Internet of Everything Value Index
The Cisco Global Research & Economics Practice conducted a ground-breaking online survey of 7,501 business and IT professionals from large and mid-sized companies called the Internet of Everything Value Index. The goal was to measure the current impact the Internet of Everything (IoE) is making on the private sector across the 12 largest global economies: Australia, Brazil, Canada, China, France, Germany, India, Japan, Mexico, Russia, United Kingdom, and United States, which together account for roughly 70% of the global gross domestic product. The results enable Cisco to measure actual value realized by firms in 2013 as a share of potential Value at Stake and explore key IoE enablers (people, process, data, things) that drive value.
What is an IoE Score?
The 2013 value realized (actual) as a share of the 2013 Value at Stake (potential). The IoE scoring model takes a comprehensive approach to include both company capabilities and objective measures by country and industry. The components of the model are divided into two primary groups:
Company Specific Factors
These include company capabilities across three types of connections: machine-to-machine (M2M), machine-to-people (M2P), and people-to-people (P2P). These three factors were tested as part of the global market research with respect to the existing technology usage and management practices.
These include transformational IT investment (particularly IT investment targeted at IoE-related focus areas e.g. new business models, company transformation), innovation productivity and network quality. These factors were included to give an appropriate indication of the market in which the surveyed firm exists.
What is Value at Stake?
As defined by Cisco, the potential $14.4 trillion bottom-line value that can be created or will migrate among companies and industries, based on ability to harness the Internet of Everything. Cisco has identified use cases that provide specific examples of how value can be both created and migrated between companies and industries.
While the $14.4 trillion Value at Stake over 10 years does include small businesses, it is important to note that all IoE score calculations are based on value realized and Value at Stake numbers that exclude companies with fewer than 500 employees. Small businesses in the Internet of Everything Value Index were not included because of practical considerations involved with getting adequate sample sizes, costs, and the suitability of available respondents.
What is Value Realized?
The actual value that has been realized from the Internet of Everything in 2013, as estimated by Cisco’s comprehensive model.
In measuring value realized, a one-year time period is used because the Internet of Everything Value Index represents a snapshot of current state capabilities. What this is establishing is the actual value realized, rather than the potential Value at Stake. The only way to measure the actual is to focus on one year (2013). Future iterations of the Internet of Everything Value Index will look at subsequent years to track how much progress is being made against the long-term Value at Stake opportunity.
It is important to note that the value realized excludes companies with fewer than 500 employees. Although these small businesses account for a significant 40% share of the overall Value at Stake, they were not included in the Internet of Everything Value Index because of practical considerations involved with getting adequate sample sizes, costs, and the suitability of available respondents. While the $14.4 trillion Value at Stake over 10 years does include small businesses, all IoE score calculations are based on value realized and Value at Stake numbers that exclude companies with fewer than 500 employees.
Three Connection Types
The IoE scoring model uses three types of connections used to evaluate how firms are deriving IoE value.
M2M connections are represented by technical capabilities in the Internet of Things and sensors. M2M connections are typically present in tracking physical assets, optimizing operations through sensor data and monitoring systems or machines remotely.
M2P connections are characterized by technical capabilities in analytics and include such elements as information dashboards and the ability to use large amounts of data.
P2P connections are represented by technical capabilities such as workforce collaboration, including unified communications and expert locators.
Four Data Elements
The IoE Value Index was fielded in the 12 largest global economies, which together represent approximately 70% of worldwide GDP. The selected group of countries also includes a mix of geographies, as well as developed and developing economies.
- United Kingdom
- United States
The five value drivers represent important areas of business activity that are not only key functions, but also each hold certain opportunities for realizing IoE value. The connection between these functions and the IoE is demonstrated by key underlying use cases that were used to illustrate the opportunity in each value driver. These five value drivers also underpin the earlier Cisco analysis that sized the total IoE Value at Stake.
- Asset Utilization - Reduced SG&A and CoGS from improving business process execution and capital efficiency.
- Employee Productivity - Labor efficiencies from fewer or more productive man-hours.
- Supply Chain / Logistics Efficiency - Elimination of waste and improved process efficiencies.
- Improved Customer Experience - Increased market share from adding more customers.
- Innovation - Increased R&D returns, reduced time to market, creation of additional revenue streams from new business models and opportunities.
Nine industries were selected to better understand the impact of the IoE on a representative sample of major sectors. Selection of these industries was driven by the underlying use cases which are used to illustrate how the IoE can have impact today and by the actual distribution of firms by sector in the 12 countries surveyed.
- Financial Services - Banking; finance; insurance
- Retail/Wholesale/Hospitality - Retail; hospitality; food services; wholesale; includes recreation (largely hotels + restaurants)
- Energy - Oil; gas; utilities; includes mining, energy refining
- Healthcare & Life Sciences - Private sector healthcare providers and payers (excluding government); pharmaceuticals; and biotechnology
- Services - Professional, business, environmental services; real estate; includes private sector education
- Transportation - airlines; rail; shipping; warehousing and logistics
- Technology & Telecom - Tech; telecom; info; media; includes high-tech manufacturing
- Manufacturing - automotive; industrial manufacturing; aerospace; process manufacturing (excludes pharmaceutical)
- Other - Includes agriculture, construction, all other
The IoE study was conducted to focus on firms within the private sector worldwide, with three size bands selected in order to get a sample of the medium, large and enterprise-class companies in each country. Small businesses were not included because of practical considerations involved with getting adequate sample sizes, costs, and the suitability of available respondents. All value realized calculations (and their corresponding Value at Stake “denominator”) exclude companies with fewer than 500 employees.
- 500 - 1,999
- 2,000 - 9,999
Three Data Views
The IoE Value Index measures actual value realized (VR) by firms in 2013 as a share of the potential 2013 Value at Stake (VAS). Our model does this by exploring key enablers (people, process, data, things) that involve various company-specific and environmental factors to drive value. Due to the array of elements included, the IoE Value Index results may be segmented by country, by value driver, by industry, and by company size.
|#1 - Full Profile||#2 - Compare Segments||#3 - Compare Connection Types|
|Available for each country, value driver or company size, this view displays a complete profile of all IoE Value Index output. As an example of one of these twenty distinct views, selecting a country will display the IoE, VR, VAS and connection type (M2M, M2P, P2P) scores for all evaluated firms in that country, along with the average IoE, VR and VAS results of a firm in that country by each of the five value drivers and by each of the three company sizes.||The breadth of the IoE Value Index allows for segment-within-segment comparisons of IoE, VR and VAS scores. For example, comparing “Value Driver by Country” displays scores for each country (really the companies evaluated in that country), organized by value driver. This means the user would see how average company capabilities in a certain value driver, such as asset utilization, compare from one country to another. The display also allows the user to change elements within the field of view.||Displays a side-by-side comparison of the IoE, VR, VAS and connection type (M2M, M2P, P2P) scores for each of the country, value driver, industry, and company size segments. For example, selecting “industry” will display the various scores for each of the nine industries included in the IoE Value Index, while also providing the ability to include or exclude any of the nine industries from the field of view.|