1. How will the IoT help your business - cisco

Editor's Notes

• #4: Industry observers all perceive a sea change is occurring Converging digital disruptions give rise to exponential change
• #5: Where Gartner has the Nexus of Forces, or IDC has the Third Platform, at Cisco, we call this the Internet of Everything. The IoE is really the mother of all market transitions, knitting together multiple technology-driven disruptions. At its essence, the IoE is the networked connection of people, process, data and things.
• #6: So let’s look at these connections. The best way to understand the value that the Internet of Everything (IoE) brings is to think in terms of connections. This approach also helps us place the Internet of Things (IoT) in its proper context within IoE. There are three main types of connections, which we covered in our original thought leadership: Machine-to-Machine (M2M) Connections: Information transferred from one machine or “thing” to another over a network. Machines include sensors, robots, computers, and mobile devices. Often called the Internet of Things. Machine-to-People (M2P) Connections: Information transferred from a machine (such as a computer, mobile device, digital sign) to a person, or vice versa. Whether a person gets information from a database, or conducts a complex analysis, this is an M2P connection. Often called Data & Analytics. People-to-People (P2P) Connections: Information transferred from one person to another. Increasingly, P2P connections happen virtually, through video, mobile devices, and social networks. Often called Collaboration. This is a good time pause to highlight the difference between IoT and IoE, which is a common source of confusion. Properly understood, the IoT is an important part—but just a part—of IoE. It’s a subset that focuses, more or less, on the connections between machines. Cisco has placed a big bet on this space, but we have much, much more to offer to help customers address the opportunities presented by IoE, as you will see in the course of these Reference Materials.
• #7: 2 minute I’d like to first take a page out of history and put IoT in the context of the industrial revolutions that have impacted society. First, in the 16th century canals fueled a dramatic improvement in manufacturing, opening up of waterways throughout the world – like the early days of supply chain. This was an enormous improvement in productivity, allowing new ways of getting goods from A to B. And canals could only go so far, so it then became the introduction of railroads which led to another surge in manufacturing. Beyond that, then steam powered manufacturing came about. You could then create machinery, like spinning wheels and looms, to make things. After that came electricity which was even better than steam, we could make things in a more distributed fashion, less noisy and less dangerous. I see the Internet as the next big industrial revolution. We’ve had an industrial revolution and we have an internet revolution. These things are now coming together into the Internet of Things. It’s the industrial internet revolution. Reflecting on the past really helps to put the future into perspective. This is where things get interesting. <click/transition to next slide>
• #9: Sometime between 2009 and 2010, there was a point of inflexion, where the number of connected devices began outnumbering the planet’s human population. And these aren’t just laptops, mobile phones, and tablets – they also include sensors and everyday objects that were previously unconnected … so IoT exists today in a very real way! More importantly, the gap is expected to widen exponentially over the next several years – with the number of sensors, objects, and other “things” exceeding 50 billion by the year 2020! Adding all of these physical objects to IP networks imposes new and novel requirements on existing networking models. IT will need to deal with those requirements in relatively short order.
• #10: In the past 2000 years, the world has generated a little more than 2 exabytes of data … we now generate that amount every day. These objects are creating a data explosion, with data coming from billions of disparate devices, located all around the world. But unless they can work together, all of this data is siloed, and therefore relatively useless …
• #11: The main benefit of IoT is derived from the connectivity of these billions of smart objects. While the data each of these individual items produces is of little value, IoT enables it to be processed and correlated with other inputs to produce relevant information; it can then be used in real-time as actionable knowledge by IoT-enabled applications; longer term, it can be used to gain deeper understandings for the purpose of developing proactive policies, processes, responses, and plans.
• #17: Manufacturing plants use a lot of energy and, when they go above a certain utilization rate, they’re charged more per unit of energy. So if they can figure out how to even out their usage to avoid spikes, they can save money. Right now, most manufacturers have a separate IT set-up and a separate network for the manufacturing plant versus headquarters. To shave those energy peaks you need to know a few things. First, you need to know what’s going to be built when. That information comes from the “Master Execution Scheduler” which is kept on the proprietary manufacturing network. But you also want to know what’s been committed to customers so you don’t save money on energy yet drive away customers in the process. That information is in your ERP system on your corporate network. And then you want to know how changing the schedule might affect labor costs, so you don’t lose all the money you saved on energy, making the whole exercise pointless. For that, you need information from your HR system, also on your corporate network. Then you need to analyze the information.  
• #18: Once you’ve brought all the right systems together, you can build an application with thresholds and policies that alert operators to an approaching peak and show gaps in the schedule—times they could push the production load to. Or they can shift production to another plant with more capacity. But that requires adjusting supply chain, MRP, and the factory build plan to compensate without impacting customer commitments or desired inventory levels. Or they can check the power co-generation system to see if they can keep production high but use co-gen energy to avoid the peak. But something interesting happens, once you’ve created your killer app….
• #19: Now you’ve built some new capabilities into your infrastructure that will enable lots of other applications. In the case of manufacturing, you can add things like predictive maintenance—which combines sensor data on equipment with historical averages in your database system to let you know before a part or machine breaks that it needs repair. This increases plant uptime—super valuable. And you can implement more fine-grained traceability. This limits your downside if you have a product recall because you can track which products came from which production lines when and which components were used to make them, so you can target only those units that really need to be recalled.   Other applications include faster supply chain flows and mobile control rooms or wireless machines for greater flexibility on the factory floor.   So just that one killer app of peak shaving has been projected in one case to save 20-30% in energy costs in the first year is 20-30%. That’s a huge number for manufacturers—and definitely worth investing in.   But beyond that, we’ve done some research that shows there is $1.95 trillion in potential new profits (from both cost savings/efficiencies and new business opportunitiess) over the next 10 years from implementing IoT just in manufacturing.
• #20: It’s a similar story with “smart cities” … Wouldn’t it be great if, while you were looking for parking, you could look on your smart device and see a map with green dots nearby where there is parking and compare rates?   From the point of view of the city, this leads to more revenue because people will find space more easily and utilization rates go up. And it’s possible to implement flexible, demand-based pricing, by gathering usage data and testing price thresholds during peaks and lulls. As a result, the quantifiable benefits to both the city and the drivers are abundant: 30% of urban traffic is caused by drivers circling the block looking for parking That’s tied to an additional 1-2% of fuel used, which has a negative impact on the environment and represents lost productivity Research has found that while users save 22% on the price of parking, cities can increase revenue by 20-30% -- so everybody wins
• #21: Here again, that new revenue funds an infrastructure that can support more apps. Consider, too, that a lot of what governments do doesn’t generate revenue for critical services such as public safety and emergency services. So the income-producing IoT apps (eg, automated tolls, waste collection, even tax collection) are a way to offset those costs.
• #22: In the United States there is legislation requiring the railway industry to implement a traffic control system called Positive Train Control. This is to avoid terrible accidents like the one in Northwestern Spain in mid-2013. (The driver went too fast around a curve. 79 deaths.)   Along with increased safety, train operators get alerts that help them optimize routes based on track, traffic and other data. Other apps include predictive maintenance and wayside equipment tracking.   Cisco estimates that customers can use our PTC solution to save 1-2% in fuel costs through optimal throttling and braking data sent to engineers via a wireless tablet. Union Pacific in the US saved 4-6% in fuel costs with their system. They found that their best engineers use only two-thirds the fuel of their least efficient drivers. UP has put rewards in place to incent fuel-efficient practices (as well as serious talks with underperformers).
• #23: And the PTC infrastructure can also carry along passenger Wi-Fi and safety applications, as well. Using Cisco’s PTC solution, Connected Trackside for Passengers, railroads will deliver converged multi-services IP networks that can enable cost effective communication solutions for electrification that can double passenger capacity along the same track infrastructure. Rail operations costs represent 75 percent of total trail transport costs, or $184 billion per year. GE Transportation estimates that 2.5 percent of rail operations costs are the result of system inefficiencies. This amounts to $5.6 billion per year in potential savings. If only one percent savings can be achieved, the amount saved would be about $1.8 billion per year or about $27 billion over 15 years. Similar types of efficiencies appear possible in heavy duty trucking, transport fleets and marine vessels, meaning much larger transportation system benefits can likely be realized. --GE report on Industrial Internet, Nov. 26, 2012, p.21 http://files.gereports.com/wp-content/uploads/2012/11/ge-industrial-internet-vision-paper.pdf
• #34: Our insight tells us that if you look at IT over the past few decades you always see this two tier architecture. This sort of terminal/mainframe ---client server model, requiring massive amounts of data to traverse satellite or mobile networks.
• #35: We think that with IOT we need to introduce this new intermediate layer and this intermediate layer we have been calling fog. It’s close to the ground, it’s close to the edge, it’s for when you want to do some processing…you want to run control algorithms, you want to run some data optimization algorithms there to avoid having to backhaul everything because you just have to recognize that many of the device in this Internet of Things world are not perfectly connected. They are intermittently connected They are on battery power They are going to be asleep most of the time They might come into range every so often but then get out of range again. We have to cater to the idea that there is a place in the infrastructure that can act as a relay…as a data governor….some kind of intermediate layer. Also if for nothing else, then just for scale. If you think about it 50 billion objects…even a small utility with smart meters will see a dramatic uptick in the number of IP device that the IT department will now have to manage. A three tier architecture is more scalable, more resilient and overcomes some of these problems. A simple way to think of this “moving from always on to always ready”.
• #36: This new fog layer will create a paradigm shift in the network infrastructure. Today, businesses deploy three disparate devices for their networking, computing, and storing. Fog introduces a concept to combine all those devices into a single unified platform—instead of having to manage three things, companies will just worry about one. Fog also shifts how data is processed. Today, data is first transmitted to the cloud and stored. From there, it’s analyzed and commands are sent to act upon that information, then operators are notified. Fog helps overcome the costly need to constantly move data around and allows analysis and notification to occur before the critical information in stored to meet compliance and regulation policies. We believe this is all critical in accelerating the Internet of Things and today we’re excited to share with you our role in making this reality.
• #37: When you have distributed intelligence, you need to be able to lever that intelligence to make better and faster decisions. That’s why tools and applications at the network edge become more important than ever. Your IoT architecture needs to enable applications as close to where the decisions need to be made, whether it be on your factory floor, passenger train, or substation. IoT not only enables the intelligent connection of physical objects to the network, it creates an opportunity for those objects to interact with one another. Those objects can share data, automate actions, and work better together. In order for that interaction to occur, application developers need an open and standards-based framework to break down any barriers that would prevent the tight integration of those objects. And because we’re talking about a massive network connecting billions of devices, your IoT architecture needs to simplify how you deploy, manage, and integrate those applications—with the flexibility you need based on your operations demands. Whether you choose to leverage the cloud or install apps on-prem, those options are necessary to give you the flexibility you need to operate as effectively and efficiently as possible. Lastly, ease of integration and automation are key to ensure actions happen at the edge as quickly as possible. If sensors are detecting that the machines are spinning too quickly and may cause a fire, you need applications that can read sensor information and deliver the command to slow down the machines before a complete meltdown.
• #38: Cisco IOx will deliver distributed computing capabilities to create that intermediate layer between the device and cloud.
• #39: Cisco is combining the communication and computing into a single platform for application enablement at the network edge. Now companies who have devices with XYZ interface or want to use ABC application to monitor and act upon sensor information and bring their own interface and bring their own and have it run on Cisco networked devices like our CGR 1240 or 819 ISR.
• #41: It’s important to understand that IoT doesn’t replace your existing network; rather, it supplements it, and relies on it in many ways. Your existing network is comprised of a core infrastructure (switches, routers, and servers); a unified platform (not just the operating system, but a programmable SDN network is becoming increasingly important); and applications. Services are an inherent part of every level of the network, and security needs to be interwoven throughout to keep data and assets safe. [ANIMATE x2] IoT requires that connectivity tools be added to the platform, as well as some network elements such as smaller, more self-contained switches and routers for fields, plants, and other operational environments. These network elements are frequently deployed in challenging environments that include harsh weather conditions, significant amounts of vibration, etc., so they need to be ruggedized to function under these conditions. [ANIMATE] Now here’s where it gets interesting … one of the primary differences between your existing IT network and an IoT network is all of these additional devices, sensors, and other “smart objects”. It’s important to note that these objects are networked together, yet they’re independent of your network – you don’t own them; oftentimes can’t see them; and you don’t control them in any way, shape, or form. Yet they’re sending petabytes of data through your network – data that’s required by the applications to function properly. [ANIMATE] Another difference is in the applications, themselves. Unlike today’s monolithic applications, where the main value is delivered locally from the application’s code, IoT applications derive most of their value from the intelligence that is collected from, and distributed throughout, the network; the application itself is merely the method employed to access that intelligence. [ANIMATE] Which leads us to the other major infrastructure difference in an IoT network, which is required to communicate and process all of this intelligence … [ANIMATE] Of course, services will need to be expanded to cover the new capabilities … [ANIMATE] And we’ll need additional layers of security to enjoy the many business benefits of IoT while maintaining a high level of data privacy and protection. [ANIMATE] This is the area of the network Cisco serves. We’ll continue providing core networking equipment, and are expanding to take a leadership role in providing the core infrastructure you’ll need for successful IoT implementations.
• #42: Cisco offers a wide range of products and solutions to serve IoT use cases across multiple industries …
• #43: But we can’t do it on our own … that’s why Cisco has built – and continues to grow – a comprehensive IoT ecosystem, which includes key industry partners for analytics, security, and vertical solutions.
• #44: We’ve focused on Cisco’s IoT Platform ad solutions portfolio, but Cisco’s commitment to the IoT goes beyond that. We continue to innovate to ensure that Cisco is the IoT Solutions leader. For example, our software embedded router, announced in August, 2013 can turn any field device (radio, proprietary mobile, hand-held or vehicular) into a smart device, eliminating the need for multiple devices and at the same time communicate across multiple networks. Cisco is the sponsor of the IoT World Forum. This invitation only, inaugural event was held in late September, 2013, in Barcelona. Over 800 of the worlds leading IoT thinkers and companies met to discuss wide ranging topics that help move the IoT ecosystem, standards and solutions in every industry forward. Though in it’s infancy, Cisco is also heavily involved with representatives in various IoT standards bodies to ensure that a consistent set of standards for IoT-related systems, devices, networks and data be developed and ultimately interoperate seamlessly. Cisco has also announced an investment fund of $50M that it will invest in partnerships with IoT start-ups and ventures to advance development and innovation. Finally, Cisco has the largest IoT partner ecosystem that ensures an IoT implementation will be planned, designed, and implemented efficiently. (Partners such as Rockwell Automation, Itron, and Schneider Electric are among those in Cisco’s ecosystem, and are probably names you are familiar with in your industry.)