A recent survey of 250 U.S. executives across five industries found that 80 percent of responders believe the Industrial Internet of Things (IIoT) could be transformational to their company or industry. However, only 8 percent are actively pursuing initiatives. Among the benefits enjoyed by that 8 percent of organizations – the welcome ability to find hidden money throughout their enterprises.
Many businesses struggle to quantify the value of investing in Internet of Things (IoT) initiatives. For one reason thing, it’s difficult to quantify precisely where and how IoT benefits will accrue. Indeed, the promise of the technology is to deliver new and unexpected insights. By connecting smart devices that share and analyze data, the IoT fuels a virtuous cycle of innovative ways to reduce costs, mitigate risk, improve quality and speed time-to-market.
While compelling, this perspective can create a paralyzing dilemma – businesses want the good things that the IoT brings, but they’re leery of investing in something without knowing the return. To complicate matters, many businesses tend to view the IoT as a grand, transformational undertaking requiring a long-term commitment. This can lead to business cases for IoT investment that involve a precarious leap of faith – a leap that many organizations are reluctant to take.
Another challenge is that the IoT is often perceived as a world unto itself, independent of the reality of existing operational infrastructure. This mindset fuels the belief that the IoT is a software and services silver bullet that can be tacked on to a dysfunctional operational environment to magically drive optimization. Unrealistic expectations result, setting the business up for failure.
To avoid these pitfalls, businesses need to take a focused, realistic approach to their IoT strategy, one that delivers meaningful benefits and builds momentum for continued investment, and at the same time executes the heavy lifting of driving significant change. Early IoT adopters are taking this approach by developing a foundational element of “Digital Transformation” while simultaneously reaping benefits. The rest of the market, meanwhile, is still at a high exploratory level.
The first prerequisite is to build a foundation of connected, intelligent assets that collect and share information in an autonomous manner. Today, we frequently find manufacturing plants and operational facilities of Fortune 500 enterprises that fail to meet this standard. Instead, environments typically operate as discrete islands, with assets residing on myriad platforms, cobbled together by consolidations, mergers and acquisitions that have never been fully integrated. To make the case for investment into underlying infrastructure (and dispel the silver bullet myth), IoT proponents need to take an adult-in-the-room approach and, perhaps counter-intuitively, avoid hyping the wonders of the IoT. Rather, the unglamorous message needs to be around the basics, such as the importance of integrating Operations and IT. If, for example, enterprise planning systems can’t share data in real time with the factory floor (and they quite often can’t), the vision of IoT functionality becomes a house of cards. An Open Systems platform that minimizes complexity and customization is essential to an integration strategy.
Once a foundation of connected assets is in place, a well-executed Minimum Viable Product (MVP) methodology enables quick wins and lays the groundwork for broader initiatives. By correlating variables from just a few devices, a business can, for example, generate automated alerts regarding the need for a predictive maintenance check on an assembly line component, or adjust temperatures to reduce energy consumption and carbon footprint. These outcomes can then be quantified in terms of mitigated risk, lower costs and new business opportunities – benefits that would remain hidden without the implementation of IoT capabilities.
Over time, tactical wins can be tied to a broader strategy and long-term vision of IoT benefits. Algorithms that expand the analytics generated by two connected assets to a broader network of multiple assets creates a snowball effect of insights into new and unexpected sources of hidden money residing in supply chains, inventories, shop floors and business processes. Predictive and proactive oversight replaces reactive fire-fighting.