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Securing the Internet of Things Opportunities and Challenges with scaling IoT solutions
Rob van den Dam
Global Telecom Leader
IBM Institute for Business Value
IoT is IBM’s # 1 research area
Telecommunications Solutions Lab (TSL)
Telecommunications Research Lab
TSL China &
Telecom Research Lab
(Beijing)
TSL North
America (Austin, Texas)
Japan
(Tokyo
Satellite TSL)
TSL Israel &
Telecom Research Lab (Haifa Satellite TSL)
Telecom Research Lab (New Delhi)
TSL LATAM (Sao Paulo,
Brazil Satellite TSL)
TSL Europe (La Gaude &
Montpellier, France)
TSL Russia (Moscow Satellite TSL)
South Africa (Johannesburg, Satellite TSL)
ASEAN (Kuala Lumpur
Satellite TSL)
TSL India (Bangalore Satellite TSL)
Centers of Excellence
Institute for Business Value
Research Labs
Almaden c
Big Data & Analytics Storage Nanotech
Healthcare
Watson Semiconductors Systems Software &
Services Big Data &
Analytics
c
Dublin
Smarter Cities
Internet of Things Smarter Cities
South Africa (Johannesburg,
Satellite TSL)
Worldclass Partner
Ecosystem
Industry
Solutions Labs
ARMONK, NY - 31 Mar 2015: IBM (NYSE: IBM) today
announced that it will invest $3 billion over the next four years
to establish a new Internet of Things (IoT) unit, and that it is
building a cloud-based open platform designed to help clients
and ecosystem partners build IoT solutions.
IBM Investing $3 Billion in Internet of Things
The IoT is poised to changed everything
The Internet is evolving to connect
people to physical things and also
physical things to other physical
things … all in real time. It’s
becoming the Internet of Things
(IoT): Billions of interconnected
smart devices measuring, moving,
and acting upon all the bits of data
that make up daily life.
Leading companies are already working on
applications for IoT connected devices
Self - integrating - configuring - learning - healing - driving - socializing
IoT solutions are changing the way work gets done
and improving the top and bottom line
23% of C-suite executives believe
IoT will spark a new wave of
innovation at their companies,
while 29% believe IoT will inspire
new working practices or
processes. – Economist
Intelligence Unit
However, challenges regarding security, privacy,
and common standards must be overcome
Malicious actors intent on taking
control of data, identities, and
passwords will exploit Internet-
connected devices that are not
securely developed, making them
easier targets than traditional
PCs, laptops, or tablets. – IBM X-
Force Threat Intelligence
Data and analytics: the vital spice in the IoT
IoT is expected to create 100ZB of
data per year in China alone by
2030. – IDC
41% of decision makers surveyed
say their organizations plan to
collect and process IoT-related data
close to the point of creation. – IDC
9
90% Volume of data created at the edge of IoT that is
never captured, analyzed or acted upon.
60% Amount of that data that loses its value within
milliseconds of being generated.
Source: IBM
http://www-03.ibm.com/press/us/en/pressrelease/46453.wss
To innovate, operate, and engage at the next level, data must be turned into insights
DATA Unlocked from billions of connected devices
CLOUD Standards based connectivity from anywhere
ENGAGEMENT
New revenue opportunities created from insights
Data, Cloud and Engagement are key to accelerate
the IoT
Today “By 2020, Internet of
Things spending will rise
to $3 trillion and nearly
30 billion devices”
Source: “IDC MaturityScape Benchmark: Enterprise
Mobility in the United States”, IDC, May 2015
In a few
years
‘Systems of Insight’ can be created by unlocking
DATA from billions of interconnected devices
07/15/15
The cloud is critical for devices
beyond the reach of the data
center to connect and
communicate from anywhere in
the world through open
standards.
Cloud computing reduces the complexity of supporting the Internet of Things ‘data blending.
The ultimate app for CLOUD; IoT takes computer
power out of the data center
07/15/15
Personalized and instant are the new
expectations for engagement.
Internet of Things gives businesses access
to product usage data they’ve never had
before.
Personalized services designed from usage
data creates opportunities for new sources
of revenue.
Insights that lead to new ways to ENGAGE; mobile
and social are changing expectations on engagements
“By 2020, each human being will
have an average of 5.1 connected devices” Frost_Sullivan
“28.1 billion in 2020” IDC
“40.9 billion forecasted for 2020”
ABI Research
“By 2020 exceed 26 billion units worldwide.” Gartner
We are at the threshold of a massive explosion in
the history of computing
The first wave of the IoT is already here. It’s the
Internet of billions of Things
Proportion of Smart
TVs being used for
Internet Viewing
Continuous
Monitoring of
Jet Engines
Automated
Smart
Meters
We have seen visible successes
in high value applications
But demand has been slow to
take off in many other areas
Proportion of Heavy
Industrial Equipment
Networked
10%
30%
Market expectations are enormous, but IoT business
models are already broken
The Internet of
Things
already needs
a
REBOOT
Video
IoT solutions that work for billions of devices won’t
necessarily scale to hundreds of billions of devices
High Cost
Lack of Privacy
Not future proof
Lack of functional value
Broken business models
High cost of supporting and maintaining hundreds
of billions of smart devices will be substantial
Support
agreements
High buy prices,
short life cycles
Low margins,
high life cycles Mismatch between cost and revenue
Lack of Privacy; the Internet is no longer a place
of trust
Centralized authorities become
single points of failure
No trusted partners on the
Internet
The Internet was original build
for convenience and on trust
Not future-proof; average life of IoT devices will
be decades
Cost of maintaining smart devices can outlast
product and manufacturer obsolescence
Average Expected lifecycle
18 to 36
months
± 10 years
± 40 years
> 40 years
Lack of Functional Value; connectivity and
intelligence is a means to a better product, not an end
Simply enabling connectivity does
not make a device smarter or better
A smart, connected toaster is
of no value unless it produces
better toast
Broken business models > as a result profits
remain elusive
Lack of sustainable business
models is holding the IoT back
And ask yourself a
few questions ……
Imagine the connected
toaster of the future .....
To see how unrealistic the expectations are with
current business models, just apply the “toaster test”
Would you be willing to pay an annual subscription for software updates to your toaster?!
How much time are you willing to spend updating
the software in your toaster?!
Would you be comfortable seeing advertising burned into your morning
toast?!
Are you willing to only buy bread from the company making the toaster?!
Do you trust the toaster maker (or the NSA) not to sell data about your heavy
consumption of Pop Tarts to your health insurer (who may then choose to
charge you higher premiums for unhealthy behavior) ?
If it doesn’t work for the toaster, it may not work for your
door lock, garage, light switch, toothbrush or toilet bowl.
To get the ‘second' wave of the IoT, it needs to be
redesigned based on 3 architectural principles
Architectural
principles
Design for radically lower cost: Embrace distributed computing, peer to peer networks and device based analytics eliminating costs associated with the IoT cloud
Design for real privacy: Privacy and
anonymity ensured by design, opt-in only, open source, transparent encryption for secure messaging and file transfers
Design for business model endurance: Transfer ownership and maintenance
responsibility from manufacturers to networks of self maintaining devices
To be secure and scalable, the IoT will evolve to be
more open and decentralized
Before 2005 Today 2025 and beyond
A truly decentralized IoT solution will require 3
foundational functions to be supported
File
Transfer
Messaging
Device
Coordination
Trustless Peer to Peer Messaging
Secure Distributed File Sharing
Autonomous Device Coordination
The set of foundational principles is an opportunity to
change the model of Internet services and security
Trustless Peer to Peer Messaging
Secure Distributed File Sharing
Autonomous Device Coordination
No single arbiter of roles and permissions • Owner/user defined interactions
• Autonomous transaction processes
• Trustless network of interactive devices
No cloud based file transfers • Secure file and data sharing
• Software/firmware updates
• Device based analytics reporting
No centralized broker of messages • Trustless encrypted messaging and transport
• Low latency, guaranteed delivery
• Store and forward capabilities, hop-ons
A secure and scalable IoT solution can be built on
open-source technology
No single arbiter of roles and permissions • Owner/user defined interactions
• Autonomous transaction processes
• Trustless network of interactive devices
No cloud based file transfers • Secure file and data sharing
• Software/firmware updates
• Device based analytics reporting
No centralized broker of messages • Trustless encrypted messaging and transport
• Low latency, guaranteed delivery
• Store and forward capabilities, hop-ons
P2P messaging protocols
P2P decentralized filesharing
Blockchains
Example
Example
Example
Not every system needs to be centralized,
however
Device Longevity
Device Value
Democracy of Devices
By empowering devices to
function autonomously, the edge
will become a frontier of new
economic value, creating an
“ECONOMY OF THINGS”
Devices on the edge can be empowered to function
autonomously in the IoT
New Marketplaces hosted by peer exchanges can
provide liquidity for transactions between devices
Similar to financial exchanges,
peer exchanges can
match
supply and demand
MUSIC NEWS WEATHER TRAFFIC MAPS
The Internet created liquid markets
of the digital world
The digital world
REAL ESTATE MANUFACTURING AGRICULTURE RETAIL TRANSPORTATION
The Internet of Things will do the same
for the physical world
The physical world
Creating liquid marketplaces of physical assets by en-
abling real-time discoverability, usability and payment
Physical
world The liquification
of the physical
world
The economic models can be constructed around the
three vectors of disruption from the IoT
3 Vectors
of disruption
The transformative business opportunity
What are the means by which value can be
from the IoT?
What will be the likely impact of the ‘Economy
of Things’ on the different industries?
How can industry players play a
key role in this transformation?
Begin the journey for collaborative value
Recommendations
Evaluate opportunities for new marketplaces
Analyze IoT data and act on insights
Thank you
Rob van den Dam
Global Telecom Industry Leader
IBM Institute for Business Value
www.ibm.com/iibv
