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Special Feature
Part of a ZDNet Special Feature: Tech Budgets 2019: A CXO's Guide

Five ways IoT projects can power your 2019 IT budget planning

Discover the biggest business opportunities that the Internet of Things (IoT) can make in streamlining manufacturing, smart cities and more.

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Image: iStock/marchmeena29

The Internet of Things (IoT) is an essential part of enterprise IT infrastructure, so it's only natural to include IoT projects when planning budgets for 2019.

IoT is long past the hype stage; now it's time to implement projects, according to Richard Mark Soley, executive director of the Industrial Internet Consortium.

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"Companies that ignore industrial IoT today will be laggards, no question, and that means they have to budget at least a test project for 2019," he said.

The most effective way IoT projects will have an impact on 2019 IT budget planning is by demonstrating the needs they have the ability to address, whether it's solving business challenges, driving revenue, saving costs or most importantly, solving security issues, which is the number one reason companies leverage IoT platforms, said Diegane Dione, digital business integration senior manager for Accenture's Industry X.0 practice.

"While the size of IoT budgets vary by industry, IoT will be more sizeable in industries such as transportation and logistics, manufacturing and healthcare, given the asset intensive nature of these industries. For example, IoT can help reduce long periods of production downtime, especially in the case of those that leverage just-in-time manufacturing," Dione said.

Here are five reasons to include IoT projects in your budget.

1. Use IoT to streamline manufacturing

According to Mark Hung, Gartner research vice president for AI and IoT, industrial IoT is currently the largest market for commercial IoT deployments. The manufacturing sector is using IoT to streamline data gathering and analytics, and applying the learnings to improve asset performance management.

Optimizing manufacturing performance may be the poster child for IoT projects, according to Bill Schmarzo, CTO of IoT and analytics at Hitachi Vantara. This is because "there are so many high-value use cases, including optimizing manufacturing performance or yield, improving predictive maintenance, improving production execution, optimizing production capacity management, and reducing inventory, logistics and supply chain costs. In the near future, all factories will be smart factories that have mastered the art of capturing and mining all the manufacturing data to optimize the business and operational decisions necessary to support the economic and financial viability of the factory," he said.

IoT combined with other innovations like additive manufacturing and robots/cobots will have an impact. "Design, build, and support timescales need to become shorter, and these process must become more tightly integrated. Analytics plays a role here, but so do innovations like the digital twin. IoT creates the bridge between the physical machine and the digital world, which is made visible to developers, operational staff, and business leaders through the digital twin," said Paul Miller, senior analyst for Forester.

Having AI-driven technology solutions combined with IoT data can help manufacturers.

"We increasingly have flexibility to push this technology to the edge which enables real-time decision making. In many ways the biggest hurdles are basic connectivity of equipment on the factory floor. There are literally dozens of different equipment manufacturers, functions, interfaces, and protocols on a typical factory floor. Manufacturers often need experienced partners who can help negotiate these differences and then capture and normalize the data, deliver it to enterprise systems, and apply AI to make business decisions," said Stephan Biller, IBM vice president, Watson IoT.

Bob Nilsson, director of vertical solutions for Extreme Networks, said he thinks IoT will continue to have a big impact on manufacturing.

"Examples of IoT devices that are coming on board in manufacturing include IoT wrenches, robotics, autonomous vehicles, and new devices for inventory monitoring and tracking. These IoT devices bring with them new challenges in monitoring and tracking, as well as the potential for rogue devices to appear on the network," Nilsson said.

2. Use IoT for real-time analytics

"The volume and velocity of IoT data necessitates a new approach to data management and analytics. As a result, both real-time and traditional analytics will be required for IoT projects," said Gartner's Hung.

According to Forrester's Miller, "Analytics are a core component of the platform solution. In 2016, [Forrester Analyst] Michele Pelino described IoT analytics as an emerging category of functionality. Today, analytics, machine learning, and even some nascent use of artificial intelligence are more common and allow industrial firms to move on from simply monitoring the state of their connected machinery. Vendors must bake analytics, insight, and action deeply into their platform offerings to support predictive maintenance, machine-learning-powered workload optimization and scheduling, and more."

IBM's Biller said, "Connectivity is a foundational component of IoT. IoT is about connecting things and collecting data from assets and devices that can be combined with historical data found in systems of records. This data alone is only marginally interesting. Things get much more interesting when you combine this data with an AI engine and use these insights to make decisions in real-time. In many industries improving the quality and velocity of decision making can lead to huge savings. For example, an LCD manufacturer that can use AI-powered visual defect detection can not only spot defects fast, but also take action immediately based on prescriptive insights from real-time analytics. This can lead to millions of dollars in savings from lost productivity, scrap, and rework."

Susanne Seitinger, global market segment manager for Signify (formerly Philips Lighting) said, "The more connected devices you have on a network, the more data you have available, the more insights are hiding in your data pools. The key to generating value from your IoT projects is the ability to apply precise analytics that sift through the data to uncover actionable insights. The quicker and easier this process takes place, the better you are positioned to make well-informed decisions that will translate into tangible business outcomes."

3. Use IoT to improve Business Process Automation (BPA)

In transportation and logistics, insights gleaned from IoT will have a positive impact on business process automation, said Gartner's Hung.

Cheryl Ajluni, IoT solutions lead at Keysight Technologies, said, "IoT is possibly the key enabling technology for business process automation (BPA) and in fact, BPA may be the most significant driver for the deployment of IoT. Today, there are even BPA solutions enabled by IoT. According to a recent customer survey by Vitria, that is exactly what a lot of the organizations are already doing. The executives across the enterprise, consumer and industrial sectors see massive opportunity with real-time big data analytics to drive business outcomes for their IoT initiatives. In fact, 48 percent of the companies surveyed are already actively working on a real-time analytics project for the IoT. IoT analytics is seen as a core investment strategy and predictive maintenance is the leading business need for these organizations."

Using automation to optimize operations allows a company to act faster. Being able to act quickly is "becoming doubly important as knowledge silos and an aging workforce make it hard for many industrial companies to optimize operations. By linking IoT, AI, and business process automation many clients are becoming more adaptive," IBM's Biller said.

Sue Rutherford, vice president of marketing for ORBCOMM, said, "Satellite IoT is particularly beneficial for those businesses that operate in remote, difficult-to-reach areas where having field personnel around the clock isn't an option. A great example is the oil and gas industry. Satellite IoT enables operators to remotely monitor sites and ensure the continuous operation of critical equipment without human intervention. Today, IoT solutions are used around the world to monitor pipelines for corrosion and vandalism, collect readings from remote equipment such as meters, and monitor the status of industrial equipment such as pumps and compressors."

4. Use IoT to impact asset performance

Another big area impacted by IoT projects is asset performance, according to Biller.

"IoT along with AI is revolutionizing how firms balance asset maintenance costs, availability, and risk. This is enabling virtually any asset-intensive industry -- industries like oil and gas, utilities, manufacturing, etcetera -- the maximize asset performance. The savings can be huge. For example, according to McKinsey, asset management at a transmission and distribution utility can be 20-30 percent of operating expenses and 15-20 percent of capital expenditures," he said.

The most prevalent use case for manufacturing is asset management, according to Ari Weil, vice president of product marketing for Akamai. "By utilizing IoT data, businesses can better predict when machines need maintenance or how adjustments will impact the production run. Managing asset maintenance, dynamically adjusting production runs, reporting for compliance can be automated and reduce downtime, improve product delivery timelines and reduce operational costs."

5. Use IoT in smart cities and smart buildings

IoT is also an essential part of smart cities and smart buildings. Smart cities leverage IoT to connect and unify city infrastructures across agencies.This provides real-time visibility into city operations. Making sure that IoT is included in budgets for 2019 is essential for cities.

IoT systems within a smart city include better regulation of traffic, improved public safety systems such as smart surveillance and emergency response system and more efficient public transportation, said Allen Salmasi, CEO of Veea.

"Edge computing will play a large role in enabling smart city IoT projects, as these projects demand increasingly more bandwidth, lower latencies, while connecting to more sources of data. As a result, it will become increasingly important for data to be collected and processed at the edge. Smart buildings will also be an area where IoT will have a large impact. Smart buildings are more efficient, give more control to building owners and operators and provide a better experience for occupants. Connected sensors, devices and systems allow for real-time monitoring as well as control and automation of building infrastructure," Salmasi said.

Additional benefits of IoT

Cost reduction, asset optimization and employee productivity need considering, along with the benefits to be realized as part of an IoT project. For external-facing IoT projects, customer retention and engagement is a strong focus, said Gartner's Hung.

It's easy to convince an IT department to add IoT. "Clients are intensely interested in projects that can save money across the enterprise. So if you can save an hour a day of production downtime it becomes a very easy sell for IT to invest," noted IBM's Biller.

Why it's essential to include IoT in budget planning

"During this business cycle, it's important for IT to engage with their business partners to determine the top issues that they'd like to address for the next year. IoT will often be part of the solution to those issues, and it is important for enterprises to at least explore the capabilities of IoT through focused trials and POCs [proof of concept]," Hung said.

If a company doesn't invest in IoT, said Hitachi Vantara's Schmarzo, "at a minimum, these organizations will miss out on learning how to manage real-time sensor and device data and the associated streaming analytics. IT organizations need to start building some muscle in learning how to manage the flood of real-time data, and gaining experience in building analytics at the edge in order to determine which data is most valuable based upon the organization's key business and operational use cases."

Schmarzo added that, on a broader scale, companies that don't act on these new sources of customer, product, service and operational insights put their business models at risk to those that are mastering or already have mastered these new capabilities: "In the end, it's about identifying and capturing these new sources of customer, operational and market value more quickly than your competition. This is one race where you don't want to finish second."

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