Interview with Kevin Bloch by Adam Fraser
This is a transcript of this podcast interview with Kevin Bloch on Internet of Things
Adam: I’m delighted to welcome Kevin Bloch to the EchoJunction podcast. Kevin is chief technology officer for Cisco Australia where he’s worked for over 15 years and currently leads the strategy and technology direction for the local business. Kevin shapes Cisco’s strategy to enable its customer to create value based on the technology platforms they build and the transformations they undertake. Kevin spends a lot of time working with business and technology leaders both externally and internally within Cisco.
As Cisco touches so many parts of the global technology industry market, his role places him in a fantastic position to see what’s coming down the track, and most importantly, to share what is possible from Cisco’s perspective. We’re going to be talking all things Internet of Things with Kevin today, so a big welcome to the EchoJunction podcast.
Kevin: Thanks Adam.
Adam: Great to have you with us. Thanks for your time Kevin. So I’ve touched on your Cisco career in brief terms, perhaps just give the listeners some context about your career to date, and how you ended up, I guess, focusing ultimately on the Internet of Things as one of your areas.
Kevin: Okay. Well, thanks. First of all, I guess, I’ll start back, I’ve got degrees in engineering, computer science. Worked for telcos, worked for an Australian manufacturer of telco equipment, been in system integration, and then came to Cisco about 15 years ago. So it’s given me a good taste of both the supply side, demand side.
In terms of the Internet of Things in particular, Cisco has been involved more technically in the Internet of Things for about 8 years. That was looking at new protocols and new architectures, but it was only about three years ago that Cisco caught on to the fact that there’s more to IoT than just connecting some things to some computer. In fact, we created this notion of what we call the “Internet of Everything.” The difference between IoT and IoE, Internet of Everything, is that the everything includes the impact that the IoT has on people and processes. As a result of that, Cisco can see some transformation, and I’m not talking about the business, I’m talking about in terms of market segments and indeed whole economies coming through as a result of using technology, digitisation, IoT, and big data to really transform healthcare, transform education. Indeed, transform almost every sector.
Adam: That’s great. And as I said, Kevin just when we were talking before that I’ve been to four or five marketing conferences this year, big data is a big buzz word, the Internet of Things is increasingly coming into the radar of marketers, there’s a few sub-sectors I want to drill into, but first – this term thrown about to create, describe a whole range of things. Can you just maybe give some context and anchor some definitions around what you see as the Internet of Things?
Kevin: Okay. So Internet of Things came about because we’ve now crossed the threshold of more things being connected to the Internet than people. So right now there’s about 12 billion things already connected, and by 2020, we believe that there are going to be about 50 billion things connected. As you move towards that, you can see how we crossed this threshold of what we believe is human scale where we’ve been up until now; where humans really acted as almost the ceiling to what we can scale. We’re now moving through this inflection point to what we call machine scale. As we move to machine scale, we’re now going well beyond what the human brain can do and see to what machines can do and see, which goes well beyond your or my brain.
So we’re now into this machine scale, we see this is the third phase of the Internet, and now we’re seeing the ability to, as I said earlier, do some things that are quite transformational. We can operate mines without people. We can get data from people’s mobile phones and even in real time, determine and use predictive analytics to even determine what they’re going to do. So it’s becoming…data is becoming the eyes of the retailer, the eyes of the banker, the eyes of virtually anybody who has to deal with either people or things. Data is presenting them with the eyes, are the new eyes into it, and also the new brain of what can be possible that we’ve never been able to do up until now.
Adam: It’s fascinating. Like you say, almost hard to get your mind around some of the potential in the sector. I mean, it’s not a sector short of industry reports and analytics. So I just found one from Mckinsey that said by 2025, it’s a $6.2 trillion sector. I mean, use cases from smart fridges on the consumer level, logistics play for tracking stock, optimising repair for big maintenance on oil rigs. I mean there’re so many potential use case, and smart cities as well. Let’s start at 10,000 feet level. Is this primarily B2B or B2C thing, that sort of marketing lingo, and what do you see is the biggest use cases or industries that will emerge out of this?
Kevin: So from Cisco’s perspective, it’s definitely initially at B2B level, and our focus is very much on business. You mentioned a number of 6.2 trillion from McKinsey. That’s in one year. We’ve done our own sums, and which is well documented and well publicized, we believe that over the next 10 years, the Internet of Everything can provide up to $19 trillion at stake. We call it value at stake. That’s additional profits that can be generated in either the public sector or the public sector. It’s a split of about $4 trillion and $15 trillion around the world that’s at stake in the economy if we can leverage this technology to change these processes.
So going back to your question, we absolutely see that take up in terms of benefit, return on investment at the B end of town, at the core industry, whether it’s mining, whether it’s finance, insurance, whether it’s retail, whether it’s transport. Each and every one of those are getting stuck in, and starting to see some of the benefits.
So, unlike a lot of the trivial media where you hear about connecting horribly toothbrushes, we’re not into that. Eventually, maybe that’ll be a thing that people are interested in. Certainly, in terms of healthcare, what you wear on your body, and being able to detect that from a healthcare perspective, very important, but still even then, it’s something that we believe the healthcare clinicians can benefit by having a human instrument that they can do far more.
So from Cisco’s point of view, absolutely focused on the core of the enterprise market and the core of the public sector market where we think there is really significant sectoral gains to be obtained through the use of this technology.
Adam: Kevin, often things change and move so quickly now. Even last year this seemed to be very much something in the future. Things are moving so quickly, is this here and now, like how the use cases right now where big industries are starting to look at smart sensors, and I guess, yeah, Internet of Things technology to drive values?
Kevin: Absolutely. So Cisco already sees this as a multi-million dollars business right now, this year. So we’re generating in excess of billions of dollars. Indeed, in terms of Australia, we in Australia are the third largest country in the world of Cisco in terms of IoT sales and we currently are 63% of all sales across Asia.
So Australia’s already quite significant in its uptake of IoT and IoE, and where we see this predominantly is in a number of areas. Number one, the resources sector, mining. We’re also seeing a very significant uptake in connected cities and smart campuses. We’re seeing significant interest in finance, banking. We’re seeing significant uptake and interest in retail.
If you look at all at those sectors, it’s all about putting out or having sensors to enable collection of data so that one of two things can happen. Number one, humans can make better and smarter decisions, we call that human augmentation. The second primary reason is automation where humans are only invoked as an exception, where there’s full on automation, whether it’s in a factory, whether it’s in autonomous trucks and trains, whether it’s vehicle-to-vehicle transport. We’re seeing a lot of interest and take up in terms of full on automation as well.
Adam: So, we should… yes, that’s huge growth into the future but this is very much here and now, and real.
Adam: Okay. That’s interesting. One technical question, Kevin, then we’ll dive into some more specific use cases and industries. Largely a marketing-based audience, so don’t go too hard-core techie on us, but I can only imagine some of the hardware equipment bandwidth, IP address-related challenges such growth is presenting. Can you just talk to the challenges? Are we ready? Do we have enough IP addresses in the world? Is the NBN relevant to this discussion in terms of bandwidth? How are we coping?
Kevin: Okay. So, you ask a lot question in there. I think we’ve already got plenty of technology to get us going. In fact, too many people tend to jump too far ahead when we haven’t even started walking yet. In terms of IP addresses, problem solved. Whether we’re using IPV4 or IPV6, that’s very well under way and very well taken care of. In terms of the scale up, so as we start really putting more and more sensors, we’re not really there yet. So at this point in time, we can more than cope with our existing networks and our existing technology to deal with IoT. Where the difficulty arises today is in the analytics piece. So, you’ve got the data, you’ve collected the data, so what are you going to do with it? What questions do you ask of the data? What do you do with the data to maybe close the loop and do something smart with a truck? So there’s a lot of work to be done there for sure.
You mentioned the NBN. It’s interesting because there’re two endpoints that I guess are going to make a big difference in terms of IoT. One is your mobile phone, and if you look at the engineering and the technology behind the mobile phone, we’re always looking at higher bandwidths going from 2 to 4 to 18 core processors, and we’re looking at as much performance as we possibly can, but we’ve already got pretty good battery life. That’s on the one hand. But on the other hand, where you’ve got a little sensor in a field, in a farm, you want absolutely the opposite. In fact, what you’re doing there is narrow band, you want as lower performance as possible because you want as lower power as possible because you want that to last for 10, 15, 20 years.
So there is a lot of technology and a lot of science going into that particular area right now because we’re seeing, as I said earlier, a world in which there’s going to be 50 billion sensors, and as you move toward a world of 50 billion sensors, the infrastructure needs to deal with that in a particular way. We can’t have repeaters and access points. So what we’re trying to do is use technology like low frequency, low power, and in doing so, have one access point to gather data from tens of thousands of sensors, and that’s the next breakthrough in IoT.
So where we’re at is we’ve got plenty of this technology, as we scale, we’re going to have to look at how do we collect the data, how do we reticulate the data. There are new technologies that Cisco’s introduced such as Fog Computing, where we actually instead of taking the data to the query, we’re taking the query to the data at the age of the network. So we’re doing that.
But again, I think the big challenge for most businesses will be less about the technology infrastructure because I think we’ve got that one under control. A much bigger challenge will be what do you do with the data? What’re the insights that you can get from the data and how you can use the data to automate and change business process?
Adam: That’s interesting. Yeah, okay, let’s dive into a couple industry verticals. So you mentioned smart cities earlier. I’m encouraged to hear you said it in Australia there is momentum there. Again, I was aware Singapore were doing some pretty interesting things there. So what’s actually happening in Australia? Are you encouraged there are some regions really having a run at this space?
Kevin: It’s very interesting to see what’s really going on in Australia because if you look into Asia, it’s well documented that there’s, for example in China, up to a hundred cities, brand new cities, that are going to be built with over a million people. We don’t have too many of those in Australia, so you’d think, well, where’s the interest in smart cities in Australia?
Well, interestingly enough, the interest around the country is huge. So we are working with a number of players, be they telcos, councils, universities who recognize the need to put an intelligent platform in the campus, in the city, in the council, whatever it may be. There’s many reasons why they want to do that. They want to do that because they can see that in today’s world, connecting is as important as water, as important as electricity. Sustaining that community therefore means they’ve got to provide that new utility. The IT utility, if you will.
So providing basic connectivity is well understood, and what we’re saying to these customers is for example, we can do enormous things with lighting. So, most lights today are incandescent light. If we move to LED lighting, we can very quickly shave say 30% of that cost. Now, if you’re going to change the light on the pole, why not put on there an LED as well as sensors, including WiFi, including cameras. If you do that, then that pole becomes a platform. It becomes a platform not just for intelligent lighting so you can save that 30% and you can switch it off when there’s nobody there and switch it on. From a security point of view, there’s a value prop there. But on top of that, you can do things like environmental monitoring, you can do security surveillance, you can improve parking, and now numbers are showing that those cities that are doing intelligent parking are generating another $18 per parking spot per month.
You can improve traffic flow, and there’s a host of other applications for the same particular investment. So when we talk about city or campus or council infrastructure, we’re now talking about smart infrastructure, and providing smart infrastructure, the incremental benefits, whether it’s for a small business, whether it’s your resident, whether you’re a council worker, whether you’re a parking attendant, whether you’re a traffic cop, all of those people can now benefit, and of course, when you get the data from this intelligent platform, you can start doing some smart things with the city as well.
So the penny is starting to drop with a lot of people who are looking after these cities, or councils, or campuses, and they’re saying “Why not?” I think we’re seeing a rapid awareness, increasing awareness of that in Australia right now and we’ve got an enormous interest.
Adam: That’s great. And maybe, I think, with second airport and some of major transport plans in Australia we sort of talked about. You’re sensing in this space, there’s already awareness, and possible action in the near term if I can say that…
Kevin: We’re acting…in fact, Adelaide City is already deploying this. They’re one of Cisco’s top 5 Lighthouse accounts in the world, Lighthouse cities in the world. We’ve got a number of other cities and we’re working with many telcos to really deploy, I guess, this digital platform for these smart cities and councils and campuses, and so on.
Adam: Well, that’s great to hear Kevin. Sort of related topic, if I think cars, and both connected cars more broadly. Now one of the reasons I’m so bullish on podcasts as a sector is connected cars and internet connected cars, but also driverless cars also big focus at the moment with Google’s initiatives in that area. So first question, do you see the car market is stand alone and separate to the Internet of things or is it all part of almost the same macro? And secondly, what do you see in that space?
Kevin: It’s absolutely an integral part of the Internet of Things and Internet of Everything. In fact, we talk a lot when we look at transport and we look at intelligent transport, and I’ve mentioned to you earlier $19 trillion in terms of value at stake, when we look at transport, we’re actually talking about lives at stake because we believe, not only, and I’ll get to the driverless car in a moment, there’s a lot that can be done today in terms of vehicle-to-vehicle and vehicle-to-infrastructure by putting intelligence into the cars and into infrastructure that can save lives. And where again there’s some very good statistics to show how if we put this intelligence in, there are lives at stake that we can save.
So if you go to, January of this year, at the consumer electronics show, which is traditionally the platform for Sony and Samsung and all of those consumer electronic goods manufacturers, who are the dominant players this year? It was Mercedes, and BMW, and Audi, and Ford, and General Motors. Why? Because the connected car is the next platform. We’ve talked about smart phones, we talked about smart homes, and now we’re talking about smart cars. Now we’re not, and I think the world has sort of jumped on to this driverless cars, but there’s a lot to happen before that.
I’ll give you just a proved point. In third quarter of 2014, AT&T sold more LTE, that is mobile connections to cars, than it did to people. More connections to cars. Now what they’re doing is connecting to these cars so that they can do something intelligently between the car and the cloud. So the next few years, you’re going to see much more in terms of the connected car, and if you believe Peter Diamandis, who is one of these futurists, he believes that his two-year old will never drive a car.
So somewhere between now and say 14 years is when we’ll start seeing, in his view, driverless cars, but even well before we get to driverless cars, this year alone we’re seeing massive investment in connected cars, vehicle-to-vehicle and vehicle-to-infrastructure.
Adam: Again, the consumer and the marketing focus jumps to not so much the gimmicky application, but in this podcast and these things. Great, you can have your iPhone application in the car. I’m sensing you’re thinking more of that insurance and repairs and maintenance, and your car telling you there’s a breakdown coming before you even know the parts on its way.
Kevin: Well, let’s face it. You don’t really need to have an intelligent car to get a podcast.
Kevin: You can do it on your phone. So now I’m not talking again about the consumer, I’m talking about business. I’m talking about the fact that Volvo is collecting data well in advance of the driver on when that car needs to be serviced. In fact, even in terms of when something might break that could be dangerous that could sacrifice a life. So this is really a business issue, and by that I also mean there’s real money in it. In other words, if whoever gets this right, and everybody is fighting to get it right, they can monetize this service, and as I say, it’s not a consumer service. This is a service driven by the big motor companies in conjunction with the big telcos to provide a value add through the data. Then it’s all about data. The beneficiaries of those will clearly be the consumer but it will be a function of the insurance company as you said, the motor car companies and the services that need to be provide, and a raft of other services that we haven’t even thought of because we’ve now got intelligence in the car.
Adam: And a vision, we’ll talk Kevin in a second about one-to-one marketing and personalized marketing. So again the vision I’ve read about an insurance sector that, again, you think it’s in the future but you may tell me somewhere in Europe this is already happening, or the U.S. that my insurance and your insurance will be based not on my age, my demographic, my actual use in how I drive the car and how fast I drive the car, and how frequently I drive the car. Again is that coming, is that being talked about? Is that…
Kevin: There’s already insurance companies doing that. The theory is that the car is the next platform where businesses can do stuff that really adds value to the consumer. So we’re already seeing insurance companies in the U.S. who are rating their premiums based on the nature of that car being driven. They can tell who’s driving it and based on that they can change the rate.
We know insurance companies in Australia starting to think about that and acting on it. We know that insurance companies are actually quite concerned about IoT and IoE because at the end of the day, let’s take the extreme case, if driverless cars make the driving of cars that much safer, then that has a direct impact on insurance premiums, and so they’re really nervous about that, and are already down the track investigating the impact on the business a result of intelligence in the car. That impacts not just as I say cars, but the infrastructures that the cars are driving on and so on. So they’re going to have to shift their model in line with what’s happening in technology.
Interestingly enough, I was with a CXO of one of this insurance companies and that person mentioned to me, I apologize because we were doing a workshop, I said, ” We didn’t bring in our insurance subject matter expert”, and the person said to me “Actually, we’re less interested in what other insurance companies are doing and much more interested in what the top four IT vendors are doing, including Cisco, because the investments we’re making in technology are going to have far greater impact on insurance than the other insurance companies,” which I thought was an interesting take away.
Adam: I love having these conversations because it makes you look at all industry in this world of disruption, of rapid change, suddenly we’re talking about car companies is almost as technology platforms, and recently you’re reading the Apple are going to buy Tesla and you ask ‘why would a phone company?’, and then you start to see all come together, and it’s almost everyone is playing in everyone else’s field.
Kevin: Yeah. I was with somebody today who I’ve known for many years ago and is very deep in the IT industry and he said to me “Oh why? You seem to be very involved in the Internet of Everything.” I said “Yes.” It was pretty exciting and the main reason it’s exciting is because what’s going on here is the shift where we’re taking IT into operations.
So the last 40, 50 years of computers and IT, it’s really been computer or IT vendors dealing with the IT department. What I’m doing and spend more than half of my time now is talking outside of the IT department. How do we affect your supply chain? How do we enable autonomous trucks and trains? How do we enable shorter queues at the retail checkout? How we help FMCGs ensure there’s no stock out in the stores? This is the real business of business rather than just dealing with the IT department, and we believe there’s a much bigger market outside of IT and OT.
The OT is now understanding that to compete not only in Australia but globally, if you are not leveraging technology and the data that comes from the technology you’re going to be left behind. The struggle that the retailers are having in Australia is not because they haven’t done retailing as well as the next guy. The struggle they’re having is because of online technology, and what is happening in online in Australia has shattered them, has absolutely devastated them, and they’re now scrambling to get back up on their feet and understand how do we get on board with this technology, and I’m talking about in operations, in the actual store itself. Forget about IT, in the store to enable them to be smarter about how they deal with customer because the customers don’t even come to the store anymore. I don’t know about you but, I don’t go to the store very often. My wife may, but I don’t. And that’s a big change and they are only now coming to grips with that.
Adam: Absolutely. Yeah, fascinating changing times. Kevin, one more general technology question and we’ll dive into marketing examples if I can. I guess, just, and again, you could probable have a whole podcast just on security, but a very high level, what are the security implications of 50 billion devices? Is someone going to be hacking my fridge in 10 years’ time?
Kevin: Okay. Let’s put the word security into security and privacy because they’re both very important. Privacy has more to do with the individual, and let’s start there, because whenever I’m dealing with a retailer or a bank and we talk about enablement and digital technology, you can’t get beyond the privacy issue, and I think we’ve still got a long way to go in sorting that out, but it’s a really, really important issue.
Now, we can still do a hell of a lot of just very simple stuff without really stepping on the toes of privacy. There’s an enormous amount in Australia that we can still do, but eventually it’s still an issue so I don’t want to dismiss it. The second one is security, and the reason that’s a big issue, notwithstanding the fact that we now have global professional for profit organizations that you can hire to hit, to hire for cyber-attacks. Notwithstanding that side, what’s happening is as we move to this, as I said, Internet of Things and Internet of Everything, we’re moving from 12 billion things connected to 50 billion things connected. In technology parlance, we talk about therefore the attack vector has just escalated dramatically. As that attack vector has escalated, it just makes whoever it is more vulnerable.
So it clearly, and from Cisco’s perspective, when we talk about IoE or IoT, in the same breath we have to have a security conversation. In fact, a few weeks ago, we just announced what we call security everywhere. So from the endpoint all the way through to the application in the cloud, we’ve got security capabilities. That’s because as we connect more things, we become more vulnerable as a society, in particular for critical infrastructures and of course, whilst technology changes and it’s very quick, some things don’t change, and that one thing that doesn’t change is senior leaders will not expose their business to more risk.
So this is more risk, so therefore we’ve got to help mitigate that risk, and we’re spending billions of dollars on doing that, and that’s the second thing. The third thing is how quick is the remediation? So we call it before, during, and after. So you got to protect yourself before an attack, what happens during an attack, how do you protect the organization, and the how do you remediate after the attack. Again, we’re investing enormous amounts of R&D in developing products for the before, for the during, and for the after so that we can help our customers in all three of those phases. So that’s it.
In summary, cyber security and privacy are enormous issues. We don’t have the total answer but we are investing very heavily so that we’re keeping in sync or in step with what we’re putting out there.
Adam: Thanks Kevin for that. If we just…for the final part of the interview more towards some of the marketing use cases, I mean if you know…I’ve got some specific questions, but more broadly, how do you think marketers should look at such a big space, but do you have any general observations about opportunities, threats, what this means for the media sector more broadly?
Kevin: So I think this is a gold mine for marketers. The reason being that you can be far more informed. The amount of data that one will now be able to acquire is enormous, and I’ll give you the way we see it, in terms of analytics is really these three phases.
Phase one was where marketers have been up until now. So you’ve got CRM systems, data stores on who your customers are. There’s a lot of signs in business intelligence, the data warehouses. That’s analytics 1.0. All right? As we moved in the last few years, we talk about analytics 2.0 where you’re now mining social media: Facebook, LinkedIn, the classical stuff that’s out there. It’s unstructured data and we’ve got technology to harness that. And now we’re entering this world of analytics 3.0, and this is pretty exciting, and this is where marketing, I don’t how much marketing is aware of this, but I’ll tell you what it is, and this is real time data. This is what we call data in motion. This is what we call hyper context, which marketers have never had before.
What do I mean by that? So if I walked to a Woolworths store, you know exactly who I am, where I am down to the square meter. You also know my habits. You can send me advertising in real time, contextual for me as a male Australian, whatever. It can be far more accurate, and we all know that the classic example used is selling mortgage insurance. Well, if you come to me to sell mortgaged insurance, you’re too late, however, if you go to my daughter who is looking for a house right now, in terms of context, you’re far better off.
So bottom line, what I’m saying is for the marketer today, they have never ever been armed with as much information as they can get today on exactly what we call precision marketing. How to hit the right person at the right time with the right message, and it all comes to data and analytics, and collecting that data and doing it in real time.
Adam: I mean there is some the great use case, I mean, the classic vision of you’re walking down isle 5 and can we know you like Diet Coke, that’s almost yesterday’s example, I’m sensing we can go almost much further now.
Kevin: Well, we’ve got a classic case of a retail in the U.S who can…today, they index the stock on the shelves. What do I mean by that? They can tell if you walk past a particular item, and a 100% of people buy that item, that gets an index of one, versus a product that everybody walks past and doesn’t buy, that gets an index of 0, and there’s everything in between. What they then do is they go back to the suppliers and for the people who got an index of one, you can put your stock on anywhere you want in out shelves, and they will charge you more for say an index of 0.5, and of course, if you got an index of 0 you probably won’t be on the shelves at all. But the points is that using real time data to now index the goods on the store to then charge the supplier for putting their product on that particular shelf.
Adam: Sensors on shelves that can sense.
Kevin: Correct. Absolutely. They’re using video, they’re using WiFi, they’re using Bluetooth. They’re detecting the human walking pass, collecting it. They can correlate it with whether they actually paid for that item or not, and based on that, they can index the product.
Adam: I mean, Kevin, I’d say that with technology there’s so much good that can come from it, and this is more of societal question to make. It comes down to personal preference, but do you think Australians are ready for this level of personalization, this knowledge that this much data about themselves is out there? I mean, there’s no right or wrong but where is the line in the sand where personalize crosses this creepy and putting people’s back and then I’m going to shut the door. I don’t want any more of this. Do you have a view on that?
Kevin: Yeah. It’s a really good question. I don’t profess to have the answer, but what do I know is this, if you look at healthcare, which is a really good case because we’ve got a lot of people dying in hospitals through basic errors in the hospital, and we know by using technology and we know firsthand that we can save lives. There’s a case, from what I’ve spoken about earlier in terms of vehicle-to-vehicle, we can, through understanding data and getting that access to that information, we can save lives. So that’s on the one extreme, but on the other extreme, you also don’t want all of your public healthcare records and so on up there. So somehow we’ve got to, I guess, weave our way through this very sensitive privacy issue but also realize that unless we do provide this data, it’s going to be, you can’t get doctors and nurses who are already working 18 hours a day to work 19 hours a day. Actually leads to more errors, more people dying.
So with cars, we’ve actually come a long way with road safety, but we still have 1,300 lives lost per annum in Australia. So, if we’re really going to shift up from human scale to machine scale, then we going to leverage technology, and I think we’ve got to balance how much information we need to really provide positive value versus negative value. I know it’s not a one liner here’s the answer, but I don’t think anybody does have that.
Adam: No, and look it will shift when companies, and I suspect we’ll have some very public fails in this space. It will be very obvious when some crosses the line in the sand unless the consumer will act as the check and balance because they will turn against companies that may do…I mean, even Facebook has had many a stoush on the grounds of privacy gone too far, and then very clearly felt the message that people didn’t appreciate it.
Kevin: Yeah. The one comment I would like to make though, and that is that it is a big issue, don’t get me wrong. Privacy, security is a big issue, but sometimes I’m being in forums where we just focus on the privacy and security and therefore don’t move forward. So, I think we got to balance this. So you can’t just focus on the…when you haven’t even worked out what you can do positively. Likewise, you can’t just have a free for all, with cameras everywhere, taking everybody’s personal data without respecting the human factor. So, I just caution because I’ve been through this where we tend to focus on this privacy issue, and it is important, but then we forgot actually why do we come to the table in the first place, and we really need to balance that out.
Adam: Sort of related topic, and Kevin, you touched on this earlier about machine learning. There’s a debate in marketing. I mean, marketing now is a world of 2,000 software tools. Marketing and IT have never worked closer. Being comfortable with technology and analytics is almost table stakes for marketing these days. So the sense almost that the robots are taking over, there’s a black box making marketing decisions, we’re losing the art of marketing. It’s becoming a hard-core science. I guess in the context about marketing and the Internet of Things, it’s almost scary the developments in machine learning and artificial intelligence. Do you have a view on that? Are the robots taking over?
Kevin: Look, I think we can clearly do an enormous amount with AI, artificial intelligence today, but where…and I’m going to quote from Peter Thiel who wrote the book “Zero to One,” famous on eBay, and he said “Where the real benefit comes with the machine and what we can do with AI is what he calls human augmentation.” And I think that’s really the message. That’s where we’ve really got to focus on. It’s not about machines taking over the world. It’s how can machines enable humans to do the better, and there’re classical examples in healthcare. Oncologist doctors can actually provide better healthcare by leveraging what machines can crunch in terms of correlation, and again, it’s not eliminating a doctor, it’s actually augmenting the doctor. It’s leaving some of the huge amounts of data crunching to machines, and by data crunching I’m talking about correlation theory. I’m talking about artificial intelligence. I’m talking about all of the above, whereby if we do it responsibly, that doctor becomes much more powerful, much more valuable, and will heal lot more patients.
That applies to almost every type of work you can think of. Now, we need to be careful because there are types of work that will be eliminated, let’s be clear on that. So we need to think as a country very carefully about our labour force, our training and education, because there will be a shift. A lot of jobs that can be done digitally will be done digitally.
But if you take the classic case of Uber, we still need people to drive cabs. What Uber’s done is not conflicted with the cabs at all. Uber’s conflicting with the companies behind the cab, which is doing all of the administrations, and building, and management. Not only is Uber doing a good job of that, they’re doing it on a global scale, they forgot they’ve got economies of scale, and that’s going to happen to every businesses. Airbnb, it’s the same thing, you still need a hotel room, and what they’ve done is they have taken the administration and they’ve digitized that, they’ve put it into algorithms and they’re doing a much better job. But it’s a combination of things. You still need the cab driver, you still need to get content from Netflix. Netflix hasn’t eliminated Hollywood. You still need the hotel room. What we’re eliminating is all the inefficient processes and margin on margin on margin…
Adam: The inefficiencies…
Kevin: Correct. So it’s just, to me, if we can be smart about this, we can augment what humans are doing, we’ll get some significant benefits, but we need to be quite careful about how we shift the labour force because it’s going to shift.
Adam: Absolutely. Well, Kevin, last couple of questions. Again, in marketing conferences these days, if you played innovation or disruption bingo on you card, it’s every second sentence. Just a more general question about Cisco. So you’ve been here for 15 years and talk about head winds and disruptions and move to the cloud, it sounds like you’ve got very exciting things going on. What’s your observation for the last 10 or 15 years at Cisco, and how’s that company you’ve had to pivot…deal with somebody’s head winds I guess.
Kevin: So, I think that in some ways if you reflect over those 15 years, the world’s come towards us because we are getting more and more connected, and Cisco’s business is connectivity. So we’ve enjoyed this transition through what I call the three phases of the Internet, and whilst we’ve always been strong in networking, and the Internet, and the Internet protocol in connecting people, obviously we’ve had to shift quite dramatically as a company to focusing not just on the network but looking at the really the various types of access mechanisms, whether it’s wired or wireless access, because look at WiFi. How that’s taken off. I mean it’s huge. So we’ve tried to lead that transition.
We’ve tried to also lead the transition to videos. So in terms of our forecast, we believe that by 2019, 81% of all traffic will be video. So again, we’ve put a lot of investment in how to transport video. Security has been a big deal, as I’ve talked about earlier, and of course, cloud. Now that’s been a massive transition, not only in the technology. So the technology has changed quite a bit because of the scale that we’re talking about in the cloud, whether it’s private or public cloud. Obviously we’re one of the largest suppliers of technology in the data centres in cloud.
But as I said, it’s not just the technical change, it’s the business change. The business model change where we’ve moved from acquisition to a consumption model, from a capex to an opex model, and of course for all companies in IT that’s a tough one to do, because you’ve been used to selling products to now selling a service on a monthly basis. That’s a transition we’re going through right now. Fortunately, we’re able to step through that okay, but there’s no question that every company in IT is having to move through that technology as well as commercial transition. And from our point of view we see it as a huge opportunity now. In particular, as we move beyond the traditional IT to OT and to IoE, Internet of Everything.
Adam: Fascinating view. You didn’t join for the quiet life 15 years ago, did you? It’s been interesting times. Last question Kevin, before we have a bit of fun with the quick fire end. I actually asked this question a couple of weeks ago, I said to a marketing guy, what you see happening in the next 24 to 36 months. And he said, “I struggle with the next 36 minutes, let alone 36 months.” We’ve talked about smart cities and connected cars…yeah, there are a lot Internet of Things related topic that get quite a lot of air time. Where do you see the main developments maybe the next 12 or 24 months?
Kevin: So hopefully, we are trying to lead a conversation in Australia to becoming a smart country. So when we talk about mining, let’s keep digging up as much iron ore, and as much gold, and nickel as we can. We’ve got a brilliant opportunity in agriculture. Let’s keep farming, but, and here’s the but, let’s do it intelligently. So when we mine, let’s build intelligence around IoT and IoE so that we build smart mining. When we look at agriculture, our farmers are farming blind. What I mean by that is they’re guessing the way the patterns. They’re guessing humidity, frost, etc. If we can put intelligence, we know this. For example, if we put intelligence into farms, we’re are losing over several hundreds of millions of dollars of crop in Australia today because of frost. If we put intelligence with sensors connected to cloud applications, we can obviate that. We cannot lose hundreds of millions of dollars to frost.
So what we’re trying to lead is this conversation within Australia that let’s do things smart. Let’s do intelligent farming. When we build infrastructure a road, a bridge, let’s put in another 1% and make it smart bridge, a smart road so we can get safety on the roads, we can reduce pollution on the roads, we can obviate disasters on the roads. That’s the sort of thinking. If we do that as a country, and if we lead that transition into intelligent X whatever it is, cities, bridges, agriculture, transport, we will foster a skill set in computational science, in data analytics, in connectivity that we can export as a separate business on top of the resources that we export, on top of the farm produce that we export. We should be building a society of people who really understand this technology, the data science of this technology, and export both the intellectual property and the services that we develop on top of our strengths in this country. So that’s conversation moving away from the NBN speeds and feeds “Hey, I want fibre to my house” towards how do we digitize the country, how do we make this country smart, and how do we export that capability.
Adam: Less about Google glasses and more about serious infrastructure.
Adam: Great to hear. Kevin, it’s been absolutely fascinating. Thank you so much for your thoughts on that. We just like to lighten things up. Put the end of EchoJunction podcast. So you’re all set for quick fire round.
Kevin: Yeah sure.
Adam: Here we go. Probably the least number of social media references to any of the podcast I’ve done, but question one, Kevin if you could use only one social network for any purpose for the next 30 days, which would you choose and why?
Kevin: It would be probably LinkedIn, and that’s because I keep my personal life and commercial business life separate, and I believe that connection through LinkedIn is probably the dominant form of social media from a business perspective. I get a lot of information out of LinkedIn. I, obviously, spend a bit of time on LinkedIn so I’d say LinkedIn, and close second would be Twitter.
Adam: Yeah. Thank you. Question two, you’ve mentioned a couple during the interview, but what’s the most influential and impactful business book you’re ever read?
Kevin: Influential. I actually…one that I did mention earlier was “From Zero to One” by Peter Thiel, which I found very interesting. The other one, this is a good one, it’s called “Leading Digital”. “Leading Digital,” and it was written by a couple of people out of MIT and one person out of Capgemini, and it really talks about why and how digital transformation has benefited, and they did this research over 500 companies and then one of the steps…and they chose that those that are very highly digitized with a forward looking management team consistently performed above the rest. Good proved point on that, and then the steps towards that would be two good ones.
Adam: Thanks for that. I link those up in the show notes for people to check out. And last question Kevin, who are the top three influences you personally follow on either LinkedIn or Twitter?
Kevin: So, I reflected on this question, and to be honest, it’s not one person. I think I get more out of following McKinsey and BCG, who obviously have many authors within them. But they’re very insightful, they’re very forward looking, and probably learned a bit more from them than I do from any individual.
Adam: That’s great. You’re allowed corporate handles in that question. That’s fine.
Kevin: I think it’s a bit of a plug.
Adam: Kevin, it’s been absolutely fascinating. We’ve only scratched the surface, but I think you’ve provided a lot of value to the listeners on this topic. Before, I let you go. Where would you like to send people that may want to look a bit more into what you are doing online or what’s Cisco doing online?
Kevin: cisco.com is the best place to go. Within cisco.com we’ve also got a site called theinternetofeverything.com I think it is, where you can find out more on what we’re talking about in terms of IoE, white papers, use cases, what’s happening around the world, heaps of information.
Adam: Fantastic. I will link those up in the show notes, I think people will find a lot of use in that. Kevin, thanks so much for being here.
Kevin: Thanks Adam.
Adam: There we go ladies and gents, Mr. Kevin Bloch from Cisco in Australia. I hope you enjoyed that discussion. As you can hear, Kevin really is one of the leading subject matter experts in Australia on this topic, and so many aspects we could have dived into, so ever, I felt like we scratched the surface but really got a good breadth of insight and info into what is a very dynamic sector, and as you heard from Kevin, a rapidly growing sector. So make no mistake, this will be something marketers need to be across and on top of, so I hope you found that useful.
Here are the show notes for this interview with Kevin Bloch.