key questions to ask about
the Internet of Things

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

Copyright © 2015 Deloitte Development
LLC. All rights reserved.3 Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview 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? Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved.

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

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

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5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved. Information within the Internet of Things creates value in a never-ending value loop consisting of 5 stages: CREATE The use of sensors to generate information about a physical event or state COMMUNICATE The transmission of information across networks, from one place to another AGGREGATE The gathering together of information created at different times or from different sources 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

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

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

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5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved. 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.

Copyright © 2015 Deloitte Development
LLC. All rights reserved.10 Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview 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. 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 Behavioral design thinking is indispensable when building the world of complex systems of interactions between people and things Digital breadcrumbs, analyzed with computational social science tools, will help measure hidden individual and organizational traits The IoT enables new products and services premised around the creation of new forms of collective intelligence

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

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5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved. 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” All’s well “Sufficient value is created, and that value is shared between customers and companies sufficiently equitably” Gridlock “Both companies and customers are pulled in opposite directions, unable to move toward an optimal outcome” Customer is king “Customers end up capturing a disproportionate share of the new value created”

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

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

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

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

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

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5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview Copyright © 2015 Deloitte Development LLC. All rights reserved. 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

Copyright © 2015 Deloitte Development
LLC. All rights reserved.19 Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview 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 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 Making visible previously unseen information allows for greater efficiency than process controls Companies can transform push-driven order systems to differentiated pull-driven systems Holistic, end-to-end ecosystems can give rise to new, innovative business models

Copyright © 2015 Deloitte Development
LLC. All rights reserved.20 Deloitte University Press | 5 key questions to ask about the Internet of Things | @DU_Press #DeloitteReview 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 Organizations must determine how to share value with customers appropriately Security and privacy take on heightened importance Profound insights await discovery across the supply chain

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

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

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

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