The recent rise in consumer Internet of Things (IoT) products, services, and technologies such as those found with the Nest thermostat, Sonos multi-room speakers, and home automation solutions have now also begun to apply to asset-heavy industries like manufacturing, logistics, mining, oil, utilities and agriculture systems to help improve efficiency, safety, productivity and results.


  • With machines and specialized sensors collecting data at every step of production, the potential gains from the Industrial Internet of Things (IIoT) are enormous. Just in 2016 alone, startups bringing digitization to the industry saw more than $2.2B of investment.


Accenture reported that the most conservative independent estimates place spending on the IIoT worldwide at $20 billion in 2012, with spending expected to reach $500 billion by 2020. PWC reports that $6 trillion will be spent on IoT solutions between 2015 and 2020 (compounded), and business investment will grow from $215 billion to $832 billion versus consumers at $72 billion in 2015 to $236 billion in 2020. The pace of growth is underlined by research from Gartner, who predicts that spending on new IoT hardware will exceed $2.5 million a minute in 2016—and that, by 2021, one million IoT devices will be purchased and installed every single hour


In the future, successful companies will use IIoT to capture new growth via three main approaches: boost revenues by increasing production and creating new hybrid business models, exploit intelligent technologies to fuel innovation, and transform their workforce. Offering vastly improved operational efficiency, outcome economy services; fueled by innovations in hardware, software, and the increased visibility into products, processes, customers and partners. Resulting in new connected ecosystems, coalescing around software platforms that blur traditional industry boundaries.


Predictive maintenance of assets is already being adopted by heavy industry, saving up to 12 percent over scheduled repairs, reducing overall maintenance costs up to 30 percent and eliminating breakdowns up to 70 percent. GE Software offers its own IIoT platform called Predix targeting the predictive maintenance business by connecting industrial equipment, analyzing data, and delivering real-time insights. Both large platform corporations such as IBM, Microsoft, Siemans, PTC, and OSISoft; along with many startups are attacking the needs of heavy industry by developing sensors, cloud platforms, networking infrastructure, as well as machine learning software to extract insights from the deluge of data. PTC, with its acquisition of ThingWorx and Axeda, has built its IIoT platform to rapidly develop and run innovative applications for connected products. OSIsoft provides real-time data management for manufacturers, utilities and mining. The company is building a platform for collecting sensor data and controlling processes to help customers improve yield, conserve energy or resolve batch production issues.


Some of the issues companies will face with IIoT are understanding where the value is; “What product-service hybrids beyond remote monitoring and predictive asset maintenance resonate with our customers and our customers’ customers?". Establishing an effective partner ecosystem; companies will need to work with partners and suppliers to create and deliver services as well as reach potential new customers. Chief among the issues is security and data privacy; already rising in importance given the increased vulnerabilities to attacks, espionage and data breaches by increased connectivity and data sharing. Organizations will need new security frameworks that span the entire cyber physical stack, from device-level authentication and application security, to system-wide assurance, resiliency and incidence response models.


Equally importance is creating the right experience outcome; “How can we provide data so that experts and non-experts alike can easily work with it? How can we raise worker productivity and empower people with new IIoT technologies and services?"


Delivering such outcomes will require new levels of collaboration across an ecosystem of business partners, bringing together players that combine their products and services to meet customer needs. The big winners will be platform owners and partners who can harness the network effect inherent in these new digital business models to create new kinds of value. For instance integration of IIoT platform data with IBM Watson creates a cognitive system which has the ability to understand both structured and unstructured data in order to make the kind of timely, complex decisions that add value, and bring significant operational and strategic benefits beyond pattern identification, to deliver powerful real-time recommendations.


To make IIoT really work will require new ways of working. Existing operations and maintenance roles will need to take on more sophistication and skill when they move from working directly with equipment in the field, to looking at data gathered to a central hub. In  the mining industry analysts, using data generated by sensing equipment in mines around the world, make recommendations to operators in the center about how to perform their jobs. This will also extend into the level of engagement with the customer. Whereas previously selling a device or sensor to an industry was the extent of the engagement, having this now become connected and part of an IIoT ecosystem means that the supplier can offer value added service to predict when something may go wrong. This now requires changes to the service operations, where the service manager, armed with this new insight, places a call to the customer scheduling a preventative maintenance visit. Then when the field technician shows up to the site, he has the right parts to replace, and is also armed with what may go wrong in the near future. So, while all current IoT implementations focus on the ‘data delivery’ architecture, a robust ‘operations’ architecture is also needed in order to maximize customer engagement.


To achieve the required degree of customer focus, the organization will need to move away from a historical focus on engineering and products, and towards a mindset that puts customers front and center. As well as requiring complex systems integration, this convergence will compel companies to think very differently about their entire approach to product design and development.


According to the World Economic Forum; "In the next 10 years, the Internet of Things revolution will dramatically alter manufacturing, energy, agriculture, transportation and other industrial sectors of the economy which, together, account for nearly two-thirds of the global gross domestic product (GDP). It will also fundamentally transform how people will work through new interactions between humans and machines."


Adoption of IIoT is a double edged sword; Once industries become digital, they also become digitally contestable, meaning companies from outside the traditional industry confines can enter and compete more easily. Think of Google’s moves into home thermostat market with the Nest solution, and its ambitions for driver-less cars, which are likely to disrupt multiple industries, including car insurance and government licensing.


For those industrial companies willing to undertake this digital transformation challenge the rewards are likely to be significant; while a few billion consumer devices, wearables, home automation devices, and cars will become IoT connected during the next five years, the equivalent global growth curve for the industrial IoT is set to rocket towards 100 billion devices as the technology becomes pervasive in industrial sectors worldwide.











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