iot breakfast briefing

Internet of things breakfast briefing 24th November 2016

Somo accelerates mobile transformation through rapid innovation to create

products and experiences your customers and employees will love.

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Our IoT experience

Partners: Clients:

What we’re covering today

1. Introduction to smart devices

2. The IoT landscape

3. The impact of the IoT – 5 key themes

COFFEE BREAK

4. IoT factors for implementation success

Introduction to smart devices

Confidential and copyright of Somo Global Ltd. November 16 6

Amazon Alexa The ecommerce giant is using the Echo speaker and the personal assistant Alexa to push the Prime service into all homes and create a bridge online-offline -  Order an Uber -  Get a take away from JustEat -  Turn off your lights

Google Assistant

Google Assistant is now available on Google Home and on Pixel phones. Google was the last to launch its personal assistant but has significantly more data about consumer behaviours compared to its rivals -  Control your home -  Backed up by Google Data -  Rumours of Chromecast connection

Apple and Siri

Apple was the first to launch its voice assistant Siri integrated in iOS to provide faster access to apps and features. In 2016 Siri has been extended to Car and TV OS and has been opened to third party apps -  Control connected devices directly

through your phone, all in one place, the ‘Home’ app

The Controllers

Hive

Connected thermostat, controlled by your

mobile phone or the Amazon Echo

Nest

Smart security camera, connected to the

internet, tracks and logs movements

Philips Hue

Smart lighting, connected with Siri and Amazon Echo, control

your lights or set a mood

Amazon Dash

In the last two months, says Amazon, Dash button orders have increased threefold,

and orders are placed at a rate of more than

two a minute

Nespresso

Connected coffee, works with the

Nespresso app to make your coffee when you

want it

The Devices “A world where everyday objects have network connectivity”

Audi of America MLS Player Index

Objective

A marketing showcase of the new Audi Player Index for the MLS. Solution Somo built 60 custom 16x16 pixel full colour LED panels that were robust enough to absorb impact but flexible enough to be comfortable when inserted into custom-built, branded soccer jerseys and sports pinnies. Player information from Opta’s APIs were delivered real time to players’ jerseys.

Results

The overall effect was instantaneous updates of content displayed across 2 full teams and a fast, robust onsite management experience. This is a great example of Somo reducing the risk of innovation through experience gained via experimentation

November 16 9 Confidential and copyright of Somo Custom Ltd.

Connected Clothing Audi MLS Player Index Connected Shirt

The IoT landscape

"The global industrial sector is undergoing a fundamental structural change akin to the

industrial revolution.”

Goldman Sachs – The internet of things: The next mega trend

November 16 12 Confidential and copyright of Somo Global Ltd.

At its heart, the IoT is about connecting objects (smart products and devices) to each other over the internet, allowing for an exchange of data between products, devices and people.


What exactly is the Internet of Things (IoT)?

Internet

Tagged (‘Dumb’) products Connected (‘Smart’) devices

Consumer applications Business applications

Source: Gartner, July 2016

The journey is just beginning


PCs

Smartphones

Tablets Internet Of Things

Connected TVs

Wearables

Connected Cars

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

20,000,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E

Nu

mb

er O

f De

vic

es

In U

se G

lob

ally

(In

Th

ou

san

ds)

Source: BI Intelligence Estimates, February 2014

IoT is set to dominate the future digital landscape


US leads the way in all sectors with the exception of Smart Cities where Europe leads

22% 20%

13% 13%

6% 5% 5%

4% 4%

8%

0% 5% 10% 15% 20% 25%

Connected Industry Smart City

Smart energy / home Connected car

Smart Agriculture Connected buildings

Connected health Smart retail

Smart supply chain Other

Global share of IoT projects


Growth and investment is coming from multiple sectors

Global installed IoT devices currently connected to the

internet in 2016

Global installed IoT devices predicted to

be connected by 2025

Growth in connected devices between 2016

and 2025

17.7bn 75.4bn 426%

Source: HIS Technology April 2016 Source: HIS Technology April 2016 Source: HIS Technology April 2016


The number of internet connected devices is growing exponentially

More devices means exponentially more data


Cats no longer the most important thing on the internet

Cat photos, selfies, emails

Machine generated data

The maximum potential economic

impact per year of the IoT by 2025

Potential annual economic impact

directly created in the home from the IoT

The potential value driven by the IoT in home safety and

security per year by 2025

$11T $350bn $20bn

Source: MckInsey, “The Internet of things: Mapping the value beyond the hype”, June 2015




The rewards for entry are potentially enormous By 2025, the IoT could drive 11% of the global economy

3%

7% 8%

20%

23%

5%

11%

17%

25%

16%

9%

16%

22% 20%

7%

0%

5%

10%

15%

20%

25%

30%

Already invested to get network ready

Currently implementing / piloting

Will begin investment in next year

Currently assessing costs and benefits

Haven't considered or assessed yet

2014

2015

2016 E

November 16 20 Copyright and confidential

Investment in IoT is no longer optional High growth in involvement in IoT technology means businesses must act now to keep up

Source: Forrester Research, “Forrester Business Technographics” July 2015

Data collection, diagnostics and customer-facing applications are getting most attention

47% 45%

26% 25%

14% 10%

0% 10% 20% 30% 40% 50%

Customer facing mobile

apps

Production and distribution ops

to track product flow

Digital sensors in products that

send diagnostic data

Digital sensors placed in business

locations (shops, offices)

Wearable tech that monitors behaviours

No current use but plan to by

2020

Ways in which companies are using IoT


How are businesses getting involved?

Lack of consumer insight creating less effective marketing and service offerings

and increasing attrition

Higher production, logistic and

productivity costs aligned with lower levels of efficiency

Disruption and disintermediation from new players and other

sectors


The threat of being caught behind Lack of involvement in the IoT will see businesses losing competitive advantage

Longer and less informed product

cycles that fail to meet evolving customer

needs

Customer attitudes and behaviours towards the internet of things

The average number of connected devices

owned by UK households, to rise to 500 by 2022 (Gartner)

UK households that have a connected

utility meter installed – leading the US, Japan

and Germany

Of UK internet users currently use mobile

apps to control connected devices in

their homes

Don’t really know what smart tech or the

internet of things is

7 37% 53% 52%

Source: GSMA: The Impact of the Internet of Things, March 2015

Source: GSMA: The Impact of the Internet of Things, March 2015

Source: Norton by Symantec, “Mobile armour and the internet of things”, March 2016

Source: UK internet users, Future, Techmonitor: Are we thriving or just surviving in a connected world? May,

2015


UK adoption of the IoT is gaining momentum But awareness remains low among some customers

53.2 49.8

29.3

44.1 35.7 33.3

24.5 31.2

Gen Y Gen X Baby Boomers Average

Customer likelihood of adopting Smart home ecosystems

Affluent Non-Affluent Source: Capgemini and Efma, “2016 World Insurance Report”, March 2016

Early adopters


Affluence and age to determine early adoption of IoT

Motivations include: energy, cost-saving, protection and convenience

Barriers include: cost of set up, difficulty of maintenance and security and privacy concerns


Motivations and barriers

Source: Deloitte Switch on to the connected home, Jul y 2016 Source: Ponemon institute, Privacy and security of connected life, March 2015 Source: Guardian, “Data could be the real draw of the internet of things – but for whom?”, Sept 2015

48% agree that

connected products are

too expensive

42% say the benefits of IoT do not outweigh

their privacy concerns

82% say that providers

gave no info as to how

their data is handled

20% felt it would be too much effort to manage

58 47

44 43 42

34 32 31

20

Help me reduce energy bills

Help me perform daily tasks

It would save me time

Home security peace of mind

I like experimenting with tech

Learn about device usage

Help me be more eco friendly

More compatible devices

Learn about personal habits

Customer willingness to share information from devices with insurers

UK home insurance owners who would share information for a more accurate premium

0%

20%

40%

60%

80%

UK US India Mexico Home sensors Wearable technology Connected cars


Sharing data

Source: Capgemini and Efma, “2016 World Insurance Report”, March 2016 Source: Deloitte, “Insurance distupted – General insurance in a connected world”, July 2015

38%

45%

17%

Yes No Don't know

UK customers are less willing to share data...Unless there’s something in it for them

Key customer purchase considerations of IoT


Service / Convenience “Is it easy to install and maintain?”

Price “Will it cost a lot to invest in the IoT? Will it save me money?”

Value / Utility “Will it enhance my life? Will it make it easier to get things done?”

Rational

Rational / Emotional

Emotional

Trust / Privacy “What is going to happen to my data?

Will I be hacked?”

Customer purchase

drivers

The impact of the IoT – 5 key themes


What happens next?

6. Velocity of new innovation 1. Data is King

Product performance and efficiency:

Understanding how products are performing

allows businesses to behave proactively in performing diagnostics and ensuring products

are maintained and performing optimally

Customer behaviour insight:

Data around customer behaviour through their

usage provides businesses with the

insight required to assist and improve individual customer experience

Future product / service development insight: Data can be used to inform future product development through an understanding of

both performance and usage, or, in the case of finance and insurance,

behavioural insights

Maintain Assist Develop

The IoT will create an explosion of real-time data Understanding how to leverage it will determine the success of business

Actionable insights and new value creation

Insights Usability

Gap

What does it mean to be a data led company and creating added value, services and personalization?

The data value chain

Advanced analytics and data

visualisation

Exponential growth of data

60%

Of marketing professionals in large companies in UK say large amounts of data is the key challenge of their

current Big Data solution

Source: eMarketer May 2015

56%

Only 56% of large companies in UK

have adopted a Big Data solution

600 trillion

gigabytes

Data generated by IoT will reach 600 ZB

per year by 2020

Source: eMarketer May 2015 Source: Fortune, 2016

1%

Of data taken from connected devices

is currently being used for beneficial

purposes Source: McKinsey, 2015

Actionable insights and new value creation

Insights Usability

Gap

Deep learning!

What does it mean to be a data led company and creating added value, services and personalization?

AI presents an answer to the challenge of Big Data

Advanced analytics and data

visualisation

Exponential growth of data

600 trillion

gigabytes

Data generated by IoT will reach 600 ZB

per year by 2020

40%

Of companies surveyed are already using machine learning to improve sales and marketing

performance

85%

By 2020, 85% of customer interactions will be

managed without a human

Source: Gartner 2015 Source: MIT Management Review 2016

Source: Fortune, 2016

1%

Of data taken from connected devices

is currently being used for beneficial

purposes Source: McKinsey, 2015


Change creates opportunities for agile disrupters Ill-preparedness for mobile and big data is bad today, worse tomorrow

Traditional Players Tech and Mobile Players

Differentiators • New business models

(subscriptions)

• Mobile user experience

• Customer data to create better products and new services and personalised service

• No legacy tech stack, agility and mobile-first platforms

Disruption!

Data Analytics

Firms Global Tech Firms

Integrators

Product Manuf.

Insurance

Telco

Utility

Consumer Electronics

Retail

Automotive

2. Everything is connected

Consumers are connected everywhere IoT disintegrates the barriers between domains joining up previously disconnected experiences

Home Commute Commute Home Work User Journey

Smart Home

Connected Car

Smart City

Connected Workplace

Diagnostics and maintenance

Automated heating settings

Appliances

Infotainment

Traffic management

Lights automation

Smart lock

Sleep monitoring

Video security

Location based activation

Heat & humidity control


Value Creation Integration Automation Personalization Control Efficiency

Performance Monitoring

Connected retail Demand responsive transport

•  Map the changing customer journey

•  Focus on customer needs and motivations to unearth usage behaviours

•  Understand how products and services daisy-chain to create a larger user journey

•  Identify which pain points you can solve in the

spaces you own and the ones you connect to


Products are part of an integrated customer experience Devices are used in train not independently so products should be developed with customer behaviours

and journeys in mind, not product specifications

3. Your new customer is a fridge

Personal assistants Smart appliances Sensor enabled tools

Smart devices change the point of purchase

$2bn+ in online

shopping will be performed

by digital assistants in

2016

- Voice prompted

- Automated reordering

- Measured & measurable

Machine to machine purchase will soon overtake human action

4. Products are alive

Remote servicing and upgrade change a company’s relationship with its products and customers

All products continuously improved


The traditional product lifecycle is extended

Traditional Product

Lifecycle

Diagnostic & usage data

insight

Remote product and

service enhancement

IoT nurture

loop

Under Armour uses wearable data to

provide fitness plans for users, tracking their

progress

Opower recommends energy improvements

by monitoring your connected devices

Tesla Easter Egg upgrades create

surprise and delight


Products are relationship platforms Data provides insight, insight can help businesses add value to its customers

IoT creates opportunity for businesses to market direct to customers


Products are your new marketing channel

•  Absolut Vodka, has created a connected

bottle using NFC in the cap •  It can communicate with third-party apps to

dim the lights or play music from curated playlists

•  Belief that the product is able to help Absolut with marketing comms to customers going forward

5. Every area of your business is affected

Of retailers already uses the IoT to monitor their supply chains and

product flow

Increase in productivity gained on

average by employees who are

armed with wearable devices

Of retailers worldwide believe that IoT will

generate closer engagement with customers via their connected devices

56% 9% 43%

Source: Frost & Sullivan “The Global Future of Work—The Future of Workplace Technology ”

Source: Tata consultancy Services “Internet of things 2015”

Source: RSR research “Internet of things in Retail”

November 16 45

IoT is impacting businesses end to end From back end services to workplace productivity and customer engagement, IoT can boost efficiency

Opportunities exist in both inward-facing and outward, customer facing areas of business


IoT can improve and optimise all aspects of business

Supply Chain -  Greater visibility around logistics from factory door to customers’ hands -  Enhanced automation in product development

Workplace -  Enhanced productivity through the use of VR / AR and other wearables -  Better performance monitoring and understanding or environmental factors

Product / Service design and development -  Improved collaboration -  Data fuelled product development cycles – shorter and more targeted

Customer insight - Insight around customer behaviours and usage to improve targeted contextual and relevant marketing and product / service needs

New revenue streams -  New opportunities to monetise services -  Utilising behaviour data to create differentiated offerings

Service and maintenance -  Automated prognostics and diagnostic insight -  More informed customer service and help functions

Coffee break

8 IoT factors for implementation success

“Connected products won't just be aimed at home life. They'll also have a major impact on business. And just

like any company that blissfully ignored the Internet at the turn of the century, the ones that dismiss the Internet of

Things risk getting left behind." — Jared Newman, writing in Fast Company

Who was there? Thing makers

-  Device makers -  Sensor

manufacturers -  Beacon providers

Consultancies

Analytics/Action Infrastructure

Thing makers

-  Device makers -  Sensor

manufacturers -  Beacon

providers

Consultancies

Analytics/Action Infrastructure

1. Educating internal staff

52

Identify KPIs

Understand the user

environment

Bring it all together / develop

Identify the available

information


Steps to creating a connected employee Whether that’s a connected worker or a retail salesperson…

Deploy to workforce

Improve sales

Improve efficiency

Enhance staff training

Provide more pertinent customer information

Reduce duplication/rework

Reduce time to decision

Reduce mechanical failures

Increase safety


Providing a value proposition Helping to ensure that employees are bought into your vision…

Review of the organisation’s

structure

Create a culture shift within the

business

Educate staff in new technologies

Conduct a review of the skills gap


The IoT demands organisational change

2. Implementing IoT platforms

56

Think IoT will be disruptive

to industry

72%

Believe it will be within 5

years

78%

Think their company is not ready

88%

Of 700 CEO’s/CSO’s surveyed by the World Economic Forum…

72%

88%

72% 78%

88%

How to approach the IoT


IT

Sales/ Marketing

Operations

IOT

Things What are the

characteristics of this machine/person/space/process?

Insights Based on our desired

outcome (sales, maintenance, etc),

what can we do with that information?

Actions Feedback to the

Thing, or pass information on.


A simple view of an IoT solution

The IoT business cycle

Connect &

Monitor

Analyse &

Improve

Transfor-mation

Know… •  If your assets are operational •  If your assets are healthy •  If your assets have been stolen •  Where your assets are •  What tools, parts, expertise are

required to resolve an issue

Ability to… •  Introduce new business

models: •  Uptime guarantees •  Device as a service

•  Introduce new product lines •  Partner with other

companies on insights about your assets

Know… •  If your assets are in an optimal

state •  Exactly when to service your

assets based on their unique needs

Complexity Legacy systems

Industry standards

Scalability


Challenges Implementing the IoT does not come without its challenges…

3. From product release to product iteration: the endless product

62

Our product philosophy

Brilliant Basics

Optimize for device Optimized user journey

Performance driven

Wow Moments Flexible Technology

Flexible methodology Rapid deployment

Scalable technology

New customer engagement Innovation

Creative use of technology

November 16 Confidential and copyright of Somo Custom Ltd.

INVESTIGATE

INNOVATE

INTEGRATE

ITERATE

End User Business

Mobile Transformation

Engine

Business insight

Customer insight

Market insight

Ecosystem insight

Current and future state: Financials / Product marketing / Customer

journeys

Internal analytics External insight

Competitors Products /

Marketing / CRM

Ecosystem insight Innovation insight Potential partners

Strategic Vision Customer Journey Product Roadmap

Marketing Roadmap

Quick Wins (<1Month) Brilliant Basics (1-3Month) Wow Moments (3+Month)

QW / BB / (WM)

QW / BB

WM

Our approach to user-centred design

November 16 Confidential and copyright of Somo Custom Ltd.

Case study: Tesla firmware updates

•  Tesla’s high-end Model S will soon be able to go 0-60 mph in just 2.4 sec, following a software enhancement next month

•  The Model S is built on a platform that makes it ready for full autonomy once capability is achieved

•  Furthermore, new services such as voice

commands and suspension adjustment are regularly provided through over-the-air software upgrades

4. Effective and actionable data management

67

Useful Define what data

should be collected and for what specific

purposes.

Accurate Data collection needs to be accurate and

measure the right things. Bad data leads

to bad decisions.

Actionable Turning data into

actionable insight is key. Businesses need to ensure the key skills to interpret and react to insight are in place.

Automated Establish how much data interpretation can be automated.

Investigate whether AI can help manage

large data sets automatically.


Key considerations when collecting data Garbage in = Garbage out

•  IoT platforms collect and store data at multiple points creating multiple points of access

•  Devices and platforms are both exposed

•  Security strategies should play a central role in all stages of IoT strategy development

•  Follow security best practices e.g. unique identity keys and secure boot process

•  Consider other security testing techniques

such as Ethical Hackers.


Security implications Data privacy and device protection are very real concerns

5. Forging partnerships

70

Partnerships are the key to IoT success. Don’t be scared to partner – GE partners with 260+ companies.


Building a partnership strategy


Added Value

Supplementary Areas

Overall Platform

Core Areas

•  Integrate with their platforms

•  Exchange data

•  Growth and visibility •  Customer

understanding

•  Integration with grocery and homewares

•  Increase reach and distribution

•  Bundle your offering with their service subscriptions

•  Increase reach and distribution

•  Tap into their existing customer base already on subscription

•  Add services to your offer

•  Include complementary products in your bundle

•  Complete product offering

Benefits Opportunity

American Family Insurance > home security •  AmFam partnered with Ring – manufacturer of

Ring Video Doorbell security device – for special discounts, and also offers a general policy discount for all customers with home security devices.

•  Offer includes multiple perks: •  Ring will reimburse American Family customer

deductibles if their Ring-equipped home is burglarized

•  AmFam customers will receive a $30 discount off the $199 Ring Video Doorbell.

•  American Family customers who use smart home devices may also be eligible for the company’s Proactive Home Protection discount (up to five percent) on their homeowners, renters or condo policies.

•  American Family also subsidizes the cost of a Nest Protect smoke alarm.


Cross-industry partnerships provide access to valuable data

As ecosystems develop they will start to overlap, providing new partnership avenues


Cross-domain partnerships present new opportunities

6. Evolving commercial models

75

Added-value services:

- Installation - Maintenance

- Product optimisation

Subscription models:

- Hire purchase -Bundled goods and

services

Bolt-ons: - Product upgrades

- Time-limited unlockable

enhancements

Usage based: - Tiered pricing

- Customised usage price plans


From ownership to services and relationships Connectivity, upgradeability and longevity of smart devices implies consideration of new commercial models

New revenue opportunities Utilising ongoing connectivity

Case study: Tesla in-car purchases

•  Tesla software-locks extra features through in-car purchases

•  Owners are able to trial some features for a month and option to purchase the feature in-car after trial period ends

•  E.g. Model S owners can pay to

upgrade to the full potential of their 75 kWh battery pack

7. Managing channels for good customer experience

78


A clear web, app and device strategy is required for successful implementation

Control and connect

- Remote functionality - Notifications and alerts - Summary information

Monitor and measure

-Data capture and store

-Trigger alerts / Actions

Review and analyse

-Dashboard data visualisation -Detailed but user friendly

insight - Clear and actionable

8. Educating customers

80

Of consumers don’t really know what smart tech or

the internet of things is

Said they need to see real value to spend money on a

smart product, not just loyalty

Will be lost by UK consumers due to a lack of

understanding of how smart tech can save them

money

52% 59% £3.6bn

Source: UK internet users, Future, Techmonitor: Are we thriving or just surviving in a

connected world? May, 2015

Source: US internet users, Warranty Week Source: Samsung, 2014


Customers won’t invest if they don’t understand the value Smart devices are still not clearly understood by customers which presents a problem as they are experience driven products

Samsung’s focus on customer stories presents the consumer with clear user benefits


Sell the experience not the product

Education shouldn’t end at the point of purchase


Customer ownership

Usage “What benefits do I gain out of using this connected device day-to-day?”

On-boarding “How do I install, set up and work this connected device?”

Ongoing Relationships “How do I benefit from my relationship with the brand?”

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