IOT EVOLUTION. How the IoT is driving new opportunities in 2018 and beyond. Alexandra Rehak Practice Head, Internet of Things Ovum

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1 IOT EVOLUTION How the IoT is driving new opportunities in 2018 and beyond Alexandra Rehak Practice Head, Internet of Things Ovum Charles Juniper Principal Analyst, Financial Services Technology - Ovum John Sousanis Managing Director WardsAuto Intelligence

2 AGENDA Key IoT Trends for IoT Impact in the Global Insurance Sector IoT and Automotive: Necessary Connections

3 THE IOT IS NOT ONE-SIZE-FITS-ALL Diverse technologies Diverse customer needs Diverse business models

4 Connections (Mn) NEW TECH OPENS UP NEW USE CASES Global M2M and LPWA IoT Connections 3500 LPWA = 1986 Mn LPWA use cases M2M = 962 Mn total M2M total LPWA We have parking pay and display using GSM, Bluetooth connectors on the road network, air quality sensors, and traffic signals. There s a city council initiative on connected bins but not using our LoRa network they re using GSM. And Ofo are using Sigfox to track their connected bikes. - UK Smart City Programme Manager

5 WHO DO CUSTOMERS GO TO FOR IOT? Specialist IoT applications or solutions provider 7% CSP/telco (e.g., BT, Vodafone) 10% Enterprise applications provider (e.g., salesforce.com, Oracle) 11% Industry vertical or industrial specialist (e.g., Philips, Bosch, GE) 10% Systems integrator (e.g., Accenture, Tech Mahindra) 19% Enterprise IT vendor (e.g., Cisco, IBM) 40% Q: Who is the main provider of your IoT deployment or solution?. Source: Ovum IoT Enterprise Insight Survey

6 WHAT S DRIVING IOT DEPLOYMENT? reducing costs improving business processes increasing competitiveness improving customer experience growing existing revenue improving employee productivity developing new revenue streams shift to as-a-service or usage-based business better use of environmental/energy resources building datasets for future business insight Q: What are the main goals of your IoT deployment or plan? Source: Ovum IoT Enterprise Insight Survey

7 WHAT S DRIVING IOT DEPLOYMENT? reducing costs improving business processes increasing competitiveness improving customer experience growing existing revenue improving employee productivity The biggest thing for us, to be honest, is customer satisfaction, which is developing new revenue streams really driving us as a differentiator. shift to as-a-service or usage-based business We think deploying this technology can move us up the value chain with customers. better use of environmental/energy resources building datasets for future business insight - US Manufacturer Q: What are the main goals of your IoT deployment or plan? Source: Ovum IoT Enterprise Insight Survey

8 IOT CHALLENGES VARY BY INDUSTRY Q: What s your biggest challenge in deploying IoT projects successfully? Data and network security concerns Integrating with ICT infrastructure Service reliability concerns Up-front capital investment requirement Expected ongoing running costs Integrating with business processes Source: Ovum IoT Enterprise Insight Survey

9 IOT ENABLES NEW BUSINESS MODELS Event- or usage-based As-a-service Data-leverage Customer pays only (or mainly) on trigger event Shift to managed service approach using IoT IoT data as basis for new revenue streams

10 DISRUPTION IN UNEXPECTED PLACES Non-data companies can also lead on IoT monetization Connect customer s nonconnected devices + processes Sell data + insight back to customers Sell data to third parties

11 KEYS TO SUCCESS: SIMPLICITY, FLEXIBILITY, VERTICALIZATION Diverse technologies Diverse customer needs Diverse business models

12 AGENDA Key IoT Trends for IoT Impact in the Global Insurance Sector IoT and Automotive: Necessary Connections

13 IOT IS REDEFINING INSURANCE BUSINESS MODELS New sectors New services Valued purchase Selling & Marketing Pricing Risk Connection to individual items Pricing reflects risk Pricing reflect usage Automated & high speed Accurate & detailed data Process efficiency & fraud Managing Claims Managing Risk Reduce risky behaviour Pre-emptive intervention Dialogue with customer

14 % of Survey Respondents IMPACT ON INSURANCE COMPANIES What do you believe the impact of IoT, telematics or wearable sensors devices will be on the your organization? Transform Our Organization Significant Impact on Our Organization Some Impact Limited Impact 100% 80% 60% 40% 20% 0% 15% 11% 8% 28% 24% 41% 41% 45% 27% 16% 15% 26% Within 12 Months Within 24 Months Within 36 Months Sample: 474 insurance senior decision makers

15 CHANGING COMPETITIVE DYNAMICS What level of competitive threat do the following types of organization present to your company when it comes to offering IoT, telematics or wearables-based insurance products? Major Competitive Threat Competitive Threat Minor Competitive Threat No threat Other Insurers GAFA* FS excl. insurers Security Co's InsurTech's Telco's Utility Co's Vehicle Manf. 8% 14% 13% 10% 10% 18% 17% 13% 33% 27% 25% 22% *GAFA = Google, Amazon, Facebook & Apple 31% 37% 39% 35% 31% 34% 39% 35% 39% % of Survey Respondents 32% 32% 31% 34% 31% 22% 20% 23% 13% 16% 17% Sample: 474 insurance senior decision makers

16 THE NEW INSURANCE PROPOSITION Today IoT-Based Insurance Bucket & Opaque Pricing Multiple Policies Annual Renewal Insurance as a Utility Disconnected From Insured Items Infrequent Communication Pre-emptive Risk Management Value-Added Dialogue Inefficient Claims Pay to clear up the mess!! Automated Claims Avoid the mess in the first place

17 AGENDA Key IoT Trends for IoT Impact in the Global Insurance Sector IoT & Automotive: Necessary Connections

18 IOT & AUTOMOTIVE NECESSARY CONNECTIONS CONNECTED IN OUR CARS Keeping up with the smart phone Mobile, personalized connectivity Navigation, concierge services Smart home on wheels Personalized environment Heating, cooling, lighting, acoustics Usage/user data

19 IOT & AUTOMOTIVE NECESSARY CONNECTIONS IMPACT OF IOT ON AUTOS Creating new business models for automakers Attracting new players to the market Changing every aspect of the vehicle and industry Safety and driving (not driving?) Maintenance OTA monitoring and updates Insurance usage and user pricing Fleet Management connecting vehicles Cybersecurity

20 IOT & AUTOMOTIVE NECESSARY CONNECTIONS IMPACT OF AUTOS ON IOT Arguably most important extension of IOT 50% of today s new cars are connected to the Internet 100% (~100 million vehicles/year) by 2025 Creates new classes of user/usage data Completes the picture Furthers the cause with public, government, businesses

21 IOT & AUTOMOTIVE NECESSARY CONNECTIONS CARS CONSUME >50% oil goes toward gasoline CARS POLLUTE #1 global warming contributor (NASA) >50% CO and NOx emissions THE PROBLEM WITH CARS CARS CONGEST Land-use: parking, streets City gridlock, commuter traffic Record demand 90 million 1.4 billion vehicles on the road CARS KILL 1.2 million deaths/year More than WAR + MURDER #1 cause of death yr olds

22 IOT & AUTOMOTIVE NECESSARY CONNECTIONS CONNECTED CARS EMISSIONS & FUEL ECONOMY Connected fuel-economy improvement driven by select systems, such as Smart Cruise Control, whose estimated impact is shown to the right Connected autonomous vehicles could reduce passenger car fuel consumption 44% by 2026 Connected driving-cycle management alone can improve fleet efficiency 5% Estimates from Autonomie Vehicle Performance Analysis Software

23 IOT & AUTOMOTIVE NECESSARY CONNECTIONS CONNECTED CARS CONGESTION AND SAFETY Connected-vehicle traffic management on freeways Reduce the number of crash-related incidents Increase the level of throughput on roads Reduce traffic delays in already congested areas Increased stages of ADAS and autonomy increase safety Reduce need for parking in city centers Safety solutions require redundant levels of connectivity

24 IOT & AUTOMOTIVE NECESSARY CONNECTIONS THE CONNECTED VEHICLE A Matrix of Connections Onboard Wireless LAN System-to-system connections Connection(s) to the Internet Vehicle to Infrastructure sensors, servers Vehicular Ad hoc networks (V2V) Systems-to-Service connections Vehicle-to-Devices Vehicle-to-Grid

25 IOT & AUTOMOTIVE NECESSARY CONNECTIONS BUILDING THE NETWORK: THE AUTO IMPERATIVES V2C Vehicle to Cloud; Full coverage, requires investment in cellular, Wi-Fi V2V Vehicle-to-Vehicle Requires international standardization, regulation V2I Vehicle to Infrastructure: Pillar of Autonomy; Traffic management; Safety Requires government regulation, investment in IoT

26 IOT & AUTOMOTIVE NECESSARY CONNECTIONS SYMBIOTIC DEVELOPMENT IoT/connected vehicles will be the key driver of change in the auto industry for the at least a decade Government regulations and investment, consumer demand and commercial interest will be activated by societal needs for safer, cleaner more efficient mobility Complexity and urgency of automotive IoT needs will act as a catalyst on overall IoT development and adoption

27 Alexandra Rehak Practice Lead, IoT Ovum +44 (0) Charles Juniper Principal Analyst Financial Technology Ovum +44 (0) Thank you. Questions? John Sousanis Managing Director WardsAutomotive Intelligence