A Framework to Humanize the Internet of Things through Verbs

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Produced exclusively for Constellation Research clients

Report: Best Practices

Moving from Hype to Commercialization Using

an Innovative Framework

A Framework to

Humanize the Internet of

Things through Verbs

By Richie Etwaru

Orbits Contributor

Content Editor: R “Ray” Wang Copy Editor: Maria Shao

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Purpose and Intent

This report provides a methodology and framework for commercialization of the Internet of Things (IoT). Clients should use this document as a source for executive and board planning assumptions.

This paper offers insights into two of Constellation’s primary business research themes, Consumerization of IT/the New C-Suite and Data to Decisions.

Executive Summary

Unfortunately, executives just getting over the hangover of binging on words like Big Data, cloud and mobility are not done. There is a buffet of new phrases to understand, internalize and commercialize in our organizations; the “Internet of Things” is one of those phrases. The Internet of Things is different from recent paradigm shifts. Big Data, cloud and mobility were monolithic paradigms and were applied to a specific vertical innovation of an industry or organization. An executive can think vertically and get value from Big Data or cloud. The Internet of Things requires horizontal thinking since value from the IoT is anchored across several organizations and, in some cases, across multiple industries simultaneously.

Today, we embrace the IoT and the Industrial Internet (for simplicity, we can temporarily consider these two one and the same), which sport high levels of horizontal complexity spanning multiple industries and organizations. This complexity makes them difficult to humanize and to extract business value from.

How can executives find practical value in the Internet of Things? One big step is to think more about the verbs specifying what things connected to the Internet can do and think less about the nouns describing what the things are. The value is in the connections of things, not the things by themselves.

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What to Expect from the Internet of Things

Constellation sees a big future in the Internet of Things. While the underlying value will be the insights gained from the connections among objects, three larger trends emerge:

1. Multiple predictions suggest there will be over 100 billion devices on the IoT by 2020. However, in 2014, with only six years to go, the IoT is still largely an Internet of Computers. This means the predictions are wildly incorrect or the adoption will be insanely accelerated.

2. Charging of connected “things” with electric power remains far away. This means that while connecting of new things to the Internet is important, powering these things still has to be easy and readily available. If not, every object will be plugged into a charging mechanism, likely outlets on the walls in our homes and offices.

3. The ecosystem of sensoring vendors is evolving from disparate to organized.

Sensoring the world will require the hardware, information systems and software to capture, communicate and compile the insights to be extracted. GE and Siemens are doing a decent job at the hardware and equipment side and, as chip-making commoditizes further, and 3D printing matures, there will be an avalanche of new hardware players. Constellation expects a vibrant sensor and analytical ecosystem that leverages startup, entrepreneurial and venture capital channels for early access. To leverage hundreds of billions of sensors embedded in millions of different unique types of things and collecting trillions of attributes, we will need a new generation of information systems and software capabilities. The new information systems and software will come from next-generation players, or from transformed versions of companies like Verizon, Cisco or Google. In addition, human expertise will be important. Experts from industries built on information value chains such as financial services will have to be found to solve the new information value chain challenges created by Big Data and complex ecosystems.

So the anatomy of the IoT paradigm is different from recent paradigms. The IoT requires elevated levels of horizontal thinking over vertical thinking. The projections above are suggesting a type of accelerated adoption that dwarfs the adoptions we just experienced in mobile and social. The remaining innovations needed to accelerate IoT are simple inventions in areas such as charging (or the ubiquitous delivery of power) and sensoring - both areas in which we have sophisticated knowledge, history and broad experience.

For executives, the reality is that this paradigm shift is new in its anatomy and will move faster than anything we have ever experienced. How can we humanize it to get to business value at an equally accelerated pace? One simple answer is to think more about the verbs for what the “things” connected to the Internet can do and less about the nouns for what these things are.

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The Internet of Things Is Here

…a

nd So What?

Cisco predicts economic output of $19 trillion from the IOT market and General Electric forecasts $82 trillion in economic output from the Industrial Internet by 2025. The economic impact of $19 trillion plus $82 trillion is expected to be greater than 10 times the Internet itself. Yet, unfortunately, most executives are no more knowledgeable about what IoT means to their lives, communities or organizations. While IoT is still in the vision-creating stage, tech companies are poised to further expand the connectivity of things already connected or designed to be connected to the Internet. However, the pivot to connect things that are not already connected to the Internet, or were never designed to be connected to the Internet, is where the lion’s share of the disruption will reside.

Companies manufacturing things not already or originally designed to be connected to the Internet are ceasing the opportunity to build connectivity into everything as a strategic competitive advantage. A simple way to look at the incoming trend is everything now “comes with connectivity built in.” Connectivity itself can mean different things, ranging from wired, wireless, proximity, sensored and sensed. Proximity would be Bluetooth-type connections, sensored are RFID connections and sensed are those that can be observed with cameras and other motion detection mechanisms.

Industry by industry, executives must determine which “things” should be made connectable, and thing by thing, which use cases can generate 10 times the value of the Internet. There lies the challenge: the first group of companies will win at connecting things, but then once connected… so what if new things are connected to the Internet?

Why Executives Must Humanize IoT

Executives attempting to extract commercial value from things being connected to the Internet are currently faced with thinking about things in categories already connected to the Internet, new things that will be manufactured that will soon be connected to the Internet, and things already manufactured that will be connected to the Internet either by being sensored, being in proximity or being sensed.

In a world where we have successfully figured out what to connect to the Internet, and connected them, we must start thinking about what newly connected things could do. Executives attempting to humanize IoT to create commercial value should think more about the verbs for what things connected to the Internet can do, and less about nouns for the names of things that can be connected to the Internet.

Constellation predicts over 100 billion things connected to the Internet by 2020 and there are already over a few thousand types of things in the world connected to the Internet. Executives looking for strategic competitive advantage need a mechanism to categorize these “things” into manageable chunks that can be dealt with. The Six S’s below apply six verbs starting with the letter “s” to humanize and personalize the Internet of Things so that executives can start to commercialize outcomes and experiences for customers around

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specific business processes or use cases (This framework will be extended in later writing to cover other letters of the alphabet):

1. Things that Suggest 2. Things that Supply 3. Things that Service 4. Things that Secure 5. Things that Share 6. Things that Satisfy

This report will describe things that deliver each of the six s-verbs across industries. For brevity, we have selected five industries in this report, but the model can extend into just about any industry (See Figure 1):

1. Consumer

2. Transportation & Lodging 3. Financial Services

4. Life Sciences 5. Government

Many of the boxes in the table/matrix below can spur individual brainstorming sessions and research and development (R&D) investments in large organizations oriented around being a connecting company. Many of the items discussed in the boxes will spark start-up companies in the near future.

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Contributor Bio: Richie Etwaru

Focus: Internet of Things, the Human API, Sensor and Analytical Ecosystems, and the Industrial Internet. Technology, Manufacturers, Life Sciences, Financial Services and Start-Ups.

Relevance: Global Digital Marketplaces, Disruption, Business Model and Industry Design Innovations, Futurism and Corporate Awesome Sauce.

Group Vice President - Cegedim – A global information and technology company with 40 years of history, 5,000 employees, customers in 100 countries and $1.2 billion in annual revenue.

Mr. Etwaru operates the next-generation innovation and product management portfolio of Cegedim globally. He is responsible for innovation and is the executive sponsor for Fortune 500 accounts representing $250 million in annual revenues. He is a member of the Executive Committee and the press and thought leadership face of the organization.

Executive Director, Chief Operating Officer, Five Years - UBS – A global financial services company, with 150 years of history, 60,000 employees, operating in 50 countries and $3 trillion of assets invested or managed.

Mr. Etwaru was the COO for the technology innovation division transforming investment governance, operational control, prioritization, strategy and processing of transactional, compliance and client-servicing information management and technology. He was a member of the technology leadership committee and the North America operating committee.

Senior Vice President, Divisional CIO, Four Years - Lehman Brothers – Once a global investment bank with 50 years of history, 25,000 employees, operating in 25 countries, clients in 100 counties and $3 billion in revenue.

Mr. Etwaru was responsible for operations, client servicing, reporting, information management and technology for the Alternative Investments division consisting of hedge funds, fund of funds, venture capital, private equity and real estate investing product categories. He was a member of the firm’s global diversity council and a high potential employee identified by the office of the CEO.

Co-Founder and Chief Information Officer, Four Years - License Monitor – A technology and risk management startup still in business, with two dozen employees, doing business nationally and over $3 million in revenues prior to Mr. Etwaru’s departure.

Mr. Etwaru was a founder, raised $1.3 million of pre-venture capital funding, Chief Information Officer, responsible for $1 million of annual revenues, and initial owner of patent and trade secrets of the company. He contracted with Fortune 500 companies, government agencies and negotiated successfully with an ecosystem of government and private stakeholders to enable the business model and industry.

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Vice President, Technology Strategy, Five Years - Prudential Securities – Once the brokerage arm of Prudential with 5,000 employees, $2 billion revenues, clients in 25 countries and offices in 10 countries.

Mr. Etwaru was responsible for architecting the then-Internet platform going from mainframe processing to desktop and distributed processing. He was a member of the technology management team, leader of technical training and key interface to IBM, Microsoft and Dell on behalf of Prudential.

Miscellaneous - Multiple features on Forbes.com, multiple international patents, numerous keynote speaking events, board member and co-founder of several companies, writer on Huffington Post and LinkedIn, Ph.D candidate, Explorer of Google Glass and member of the Clinton Foundation startup mentors.

Twitter: @RichieEtwaru

Blog: https://www.constellationr.com/users/richieetwaru LinkedIn: http://www.linkedin.com/in/richieetwar

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About Constellation Research

Constellation Research is a research and advisory firm that helps organizations navigate the challenges of digital disruption through business models transformation and the judicious application of disruptive technologies. This renowned group of experienced analysts, led by R "Ray" Wang, focuses on business-themed research including Digital Marketing Transformation; Future of Work; Next Generation Customer Experience; Data to Decisions; Matrix Commerce; Technology Optimization and Innovation; and Consumerization of IT and the New C-Suite.

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