Predictive maintenance, operational and supply chain improvement, and enhanced customer experiences top the list of objectives driving nearly universal interest in the Industrial Internet of Things.
By Josh Bond
September 05, 2017
Thirty-one percent of manufacturers are implementing Internet of Things enhancements to their internal operations, with another 56% exploring doing so in order to cut operational costs, achieve supply-chain efficiencies and improve predictive maintenance capabilities.
These are among the findings of a new report from PwC and the Manufacturers Alliance for Productivity and Innovation (MAPI), Monetizing the Industrial Internet of Things (IIoT).
“I was surprised to see the amount of uptake in the use of IoT, with nearly 90% of companies exploring strategies,” said Bob McCutcheon, U.S. industrial products leader for PwC. “It was higher than expected, and it demonstrates that with new and emerging technology we often underestimate the speed at which things are adopted.”
The report explores how industrial manufacturers are leveraging the IIoT and the challenges they are encountering. Conducted from March to April 2017, this survey included responses from manufacturing executives, nearly two-thirds of which came from companies with annual revenues between $1 billion and $5 billion.
McCutcheon said the survey results reflected his observations during several plant tours in recent months. Having struggled for years to connect all the data in the operating environment – from process control technology to common technologies and sensors – manufacturers are now better able to capture and use data.
“Virtually all have some IoT on the plant floor, especially for preventative maintenance,” he said. “The ability to monitor equipment in real-time as well as over periods of time for large populations of machinery allows you to apply more advanced analytics. It’s clear now that with the cloud and more affordable sensors and data analytics, more and more companies taking up IoT in operating environment.”
In addition to IoT for internal operations, the survey also captured manufacturers’ development of IoT capabilities in their products and services. Nearly half (47%) of manufacturers currently offering IoT products and services are selling customer-managed IoT platforms (i.e., selling a bundling of product and IoT service, related data-gathering and analysis technology and software). Another 30% of manufacturers have gone beyond that, selling IoT product-as-a-service (the manufacturer remotely captures customer IoT data and sells data analytics and services, including alerts on performance and maintenance needs). Only 4% are selling fully integrated multi-sourced IoT platforms.
“To bring this concept to life, think about a connected car,” McCutcheon explained. “All the gauges and lights and indicators are specific to your car and only help you. If you took all of those to the cloud from every vehicle so the manufacturer could access data from all cars, it could also tailor feedback to each driver, for example by notifying them their brakes are likely to fail.”
The report also indicated IoT ROI is gathering steam. Nearly half of manufacturers say they are seeing returns, with 41% experiencing returns of up to 5% of their total revenue in 2016. Over the next five years, survey respondents expect to see an even greater return, with 42% expecting between 10-20% of their total revenue to be driven by IoT products and services. Four in five manufacturers are already pouring investments into IoT products and services development, and 40% of those companies have earmarked between 5-20% of their total research and development budget specifically for IoT.
Despite the industry’s overall receptiveness to deploying IoT, there remain several concerns. The report highlighted two that are especially noteworthy. The first is the issue of specialized talent; 26% of manufacturers have looked for additional talent resources through partnerships and acquisitions, and 25% purchased an IIoT platform to help with the product integration.
The most challenging part for manufacturers will not be integrating IoT, the report’s authors argued, but creating successful business models around the products and services. The next five years are expected to reveal major changes for the industry as more IoT products come online and data is better utilized.
About the author
Josh Bond is Senior Editor for Modern, and was formerly Modern’s lift truck columnist and associate editor. He has a degree in Journalism from Keene State College and has studied business management at Franklin Pierce University.