Building the IIoT: The next industrial revolution

Building the IIoT: The next industrial revolution

Industrial Internet of Things with SiliconANGLE

The economic potential of the Industrial Internet of Things (IIoT) is simply too massive for enterprises to ignore. Accenture LLP says it could add as much as $14 trillion to the world’s economy by 2030, as long as businesses and governments make the necessary investments to build out enabling factors like broadband networks and skills.

Accenture describes the Industrial Internet of Things as a “network of physical objects, systems, platforms and applications that contain embedded technology to communicate and share intelligence with each other, the external environment and with people” in a business setting. It believes that connected devices, combined with Big Data, will generate entirely new lines of business for industrial companies.

But there’s work to do first. In a survey of more than 1,400 business leaders, the consulting firm found that just 36 percent have a full understanding of the Industrial Internet of Things’s implications, and a mere seven percent have developed a comprehensive strategy with investments to match. Those who do put plans in place today stand to reap the benefits of what the report calls the “outcome economy.”

 

The ‘outcome economy’

 

The outcome economy is based on selling outputs rather than inputs. Like service level agreements, outcomes guarantee results, giving the customer peace of mind in exchange for a higher price. Industries that could never before promise outcomes because of the inherent uncertainty of processes and equipment will now have the means to do so because they can know exactly what’s going on in the field.

However, few businesses have worked out ideas for creating new value-added services and revenue streams from the Industrial Internet, Accenture says. They see immediate benefits in lower costs and improved quality, but the vast volumes of data generated by sensors can also be used to offer tailored outcomes that have much higher value for customers.

James Heppelmann, CEO of software company PTC, explained in a recent interview with McKinsey & Company how connected products can help companies become more proactive and efficient. Connected products come with three crucial benefits: the ability to service those products better by monitoring their status; the ability to operate those products better; and most importantly, the ability to improve those products.

“You can add feedback loops into the engineering and design processes to understand if the customers use the product like you thought they would,” said Heppelmann. “I think that this will have a transformative effect on the way things are created, operated, and serviced. And a tremendous amount of efficiency and differentiation and value will be created as a result.”

The Accenture study illustrates how this would work in the real world, citing the agricultural sector as an example. Businesses in the sector will be able to go beyond simply selling products to providing a service that offers guaranteed yields for specific crops in different locations through analysis of geo-location, diagnostics, crop, fertilizer, weather and other data. Meanwhile, in the aviation industry, engine manufacturers can generate new revenue streams by carrying out real-time monitoring of engine performance during flight to pre-empt maintainance problems, improve fuel efficiency and avoid travel delays.

Robots and humans, better together?

 

Seven of NineThe workforce will also undergo a dramatic evolution as the Industrial Internet emerges. While some menial jobs will become automated, Accenture believes the Industrial Internet will actually lead to the creation of new jobs, driving the world toward a blended workforce where machines empower humans to make better decisions rather than competing with them. This combination will deliver outcomes that neither could achieve alone and generate jobs in new lines of business that the IIoT creates.

“Amazon now operates one of the world’s largest fleets of industrial robots in its warehouses, where humans and robots work side-by-side, capable of fulfilling orders up to 70% faster than a non-automated warehouse,” the study notes.

Even more beneficial perhaps, is that the Industrial Internet will allow workers to do more. Routine tasks can be automated, allowing workers to engage in more interesting and more rewarding work. Accenture cites a proof-of-concept demonstration involving a Google Glass head-mounted display that improves the effectiveness of surgical procedures. The theory is that this hands-free access to data can be applied to numerous other industries too, such as utilities, allowing field engineers to repair unfamiliar equipment more easily than is possible today.

These advances won’t just relieve workers’ boredom, but also help them to become more productive. Workers will be freed from performing menial tasks and given more time to produce customized products and services. The shift from mass production to tailored outcomes will generate new revenue streams while creating new demand for human talent.

Smoothing a path for the Industrial Internet

 

The Industrial Internet makes some tantalizing promises, but organizations will need to make a serious effort to realize them. A recent report by National Instruments Corp., which builds automated test equipment and virtual instrumentation software for the Industrial Internet, identified a number of key challenges that organizations and technology providers must address if they’re to reap any benefits.

The most daunting of these is the challenge of building out networks to cope with the influx of new connected devices. It’s not just that bandwidth requirements will increase; the Industrial Internet demands better latency and determinism as well. “When dealing with precision machines that can fail if timing is off by a millisecond, adhering to strict requirements becomes pivotal to the health and safety of the machine operators, the machines and the business,” notes National Instruments’ report.

Organizations will also need to change the way they design and augment their industrial systems, says National Instruments. The traditional design and augmentation of industrial systems tends to go one of two ways: either you add functionality by tacking on vendor-defined black boxes, or you design a proprietary or custom end-to-end solution. Neither solution is conducive to the Industrial Internet, so organizations will need to build new systems that are adaptive and scalable through software or added functionality that integrates with the overall solution, says the report.

The National Instruments report also points to the challenge posed by security. Rick Bullotta, Chief Technology Officer at ThingWorx, an application platform for the Internet of Things, told SiliconANGLE that Industrial Internet security should be treated as its own distinct area, separate from desktop, mobile and server security systems. In addition, he stressed that organizations need to be aware of how different devices interact on their networks, and to adapt network monitoring and intrusion prevention/detection systems to take into account each different kind of device. “A formal risk process for risk assessment and mitigation should be a key element of any IoT deployment, as well as an ongoing operation,” Bullotta said.

Finally, NI warns that organizations must be prepared to make a massive investment in the development and deployment of Industrial Internet systems. It’s not enough to just consider today’s or even the immediate future’s needs – organizations must be able to adapt to changing circumstances over time, which means building open, integrated hardware and software solutions together with a real-time network that can scale with new technologies. “The only way to meet the needs of today and tomorrow is not by predicting the future but by deploying a network of systems flexible enough to evolve and adapt,” the report says.

Putting the foundations in place

 

Industrial Internet1But Accenture warns that these efforts will be fruitless if governments fail to invest in the “enabling factors” it says are required to accelerate the IIoT. The technology behind the IIoT must be combined with a number of broader social, economic and political factors if nations are to make the most of their productive and innovative potential, says Accenture.

The problem for organizations is these factors are complex, often indirect and not always under the control of the private sector. Governments will need to make an even bigger investment in digital infrastructure if they’re to faciliate the IIoT, as its success is heavily dependent on the presence of robust infrastructures, such as ubiquitous broadband connectivity and sensors. It’s a point that even less developed nations would do well to take note, as the IIoT could effectively help them to “catch up” with more advanced countries.

“Through targeted investment, emerging markets will have a unique opportunity to
potentially leapfrog developed countries in the Industrial Internet infrastructure,” notes Accenture’s report. “As these countries continue large construction efforts like roads, airports, factories and high-density buildings, they can avoid costly retrofitting faced by developed countries by installing state-of-the-art embedded sensors from the outset.”

But infrastructure is not the only enabling factor required to make the IIoT ‘work’. Policy makers will also need to do their bit, clarifying and simplifying data policies so global companies will be able to work within clear legal guidelines over data ownership, transfer and usage. Meanwhile, industry regulations will need to be updated and relaxed in some of the most heavily regulated industries, such as healthcare and utilities, “to provide more flexibility and incentives for companies to invest and innovate,” notes the report.

Technology has tended to disrupt industries in the past, but the IIoT will present the opportunity for many existing industries to deliver greater value to their customers and create new lines of business. Victory will go to those that start now.

photo credits: Squiggle via photopin cc; Seven of Nine via Wikipedia; Futurilla via photopin cc