CISCO STUDY

Adoption of Internet of Everything by Oil and Gas Industry Could Fuel GDP Increase of Up to 0.8 Percent, or $816 Billion, Over 10 Years

SAN JOSE, CA--(Marketwired - Apr 16, 2015) - Cisco (NASDAQ: CSCO)

• For a $50 billion O&G firm, increased IoE adoption translates into an 11 percent bottom-line (EBIT) improvement. For the entire industry, increased IoE generates $600 billion in Value at Stake.
• 14-country survey reveals that oil and gas professionals believe "operational efficiency of existing projects" and "maintenance of assets and infrastructure" are their top two areas of increased investment over the next 24 months.

Worldwide oil production is outpacing demand, and oil prices have fallen by more than 50 percent since June 2014. Many factors -- including soft demand, increasing U.S. production and diminishing storage for crude oil -- suggest that the days of $100-a-barrel oil may not return. This scenario presents potentially disastrous consequences for oil and gas (O&G) firms that are not prepared to accelerate their digital transformation. Innovative oil and gas firms, however, believe today's turbulent market landscape provides an opportunity to grab competitive advantage by harnessing new technologies.

Cisco® Consulting Services conducted a survey that uncovers the urgency for the oil and gas industry to adopt digital technologies powered by the Internet of Everything (IoE) -- the networked connection of people, process, data, and things -- to stay competitive. The survey identified intelligence from data as the key area needed to improve operational efficiency, and data analytics as the No. 1 IoE driver for faster, better decision-making.

Industry Adoption of IoE Could Increase Global GDP by Up to 0.8% -- or $816 billion
To calculate this number, Oxford Economics began by incorporating into its Global Economic Model Cisco's $600 billion IoE Value at Stake estimate for the oil and gas industry over the next decade (including productivity gains, reduced OpEx and CapEx, and IoE adoption cost of $180 billion).

This estimate is based on both increased supply and greater demand, resulting in a "positive supply shock" for the global economy. Lower oil prices stimulate more spending on goods and services, with most of the gains being realized through the consumer sector. Oxford also projects that global consumer spending could be up to 1.5% higher than the base-case forecast by 2025. This aggregate increase includes a "second round impact" of higher economic activity, raising overall employment (and decreasing unemployment) around the globe.