Even with all necessary systems and processes in place, a strategy can be crushed by old visions of what a company is or aspires to be.
by Dan Yarmoluk

The Internet of Things (IoT) is changing the future of industry. Cloud-connected “things,” including all manner of equipment and devices, are becoming pervasive among consumers and business alike.

Many of these concepts are not new. Some were known by different labels in the past: supervisory control and data acquisition (SCADA) systems, telematics, machine-to-machine (M2M) communications. Another term has been coined: “Industry 4.0,” representing the Fourth Industrial Revolution.

There are many concrete examples of the IoT in action. In oil and gas, industrial equipment is being remotely monitored across vast distances and often in harsh environments. In agriculture, moisture sensors are used to minimize water usage while maximizing crop yields. Commercial buildings are being retrofitted with next-generation, connected heating, ventilation and air conditioning (HVAC) systems that can factor in weather to maintain comfort and save energy.

Pumps and systems can be retrofitted with accelerometers to analyze vibration and temperature as ongoing condition monitoring. The learning and trends, or normative data, can be analyzed to have a true sense of degradation over time and feed into a data-driven preventive maintenance schedule.

Business Drivers for IoT

Along with vision, IoT projects need funding justification with a business case. There are principally four main business drivers for commercial IoT projects.

  • Comply with new regulations: An example is the U.S. Department of Transportation’s new rules for commercial drivers around e-logs and hours of service. Electronic compliance is a straightforward way to document these new regulations digitally.
  • Reduce or avoid costs: Examples include field service, logistics and supply chain optimization. Industry is moving from scheduled maintenance to a predictive maintenance model. Also, companies are using IoT to prevent inventory losses among valuable, perishable assets like food and pharmaceuticals.
  • Differentiate product: Industrial companies are offering connected product features as adjunct offerings to differentiate themselves from competitors, increase revenue, avoid commoditization, enable better reliability and improve uptime. Additionally, manufacturers are using connected product customer usage data to gain insights and improve road maps.
  • Generate new revenue streams: Monitoring a product sold to a customer can enable premium service levels, as well as entirely new managed services revenue streams for manufacturers. IoT is also reinventing the concept of equipment leasing: IoT enables managed hardware-as-a-service monitoring—or subscription-type offerings—that bundle the device with connectivity and the application. This is opening up recurring revenue-based business models for traditional manufacturers. Traditionally, original equipment manufacturers (OEM) have created a product and sell direct or through distribution. The service element is handled by OSM or outside service and maintenance organizations. As sensors can be connected, the OEM itself can guarantee uptime as opposed to a standard warranty.

But why is there not faster adoption of IoT technology? Here are the top five barriers to IoT adoption:

1. Too much media attention is on informational technology

For the mid-tier industrial world, it is hard to decipher the big picture on how and where to start. As a result, the IoT industry appears heavily focused on gadgets and not making them relevant to the particular business verticals themselves—so the IoT can appear expensive and intimidating. While one must understand the pieces and costs, focus on the desired outcome and peel back the onion one layer at a time. As a manager, use data and information to influence human behavior. For example, a maintenance technician can preempt a costly pump failure through use of data alerts and trending analysis.

2. Conservative technology culture or too much focus on operational technology

A second major barrier has to do with the expertise and culture of industrial organizations, which focus on operational technology (OT). Industrial organizations as OT companies are at direct odds philosophically with informational technology (IT) organizations. While IT is defined by constant change and innovation, OT is change- and risk-averse. That is why it is not unusual to see industrial automation systems in service for decades with little or no change. In a world where production downtime can devastate revenue, stability is the top priority.

Kodak was a market leader until digital disruption eclipsed film photography with digital photos. Some referred to those who do not innovate during these rapidly changing times as being “Kodaked.” One has to commit through a series of small experiments to learn from these organizational changes. Companies can mitigate risk by having reasonable expectations in small, coordinated “digital test beds” to determine the value and return on investment (ROI).

3. Lack of industrial technologists to lead the IoT program

There is the question of who in a company can lead the digital charge. Companies need a person or team that can bridge the gap between the IT and OT cultures so competing priorities are met. The program needs a combined IT/OT perspective for the organization, all within the confines of achieving IoT goals with increasing operational complexity or burdens that may be already short-staffed.

An organization must consider how lean manufacturers are running, and think of innovative ways to automate insights, but have human “touchpoints” that force change from those insights such as alerts, schedule maintenance to save on costs.