Redefining the Business Case for Industrial IoT
Industry 4.0 is rapidly transforming how businesses across the globe are operating in an ever increasingly commercially competitive landscape. According to the Industrial Internet of Things (IIoT) Market Size & Forecast Report, the global market is expected to be valued at USD 933.62 billion by 2025.
Whilst IIoT affects many industries, the manufacturing sector is an obvious beneficiary. The National Association of Manufacturers (NAM) states manufacturers contributed $2.38 trillion to the U.S. economy in the fourth quarter of 2018 and accounted for 11.4 percent of GDP. When talking about huge dollar figures like this, IIoT can clearly provide a major boost to the country’s economic competitiveness due to its ability to offset operational challenges such as labour costs and distance to markets.
For over five decades, industrial sensors and actuators have been instrumental in the evolution and automation of processes within heavy industries. Systems like SCADA (Supervisory Control And Data Acquisition), PLC (Programmable Logic Controller) and RTU (Remote Terminal Unit) have been in use since the 1960’s. DCS’s (Distributed Controls Systems) were introduced in the 1970’s to provide distributed control of production plants. The business case for Industry 4.0 was barely a consideration due to the limited capacity of the technology available at the time.
These systems generated massive amounts of time-series data. Data Historians became the tool of choice in the 1980’s, with systems such as OSIsoft PI having been the go-to tool for operations teams across many industries for decades now.
Throughout the start of this new millennium, the Internet has touched and transformed many consumer industries however the industrial transformation is still catching up. Production and operations continue to face even more pressure to improve performance. Competition is no longer ‘down the road’, it’s global. The need for higher uptime and availability is affecting all industries and the tension between operations and maintenance is now even more prevalent.
From my dealings with clients in North America and the Asia-Pacific, the value proposition of IIoT keeps pointing to Production and Operations teams. If these teams both understand their uptime and machine health through IIoT sensor use, they inevitably start looking into increasing their throughput by optimising the use of their existing assets, instead of incurring new capital expenses.
When we look at the impact that the Production and Operations teams have in industrial manufacturing and processing businesses, we start questioning ourselves “what other efficiencies can we create in a heavily process-oriented supply chain?”.
Some light manufacturing businesses such as food and beverage are building their business case aimed at reducing idle product stock and decreasing inventory and spare parts levels. Heavy asset businesses with strong zero harm policies look at the safety aspects of IIoT from the outset; by having IIoT sensors monitoring remote equipment, they reduce the need for long-travel distances and for accessing machines in hazardous locations.
If the recent Industrial IoT Platforms for Manufacturing 2019-2024 report is anything to go by, more industrial manufacturers will increase spending on their digital transformation journey. Spending on IIoT platforms is forecast to increase at a compound annual growth rate of 40% annually, and annual spending on the technology is estimated to be valued at more than US$12.4 billion by 2024. It may seem like a long time away, but it’s less than five years from now. More about New business opportunities using IIoT and analytics
IIoT is obviously not an out of the box solution that fits all industries and business cases, but recent market developments indicate a huge uptake of the technology in the very near future: the lower cost of remote condition monitoring sensors and platforms, the successful pilot projects deployed across the globe in different industries, and the realisation of its benefits among the established OT (operations technology) players.
When building your business case for an Industrial IoT solution ensure you have a holistic understanding of how the processes connect to one another, take a deep dive into the processes you’re looking at improving, make sure you know what the performance indicators and personal motivations of the teams are, pick one critical challenge to tackle, and above all, start small. Once you prove you created efficiencies (and potential cost savings) in a small part of the business, you already have a business case to build upon and scale your mission. Find out more about Industrial IoT platform market growth.
This article was written by Brad Parsons, the CEO and Founder of MOVUS, the developer and provider of FitMachine®, a continuous condition monitoring solution supporting industrial businesses across the globe in several industries, including heavy manufacturing, mining and minerals processing, food and beverage manufacturing, chemicals, rendering, and energy.