The document discusses the potential of the Internet of Things (IoT) to generate trillions of dollars in value for organizations. While 68% of companies are already investing in IoT, most organizations have low maturity in their IoT solutions and 70% do not generate service revenues from their IoT implementations. To fully capitalize on the IoT opportunity, organizations will need to develop new capabilities around products, marketing, sales, services, and data analytics in order to transition from selling products to selling outcome-focused services and solutions.

1. The Internet of Things: Are Organizations Ready For A Multi-
Trillion Dollar Prize?
Transform to the power of digital
TeliaSonera M2M Symposium
Karl Bjurström, Capgemini Consulting
Stockholm, 18 November

2. Copyright © 2011 Capgemini Consulting. All rights reserved.
The potential of IoT is immense, with a trillion dollar potential
2
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IoT has the potential to generate
$19 trillion of value over the
coming years1
6688%% of
companies are already
investing
in IoT2
96% of companies will be using the IoT in
some way within the next three years2
Source: Cisco, PSFK, Capgemini Consulting

3. Gartner predicts the lion part of the IoT market to come from Apps and Analytics
Apps, Services,
Analytics
Compute, Storage,
Networking
Things "Hardware"
Copyright © 2011 Capgemini Consulting. All rights reserved.
80%
11%
9%
Source: Gartner, Capgemini Consulting

4. Players will need to find their positioning and business models in a changing environment
Vehicles and machines to become software-defined –
opportunity & potentially disruptive
• Office
• Windows
• HD, processor,
network
New entrants
Apps
Platform
Infrastructure
Current leaders
Revenue
growth
Copyright © 2011 Capgemini Consulting. All rights reserved.
New players
New business
models
Software
Hardware
$
Profit
squeeze
New
battlefield
New business
processes
New FS-related services
e.g. insurance, payments
With the Internet of Things, business models likely to
shift towards data, computations, priority
50 Bn
500 Bn
People
(things)
Things
(people)
Approx. 20
Bn devices
Business model:
•Data
•Eye balls
Business model:
•Data
•Computations
•Priority
2014 2020 Time
Connections
2050
Internet of Things
Digitization will spur competition – and collaboration – on system and platform level
Need to decide which ecosystem to take part in and in what capacity/position
4
2014 Source: Ericsson, Capgemini Consulting

5. But for most organizations, these are early days in the adoption of advanced IoT Solutions
Copyright © 2011 Capgemini Consulting. All rights reserved.
5
Control (Remote
Operability)
Ability to be
controlled and
configured remotely
Monitoring
(Basic Information)
Optimization
(Performance
Improvement)
Delivery of alerts and
notifications on
product status
Predictive maintenance and
productivity enhancement
insights based on sensor data
58%
27%
34%
Autonomy
Combining monitoring, control, and
optimization allows:
• Autonomous product operation
• Self-coordination of operation with other
products and systems
• Autonomous product enhancement and
personalization
• Self-diagnosis and service
<10%
trials
Levels of Maturity for IoT Solutions
Source: Capgemini Consulting

6. Copyright © 2011 Capgemini Consulting. All rights reserved.
… with significant differences looking at maturity in different industries
6
Maturity of IoT Solutions by Industry
Low Maturity : <40% of firms provide IoT
solutions that support the feature
Medium Maturity : 40-60% of firms provide
IoT solutions that support the feature
High Maturity : >60% of firms provide IoT
solutions that support the feature
Industrial
manufacturing
Medical devices
Utilities
Automotive
Insurance
Home appliances
Pharmaceuticals
Source: Capgemini Consulting

7. But there is a catch, 70% do not generate service revenues from their IoT solutions
Copyright © 2011 Capgemini Consulting. All rights reserved.
7
“Offering the telematics hardware for free with
the car is not a sustainable option. We need to
have a clear strategy to generate revenues from
services.”
Leading car manufacturer
Today
~2
Trillion
2020
10-20
Trillion
GAP
What does it take to address the market and close the gap?
Source: Capgemini Consulting

8. Essentially it is about a company’s ability in selling services instead of products …
Type of offering and position Type of monetization
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Copyright © 2011 Capgemini Consulting. All rights reserved.
8
Low Medium High
Customer
relationship
Collaborative
Relational
Transactional
Hardware
premium
Service
revenue
Data
revenue
Ecosystem
building
Convert traditional product into a
service incl. monetization model
Generate revenue by selling packaged data
gathered from sensors
In this model, organizations create a platform
where they ideally make money from both
other product vendors and end consumers
Simplest model where organizations
charge a price-premium for the
product’s connected features
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Often part of
ecosystem offering
Complexity
Source: Capgemini Consulting

9. Capabilities needed Methods of capability build-up
Copyright © 2011 Capgemini Consulting. All rights reserved.
New capabilities are needed to take position in IoT
9
MAKE 10% have developed open
platforms or APIs
PARTNER
57% of organizations are using
partnerships as a viable
approach to develop IoT
solutions
BUY 10% have made acquisitions
Product mgmt
Augment Product Management Capabilities
with Services Expertise and Emphasize Ease-of-
Use in Product Design
Marketing Sales Service
Data Analytics
Develop Customer Support
Capabilities to Drive Real-Time
Quality mgmt and Issue
Resolution
Today’s Product-
Focused Sales Force
is not Equipped to
Sell IoT Services
Traditional Product-
Centric
Organizations Lack
Capabilities for
Marketing Internet
of Things Services
Organizations Lack ability to Effectively
Interpret Sensor Data. Put the Right IT
Infrastructure in Place and Acquire Data
Analytics Capabilities
Source: Capgemini Consulting

10. Leaders are now investing in becoming data driven enterprises – IoT bring enablers across an
organization
Internal
Collaboration
Copyright © 2011 Capgemini Consulting. All rights reserved.
Investment characteristics of digital leaders
Social Media
Customer
Experience
Mobile Channel
How to engage
customers
How to work
and operate
How to generate
revenues
BUSINESS MODEL
Process
Digitalization
Analytics
Data Integration
Sensors
CUSTOMER-FACING PROCESSES OPERATIONAL PROCESSES
Companies to use IoT as an enabler for radical improvements in customer experience and
operational excellence, and new revenues and business models
Source: Capgemini Consulting, MIT