Leverage The Internet Of Things

Tanja Rueckert

Part 2 of the “Manufacturing Value from IoT” series

In my last blog, I talked about the main challenge manufacturers face today, and how they can identify and implement IoT opportunities and technologies, respectively, in their organizations. Here, I will talk about how the manufacturing IoT innovators are overcoming the industry-wide challenge.

The Internet of Things (IoT) has rapidly evolved from hype to reality, emerging as a key driver for performance improvement and competitive advantage along with analytics, machine learning, and artificial intelligence. According to Gartner, the number of connected things will hit 6.4 billion this year and will total 20.8 billion by 2020.

That’s exciting news — if your company is one the few leading the IoT charge.

Unfortunately, many manufacturers are still on the IoT sidelines. According to The MPI Group, about a quarter of manufacturers — “IoT indifferents” — have no company-wide understanding of how to apply the IoT to their business.

Another 43% — “IoT incipients” — are stuck at the starting gate. Although intrigued by the profit potential of the IoT, these manufacturers have limited company-wide understanding of the IoT, and risk missing their IoT potential through lack of planning and investment.

Who’s winning the race? “IoT Innovators” — about 33% of manufacturers —  are taking big strides toward their digital futures:

  • 71% have a strategy to apply the IoT to their processes (vs. 16% of incipients and 11% of indifferents)
  • 67% have a strategy to develop smart products with embedded intelligence (vs. 17% of incipients and 11% of indifferents).

Applying IoTSource: “Catch Up with IoT Leaders,” SAP, 2017.

 

It’s hard to overstate the importance of strategy: Innovators (those guys with the plans) have already incorporated smart devices and embedded intelligence into 44% (average) of their production processes, versus just 27% of incipients and 18% of indifferents.

Why? Because IoT innovators consistently embrace a wider range of opportunities for connected intelligence within their enterprises. They’re also far more likely to leverage the IoT to achieve performance-improvement objectives, including product quality, speed of operations, manufacturing costs, equipment reliability, and access to information for business analytics.

These leaders also anticipate bigger things from the IoT: A full 43% of Innovators expect that the application of the IoT to plants and processes will increase their profitability by more than 5% over the next five years. Only 18% of incipients and 9% of indifferents expect the same returns.

The IoT race has already begun. Will your company be an innovator — or indifferent?

Stay tuned for more on how your company can excel at IoT transformation. In the meantime, download the report “Catch Up with IoT Leaders” to learn more about what it takes to be an IoT innovator.


Tanja Rueckert

About Tanja Rueckert

Tanja Rueckert is President of the Internet of Things and Digital Supply Chain Business Unit at SAP. This year she was voted by IoT Breakthrough as IoT CEO of the Year.