key

questions
to ask
about the
Internet of Things

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?

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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?
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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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How does information generated from

the Internet of Things create value?

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ofThings
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Information within the Internet of Things creates value in

a never-ending value loop consisting of 5 stages:
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
CREATE
The use of sensors to
generate information
about a physical event
or state

AGGREGATE
The gathering together of
information created at
different times or from
different sources
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COMMUNICATE
The transmission of
information across networks,
from one place to another
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It is crucial to look upon the IoT with both an open mind

and a certain level of skepticism.

value

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.

To learn more, read The more things change: Value creation, value
capture, and the Internet of Things from Deloitte Review 17
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Where do humans
fit into the equation?

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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.

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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.
The IoT enables new products and services premised around the
creation of new forms of collective intelligence
Digital breadcrumbs, analyzed with computational social science
tools, will help measure hidden individual and organizational traits
Behavioral design thinking is indispensable when building the world
of complex systems of interactions between people and things

To learn more, check out IoTs about us: Emerging forms of innovation
in the Internet of Things from Deloitte Review 17
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3
11

Customers vs. companies: Who

benefits from the Internet of Things?

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Information is a powerful value-creation tool. However,

the information value loops underlying structure tends to
pull IoT deployments in one of four directions:

12

Hobsons choice

Alls well

Customers are free to decide

but only one option exists;
thus, it is really no choice at all

Sufficient value is created, and that

value is shared between customers
and companies sufficiently equitably

Gridlock

Customer is king

Both companies and customers are

pulled in opposite directions, unable
to move toward an optimal outcome

Customers end up capturing a

disproportionate share of the new
value created

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Companies can employ three techniques to develop an

economically sustainable and mutually beneficial
result for both the company and its customers.
Take a hard look at who
benefits most from each
IoT-enabled transaction and
correct value allocations
Examine how a company
is using IoT technologies
using the Information
Value Loop

Assess where IoT

investments may not have
an appreciable benefit and
move away from them

To learn more, read Power Struggle: Customers, companies, and the

Internet of Things from Deloitte Review 17
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14

How will companies

keep information safe?

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The complex and rapidly changing landscape within

the Internet of Things demands a structured approach to
identifying risks and appropriate responses.

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IoT solutions need to blend operational understanding

with multilayered cyber risk management techniques
Securing data is critical at every stage of the value loop, especially the
create and communicate stages
Remaining vigilant to new or unexpected challenges is crucial to
maintaining security
A systems resilience defines how quickly a realized risk can be
addressed and normal operations restored

To learn more, read Safeguarding the Internet of Things: Being secure,

vigilant, and resilient in the connected age from Deloitte Review 17
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17

How does the Internet of Things

create value for your supply chain?

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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

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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
Making visible previously
unseen information allows
for greater efficiency
than process controls

Holistic, end-to-end
ecosystems can give
rise to new, innovative
business models
Companies can transform
push-driven order
systems to differentiated
pull-driven systems

To learn more, read Forging links into loops: The Internet of Things
potential to recast supply chain management from Deloitte Review 17
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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

Profound insights
await discovery
across the
supply chain
Organizations must
determine how to share
value with customers
appropriately

Security and privacy take on

heightened importance
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Read more from our special Internet of Things section in

Deloitte Review Issue 17

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Meet the authors

MICHAEL E. RAYNOR

MARK J. COTTELEER

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

research director with Deloitte

Services LP, affiliated with
Deloittes Center for Integrated
Research, focused on
operational and financial
performance improvement

JAMES GUSZCZA

HARVEY LEWIS

US chief data scientist for

Deloitte Consulting LLP

UK lead for analytics research at

Deloitte LLP

JOHN LUCKER

JOE MARIANI

principal with Deloitte

Consulting LLP, Global Advanced
Analytics & Modeling market
leader, and a US leader of
Deloitte Analytics
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lead Market Insights analyst with

Deloitte Services LP focusing on
technologies and trends that cut
across industries
Copyright 2015 Deloitte Development LLC. All rights reserved.

Meet the authors

SEAN PEASLEY

ARUN PERINKOLAM

EVAN QUASNEY

IFRAN SAIF

principal with the Cyber Risk

Services practice at Deloitte &
Touche LLP and the US
Consumer Business & Industrial
Products leader for cyber risk
services

senior manager with the Cyber

Risk Services practice at Deloitte
& Touche LLP focusing on cyber
risk strategy and program
development

manager with Deloitte LLP, with

extensive experience designing
and implementing IoT
applications for high-tech
manufacturers

principal with the Cyber Risk

Services practice at Deloitte &
Touche LLP, US Advisory
Technology leader, and a leader
of Deloittes CIO Program

BRENNA SNIDERMAN
manager with Deloitte LLP, with
extensive experience designing
and implementing IoT
applications for high-tech
manufacturers
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