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For a couple of years now, Cisco (CSCO) has been one of the tech industry's biggest proponents of the trend toward the Internet of Everything (IoE). The company has commissioned numerous studies including one it recently released at this month's Consumer Electronics Show (CES) in Las Vegas. The report specifically points to the fact that IoE can generate $4.6 trillion in value for the public sector vertical over the next decade by helping governments save money, improve employee productivity, generate new revenue and improving the citizen experience. This report follows a report last year when Cisco predicted that the IoE will create $19 trillion in total value for companies that are involved in this ecosystem.

For those not familiar with this concept, the IoE is a technology shift where we live in a world where everything is connected. The inter-connection of "things" will allow for new processes that can significantly change the way we live. At the end of last year, I attended the inaugural "Internet of Things World Forum" in Barcelona, Spain, and the City of Barcelona showcased how the IoE transformed the city. Details of connected parking meters, street lights and trash cans can be found in a blog I wrote earlier (here).

I'm certainly on board with the concept of IoE and believe it to be a bigger shift in our lives than the Internet was. However, while the predictions of trillions dollars of value is fine and dandy, one of the questions I've had is how exactly does Cisco make money off the IoE and how meaningful can it be? Conceptually it makes sense that if more things are connected, that's good for a company that makes its money selling devices that connect things to one another. However, if Cisco's role in IoE is merely to sell more routers and switches as the world gets more connected, it would certainly help Cisco but wouldn't really have the impact that other market transitions have had.

Over the past year or so, CEO John Chambers has stated his vision for Cisco is to becoming the #1 IT solution provider, as measured by value, not revenue, and it's my belief that IoE is the technology shift that will give Cisco a shot at achieving this goal. One of the fundamental principles that I have as part of my research is that significant market share shifts only happen at moments of market transition. For example, if Cisco builds a PBX five years earlier than they first did, no one cares and the company fails miserably because the vendor landscape is well established. However, they came to market with an IP PBX when the market was transitioning from TDM to VoIP and now they stand the No. 1 voice vendor. The IoE will have a similar, but bigger impact on Cisco for the following reasons:

· The IoE shifts IT from being compute centric to network centric. Think of the power brokers in IT today. IBM (IBM), HP (HPQ), Oracle (ORCL), Microsoft (MSFT), etc. They're all compute centric companies because IT's strategy revolved around the compute infrastructure. A few decades before, the power brokers were IBM, Amdahl, Honeywell and NCR because IT was mainframe centric. When the world shifted from being mainframe centric to compute centric, the power shifted to a new set of vendors. The IoE will shift IT's value away from the big compute platforms to the network, putting Cisco in a position it's never had before. This shift is one of the reasons VMware (VMW), Oracle (ORCL), IBM and Microsoft have all been investing in networking and communications technology.

· Many of the IoE solutions are shifting to IP. A number of the IoE solutions today use some sort of proprietary wireless protocol for communications. This allows vendors to sell solutions that work but makes interoperability very difficult. One of the key points I picked up at CES this year is that almost all vendors with IoE solutions are shifting to IP, WiFi and other more standard types of communications protocols making it much easier to build multi-vendor solutions. Since manufacturers such as Rockwell and Schneider do not have much networking expertise, many of them have partnered with Cisco, some of them even embedding Cisco networking technology into their products.

· The IoE requires an architectural approach. Organizations that try to "ad hoc" the IoE will likely spend a lot of money but not see the results they had hoped for. Business and IT leaders need to consider what they would like to accomplish today but also into the future. For example, a municipality may deploy smart street lights to save money, which would certainly have some value. However, the network that is used to connect the street lights could also be used to provide city-wide WiFi to its constituents. Over the years, Cisco has been a master at the "architectural" approach and one of the reasons why it has dominated so many markets. I fully expect organizational leaders to seek out Cisco as they try and understand how to fully leverage IoE.

To capitalize on IoE, Cisco is beefing up its consulting and advisory services. Years ago Cisco had a group within the company called "Internet Business Solutions Group" or IBSG. It was the mission of IBSG to work with Cisco's top customers to develop network-based solutions to solve customer problems. Although this was a "for free" service, Cisco did use the lessons learned from IBSG to develop solutions that could be replicated by its channel partners. Over the past half decade, IBSG has diminished in size for a number of reasons including restructuring the group to be more vertically oriented.

From conversations I've had with Cisco management, it appears that a new group has been created called "Cisco Consulting Services" (CCS), which can be thought of as a combination of IBSG, and vertical consulting. This group will be tasked with working with Cisco customers to develop IoE-related solutions, although this won't be a for free group as IBSG was. While leading edge technology will always remain the calling card for Cisco, CCS will play a critical role in getting organizations to understand the value behind the Cisco architecture.

As I stated earlier, Cisco has stated a goal of becoming the #1 IT vendor and I believe that the IoE presents the best opportunity for Cisco to make this transition. The network oriented nature of IoE combined with the factors I listed above put the company in a strong position to capitalize on this trend and having it be the next big market transition that Cisco uses to fuel another wave of growth.

Source: The Internet Of Everything Can Make Cisco The No. 1 IT Vendor