Today’s manufacturers are on the cusp of a fourth industrial revolution, in which internet-connected sensors (aka, the Internet of Things, or IoT) make physical machines and objects more intelligent. To realize the promise of industrial IoT, however, companies must combine operational technology with enterprise IT, and collect and analyze data across the entire manufacturing ecosystem to generate actionable and valuable insights.
By doing so, manufacturers can better manage production, address customization requirements and add value. In turn, they can more intelligently manage their businesses, improve response time, promote innovation, reduce costs and boost revenues. In our view, here’s how forward-thinking executives should be thinking about the opportunity.
The Future Has Already Arrived
Rolls-Royce has built engines since 1915. Today, however, the fabled company sells a whole lot more than just engines. In an industry where fuel savings can add up to millions each year, Rolls-Royce now provides airlines with information to help optimize routes, altitude, airspeed, weight and freight – this in addition to supplying the engines themselves. Along the way, Rolls-Royce engineers learn how its engines perform in a range of conditions, which they then use to inform the design of their next generation.
In short, Rolls-Royce exemplifies the opportunities and benefits of industrial IoT. And this iconic company is not alone. Shell Oil is pioneering simulation technology to help oil and gas operators manage offshore assets, improve worker safety and better predict maintenance. Stanley Black & Decker is already adding digital technologies to its entire line of customer tools, hydraulics, fasteners and electronic security devices.
All told, the list is long and diverse, covering equipment manufacturers, pharmaceuticals companies, medical device manufacturers and many other sectors. According to a recent MPI study, which surveyed 350 manufacturers, almost two-thirds (63%) believe IoT will have measurable impact on their business in the next five years. By 2020, IDC predicts that 50% of the Global 2000 will depend on digitally enhanced products.
This is because industrial IoT promises a single view of analytical data to operate with real-time agility and quickly respond to adverse events within the plant or supply chain. This requires integrating and consolidating enterprise and operational applications, however, which have largely remained isolated from one another. Until now.
Beyond connecting devices to a network where they interact and exchange information, the real value of industrial IoT lies in the data generated from these important relationships. Unlike traditional software applications, industrial IoT is rooted in physical space — integrating data from digital devices and systems in factories and supply chains with enterprise assets. It enables enhanced monitoring, data gathering and integration, role-based information presentation and situational awareness reports for operators. The objective is to convert operational data into insights that inform decision-making, drive innovation and realize greater efficiency.
Getting Started with the Right Questions
That said, many manufacturing leaders already recognize the need for industrial IoT. They struggle, however, with the complex and siloed landscape of their manufacturing landscape, including processes, IT and operational technology. To that end, we advise decision-makers to conduct a self-assessment and organizational readiness analysis by answering the following questions:
What changes do we need in our business processes, operations, people and business models to respond to rapid market changes, new developments and emerging technologies?
What kind of talent do we need?
Where can our organization benefit most from a deeper understanding of operations and efficiency?
How can we assess our readiness for an IoT transformation, and how should we benchmark our peers?
What budget should we set for additional computational capacities, and for security and storage capabilities?
What is preventing us from a transformation? Legacy systems? Cost pressures?
Besides cost, what internal barriers do we need to overcome?
To help with those answers, leadership must compare approaches, examine the readiness of its technical architecture, understand the organization’s capacity to change, and review available case studies. They must also engage with partners with the required domain expertise as well as hands-on experience in deploying industrial IoT technologies.
In our experience, successful journeys take manageable steps such as designing and installing sensor technology; implementing faster and more efficient interconnectivity between the enterprise, business units and production facilities; developing analytics; and piloting use cases that not only demonstrate the promise of the industrial IoT but also realize its value at scale. In proceeding this way, manufacturers develop and grow the talent, skills and tool-sets necessary to build a connected ecosystem that seamlessly integrates digital, operational and information technology.
Organizations that align both IT and operational technology to create a “system of systems,” instrumenting every device in the extended manufacturing ecosystem, will be best positioned to harvest meaningful data at every touchpoint. Only then will manufacturers be able to benefit from the improved yields, additional value and greater efficiency that industrial IoT can produce.