The declining cost and size of sensors and communication technologies boosts the “Internet of Things” (IoT) by leaps and bounds. In 2017 Internet of Things (IoT) and Industrial Internet of Things(IIoT) forecast, Bain predicts that by 2020 annual revenues for the IoT vendors selling the hardware, software and comprehensive solutions would exceed $470B, while General Electric predicts investment in the Industrial Internet of Things (IIoT) to top $60 trillion by 2025. Leading to $13 trillion ROI by 2025.
To put these numbers in perspective, consider that $13.6 trillion was the estimated combined GDP of India and Japan during 2016 (Source: “Rank Order GDP,” CIA World Factbook.) If the Internet of Things were a country, it would likely be the fourth largest economy by 2025. These are mind-boggling figures, even by the conservative standards, the global IoT marketplace will generate more wealth than any technological “revolution” in history.
In 2014, Harvard Business School Professor Micheal Porter wrote about “How Smart, Connected Products Are Transforming Competition”. In it, Porter introduces the notion of smart, connected products as the bulk of IoT: These “smart, connected products”—made possible by vast improvements in processing power and device miniaturization and by the network benefits of ubiquitous wireless connectivity—have unleashed a new era of competition.
These connected products offer new types of opportunities for functionality, higher product utilization and capabilities that transcend traditional product boundaries – altering industry structure and nature of competition.
The new wave of Industrial Internet of Things (IIoT) will raise a fundamental question in many companies “What business am I in?” Connectivity and Intelligence enable an entirely new set of functionalities and capabilities, which can be further grouped into: monitoring, control, optimization, and autonomy.
Connected products enables manufacturers with comprehensive monitoring of a product’s usage, condition and external environment with the help of embedded devices like sensors along with other external data sources.
The connected products are a huge source of 2.5 quintillion bytes of data created every day, can help companies raise a new set of strategy related to how value is created and captured, how the enormous amount of new and sensitive data they generate can be utilized and managed, how relationships with traditional business partners be redefined by helping them improve their offering by tracking and analysis.
For example, if you manufacturing and selling heavy equipment that can break and subsequently need maintenance and servicing, you’ve struck gold. Now you can offer preventative maintenance services, monitoring services and value-added services that you previously couldn’t, creating entirely new business line.
Connected products can now be controlled through remote commands or algorithms built into the device or reside in the product cloud, these algorithms written as rules can direct the product to respond to specified changes in its condition or environment.
For example, in case of a liquid bulk third-party terminalling business, connected tanks can provide real time visibility into the functioning of the equipment’s – such as which tank is being heated or mixed or which pumps are being used to load or unload a truck or railcar. Now with connectivity and intelligence enabled the administrator can not only see real-time functioning of the pumps, mixers, but also the levels and the temperature of the tanks. The administrator can also take the external temperature from a weather station and use that to predict when a particular tank is going to reach a given set point, allowing them to shift activities accordingly.
The rich flow of monitoring data from connected products, coupled with the capacity to control various product functions, operations, can help companies to optimize product performance in numerous ways.
Continuing our earlier example, on a liquid bulk third-party terminalling business, the collected monitoring data can help the business “Learn” models for activities to schedule them so as to smoothen peak-demand graph (reducing electricity bill).
Also in case of a heavy equipment manufacturer, real-time monitoring of data on product condition can enable firms to optimize service by offering preventative maintenance when failure is imminent and accomplishing repairs remotely, thereby reducing product downtime and the need to dispatch repair personnel.
With monitoring, control and optimization capabilities combined together can help businesses achieve a previously unattainable level of autonomy. At the simplest level is autonomous product operation like, a tank that uses sensors and software to monitor the pressure, is able to learn about the environment, self-diagnose the optimize pressure required and turn the value on/off accordingly.
Autonomy not only reduces the need for operators but also improves safety in hazardous environmental conditions and facilitates operation from remote locations.
There’s still a lot we don’t know – which is both exciting and scary.
This article was written by Neha Garg, a Techno Marketing Leader at Great Software Laboratory (GS Lab), variously spending her time on research and new service development. The article was first published here.