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5 Key Questions (and Answers) About the Internet of Things

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key questions to ask about the Internet of Things


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The Internet of Things (IoT) has been simmering for a while, but now seems ready to boil over as widespread transformation seems likely. Will your organization be ready? 2 Deloitte University Press | 5 key questions about the Internet of Things Things | to ask about the Internet of | @DU_Press #DeloitteReview @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved.


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Want to know how many steps you walked? Miles you drove? Watts you consumed? The IoT can tell you all that and more. But how, exactly, can the IoT bring value to your organization? 3 Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved.


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To obtain a foundational understanding of how the Internet of Things applies to your business, begin by exploring the answers to five key questions. 4 Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved.


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5 1 How does information generated from the Internet of Things create value? Deloitte University Press | 5 key questions to ask about the Internet of Things | | about the Internet of Things @DU_Press #DeloitteReview @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved.


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Information within the Internet of Things creates value in a never-ending value loop consisting of 5 stages: ANALYZE The discernment of patterns or relationships that leads to descriptions, predictions, or prescriptions for action ACT Initiating, maintaining, or changing a physical event or state CREATE The use of sensors to generate information about a physical event or state AGGREGATE The gathering together of information created at different times or from different sources 6 Deloitte University Press | 5 key questions to ask about the Internet of Things | COMMUNICATE The transmission of information across networks, from one place to another @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved.


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It is crucial to look upon the IoT with both an open mind and a certain level of skepticism. value Some changes enabled by the Internet of Things will be incremental, while others will be transformative. Yet the need to capture value remains as acute as ever. To learn more, read “The more things change: Value creation, value capture, and the Internet of Things” from Deloitte Review 17 Download the article 7 Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved.


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8 2 Where do humans fit into the equation? Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved.


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At first blush, the obvious implication of the IoT is that everyday objects can and will become better, more efficient versions of what they already are. 9 Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved.


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But if you look closer, the Internet of Things is not just about “smart devices”; it is also about devices and services that help people become smarter. The IoT enables new products and services premised around the creation of new forms of collective intelligence Digital breadcrumbs, analyzed with computational social science tools, will help measure hidden individual and organizational traits Behavioral design thinking is indispensable when building the world of complex systems of interactions between people and things To learn more, check out “IoT’s about us: Emerging forms of innovation in the Internet of Things” from Deloitte Review 17 Download the article 10 Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved.


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3 11 Customers vs. companies: Who benefits from the Internet of Things? Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved.


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Information is a powerful value-creation tool. However, the information value loop’s underlying structure tends to pull IoT deployments in one of four directions: Hobson’s choice “Customers are free to decide but only one option exists; thus, it is really no choice at all” “Sufficient value is created, and that value is shared between customers and companies sufficiently equitably” Gridlock Customer is king “Both companies and customers are pulled in opposite directions, unable to move toward an optimal outcome” 12 All’s well “Customers end up capturing a disproportionate share of the new value created” Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved.


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Companies can employ three techniques to develop an economically sustainable and mutually beneficial result for both the company and its customers. Take a hard look at who benefits most from each IoT-enabled transaction and correct value allocations Examine how a company is using IoT technologies using the Information Value Loop Assess where IoT investments may not have an appreciable benefit and move away from them To learn more, read “Power Struggle: Customers, companies, and the Internet of Things” from Deloitte Review 17 Download the article 13 Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved.


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14 4 How will companies keep information safe? Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved.


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The complex and rapidly changing landscape within the Internet of Things demands a structured approach to identifying risks and appropriate responses. 15 Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved.


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IoT solutions need to blend operational understanding with multilayered cyber risk management techniques Securing data is critical at every stage of the value loop, especially the create and communicate stages Remaining vigilant to new or unexpected challenges is crucial to maintaining security A system’s resilience defines how quickly a realized risk can be addressed and normal operations restored To learn more, read “Safeguarding the Internet of Things: Being secure, vigilant, and resilient in the connected age” from Deloitte Review 17 Download the article 16 Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved.


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17 5 How does the Internet of Things create value for your supply chain? Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved.


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Information from IoT deployments allows supply chains to invest less in eliminating variation and instead use it as a driver of innovation or competitive advantage 18 Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved.


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The transformations that the IoT can bring open up the possibility for new improvements and allow companies to find new paths to supply chain management Making visible previously unseen information allows for greater efficiency than process controls Holistic, end-to-end ecosystems can give rise to new, innovative business models Companies can transform push-driven order systems to differentiated pull-driven systems To learn more, read “Forging links into loops: The Internet of Things’ potential to recast supply chain management” from Deloitte Review 17 Download the article 19 Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved.


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The Internet of Things can fundamentally transform how organizations create value The Information Value Loop gives rise to increasingly complex business ecosystems Big data analytics take on additional levels of complexity Profound insights await discovery across the supply chain Organizations must determine how to share value with customers appropriately Security and privacy take on heightened importance 20 Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved.


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Read more from our special “Internet of Things” section in Deloitte Review Issue 17 Download Download Download Download Download Share your thoughts with the hashtag #DeloitteReview Follow @DU_Press on Twitter 21 Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved.


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Meet the authors MICHAEL E. RAYNOR MARK J. COTTELEER director with Deloitte Services, LP and the director of the Center for Integrated Research which designs, executes, and supports research into important issues facing companies today research director with Deloitte Services LP, affiliated with Deloitte’s Center for Integrated Research, focused on operational and financial performance improvement JAMES GUSZCZA HARVEY LEWIS US chief data scientist for Deloitte Consulting LLP UK lead for analytics research at Deloitte LLP JOHN LUCKER JOE MARIANI principal with Deloitte Consulting LLP, Global Advanced Analytics & Modeling market leader, and a US leader of Deloitte Analytics 22 Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview lead Market Insights analyst with Deloitte Services LP focusing on technologies and trends that cut across industries Copyright © 2015 Deloitte Development LLC. All rights reserved.


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Meet the authors SEAN PEASLEY ARUN PERINKOLAM EVAN QUASNEY IFRAN SAIF principal with the Cyber Risk Services practice at Deloitte & Touche LLP and the US Consumer Business & Industrial Products leader for cyber risk services senior manager with the Cyber Risk Services practice at Deloitte & Touche LLP focusing on cyber risk strategy and program development manager with Deloitte LLP, with extensive experience designing and implementing IoT applications for high-tech manufacturers principal with the Cyber Risk Services practice at Deloitte & Touche LLP, US Advisory Technology leader, and a leader of Deloitte’s CIO Program BRENNA SNIDERMAN manager with Deloitte LLP, with extensive experience designing and implementing IoT applications for high-tech manufacturers 23 Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved.


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Sign up for Deloitte University Press updates at http://www.dupress.com @DU_Press About Deloitte University Press Deloitte University Press publishes original articles, reports and periodicals that provide insights for businesses, the public sector and NGOs. Our goal is to draw upon research and experience from throughout our professional services organization, and that of coauthors in academia and business, to advance the conversation on a broad spectrum of topics of interest to executives and government leaders. Deloitte University Press is an imprint of Deloitte Development LLC. This publication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or its and their affiliates are, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your finances or your business. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. None of Deloitte Touche Tohmatsu Limited, its member firms, or its and their respective affiliates shall be responsible for any loss whatsoever sustained by any person who relies on this publication. About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright © 2015 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited


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