Arunkumar Janarthanan is the associate director, Industrial Practice for Frost & Sullivan. He has more than 14 years of experience in monitoring and analyzing global growth opportunities and trends in the security, manufacturing and process control segments. Janarthanan has expertise across critical consulting processes and has developed growth tools that facilitate organizations to understand global demand drivers and trends in a targeted industry vertical. He also has all-round experience and exposure in tackling complex business challenges, technology adoptions, investments, etc. For more information, visit www.frost.com.
The Gulf Corporation Council's (GCC) IIoT Adoption Curve
The GCC has been undergoing a significant transformation with respect to its role in the global industrial market. There has been a push toward construction of assets that are best-in-class and in a manner that will enable GCC nations to enhance their export focus and deliver exceptional customer experience globally. Additionally, the smart facilities are also expected to ensure better return on investments (ROI). Considering this scenario and the expected wave of industrialization, we can expect adoption of the industrial internet of things (IIoT) to take off with a strong thrust in the near future.
Process majors in GCC are keen on next generation practices and want to be the front runners in adoption, but there exists a key question on the need for IIoT while the advanced automation can handle the current duties. This situation is fast changing with the aging assets, the increasing need to minimize costs while ensuring long-term asset reliability as well as manage the data explosion for achieving life cycle optimization. The success of ongoing pilots and proof of value demonstrations by solution providers is expected to encourage the users to start accepting IIoT as a complementing solution to the existing automation solutions.
A case in point is adoption of smarter and more digital oil field technology. The oil producers in the region have already been using automation, but they are increasingly turning to digital technology to not only enhance recovery but also produce economically.
Trends on the Global IIoT Landscape
There is a significant shift in global customer perception toward IIoT as the IIoT adoption is expected to drive efficiencies across the enterprise such as safety, security, sustainability and operational efficiency.
The key trends are:
- The convergence of operational technology (OT) and information technology (IT) is driving new business opportunities and unlocking previously unseen levels of efficiencies.
- Customers prefer to opt for long-term service contracts/outcomes-based instead of capital expenditure (CapEx) based.
- The complexity and the industry/segment specific challenges have necessitated the solution providers to develop asset and function specific apps to address user requirements.
- IIoT will help enable product life cycle through enabling services.
- 5G will become critical to accelerate adoption and efficient implementation of edge computing.
- Cross-industry collaborations will occur, and mergers and acquisitions (M&A) will become indispensable.
- There will be enhanced field force effectiveness through use of wearable devices such as augmented-reality systems.
Digitization, Digitalization & Digital Disruption
The process majors in the GCC are expected to spend money on IIoT adoption in order to enhance capital, asset and process efficiencies. The organizations are working on a focused digital transformation journey.
In the current scenario, the adoption of digitalization is focused on addressing the following:
- Shift from periodic inspection to real-time monitoring of assets or processes
- Better use of sensors and real-time data to enable life cycle cost savings
- Enhance energy efficiency and robust cyber security
- Emergence of “as a service model.” “As a service model” enables customers to pay only for the service they receive instead of upfront capital expenditure and other lifecycle costs. For example, instead of buying a compressor, customers are keen on opting for “air as a service”. This scenario is necessitated because customers prefer to focus on their core activities, reduce total expenditure and also ensure asset uptime for their critical assets. Even in scenarios wherein customers have an existing installed base, they are willing to work with solution providers on a subscription fee-based asset management model to enhance efficiency and critical asset uptime.
- Managing human capital and skills
However, the region is still evolving from the perspective of full-fledged adoption and implementation. The users are confused about different solutions or solution providers that are approaching them with ways to approach different challenges. The existing legacy systems and processes may not always be supportive of the new solutions, and the available budgets are highly targeted toward a specific real-world challenge. In addition, the end users prefer to deal with fewer suppliers to increase project execution consistency and flawless implementation.
Considering the above, there is a clear need for solution providers to offer industry-specific solutions and offer the possibility of co-creation with customers. In order to facilitate industry-specific solutions, the systems integrator ecosystem or focused application developer ecosystem is critical, and this has to evolve further in Middle East. The solution providers should adopt a consultative approach (understand the users’ technology maturity, their existing peripheral process and the spend threshold), and play a role of facilitators enabling futuristic planning and answering ROI questions. The above factors are crucial to accelerate the adoption of IIoT in the GCC region.