While news reports about the Internet of Things (IoT) tend to center on consumer applications, the Industrial Internet of Things (IIoT) is likely to be much more far-reaching. What is the Industrial Internet of Things and why is it poised to make a global impact?
The IIoT is likely to have a transformative impact on industries of all types, changing the foundation of competition, changing industry boundaries and providing opportunities for countless disruptive companies.
According to a recent report by the World Economic Forum, there are four key areas where the IIoT is likely to provide significant business opportunities:
- Significantly improved operational efficiency via remote management and predictive maintenance.
- A newly emerging outcome economy that relies on new software-based services, hardware innovations, and more visibility for products, customers, processes and partners
- Software platforms that create new connected ecosystems that blur the lines between industries.
- Increased collaboration between humans and machines that boost productivity to astonishingly high levels and deeper work experiences
As a result of this vast volume of data, the IIoT provides new insights that improve decision-making, flatten management, and provide for better outcomes across the supply and value chains.
The report recommends that the growing IIoT will take shape over four phases, two near-term and two long-term.
The first phase is operational efficiency, wherein the IIoT leads to better business processes. The results in this phase include better asset usage, operational cost reductions and improved worker productivity.
The second phase is new products and uses as companies begin to identify new markets and opportunities. Many of these are already emerging, including pay-per-use technologies, software-based services and monetizing data and analysis of that data.
The third phase is the outcome economy, wherein a platform-based marketplace leads to pay-per-outcome experiences and newly connected ecosystems.
The fourth phase, the report suggests, is an autonomous, pull economy, with end-to-end automation, continuous demand-sensing, resource optimization and waste reduction.
“Companies need to overcome some significant barriers, including a lack of visionary leadership and a lack of comprehension of the value of the industrial internet among C-level executives.”
Visionary leadership is needed
To capitalize on the emerging IIoT, companies need to overcome some significant barriers, including a lack of visionary leadership and a lack of comprehension of the value of the industrial internet among C-level executives. Additional challenges include a lack of proven, outcome-based business models in most industries and a rapidly changing technological landscape that leads to delays in investments by many companies.
In addition, embracing the IIoT requires a significant leap of faith to change a whole business strategy and business processes. Not to mention, these shifts likely come with a large investment in capital upfront.
Sensor costs remain high and there is an inadequate infrastructure in place in most companies.
A path forward
Despite the obstacles, there are clear steps that stakeholders can take, including
- Shifting business strategy towards the industrial internet
- Identifying the corporate ecosystems that should take the lead
- Finding pathfinder projects that are possible in the present
- Creating test-beds in which to create interoperability among business units and operations
- Share best practices
While the IIoT may seem far away, the companies that take bold steps are far more likely to reap the benefits. Those that delay are apt to be left behind.