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IoT savvy is already translating into market success

Employing the Internet of Things in combination with data analytics and new thinking is winning the day.

We're no longer designing and running solutions that meet the requirements of internal and external customers that directly access our systems and information. This support needs to extend to external customers' customers as well. The Industrial Internet of Things is reshaping the way goods and services are delivered, dramatically shifting the relationship between companies and customers -- and the roles IT leaders need to play.

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That's the word from Tom Leeson, industry and marketing value strategist for manufacturing at OpenText, who has been involved in the manufacturing sector throughout his career. I recently had the opportunity to sit down with Leeson at the OpenText's recent Enterprise World conference, who pointed out that thanks to IoT and automation, manufacturers have no choice but to be digital. Manufacturing is the industry that collects the most amount of data on a daily basis."

The automotive industry is going to be an entirely different industry within the next few years, built on IoT networks, software, data and contract manufacturing, Leeson illustrates. "Electric vehicles mean a huge shift, creating new data challenges, with connected vehicles as part of the connected world. This is actually an exciting time to be in the industry."

For all manufacturers, the Industrial IoT means a rise in AI-assisted predicted maintenance, in which companies will sense when issues may occur with products in the field and proactively deliver software updates or send maintenance teams. "The next evolution of analytics will no longer be predictive, it will be prescriptive," Leeson points out. "We're not just going to predict maintenance, were going to avoid maintenance." As result, IT needs to be "100% operational to cope with the demands of the customer and deliver customer satisfaction."

As he put it: "If we can help our customer's customer, then our customer will trust us for life." The way this happens is data streaming in from the end-user product -- such as an elevator system -- is automatically analyzed for anomalies -- we';re more interested in the 1% than the other 99%," Leeson explains. "If they point heuristically to failure, you send the service engineers with the right part. When the service engineer arrives, they are wearing a body camera, and has access to the back office database, all the documentation, all the manuals, and previous training videos to make that service call." Companies who have these advanced capabilities "have the competitive advantage," he adds.

For manufacturers going forward, "the product is only 50% of the deal," he adds. With data flowing from sensors within products and locations, there is opportunity to provide value-added services to customers.

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A recent survey by McKinsey explored the opportunities companies are seeing as a result of IoT. Those companies achieving scale in IoT often did so not by entering unfamiliar territory -- such as a manufacturer becoming a software company, but by playing to their strengths. "IoT leaders, the group getting the most economic benefit from IoT, were nearly three times more likely to add IoT connectivity to existing products they sell than the laggards were," the McKinsey team, lead by Michael Chui, observe. "Conversely, laggards--those in the bottom quintile of economic returns--were significantly more likely to focus on developing new IoT products or services."

Chui and his co-authors cite examples of Industrial IoT in action:

  • Building an external customer platform. An agricultural-equipment manufacturer "shifted R&D investments to IoT-enabled products and services in existing lines of business" that used farm-based sensors to read soil conditions continuously and monitor irrigation levels, sending data to a cloud-based analytics platform. "As the manufacturer added users, the growing quality and breadth of data improved the predictive capabilities of the system, further increasing value to farmers who joined the ecosystem."
  • Building internal collaboration. A metals manufacturer connected three rolling mills with sensors in an IoT deployment to capture and analyze previously unused data from the machines. To promote adoption by frontline employees. the company modified a range of plant-floor processes, to "enable line operators to recognize immediately when bottlenecks in the process were forming," as well as encourage greater collaboration to solve problems. "This metals manufacturer learned that, in order to maximize IoT value, people have to behave differently, make decisions differently, and operate in a new normal of rapid information flow.."

IoT isn't something companies should attempt to go it alone, Chui and his co-authors caution. "Technical IoT ecosystems are growing -- and improving -- by the day. Collaboration, often with smaller players that have high levels of expertise in areas such as software development, will provide a solid source of competitive advantage. That will help companies accelerate their programs and better position themselves to become IoT leaders."

(Disclosure: I was a guest at OpenText Enterprise World, mentioned in this post.)