Cisco Systems wants its customers to know
that there is a huge amount of money to be
made if they focus their strategy and IT
budget on what the company and others call
the Internet of Everything .
That's the idea that more than half of the
people and 99 percent of the things on the
planet are unconnected and that by connecting
them and riding the wave of industry
transformations, such as smart factories,
digital health, mobile collaboration, virtual
assistants, and connected commercial vehicles,
giant profits will follow.
In other words, the companies that invest in
the "connections economy" and harness the
network effects of the Internet of Everything
-- which is people, process, data and things --
will reap more of the profits.
Beyond stating the obvious -- companies
leading the next wave of commercialized
technology innovation will reap profits --
Cisco calculated that the Internet of
Everything will create $14.4 trillion of "value
at stake," defined as the potential bottom-
line value derived from harnessing the
Internet of Everything, over the next 10
years. That figure includes $613 billion in
potential global corporate profits this year.
For companies taking even greater advantage
of the Internet of Everything, an additional $
544 billion in profits could be gained in 2013,
Cisco said.
"This study shows us that success won't be
based on geography or company size but on who
can adapt fastest," said Rob Lloyd, Cisco
president of development and sales.
Most of the value generation will come from
improvements in utilization, employee
productivity, operational efficiency, customer
experience and innovation, Cisco said, with
retail, manufacturing, finance and information
services providing more upside than other
industry sectors.
In retail, for example, profiting from the
Internet of Everything means investments and
expertise in predictive analytics, data
visualization, mobile payments, remote
customer monitoring and rich media
interfaces.
Not all of the global profit in the $613 billion
figure is attributable to creating new value
(additional profit) on top of what could be
considered the perennial shifts in market share
among players in a particular area. Cisco
estimates that 59 percent of the $613 billion
will be new value, while 41 percent will be
generated by companies taking market share
from the competition.
Cisco's survey of 7,500 business and IT
decision makers from the largest 12 global
economies and across 18 different job
functions, found that technology
infrastructure and tools were the most
important factors in determining the amount
of value realized. That's not an unexpected
finding considering Cisco's authorship of the
study and the need to invest in technology to
create new business opportunities and cost-
saving operational efficiencies.
However, people management and IT processes
are core to the value proposition, in terms of
reducing the risk of implementation failures,
which according to some estimates could be as
much as $3 trillion annually worldwide.
"The value of looking at people management;
policies, practices and process; and
information management is just as important
as technology, so it's much bigger than Cisco,"
said Blair Christie, chief marketing officer at
the company.
The least risk and the greatest profit are in
developed economies and in the IT-intensive
high tech, telecommunications and financial
services sectors, the study found. Among the
other findings, the playing field is leveling
out, allowing smaller firms to have more of a
shot at unseating the incumbents in various
industries.
The Internet of Everything could also be a
boon to workers. Forty-seven percent of those
surveyed said it could lead to higher wages at
their companies, especially in emerging
markets. On the other hand, companies might
be less eager to hire people. Only 33 percent of
respondents said the Internet of Everything
would lead to more jobs at their companies.
It's likely that much of the profit derived from
the rapid scaling of Cisco's Internet of
Everything, with billions more people and
devices, and trillions more sensors in things
connected to the Internet, will come from
companies scaling their operations with more
machines talking to other machines, rather
than significant workforce increases.
And it's the rise of the intelligent machine
mediating the Internet of Everything in the
cloud that will deliver the most value, if not
profit, for billions of people and the companies
in the data and services supply chain.
