Connected products create new opportunities for manufacturing companies to bond themselves with their customers, says Gartner analyst, Eric Goodness.
In a recent interview with DXJournal.co, Goodness talked about how the combination of IoT and manufacturing is helping manufacturing companies transform their processes and take advantage of new revenue streams.
DXJ: What are three digital transformation trends you’ve seen in manufacturing?
EG: The three digital trends that we’re seeing in manufacturing [include]:
-Looking at applying IoT to operations to drive out inefficiencies and to improve asset performance
-Applying IoT to the supply chain, again, to drive out cost inefficiencies and to gain more visibility there
-the biggest trend, without a doubt, and where most of the revenue that we’re seeing being spent — rather than languishing in cycles of indecision — is the creation of connected products.
If you look at how manufacturers are looking at bringing connected white goods, connected industrial infrastructure, connected commercial infrastructure, connected consumer products that is by far the biggest use of IoT as an extension of the digital business technology platform that’s happening out in the marketplace.
DX Journal: Is the use of connected products where IoT technologies are creating the most impact within larger manufacturing companies?
EG: Today, it is creating the largest impact as it provides [large manufacturing companies] a new way to bond themselves with their customers, to help those customers better monitor and manage those big industrial assets that they’re acquiring from the manufacturer.
Related: Stepping into Digital with IOT – 14 Cases
And it also helps the manufacturers create a premium revenue stream from their ability to remotely monitor, manage and create performance-based service-level agreement (SLAs) with their industrial customer base that are buying those assets.
Service-based revenue is going to be far more profitable than actually selling the capital asset. It’s the creation of these connected products where we’re seeing manufacturers actually sell some industrial assets at cost or at a slight loss in favour of these performance-based long term contracts, with the maintenance and support of those assets that they’re selling.
DX Journal: Are there any areas within manufacturing companies that are easier than others to implement IoT?
EG: The real bifurcation that we’ve seen in the marketplace is simply those environments behind the four walls of the factory that are security instrumented and where there is significant safety of life concerns, or where there is significant intellectual property at risk from external breaches. An environment where those concerns are less so, we are seeing IoT slowly make it to the factory floor.
[Download] Stepping into Digital with IOT – 14 Cases
There are initiatives such as analytics of production lines or plants where they analyze cold data in the cloud or within the corporate data lake to find inefficiencies in production or applying an optical-visual inspection on a production line to drive out errors. But in process manufacturing where there’s hazardous chemicals or other safety of life issues it’s going to take a long time before IoT makes it within the four walls of [those] factories.
DX Journal: What are some ways that large manufacturing companies have been keeping up with emerging technologies?
EG: We’re finally starting to have the conversations where the operational technology (OT) side and the IT side of the manufacturer are coming together. We’re seeing more investments in centres of excellence that have representatives from operations and engineering as well as the CIO part of organization, and sometimes even from the product side that reports within the CTO of a manufacturer.
Inside of organizations, we’re starting to see these multi-business unit, multi-stakeholder centres of excellence work to identify short lists of relevant vendors. It’s a slow slog for these organizations to come to agreement, but it’s very encouraging to see these organizations work together.
DX Journal: Is it possible to predict what the next five years will look like in the manufacturing industry?
EG: Over the next five years, we’re going to see a lot of IoT manufacturing convection currents. IoT is going to be subsumed into other recognizable services that vendors offer to their manufacturing clients. For example, vendors are going to be increasingly introducing their own platforms to provide manufacturers with fully-formed OT and IoT solutions. Traditional OT players, like GE, ABB, Honeywell, and Rockwell, are looking to present their own IoT platforms, alongside their legacy conjunction control and automation capabilities. While players like SAP, Microsoft, and Oracle are leveraging their IoT platforms with their manufacturing execution systems, asset performance management systems, or enterprise performance management applications.
[Download] Stepping into Digital with IOT – 14 Cases
We believe that IoT is going to become an embedded capability of all legacy platforms in platform-as-a-service and integration capabilities. There is going to still be a sector of the market where you see smaller niche IoT specific companies, but if you consider yourself an SAP, Microsoft or GE, why wouldn’t you at least consider participating in a closed ecosystem of value that has a natural and virtuous integration path to make it easier to deploy IoT to your business problem.
This interview has been edited for length and clarity.
