This article is featured in the July 2014 issue of the Cisco TS Newsletter. Subscribe now to have monthly issues delivered to your inbox.
Almost 1 year ago Cisco announced the creation of a new group focused on creating and delivering solution for the Internet of Things (IoT). The IoT is not a new concept, it has been around for some time now, sometime between 2008 and 2009 the number of Internet-connected devices surpassed the number of people living in the planet, but what we have in front of us is perhaps one of the biggest technology revolutions of our time. Just think about it, as big as the Internet is today, we have only connected about 1% of the total number of devices (or things) that could be connected. What an incredible opportunity to bring innovation and excitement to our industry!
Now, the road to realize the value and potential of the IoT will not be easy. It needs a new essential infrastructure to support it. It will be an evolution of our current Internet, but in a scale completely different. And it also needs cooperation between 2 distinct technology-oriented groups inside most companies: the information technology (IT) group, and the operational technology (OT) group. For most of the companies, the challenge of taking IT-related technologies to new places in the network is not small.
As the IoT market gets better defined and developed, and grows in size and relevance, it presents an unprecedented opportunity for IT professionals to engage in the conversation and bring in their experience, skills and perspective. The IoT solutions required by OT professionals are ripe for innovation, the type of innovation that IT professionals are great at.
Resilient, scalable and secure converged networks, simplified and automated management, new computing models (like Fog) that deliver distributed intelligence, and system-wide application enablement are building blocks for more advanced and smarter solutions for IoT.
These are some of the defining characteristics of the IoT market that should be considered too:
IoT is a Greenfield Market. The Internet of Everything (IoE) is about connecting the unconnected – People Processes, Data, and Things -- and by our estimations 99% of the Things in the world that could be connected, remain unconnected today. The first 1% is what Cisco and our partners have been working to connect for the past 3 decades. That other 99% is what is called the IoT. How is that possible? Well it’s quite simple. For the most part, the Internet as we know it is a network of computing devices (PC’s, tablets, smartphones, and servers); while the IoT is a network of “things”, such as sensors, signals, meters, motors, actuators, cameras, etc. And how big is this market? Cisco estimates that the value at stake of the IoE market is about $19 Trillion USD (2013-2022), and about $7.4T of that comes from IoT. How is that for a net-new business opportunity?
IoT Devices are Not Computers. It is not that you can’t connect a computer to these networks (actually, sometimes you really can’t). What is different about IoT is that the rest of the devices connected to these networks are not traditional computing devices. They are usually designed for a particular purpose only, they use different local communication protocols (not IP), and they live in disparate networks (convergence has not happened here yet). The information flows on these networks are not focused on moving massive amounts of data, voice and video in an any-to-any fashion, but is focused on automation and control tasks. And most times these devices operate in hierarchical and closed-loop networks… intentionally! But in the end, these are networks, and standardization and convergence will drive BIG efficiencies and better visibility and control across the board, and the market (from the device makers all the way up to the application developers) have already recognized that. For example, according with a recent Lopez Research report, efficiency improvements of 5% in a small industrial power plant generating 15MW can save over $200,000 on average per year. These devices are often rich in data but poor in information, and they need a new level of resilience at scale. They need a new distributed computing model (Fog) and a new platform for application enablement from the core to the edge of the network. And of course they need a whole new approach to security (cyber and physical). Now think about this: by 2020 we calculate we will have over 50 Billion devices connected to the Internet, up from the nearly 7 Billion we have today. How is that for a new dimension on scalable networks?
IoT Lives in “Outside”. We have been quite successful delivering solutions for the “carpeted office” for many years now. Cisco products are present today across the Data Center, the Campus and the Branch Offices of small, medium and large companies around the world. Our customers enjoy the value and reach of the networking, collaboration, security, computing and other solutions we offer with our partners. But IoT lives outside, not inside. IoT is the land of the field networks at power sub-stations and oil rigs. IoT is the essential infrastructure and services foundation for the industrial networks at manufacturing sites, refineries, and train stations and tracks. These new places in the network require a different kind of secure, manageable, scalable and reliable infrastructure that can respond to environmental (temperature, shock, vibration, dust, water, etc.), regulatory, mobility and multi-protocol (Modbus, Wireless-Hart, Zig bee, Serial, etc.), requirements that go far beyond what you need in a typical wiring closet.
Now, let’s talk about Business Value. All these technologies and differentiated characteristics also open great opportunities to enable new business models, to create new value streams, and to deliver better services to customers. Think about these examples in terms of business value enabled by Cisco’s IoT portfolio:
In Manufacturing, better connectivity and distributed intelligence at the edge can increase visibility and control in manufacturing environments. Manufacturers benefit by reducing downtime, providing leading (not lagging) indicators for proactive maintenance, and connecting operational environments to ensure better quality products and minimum waste.
For Energy Utilities, implementing local control loops over the same converged network not only allows the utility companies to prevent losses and deliver proactive load balancing over the grid, but also enables new business models for these companies. These new business models in turn lower the cost of energy distribution, automate billing and service calls, and provide proactive response to environmental conditions (from tornados to blizzards and anything in the middle) . They can do this by allowing the infrastructure elements to communicate with each other in an automated, instantaneous and reliable way, even when their connection to the Internet connection is down.
But that’s not all. And it’s not just about business value. The IoT solutions that can be delivered by a combination of the know-how of both OT and IT professionals can also greatly improve the quality of life for all of us. Consider these examples:
In Hospital environments, better care is at the core of their mission, not only because it is critical for their business, but primarily because they deal with the lives of the patients. Working with partners, we have created new solutions for patient monitoring and observation based on advanced video analytics and imaging to provide proactive status of the needs of the patients to the staff that is taking care of them. These new technologies not only empower the hospital staff to make better decisions for the well-being of their patients, but actually increase the quality of the health care provided, improves the productivity of the nurses and doctors, and helps patients to get better sooner. Higher quality healthcare enabled by IoT!
Cities are getting smarter every day. There is a new generation of citizen services enabled by IoT that were not even possible a few years ago. For example, smart street lighting that not only provides proactive maintenance information for the city (reducing costs and avoiding complaints), but that can also detect the presence of citizens on the sidewalks. With this citizen detection capabilities the streetlights can alter the intensity of lighting. This helps to provide more security to the passers-by, but can save on power operating costs for the city. Smart parking not only helps drivers find parking spots faster (that increases citizen satisfaction) but also reduces pollution in the environment caused by circling and circling a block as they look for parking. Again, better quality of life, thanks to IoT!
So as you can see IoT represents great opportunities to create value at the business and personal levels. Most importantly, it really represents an opportunity for innovation, to enable new and exciting business models, to create a new generation of customer and citizen services, and to extend the reach and power of the Internet to areas where we need it the most.
As the market grows, Cisco continues to invest on its development. From our involvement as hosts of the IoT World Forum and the creation of its Steering Committee, to the investment in startups and incubators, the IoT Grand Challenges for Security and Innovation (and more to come soon), to the work our teams do every day with the industry standards groups to foster interoperability. We have open already almost 10 Cisco Innovation Centers around the world, and in average, every week we have at least one Cisco representative sharing our perspective on IoT and helping to educate customers and partners on the possibilities it opens.
It will take some work, but the journey has started and we are leading it. We are starting to harvest success in all areas in the market; the time to make it big on IoT is now. If you have a passion about innovation, about changing the way people live, work, play and learn, in the best Cisco tradition, come and join us!
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