How can industrial companies transform their operations with IoT? To find out status as well as future opportunities, we gathered Forrester analyst Paul Miller, Microsoft’s Director of Business Development Ola Reppling, and Cognizant’s manufacturing expert Andreas Rosengren for a manufacturing event in Stockholm. One thing is clear: to gain the real benefits, you need to think bigger than just sticking sensors on your machines.
Do you really think you will own your next washing machine? Quite likely, it will be offered to you as a service, where automatic suggestions – the optimal amount of washing powder, the ultimate time to wash during the day, or what program that will save most water – will help you optimize your usage of it. The same setup will probably apply to your car or to any other complex product you used to purchase.
Optimizing production not enough
Why is this? Because no matter how successful a product historically has been, it’s just not enough anymore on the competitive global arena. As a response to market volatility, changing customer expectations, increased internal pressure to streamline operations and cut costs, most manufacturing companies consequently move from only building products, to developing and delivering new business models around the products. Here, IoT can play a major role.
It’s not surprising then that the interest in IoT is high; within industrial products, 45% are already implementing or expanding IoT while 22% are planning it within a year, according to Forrester Internet of Things Heat Map 2018. In industrial products, there’s a specific interest for improving manufacturing’s core processes like asset management, predictive maintenance, and supply chain management. And the Nordic countries are well-positioned when it comes to IoT; we are the most advanced region in terms of IoT adoption.
New value through data
So, how can IoT contribute in the industrial sector? In short, industrial IoT delivers value by using data in three different ways: asset monitoring and control (like a pharma company that uses IoT to track ingredients), prediction and action (like a train operator that uses IoT for preventive maintenance), and to power new business models (like another train company that offers trains-as-a-service and only gets paid if the trains run on time).
However, IoT initiatives are surrounded by challenges: older industrial machines weren’t designed for being integrated in a neutral environment, and quite often no one knows exactly what assets they have in the plant. Culture, competence, organizational structure, infrastructure, and digital adoption are all main challenges that need to be addressed to succeed.
IoT as an enabler
Early IoT projects naturally tend to focus on instrumenting existing workflows – but the real opportunity is about using IoT to create new business. This approach, where IoT is a tactic rather than a destination, allows IoT data and solutions to change the whole nature of what you’re selling – like with the washing machine-as-a-service. It requires that you bridge information technology, operational technology and business. It also requires strong leadership, scaling-up capabilities, and a supportive ecosystem of partners.
How to accomplish all that? This is something we’ll dive into in a series of coming blogposts. Meanwhile, we urge you to sign up for our next Snapshot Breakfast on the 20th Sep, where you’ll meet Martin Sköld, Scania Associate Professor at the Stockholm School of Economics, and Pranav Chandra, Digital Strategist at Stora Enso.