzen
Baidu Microsoft Intel Bangalore
Microsoft
Huawei
EMC

City Legend Global Talent Pool*

2850K
High Big Data, Machine Learning & NLP
Medium-to-High 218 K 1850K

Medium User Experience Design 1250K

750K
Low 220 K
Companies with IoT / Mobility 2013 2020 2025 2030
innovation labs 312 K

Source: Zinnov Annual Talent Study 12

 Existing product development processes and methods are not well suited for the
rapid product development of IoT products P
ROCESS

― ITERATIVE
PROTOTYPING
― INCREMENTAL AGILE

Waterfall Method V Method

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 The Product Development should be executed incrementally and iteratively using
Agile methodology P ROCESS

Prioritized IoT solutions should implemented in an iterative and incremental manner

Incremental execution of prioritized IoT Solution Agile methodology is used in the development of the IoT
solutions solutions
A list of prioritized
IoT Capabilities should be
IoT features to be augmented incrementally
Solution 1 built for the next to enable the
sprint implementation of the
Prepare People, feature being currently
IoT Technology & Org built
Create Sprint
Implementation Solution 2 Structure feature by
Backlog
Complete feature

Implementation in IoT
Prioritized
process Solution 3
bucketlist of
AGILE Implement IoT
features, bugs Update Solution
DEVELOPMENT
IoT and development Product incrementally
work by the
Solution 4 Backlog and iteratively
Product Manager
feature by
feature

People IoT Sprint Working

Priorities Review Solution
Tech
Review for early
warning of broken/
Proces incompatible
s features
Continuous Tracking
Source: Zinnov Analysis 14
 New Age platforms are emerging across the IoT horizontals, and Enterprises
need to partner with the right platform to build connected products P LATFROMS

PRODUCT CLOUD
Smart Product
Security Applications External Integratio
and Data n with
Analytics
Privacy Platforms Sources Business
Systems

IoT
Application
Platform
Information Connections
Data from to existing
Platforms external Enterprise

Platforms CONNECTIVITY
sources
such as
Location
applications
-
ERP, EAM,

Stack Network
Communication
Intelligence,
Weather
Data, APIs
PLM, CRM
etc.

Product
Software

Product
Hardware

Source: Zinnov Analysis | HBR review 15

 Enterprises need to establish partnerships across the ecosystem in order to
leverage their talent, technologies, expertise and services P ARTNERSHIPS

FORGE PARTNERSHIPS ACROSS THE VALUE CHAIN

1 2
Engineering Partners
Service Providers with strong
product development capabilities.
Partner to :
• Accelerate Product Development
• Complementary skillsets
• Domain Expertise
3 4 5
GTM Partners Infrastructure Partners Platform Partners Data Partners
Partners providing sales Partnership with infrastructure Technology vendors Build Open products to communicate
channels and after sales companies including: across the IoT tech stack with Data and APIs from multiple
support including • Connectivity Service Provides sources including:
• Channel partners • Cloud Vendors • Customer Usage data
• Managed Services • Data Centers • Social Data
Vendors • IT infra vendors etc. • Public data sources such as location
• Servicing Partners data, weather data
• OTA upgrade partners

Source: Zinnov Analysis 16

 Success stories around restructuring organizations for the connected world reinforce the
fact that times are changing, and it is imperative to transform rather than perish!

• Revenues of ~1 billion through IoT software business, the fastest a G.E. business has hit the $1
billion mark
• Will open GE predix platform for other device manufacturers allowing companies to build and deploy
their own customized software applications on Predix
• Partnering with platform companies throughout the value chain including AT&T, Cisco ,Accenture
etc.

• Carved out an IoT focussed Business unit

• Has setup geographically distributed team focussed on IoT – Bangalore, Germany & Switzerland
• Partnered with Institute for Technology Management (ITEM) at the University of St. Gallen since
2012 for developing IoT products

Siemens has restructured its closed system policy to a more open and connected outlook;
• Siemens has partnered with SAP HANA Cloud Platform to build the Siemens Cloud for Industry
powered by SAP HANA Cloud Platform as an open cloud platform for analyzing large datasets in the
industry
• Siemens plans to create an open IT ecosystem for OEMs and application developers based on SAP
HANA Cloud platform.
• Last year launched a new, $100 million fund to back early-stage startups working in the areas of
Industrial IoT
Source: CXO Interviews and Company Annual reports 17
 How Zinnov can help you redefine your “Connected World” strategy

P RODUCTS

P EOPLE
HOW P ROCESS
ZINNOV IMMERSION
Do I shape my
Organization’s Strategy
WORKSHOPS
P
amidst the IOT Disruption

LATFORMS
Meet us to know more

P ARTNERSHIPS
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