April 21, 2016
Companies need a clear focus to make the most of industrial internet of things opportunities.
Internet of Things is a much discussed topic in the industry as executives try to determine how to create value for their companies. However, the Industrial Internet of Things (IIoT) is still evolving and we see challenges for companies around its ecosystem, including new requirements for products and solutions and transforming business models.
The Industry of Things World Conference 2016 in San Diego provided a platform for 400 professionals to exchange their views and experiences. Throughout the discussions, three topics emerged as most top-of-mind for executives:
- Defining the right focus on IIoT opportunities
- Converging IT and OT
- Missing framework for IIoT enabler
Defining the right focus on IIoT opportunities
Companies need the right focus to leverage IIoT opportunities. It is important to not only concentrate on technology and data gathering, but to evolve business models and create insights through judgment. A successful IIoT offering plan has to be grounded on product, speed to market, operations and revenue strategies, and strong execution capabilities.
Fortunately, there is no one way to create value from IIoT. Different companies focus on different areas. Examples we heard at the Industry of Things World Conference include:
- A manufacturing company managed to produce lot size 1 at the same productivity levels as lot size 100 by applying smart equipment. This helped them to transform from a job shop into an agile manufacturer.
- A metal company is now able to get real-time insights from their manufacturing equipment after going through a smart manufacturing transformation that focused on standardizing the asset base and setting up internal centers of excellence. This enables them to make decisions based on facts in real time and to improve manufacturing efficiency.
- A cleaning equipment provider created higher entry barriers for competitors by introducing a cloud-based fleet management operator model that provides predictive maintenance for smart cleaning equipment fleets. Copying this operator model will take competitors 2-4 times longer than copying a product.
Industrial companies must understand how they can leverage data analytics, cloud solutions, and software to enrich their products or internal operations. Their IT departments need to grow in capabilities and, as a result, new departments focusing on data analytics are likely to emerge. As such, R&D and IT departments need to collaborate more intensely and companies need to become more open and flexible to obtain missing capabilities through acquisitions or partnerships.
Converging IT and OT
As IT and OT converge, industries will be reshaped as smart technology – which combines hardware, software, and connectivity – requires collaboration between formerly unrelated industries and companies. Of course, the software is often the differentiating characteristic as different systems begin working together in ways they haven’t. We anticipate that, in the future, industrial companies will likely not compete with products, but with total systems.
Missing framework for IIoT enabler
Today, creating insights across multiple silos is difficult. However, the W3C has the objective to break up these silos and create a common global web of things – an open ecosystem based on shared semantics and data formats. By bridging different IoT platforms through the web, the web of things aims to create interoperability and enable vertical and horizontal integration across the value chain.
Industrial companies are, to a large degree, still in the phase where they are trying to understand what IIoT is and how it could benefit their businesses. People recognize the potential IIoT has, but are having a hard time breaking it down into actionable insights for their companies while struggling to explain the concept key stakeholders.
As more companies engage in pilots and as initial results emerge, we expect industrial companies will be able to validate and quantify value in a better way. This will help industrial companies in determining appropriate strategies and will set up the right framework for execution.