Cisco 'Internet of Everything' (IoE) Study Says Profits Will Be in Billions

By Peter Bernstein June 20, 2013

With their Visual Networking Index (VNI), the researchers at Cisco have, in many ways, set the standard for looking at current and future traffic trends. In fact, it is almost impossible to see an industry presentation these days without a reference to the VNI. Clearly, Cisco likes to measure things and forecast their impact. This is why their new whitepaper, Internet of Everything (IoE) Value Index, is going to be a “must read.”

The study of 7,500 global business and IT leaders in 12 countries reports that the United States, China and Germany are expected to realize the greatest value in 2013. It also found that a lot of market opportunity is being left on the table. The authors predict that corporations could nearly double their profits by greater adoption of business practices, customer approaches and technologies that leverage IoE.  

This is a non-trivial amount of money. As the graph from the study shows, Cisco estimates that while IoE is already driving private-sector profits, an additional $544 billion could be realized if companies adjusted their strategies to better leverage it.

"The Internet of Everything has the potential to significantly reshape our economy and transform key industries,” said Rob Lloyd, Cisco president of Development and Sales. "The question is who will come out on top and win in this new economy. This study shows us that success won't be based on geography or company size but on who can adapt fastest.”

What is IoE?

According to Cisco, the Internet of Everything is: “The networked connection of people, process, data and things, and the increased value that occurs as ‘everything’ joins the network. Several technology transitions – including the Internet of Things, increased mobility, the emergence of cloud computing, and the growing importance of big data, among others – are combining to enable IoE.”

"This study confirms the potential for the Internet of Everything and our ability to make the world smarter together," said SmartThings CTO Jeff Hagins, who participated in the global Cisco event. "With the SmartThings platform and open community, we believe that more developers and inventors will be able to participate in the value chain and ultimately bring the physical graph to life.”

The IoE Index builds on earlier Cisco research which found that global businesses could pursue as much as $14.4 trillion over the next decade by leveraging IoE to improve operations and customer service.

Key Findings

The slideshow embedded below illustrates the study’s key findings at a high level.

Page 1 of 5

Profits from Global Impact of IoE > $600B

Page 2 of 5

What Business Leaders are Saying

Page 3 of 5

IoE has a Global Impact

Page 4 of 5

Emerging Markets Confidence is High

Page 5 of 5

Key Drivers of IoE Value

Source: Cisco 2013

It found that business leaders are optimistic about IoE in terms of: contributions it can make to jobs, wages and security; how leveraging IoE has global impact; and outlines the key drivers of IoE value in 2013. There are also insightful looks at value creation by geography including economic maturity of the studied areas, industry sector and company size. 

In addition, there are recommendations as to how businesses capture more value in the IoE Economy.  These include high level ones that are common sense regarding investing in technology (infrastructure and tools), adopting and following inclusive practices that enable all employees to contribute, and developing effective information-management practices. Plus, there are suggestions by sector as to what technologies could provide the greatest near-term benefit.

A great pullout from the study is its view on the key drivers of IoE value in 2013. They are:

  • Supply Chain: $158.7 billion
  • Customer Experience: $145.2 billion
  • Innovation: $110.5 billion
  • Asset Utilization: $109.7 billion
  • Employee Productivity: $89.3 billion

As the Cisco researchers point out, we are at the early stages of the development of the Internet of Everything. They also add that over the next decade $14.4 trillion in profits could be achieved by companies that leverage IoE. 

The authors rightfully state that, based on the analysis, companies should have a sense of urgency about aligning their strategies and practices to leverage IoE. This is about not just creating sustainable new value, but is also about grabbing mind and market share from competitors who do not adapt as quickly or effectively. Another way of putting this is that “E”verything is in play, and to those who are fast-to-market and fast in the market will go the spoils. 

Given the gap identified in the study between opportunity available, opportunity not realized and how much is at stake, what the charts look like going forward will be enlightening. I can’t wait to see the next report.

Edited by Rich Steeves
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