And now we're going to look at some business considerations. Business leaders witnessed the stability and the maturity of the emerging solutions and these tools and these applications. Thinking back to some of the material from the previous lecture, there were a confluence of contributing factors that enabled this advancement to take place. This implementations have a number of goals one of them is to reduce risk. Business managers, company owners are very concerned about risk when. I worked at Seagate we looked at risk, almost every technical decision that was made had a risk component associated with it. How risky is this? If we add this feature does it put the schedule at risk? Does it add so much complexity that we might release a product with a bug? So their risk is a big thing that management and business owners are concerned about. And here's our catchphrase for the semester, operational efficiencies these solutions increase operational efficiencies. And as business owners see that they can increase their operational efficiency, this drives adoption, And the adopters, they want to see our increased profits and increased revenue sales and lower operational expenses. When you're in management, these are the things you're very, very concerned about. Our influencing factors now. So we're going to look at some drivers, this notion of increasing connectivity due to IP version 6, and cell phones. Growing penetration of smartphones and all of these connected devices, increasing adoption of wireless sensors, and some of the ones that we're going to look at are pretty cool. That's coming up later in this semester. Streaming of cloud computing, machine learning, and analytics. So these are the driving factors that if you think about that business cycle or that the drawing I do that was next to the traditional business cycle of technology driving new businesses and new businesses driving the adoption of new technology. These other primary driving factors that are in play now. There are some restraints that play. So significant lack of standards when we study all of the different types of communications and of the sensors that are out there different companies are advocating different sensors, communication protocols. I imagine over time within five to 10 years there will be a washout and there will be some that went in and others will just go away. There's a significant lack of standards and as the gentleman in the one video said, there's a mis-mash. If you go to a manufacturing facility you'll see old legacy systems, that use machine to machine communication, non TCP IP communication. Eventually, I believe it's my opinion that all that legacy communication will go away and everything would be TCIP at some point but it's a matter of time for these new products. These new machines to roll out and replace the legacy machines. I disagree with this as a restraint just came out of the market research report, low power efficiency. I'm not sure why they seized on that notion as a restraint. What we've seen is energy efficiency for wireless sensors with the reduction of size and so forth and even some of the energy harvesting ones we'll look at. I don't see the power efficiency of the systems either at compute storage bandwidth, any of that, I don't see low power efficiency being a restraint. But the folks that wrote the report believe that was true. It's a number of opportunities, significant government funding, China in particular is spending quite a bit of money to develop IoT infrastructure within the country. Companies, engineers, computer scientists around the world are creating innovative applications and developing comprehensive system solutions. Which again goes back to those business decision makers. They look at that, and they say wow if l was to deploy this system l could increase my operational efficiency of my manufacturing facility. On my oil and drilling facility by 2% or 5%, or some percent and that means greater revenue. Challenges, security it's huge, we talked about that. There's a number of acquisitions and alliances and collaborations and partnerships. I was going in a pretty good clip. According to the market research report, there was at least 50 deals in the last three years and I suspect that number is low. I suspect that there's the number is actually way higher than that. I couldn't tell you what the number is but it just, to me, intuitively, it feels like a low number. And new product launches, dozens and dozens and maybe even hundreds of new products and service launches within the last three years in the IoT space. So here's some examples of the power of 1%. Has anyone ever heard that term before, the power of 1%? Doesn't seem like very much, kind of small. So a small amount of operational efficiency gain can lead to significant savings. So in the airline industry, if they could save 1% on their fuel efficiency, they could save 30 in the airline industry as a whole because, it was estimated that they could save $30 billion. I don't know if you were old enough to remember when planes didn't have the little tip up curly things at the end of the wings like they all have them now. I'm not aeronautical engineer, but my understanding is that those help reduce drag and result in better fuel efficiency. If gas-fired power generators that produce electricity could gain 1% efficiency, that segment can save $66 billion a year. The oil and gas area, if they could improve pumping efficiency at the wells and increase total planetary production by 500,000 barrels a day, they would have a potential to earn an additional $19 billion. That's just with a 1% efficiency gains. And these efficiency gains, they all reduce cost. So when your cost goes down and the prices appear, the difference is your margin or your profit, they'll increase profit. Technical proposition behind all of this is that smart machines are better than human beings at accurately, consistently capturing and communicating data. And this can enable companies to identify inefficiencies in their process and identify problems sooner, saving time and money and supporting business intelligence efforts. How can we do things smarter, how can we do things better, how can we reduce costs. In manufacturing sector IIoT holds tremendous potential for quality control, sustainable and green practices, supply chain traceability and overall supply chain efficiency. This is going to be huge. We heard in video, the gentleman speak about the company that manufactures tennis shoes. You log on to the website and you put your order in for your tennis shoes, and some machine in some place goes off and build your tennis shoe and it's ready to go in 20 minutes or 30 minutes or something. And get packed up and put it in a box and get it ready for Amazon or FedEx or somebody to ship it to you. Wait, did we cover this already? No, my bad, [LAUGH] I'm sorry I thought we had covered the slide already so when you were looking at me, what is he talking about when he was talking about the business feedback cycle right, I was getting ahead of myself. So this is a traditional business feedback cycle, so we've got some customers out here with needs and wants that drives businesses to provide goods and services. So the consumer buys those goods and services and it creates wealth for the company's employees and those employees can go off and become consumers and spend money from their wages creating more needs and wants. And so this goes on around and around and around. In, The technology sector what's happened is technology is created that enables new businesses and as these new businesses offer new services, lowering costs. These things drive demand, which feeds back and causes more technology to get created. And this goes around and around, and these things feed on each other. It's very similar to this traditional business cycle. This is from RTI, this isn't from the markets to markets report, RTI did a own quite a bit of analysis on IoT. And I snagged some of their material, in the near term they were seeing a four phases, industry 4.0. The first one is this operational efficiency, there it is again. [LAUGH] We're going to see this a lot. Anyway, that's going to move in to new products and services and we'll see some examples of that monetizing data, information as the new currency. Software based services pay per use, and way over here at the other end is what they're referring to as an autonomous pole economy where manufacturers want manufacturing and a batch of products. And then put them in finished goods inventory and then wait for orders to come in and ship them out everything will be built on demand. And so there's this notion of this pole in the economy as consumers of whatever, consumers of services, consumers of products, they see that as the fourth stage. This again is from RTI, they did a survey, asking many, many business owners, CEO CFO of many, many companies. And they asked him this question, how important are the following benefits and driving businesses to adopt the industrial Internet? So these colors here are very important and extremely important, represent fairly sizable chunks in these various categories. Optimizing asset utilization you have a manufacturing plant manufacturer products, you want your machines to be busy as much as possible to increase their or optimize their utilization ideally would be 100%. You want to reduce your operational costs that's again that operational efficiency. Improve worker productivity, enhance worker safety wasn't quite as big. Create new revenue streams through new products and services, this is huge. And we'll talk over the course of the semester of a number of examples of companies that were able to take a traditional. We make product X and we sell it and they turned it into a service instead, and generated much more revenue by exiting the old style, the old model of just manufacturing a product. And bringing in the service of aspect of it enabled them to generate quite a bit more revenue. Improved sustainability, that's important and enhanced customer experience was fairly significant as well. So they see a lot of benefits. Run through some terms and definitions that they used in the market reports so when we see things we know what they're talking about. So if we see the word processors it means CPU, Microcontrollers, FPGAs, DSP and memories, all just lumped into processors. Sensors, there's tons and tons of sensors out there, humidity, pressure, temperature, vibration, all these conductivity, Bluetooth, Wi Fi, Ethernet, and way more we're going to look at a whole bunch of wireless communication protocol. Software is enormous, they talk about in terms of software solutions. Software as a service and just plain services and I've got an example into this at the end of this lecture. And these things called platform. We're going to learn about platforms. So platform allows central monitoring and control of each and every activity that takes place in an organization. It's highly customizable software with API's that allows external developers to create specialized applications. So one of the ones you have you have the opportunity to interact with is your extra credit is IBM, Bloomx and is a platform. When we started to look at this last year it's really amazing what IBM has done in terms of offering companies and developers, a tremendously wide range of programming environments. You can develop applications and see your Java or Python or who's familiar with Node.js? You've heard of that, okay good. And on and on and on, it's really amazing. But then programmer could use IBM's platform for instance and all their software and service to go craft a solution for a particular business. Takes care of device management, some time devices fail, sometimes they might need maintenance, depending on what device is. Application management, in this context application means had to do some interpretation, I guess, it means these various business segments agriculture, building automation, oil and gas and so forth. It's the business segment that we'll look at some of these in detail this semester. Network management is huge there's slots of bandwidth. The example I have coming up, I'll talk more about that. All this capability within the platform empowers system administrators to monitor control, visualize, simulate schedule and analyze all organizational activities from a single location. Maybe cell phones or wherever the responsible party happens to be on their laptop on an airplane, flying over the ocean, wherever and they can check in and see how their business is doing. And check it statistics, check its health, check all kinds of things. A platform is a kind of glue that holds the entire system together.
