You Can't Build Smart Products in Dumb Factories

Depending on who you talk to these days, the Internet of Things (IoT) or the Industrial IoT (IIoT) is either just marketing hype or the technological inflection point that is going to transform manufacturing as much as the automation revolution or even the industrial revolution before that. There are antagonists who say IoT is mostly just marketing speak and that we have been doing IoT ever since the shift to digital sensors and control technology three decades ago. They believe it’s just another acronym, M2M for machine-to-machine communication that appeared on the scene at the turn of the millennium. These, unfortunately, have a shortsighted view of IoT. Proponents who believe IoT is transformative and will cause a shift across industry are correct, but some are overly optimistic as to how fast this transformation can and will occur.

LNS Research has surveyed several thousand companies on their initiatives related to Smart Manufacturing and Digital Transformation. Across all industries, there is improvement in acknowledging what IoT offers and its ability to transform business. However, actual use cases, beyond pilot programs, remain stubbornly limited. We can attribute part of this to the conservative posture of manufacturing where the phrase “if it ain’t broke, don’t fix it” probably originated.

Another factor that has contributed to the slow spread of real IoT capabilities in industry is that investments in automation technology typically have lifespans measured in decades rather than years or months like in certain segments in the consumer electronic sectors. Much of the real power of IoT devices is dependent on the deployment of new technology platforms, and retrofitting only offers partial benefits. With capital investment stifled in an economy that is still recovering, new investments face high hurdles. Because of this, we see the projects that are being used to justify IoT investment often centered around predictive capabilities, particularly as it applies to asset performance. Since asset reliability and performance has productivity, safety, and quality implications, it is an area where investments have the biggest payoff and is where many of the pilot projects are bearing fruit.

Today’s IoT, at least in manufacturing, creates new opportunities that previous M2M technologies were unable to deliver, thanks to two primary factors:

1. IIoT is based on a platform approach

2. IIoT is giving us a wealth of data, which when coupled with Big Data Analytics, is providing insight into our manufacturing processes that was simply not achievable in the past.

Companies must consider and include four key elements when deploying an IIoT platform:

1. Connectivity: Includes all necessary hardware and software to network within the plant and the enterprise, standards for integrating machines, Clouds, applications and the technology for quickly and efficiently managing devices, moving data, and triggering events.

2. Cloud: Includes all of the various Clouds across an enterprise to implement computing and storage capabilities wherever they are most needed: at the edge, within the plant, at the enterprise, or outside the firewall.

3. Application Development: Includes the needed tools for quickly and easily creating new mashup software applications that leverage all other areas of the IIoT platform, as well as quickly and easily moving existing legacy applications on top of the platform.

4. Big Data and Analytics: Includes the use of a broad set of statistical and optimization tools to cleanse, monitor, and analyze both structured and unstructured data for enabling unprecedented insights.

New insight is the value that IIoT delivers through Big Data & Analytics. This is where leaders today see real ROI on their IIoT investments. In some cases, the benefits are from being able to use their existing analysis tools to look at new sources of more varied data. It enables companies to get new and better answers to existing questions they may have already had like predicting machine reliability. But the real payback from IIoT investments is not just in doing the same old things better, faster or cheaper. The real payoff is when companies use advanced analytics to get new answers to questions they never even knew they had. This is the power that organizations need to have to radically transform their businesses.

Nowhere is this more relevant than in companies that are trying to deliver IoT-enabled products themselves. LNS holds that “you can’t build smart products in dumb factories.” To remain competitive, companies either have to start providing smart products, deliver value-added services, or both. We already see examples such as the often cited jet engine sector where GE and Rolls Royce essentially sell thrust instead of the engine itself. Others will have to follow suit as LNS already sees this model taking root in industries from mining to agriculture.

LNS Research provides advisory and benchmarking services to help Line-of-Business and IT executives make critical decisions. Our research focuses on the Industrial Internet of Things (IIoT), Digital Transformation; and providing insights into the metrics, leadership, business processes, and technology capabilities needed for achieving Operational Excellence. Learn more at www.lnsresearch.com/blog.