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Industrial IoT adoption is challenging, but manufacturers are paving the way

KristenReyes

Wmr.jpgritten by Matthias Roese, HPE Domain Executive – Technology enabled Business Models

The Industrial Internet of Things (IIoT)—also known as Industry 4.0—is about more than just increasing efficiency and flexibility of production, according to a survey of 200 delegates at the Industry of Things World conference in Berlin. Industrial IoT is also about advancing production processes, introducing new forms of cooperation in the supply chain, and delivering innovative ways of commercializing products and services.

But successful transformation also requires cultural change, which can be particularly difficult in established companies. When asked about the biggest obstacles for adopting IIoT, 40% of respondents named their company’s culture. Corporate culture among their customers was also cited as a barrier by 30% of respondents.

Industrial IoT adoption on the rise

Industrial IoT is about closing the gap between operational technology (OT) and information technology (IT) in order to digitally integrate manufacturing processes both within and between factories. Yet this is a key challenge today, with 38% naming missing standards and 28% citing lack of technologies/solutions as the primary stumbling blocks of Industrial IoT adoption. 

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However, there is some good news: Manufacturers seem ready to solve these problems. We asked respondents which Industrial IoT approach they have implemented or plan to implement within the next six months. To assess their IIoT maturity level, we used the three Industry 4.0 components as defined by the German Plattform Industrie 4.0: vertical integration inside the enterprise, lifecycle management of products, and horizontal integration along the value chain.

At present, most manufacturers’ main concern is with vertical integration (63%), which helps increase the efficiency and flexibility of production. It’s also a prerequisite for lifecycle integration and horizontal integration.

Nearly half of manufacturers surveyed are also strongly engaged with lifecycle management, which digitally manages all manufacturing stages. These stages include market analysis, development, operation, and maintenance, as well as continuous improvement.
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Horizontal integration, a shift from value chains to value networks—propelled by digital platforms—is the least advanced approach (38%). In some consumer industries, the classic linear supply chain has been shaken up by platforms such as the Apple App Store, Amazon, and Google.

The same will happen over time in the manufacturing sector, and will require manufacturers to achieve a high level of vertical integration and lifecycle management.  Horizontal integration will lead to a structural change of the industry as manufacturers’ roles in the ecosystem are redefined.

Creating a sustainable business model with Industry 4.0

Industry 4.0 is not about achieving a few percentage points of efficiency, but about the sustainability of a company's business model. Survey results at Industry of Things World indicate that manufacturing companies understand that.

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While 58% respondents aim to increase efficiency with the help of Industrial IoT, almost half are developing new service offerings for their customers, and nearly a third are developing new business models.

Similarly, while 53% of respondents still apply the traditional ROI-based multi-year investment approach to Industrial IoT, a considerable portion are already using modern approaches like lean start-up (34%), incubation strategy (31%), and minimal viable product (23%).

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Open standards are the future

Finally, let’s take a closer look at how manufacturers think about the evolving Industrial IoT platforms that will shape the industry.

Asked which governance and model of Industrial IoT platforms they favor, only 10% of those surveyed believe closed platforms with proprietary standards are a good idea. In contrast, more than half voted for open platforms with open standards. They also favor an association of OT and IT firms to govern that platform, rather than one single firm, non-profit, or government agency. The key takeaway: The Apple App Store is not a role model for manufacturing.
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These results reflect one of our core tenets that the evolving industrial digital ecosystems will only thrive when open. Openness fosters innovation, enables choice and cooperation, and fuels growth, which is why it was a key design principle when HPE designed digital platforms like Cloud28+ and Virtual Fort Knox.

Learn more about Industrial IoT adoption in this HPE IoT blog post: “6 lessons learned in Industrial IoT.

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Attending Industry of Things World in San Diego February 20-21? Hewlett Packard Enterprise is a Diamond Sponsor!  Volkhard Bregulla will be hosting a keynote on Day 1  at 9:40am ,and I will be leading a streaming session  (STREAM 1 - BUSINESS MODEL GENERATION: MODERATOR)  at 10:10am.  Be sure to visit us and engage in a deeper discussion about IoT.  For the full agenda, click here. I look forward to seeing you soon.

 

Matthias Roese is an IoT mr.jpgStrategist at Hewlett Packard Enterprise.
Follow him on Twitter at @thedigital_7

 

 

 

 

 

 

Related links:

Follow @HPE_IoT on Twitter

Blog: 5 challenges of Industrial IoT

Blog: Exploring the four stages of an Industrial IoT solution

Blog: 6 lessons learned in Industrial IoT

Blog: 3 ways Industry 4.0 is disrupting manufacturing

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KristenReyes

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