In depth cases of mature companies using IoT to transform their operations. Includes John Deere, Boeing. Economic estimates of the benefits to companies are included.

1. Case Studies of
the Internet of
Things
ROBERT B. COHEN, PHD
SENIOR FELLOW, ECONOMIC STRATEGY
INSTITUTE
BCOHEN@BWAY.NET
IoT Slam ‘17, Davis Conference Center, RTP, NC
June 20enter
THE AUTHOR THANKS THE BERGGRUEN
FOUNDATION, THE EWING MARION KAUFFMAN
FOUNDATION, BROCADE COMMUNICATIONS
AND THE ORGANIZATION FOR ECONOMIC
COOPERATION AND DEVELOPMENT FOR THEIR
FINANCIAL SUPPORT.

2. ECONOMIC IMPACTS OF BIG DATA AND THE
INTERNET OF THINGS
• THE ANALYSIS OF HUGE AMOUNTS OF DATA PROVIDES:
• BETTER UNDERSTANDING OF HOW FIRMS OPERATE;
• THE PROCESSES INVOLVED IN PROVIDING SERVICES
• THE PROCESSES AND COSTS OF PRODUCING GOODS, PARTICULARLY WHERE MANY DIFFERENT PARTS OR COMPONENTS ARE
INTEGRATED INTO A GOOD OR WHERE EXTENSIVE TESTING AND ANALYSIS OF PRODUCT PERFORMANCE IS REQUIRED
• PRODUCING AN AUTO OR A LARGE JET THAT INCLUDES PARTS FROM MANY DIFFERENT SUPPLIERS AND PRODUCTOIN PROCESSES
THAT NEED TO BE MONITORED AND CHECKED AT EACH STAGE.
• A COMPLEX LOGISTICS FIRM THAT NEEDS TO RELY UPON PREDICTIVE ANALYTICS TO REDUCE COSTS AND OPTIMIZE THE WAY
PARCELS ARE DELIVERED.
• FIRMS ARE MOVING BEYOND BIG DATA TO CREATE SOFTWARE DEVELOPMENT TEAMS TO
RESTRUCTURE INTERNAL PROCESSES AND TRANSFORM BUSINESS.
• IN PART, THIS FACILITATES THE USE OF NEW ANALYTIC TECHNIQUES
• IT ALSO CREATES A CONTINUOUS SOFTWARE DELIVERY FOCUS IN THE FIRM THAT CAN DEVELOP SOFTWARE NEEDED FOR
INNOVATION AND PRODUCT DEVELOPMENT/ANALYSIS
• DEVOPS IS A KEY WAY TO SUPPORT ANALYTIC TEAMS
• BIG DATA CAN CHANGE BUSINESS MODELS
• ROLLS ROYCE SELLS ENGINES BY KILOMETERS PER HOUR, MICHELIN SELLS TIRES BY KMS PER HOUR
• “SERVICIFICATION” OF CERTAIN INDUSTRIES – ENGINES, TIRES, AUTOS?
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3. IoT IN AN ECONOMIC AND INNOVATION
CONTEXT
Firms produce on the productivity frontier
and make trade-offs; greater efficiencies
move a firm from point 1 to point 2.
With innovations, the productivity frontier
expands, i.e., innovation is defined by the
trade-offs you break – or surpass.
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4. ECONOMIC IMPACTS OF IOT
• IoT IS PUSHING THE INNOVATION FRONTIER AND RESULTING IN HIGHER
EARNINGS PER SHARE.
• BIG DATA IS CRUCIAL TO THIS NEW INNOVATION – COMPANIES NEED DATA
ANALYSTS AND DATA SCIENTISTS TO GAIN BETTER INSIGHTS INTO THE
DATA.
• DEVOPS AND THE CONTINUOUS DELIVERY OF SOFTWARE WRITTEN ON
CLOUD INFRASTRUCTURE PERMITS RAPID CHANGES TO PROGRAMS. THIS
LETS USERS MANAGE AND ANALYZE BIG DATA MORE EASILY
• IMPROVED PROGRAMS ADDRESS PROBLEMS OR MALFUNCTIONS BEFORE THEY
DISRUPT A PRODUCTION LINE.
• PRESCRIPTIVE OR “FAULT TOLERANT” PRODUCTION/PERFORMANCE IS POSSIBLE.
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5. IN DEVOPS HIGH PERFORMING FIRMS,
DEVELOPER PRODUCTIVITY INCREASES AS STAFF
SIZE GROWS
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Higher performing
development
organizations experience a
linear improvement in
deployment frequency as
the number of developers
increase. When lower
performing teams add
developers, the opposite
is true. Source: Puppet
Labs 2015 State Of
DevOps Report.

6. JOHN DEERE AND PRECISION AGRICULTURE
• DR. JOHN FULTON OF OHIO STATE: IF YOU’RE GOING TO DO FARMING IN THE FUTURE,
THIS IS WHAT YOU ARE GOING TO USE, PRECISION AGRICULTURE WHICH IS MOVING TO
DIGITAL DATA; THIS INCLUDES: PRECISION AGRICULTURE, PRESCRIPTIVE AGRICULTURE
AND BIG DATA. (IoT)
• IoT INTRODUCES GREATER CONTROL OVER PRODUCTION
• REDUCES COSTS
• MAKES IT EASIER TO EXPAND PRODUCTION, RAISE REVENUES – PRECISION AG CONTRIBUTES $12.4 BN
TO US ECONOMY ANNUALLY, 7% OF TOTAL AGRICULTURAL PRODUCTION
• RESULTS IN GREATER PRODUCTIVITY – THIS IS NOT SHOWING UP IN THE DATA
• FACILITATES LINKING MANUFACTURED PRODUCTS TO SERVICES
• MONITORS ENGINES IN REAL TIME, REDUCING UNEXPECTED MAINTENANCE
• EXTENDS LIFETIME OF PRODUCTS, LIKE ENGINES
• SUPPORTS ZERO DEFECT OR ZERO DOWNTIME GUARANTEES
• SPEEDS UP PRODUCTION OR SERVICE DEVELOPMENT
• ACTIVELY IDENTIFIES ISSUES IN PRODUCTS WHILE THEY ARE PRODUCED
• REDUCES ERRORS AND POORLY PRODUCED PRODUCTS, ELIMINATING TIME LOST
• SHOULD ADD TO PRODUCTIVITY
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7. PRECISION AG AT JOHN DEERE
• Propelled programmable vehicles
• Harvest 500-600 acres a day
• Single farmer 100-150 acres a day
• Enhanced Planter and Tracking System
• Increases number of acres planted per day from 600 to over 800
Recent efforts have focused on software:
John Deere FarmSightTM (Deere’s focus on Precision Ag);
JD Link Telematics Connection for large agriculture machines;
Remote Display Access remote support for farmers when they need to set up
equipment,
Service Advisor Remote, which lets dealers perform diagnostics and update software and
settings.
Expanding DN2K's existing cloud software platform, MyAgCentral, for agricultural retailers
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8. DevOps AT JOHN DEERE
• DevOps was central to the creation of a small tractor line at John Deere,
the first BMW electric car project, the first profitable digital news operation
at the “Wall Street Journal.”
• They all had a small, dedicated team that was held accountable for a result, and for
breakthrough performance.
• Teams were free from the processes of standards and regulations of the rest of the
firm’s businesses.
• IoT Innovation Unit is at core: Intelligent Solutions Group
• hyper-accurate GNSS location-tracking system
• worldwide correction network, a dual-band GPS system that lets farmers track their
planting, harvesting and more to an accuracy of less than an inch. 15-30 cm accuracy
5-10 years ago, now 3 cm.
• software is all in-house and proprietary
• 2016 AgBot Challenge: students worked to develop a fully-autonomous machine
that could load seed, then plant and fertilize a two-acre parcel.
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9. PRECISION AGRICULTURE – QUADRUPLES BY 2022
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11. PRECISION AGRICULTURE SERVICES
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12. DRONES REVOLUTIONIZE PRECISION
AGRICULTURE
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Why?
Finer resolution of
ground and crop
pictures.
Ability to provide
pictures rapidly,
without the two-
week cycle time of
satellites.
May have biggest
impact on savings for
water and chemicals.

13. WHAT UAVS ADD TO SATELLITES
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14. IN 2010-12, PRECISION AGRICULTURE ACCOUNTED
FOR 7% OF AG’S CONTRIBUTION TO US GDP
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Two US Department of Agriculture economists have estimated more modest benefits from
precision farming. They presented an estimate of $14.50 per acre. This was limited to savings on
seed, fertilizer and watering.

15. PRECISION AG’S GOAL IS TO REDUCE INPUTS
AND INCREASE OUTPUTS
• These results assume the large
farms have:
• Wireless transmitting moisture
sensors.
• Weather forecasting service.
• Integrated Decision support
Systems.
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$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
$45.00
$0
$5
$10
$15
$20
$25
$30
Output Gains and Input Savings in Dollars Per Acre Using
Precision Agriculture for Hard Wheat
Output Gains Input Savings
Output Gains
Input Savings

16. AGRICULTURE ACCOUNTS FOR 90% OF
ECONOMIC BENEFITS OF UAVS BY 2025
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UAVs add $82 billion to US economy 2015-2025. $75.6 billion is from Agriculture. This builds on a
Japanese model that assumes very rapid uptake for UAVs. Given farmers’ reluctance to move to precision
agriculture, the gains may take longer to materialize in the US.

17. HOW IoT CHANGES PRODUCTION AT BOEING
• BOEING ANALYTICS ON THE
FACTORY FLOOR COMBINED
WITH ROBOTS IMPROVE
EFFICIENCIES.
• JUST IN TIME MATERIALS
• TIMING PROGRESS ON THE LINE
• EXPANDING PRODUCTION BY
USING A MOVING ASSEMBLY LINE
• COST SAVINGS PLUS EXPANDING
THE SCALE OF PRODUCTION
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18. WITH IOT, BOEING REDEFINES PRODUCTION
• Boeing installs Ford or Toyota
like production lines
• Initially, 42 737s per month in 2014-5.
52 737s per month in 2018
Boeing builds EPS % change to nearly 20%
per year (See charts)
Economic Impact:
If we assume 5-10% increase in revenues
Boeing gains $4 Bn to $8 Bn/yr
Suppliers gain $2 Bn to $5 Bn/yr
Jobs: Boeing gains 8000 to 16000 jobs/yr
Suppliers gain 6300 to 12,600 jobs/yr
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AdjustedBoeingRevenueGrowth--20%Increasein737Production
2017 2018 2019 2020
Baseline Forecast 94.57 98.14 102.12 105.97
Add$4Billionin737Sales 94.57 102.14 106.12 109.97
Add$8Billionin737Sales 94.57 106.54 110.12 113.97
EarningsPerShare(EPS)increasesto12.22%from10.89%with$4Bnadditionalsales.
Baselinecaseisfrom"FTEquitiesBoeing"atft.com

19. PRODUCTION INCREASES BOOST BOEING’S
SALES, PROFITS
• If we accept the estimate of $4 billion in extra production each of the
next few years, largely based on the 3 new production lines for 737-
MAX Jetliners, this increase will have the following impact.
• Increase sales by about 10% more than they are expected to be.
• Increase Earnings per Share (EPS) to 12.22% from 10.89%
• We are not considering cost savings due to using UAVs to diagnose
problems in the structure of jetliners in the factory. This often cuts
inspection times from 24 hours to an hour.
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22. DRONE-PICTURED AIRBUS 3-D DIGITAL PLANE:
Drones can see the micro-architecture of the airframe
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23. IoT LETS BOEING TRACK PRODUCTION,
FLIGHT AND MAINTENANCE PROCESSES
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24. BOEING: IOT AND MAINTENANCE AND SAFETY
Knowing that an aircraft has been maintained according to the
required schedule is difficult today
• Many interested and dependent parties with
contrasting/conflicting goals
Use IoT and blockchain as a shared ledger of aircraft history,
for usage, maintenance, warranty work, replacement parts
Benefits:
• Greater transparency of true history: proof of good parts,
completed maintenance and certifications, clean documents.
• Greater confidence and safety because replacement part
provenance, and all service is indelibly recorded
• Safety certifications and auditability
• Greater trust since no single authority "owns” the whole
story
• New business opportunities for insurers, lenders, warranty
services
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25. BLOCKCHAIN, IoT, AND BOEING
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26. DevOps AT BOEING
• DevOps Engineers work side-by-side with Advanced Software
Development Team
• in an Agile development environment
• Leverage the power of Continuous Integration to drive releases to our
customers.
• Boeing Test & Evaluation Organization future Software Engineer will
design and develop the Next Generation Flight Test Data System.
• The system includes everything from sensors and data acquisition to test
setup and configuration to post test data processing and long term storage.
• Initial system is being targeted for the 2018 777 Eco Demonstrator program,
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27. UPS: DevOps and IoT CHANGE COMPETITIVENESS
• UPS INTERNATIONALLY USED A SYSTEM BASED ON:
• “Visual Basic 6 and Microsoft SQL Server, monolithic, hosted on a single server, unable to scale easily or to cope with
peaks in demand, and prone to downtime.”
• UPS PURCHASED i-PARCEL AN “INTERNATIONAL CROSS-BORDER e-COM-MERCE ENABLER”
• It built a logistics platform with a MongoDB solution that could grow.
• The solution supported dynamic queries and flexible schemas.
• THE NEW UPS SOLUTION:
• Changed process 1.0 that required 30 to 60 seconds to process a parcel with
• Operations 2.0 that required less than 2 seconds
• This was a “huge performance increase.”
• UPS BUILT A DEVOPS OPERATION TO SUPPORT OPERATIONS 2.O.
• i-parcel became an “innovation driver in UPS.”
• The new software development scheme is likely to incorporate DevOps in UPS’s analytics efforts, a
change that did not occur during the 15 years’ of work establishing Analytics 2.0 at UPS (this is
documented by Tom Davenport.
• UPS has recognized the need to develop new applications and services rapidly. This has not been a
priority for UPS’s previous efforts at predictive and perspective analytics.
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28. IoT CHANGES COMPETITIVENESS AT FORD
• FORD EMPLOYS BIG DATA
• Savings of $2 Bn over 4-5 years in supply chain/dealer deliveries
• Big data analysis identified truck design changes that could improve fuel
efficiency and lower production costs – aluminum chassis
• Reduces cost, increases profitability – 50% profit on new F-150
• FORD CREATED “FORD SMART MOBILITY” AND “FORD PASS,” A
PIVOTAL PLATFORM FROM CLOUD FOUNDRY.
• This mobility solution looks forward to the day when car-use-as-a-service is
more popular than auto ownership.
• It is based on DevOps. Ford’s developers wanted to deploy software in
minutes instead of months. This drove the use of agile processes and DevOps.
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29. IoT CHANGES COMPETITIVENESS AT ROLLS-
ROYCE
• ON THE SERVICE SIDE, ROLLS-ROYCE OFFERS “POWER BY THE HOUR” (LIKE MICHELIN’S
“KILOMETERS BY THE HOUR” AND FANUC ROBOTIC SYSTEMS’ ZERO DOWNTIME)
• ROLLS’ SERVICES IS MOVING TO GUARANTEE CUSTOMERS “ZERO-BASED DISRUPTION” LIKE
FANUC’S “ZERO DOWNTIME”
• 5,000 ROBOTS IN 26 GM FACTORIES THROUGHOUT THE WORLD
• UNPLANNED DOWNTIME IN AN AUTO PLANT CAN COST $15,000 – $50,000 A MINUTE, $3 MILLION AN HOUR
• ROLLS ROYCE’S BETA-PROJECT USE OF DEVOPS ACHIEVED:
• “Close to a 20x increase in the speed of code-creation,
• Removed cost from the development process, and
• Paved a way to Azure PaaS.
Thanks to the DevOps work we’ve undertaken with their software development team” quote from Black Marble.
DEVOPS IS KEY TO A SERIES OF NEW TECHNOLOGIES THAT ROLLS-ROYCE IS DEVELOPING WITH SUPPORT FROM
THE RESEARCH COUNCIL UK AND INNOVATE UK. THESE DEAL WITH NEW ADVANCED REPAIR TECHNOLOGIES
AND INTEGRATED CORE TECHNOLOGIES. THIS PUSHES THE TECHNOLOGY FRONTIER.
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30. IOT REQUIRES NEW JOB SKILLS
• WE SEE SKILLS CHANGES IN ANALYTICS, SOFTWARE DEVELOPMENT AND
INFRASTRUCTURE MANAGEMENT
• IN ANALYTICS
• Ford is hiring data analysts/scientists
• Ups developed predictive analytics
• Most analytics employees need computer science plus analytic tools skills (Hadoop)
• IN SOFTWARE DEVELOPMENT
• Programmers work on digital systems: Boeing applied simulation and analytics
• Rapid development of new services in cloud ecosystems; testing and development of
new software for applications.
• IN INFRASTRUCTURE MANAGEMENT
• Big Data lake requires familiarity with virtualized environments. We see this at Ford,
Boeing, and UPS.
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31. IoT CHANGES THE LABOR MARKET
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TIGHT LABOR MARKET FOR DEVOPS JOBS MEANS EMPLOYERS CAN SEEK SPECIFIC SKILLS AND STRATIFY THE
WAY THEY HIRE PEOPLE FOR DIFFERENT OCCUPATIONS. THIS OPENS MORE DOORS FOR NEWCOMERS WITH
DESIRED SKILLS, SUCH AS RUBY, PYTHON, CHEF OR PUPPET, BUT NOT A FULL RANGE OF SKILLS.