Internet set to generate $613bn in global profits in 2013, new Cisco study finds

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The internet will enable global private-sector businesses to generate at least $613bn in global profits in 2013, according to the Internet of Everything (IoE) Value Index, Cisco’s global study of 7,500 business and IT leaders, looking into the potential value at stake from the internet for large and mid-sized private companies in 2013.

The study of 7,500 global business and IT leaders in 12 countries reports the United States, China and Germany are expected to realise the greatest value in 2013. But the study also found corporations could nearly double those profits by adopting business practices, customer approaches and technologies that leverage the IoE. While IoE is already driving private-sector corporate profits, it is estimated that an additional $544bn could be realised if companies adjusted their strategies to better leverage it.

“The Internet of Everything has the potential to significantly reshape our economy and transform key industries,” said Rob Lloyd, Cisco president of development and sales. “The question is who will come out on top and win in this new economy. This study shows us that success won’t be based on geography or company size but on who can adapt fastest.”

The Internet of Everything is the networked connection of people, process, data and things, and the increased value that occurs as “everything” joins the network. Several technology transitions – including the Internet of Things, increased mobility, the emergence of cloud computing and the growing importance of big data, among others – are combining to enable IoE.

The Internet of Everything Value Index builds on research that Cisco conducted earlier this year, which found that global businesses can pursue as much as $14.4 trillion over the next decade by leveraging IoE to improve operations and customer service.

Additional key findings from the study include:

Among business leaders who participated in the IoE Value Index:

  • 69% said they thought the global job market would stay the same or improve due to IoE.
  • 89% thought wages would improve or stay the same.

In addition, business leaders believe the Internet of Everything will help drive better information security – an indication they understand the importance of security and privacy to the growth of IoE. Fifty per cent of business leaders said IoE would improve security while 26% thought there would be no change.

While businesses in the United States, China and Germany are poised to realise the greatest level of profits in 2013, IoE value is spread across companies around the globe: The 12 countries included in the study, which account for nearly 70% of global Gross Domestic Product, are expected to realise the following value from IoE in 2013:

Billions

1.     United States                                                                               $253.0

2.     China                                                                                            $76.9

3.     Germany                                                                                       $54.4

4.     Japan                                                                                            $41.0

5.     Australia                                                                                       $35.6

6.     France                                                                                           $32.2

7.     Canada                                                                                         $30.2

8.     United Kingdom                                                                           $28.4

9.     India                                                                                             $18.2

10.  Brazil                                                                                             $17.3

11.  Russia                                                                                           $17.0

12.   Mexico                                                                                         $9.2

Business leaders in emerging countries clearly expect to leverage IoE to their advantage. According to the research, these executives are the most bullish on capturing value (on a scale of 1-10):

1.     India:                                                                           8.2

2.     China:                                                                         8.0

3.     Brazil:                                                                          7.9

4.     Mexico:                                                                       7.4

5.     Russia                                                                         7.2

6.     Non-emerging countries:                                           6.7

While IoE is driving a huge number of corporate profits, an additional $544 billion could also be generated in 2013 if companies adjusted their strategies to better capitalise on IoE. “That figure should be a wake-up call to businesses large and small that IoE can significantly add to their bottom line,” said Cisco’s Lloyd.

To capture more value in the IoE Economy, companies should:

o       Invest in high-quality technology infrastructure and tools.

o       Adopt and follow inclusive practices that enable all employees to contribute.

o       Develop effective information-management practices.

To maximise value from the Internet of Everything, firms should focus on the IoE-driven capabilities that will benefit their industries most:

  • Manufacturing companies: real-time, multidimensional data analysis; integrated video collaboration; remote tracking of physical assets.
  • Energy companies: integration of sensor data; ability to locate experts; predictive analytics.
  • Retailers: predictive analytics and data visualisation; BYOD and interacting with customers using rich media; mobile payments and remote customer monitoring.

Among industries, services ($158.8bn) and manufacturing ($103.1bn) realised the greatest IoE value in 2013. 

The key drivers of IoE value in 2013 are expected to be:

Supply Chain:                  $158.7bn

Customer Experience:      $145.2bn

Innovation:                       $110.5bn

Asset Utilisation:            $109.7bn

Employee Productivity:    $89.3bn

An analysis of IoE-generated profits underscores that company size is not necessarily an indicator of which companies will benefit most from it. In fact, the study drives home that market incumbency is at risk as IoE grows in impact.