John Deere doesn’t sell just tractors and other heavy-duty vehicles any more. Buyers of its equipment can also become the beneficiaries of a stream of useful information – fuel consumption, performance, the need for repairs and maintenance, and even the weather, all of which are extremely helpful for farmers.
How does John Deere do this? The answer is a genuinely transformational development dubbed the Internet of Things (IoT) or, in the case of John Deere, the Industrial Internet of Things (IIoT) that is based on data-hungry sensors and a host of other lightweight and increasingly low-cost devices. Proliferating rapidly as their virtues are recognised, these devices gather data that customers can use and then send out as a personalised stream of information that ultimately transfers into things that makes customers grateful. It hardly needs saying that services such as this breed loyalty to brands as well as adding extra streams of revenue.
As the IoT proves its worth, the bigger manufacturers are adopting it wholesale. ABB, the power and automation giant, makes industrial robots that are used for everything from mass-producing cars to much more discrete products.
But rather than just selling and installing these intelligent machines, ABB tracks their health on a real-time basis in a way that allows it to offer additional services such as remote monitoring, preventive maintenance, and software patching if things go wrong.
Studies by SAP, Accenture and other consultants show that the IoT will be the catalyst for opportunities estimated to be worth $14.2trn in extra revenues by 2020. Essentially, the phenomenon of the IoT will create a more intelligent workplace that enables companies to devise new and better products and services. In concrete terms, all this will happen because the plethora of data-rich devices will do much of the thinking on behalf of increasingly skilled workforces that can digest and interpret the data to the company’s benefit. Among the benefits claimed – and already proved – for the IIoT are:
- Seamless and productive communication between devices that monitor the manufacturing process;
- Lower incidence of failures in manufacturing because machines will develop fewer defects;
- Lower operating costs because efficiency is improved through, among other things, reduced downtime with faulty equipment;
- Higher productivity because machines are smarter and have a better idea of what’s required of them;
- Shorter, more customised and automated production runs;
- Improved customer interaction through the increased use of more interactive interfaces;
- Employee-friendly gains such as fewer accidents and more interesting work;
- Higher security in plants as locks on doors and windows are equipped with sensors and camera systems that alert managers the moment an intruder attempts to gain entry.
Industrial Revolution 2.0
Following the lead of the first manufacturers off the blocks, companies such as Germany’s Bosch, General Electric (GE) and US-based power solutions group Johnson Controls are all working on systems where machines automatically predict failure and trigger maintenance, without the necessity of human intervention and costly disruption to production. Toyota reports it is saving more than $500,000 a year at its Alabama plant through a similar system to Bosch, GE and Johnson Controls.
Automotive giant General Motors has introduced a common network architecture across its plants that enables just one team of troubleshooters to deal with engineering problems around the world, with gratifying results to the bottom line. GM says the system has slashed network downtime by around 70 percent. Little wonder then that an observer such as Megan Anderle, Editor at Dell’s Tech Page One site, said: “IoT-connected devices used in business settings are just beginning to catch on in a change akin to the Industrial Revolution.”
We are miles away from reaching a tipping point with the Internet of Things. In fact, we are barely scratching the surface of its potential
But while all this is good for industry, the biggest beneficiary will be customers and client, which is why software designers are working backwards from the perceived needs of end-users rather than forward from a set of instructions given by office-bound managers. Thus, automobile manufacturers are already installing hundreds of sensors in their latest models and collecting information that can be used in everything from customer service to product design in a shining example of mutually beneficial collaboration. And it’s why insurance firms offer a service known as telematics – an interdisciplinary development that pulls together telecommunications, electrical engineering such as sensors, and vehicular technologies – that monitors how well their clients drive. If they prove themselves to be safe behind the wheel, lower-priced policies will be their reward, and of course vice versa. Bus and van drivers will also become the beneficiaries (or victims) of telematics, according to the level of their skills. In the hyperconnected world, there will be no escape from the truth.
Business model transformation
As heavy industry exploits the opportunities of the IIoT to transform the customer experience, other companies are using the IoT to transform themselves. For instance, sportswear giant Nike’s intelligent wearable devices that monitor physical activity are turning the company into a digital fitness advisor that absorbs the information provided by satellite-linked watches and repackages it into programmes that make athletes fitter and faster.
ISAP brings together the sharing economy, algorithmic economy, networked economy and the idea of IoT to better serve customers and innovate new business models. By connecting businesses to this reimagined digital core, companies can create a platform for resource optimisation and future business innovation and enable a fluid, nimble, real-time digital business.
Although big companies have the resources – and incentives – to invest in IoT, this particular revolution is not confined to global giants by any means. A study by McKinsey shows that smaller companies (as well as emerging economies) can harness hyper-connectivity to their considerable profit.
Concludes McKInsey: “Globalisation has become a reality for smaller niche producers in a way that would have been difficult even a decade ago.”
Smarter and smarter
The race is on to render the new wave of data-capturing tools – the sensors, beacons and other smart devices – even more powerful and effective. As SAP’s David Newman pointed out: “The IoT makes the capturing and interpretation of raw data more effective [but] the quality of the insights generated from it depend on how relevant that captured data is. To gain better and more accurate insights, sensors or endpoints need to be more intelligent.” In short, the data must be made so relevant that its value can be quickly spotted and turned to good use.
Newman believes that an emerging technology known as software-defined infrastructure (SDI) could be the answer. An exciting development, SDI is being developed by, among others, chip manufacturer Intel. It aims to put machinery or other equipment under the control of software with no operator or human intervention. The main point, say its supporters, is that SDI allows the production of bespoke data of specific benefit to the entity using it.
With SDI and other IoT developments happening on the sidelines of the manufacturing and service industries, we’ve still got a long way to go. “We are miles away from reaching a tipping point with the IoT”, said Newman. “In fact, we are barely scratching the surface of its potential.”
At the moment the big investors in the IoT and the capture of big data for commercial ends are those sectors for whom the benefits are more obvious. As technology consultant Gartner pointed out in a recent global report, the pioneers are media and communications, banking, and services. But others are catching the train – transportation, health and insurance are also early adopters.
And how is that money being invested? According to Gartner’s survey, it’s on efficiencies that are linked to customer experience. But some organisations are engaging in more of what the consultant termed “game-changing” activities such as developing new products and business models; SAP, as we have seen, is a leader in this regard. Indeed, nearly a quarter of those surveyed have got so good at it that they are monetising the data directly. “This is encouraging, as Gartner believes that the big opportunities lie mostly in these areas.”
With all this happening, people such as David G Simmons, an executive at Psi- Kick, a manufacturer of ultralow-power sensors, are no longer seen as wild-eyed visionaries when claiming: “The Internet of Things will fundamentally change a lot of how we do things, at the same scale as the world wide web transformed the workplace in the nineties.”
Part of the series: Our Digital Planet: Data-Driven Business Frameworks Are the Future. In a Hyperconnected World, the Collaborator Is King
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