The Internet of Things is undoubtedly flavour of the month, but taking your project from initial concept to successful completion isn't straightforward and requires careful planning. Helen Saunders offers five key steps companies should take to minimise the risks to their projects.
The Internet of Things (IoT) is everywhere, with everything from fridges to cars to the plant floors that manufacture them increasingly connected.
IDC predicts that the worldwide installed base of IoT endpoints will grow from 14.9 billion at the end of 2016 to more than 82 billion in 2025. That’s a lot of connected devices.
Yet despite this leap, recent research published by technology company Cisco shows that 60% of IoT initiatives stall at the proof of concept (PoC) stage and only 26% of companies have had an IoT initiative that they considered a complete success. Even worse, a third of all completed projects were not considered a success.
With manufacturers at the forefront of the rapid IoT evolution, these statistics make for worrying reading. But does it really matter? Is IoT not simply the latest fad? In a word, no. IoT is at the heart of the Industry 4.0 movement, the so-called ‘Fourth Industrial Revolution’.
It’s not only changing the way we manufacture, but what we manufacture and how we go about doing it. It’s a fundamental shift that manufacturers of all sizes need to get a handle on, and quickly.
Here we outline five key steps manufacturers can take to avoid IoT project failures and ensure they transform their business models to take advantage of the huge opportunity IoT presents, while minimising the risks.
1. Rethink your product strategy
The real value of IoT is not about creating connected things, but the potential that connecting them brings. As connectivity is embedded into your products, revenue will begin to shift from the products themselves to the services you can deliver via those connected devices.
Customers in consumer-facing industries already expect to be able to deliver new services throughout the life of even the simplest products. At the very least, you need to be able to facilitate this new service model. And manufacturers that take the lead and develop and either deliver or partner for the delivery of value-added connected services will have a competitive advantage and reap the financial rewards.
Sportswear brand Under Armour is a perfect example of thinking beyond traditional product boundaries. It has acquired a number of popular fitness platforms, including MyFitnessPal, yielding an engaged community of over 130 million users to whom it can target services linked to or connected with its products.
2. Plan for the future
Regardless of the size and reach of your business today, it’s important that you build in the ability to scale to meet future market and customer demands. Short-term thinking can save money up front but cost you dearly if you are prevented from responding to opportunities down the line.
When scoping your IoT projects, be sure to think through the different future scenarios, for example serving customers in different territories, significantly expanded volumes of users or a more complex supply chain. Question prospective partners hard on how they’ve helped other customers to scale and drill down on the costs of doing so.
For example, you will need to be able to quickly and easily set up new connectivity services with network service providers in any area you establish operations. Asking now for how and where your provider has done this will reassure you that wherever IoT takes your business in the future, you’ll be able to respond.
3. Automate everywhere
Manufacturing is no stranger to automation, yet many companies are still reliant on manual processes to manage their automated machines. Remember that for each connected device you need to handle connectivity provisioning and billing, not to mention support diagnostics and training.
Cisco Jasper estimates that an average device requires over 100 real-time actions each year. When extrapolated by tens or hundreds of thousands (which is easily surpassed, even for a small-to-medium plant), it’s easy to see the burden that can be placed on your business. Automating the management of your IoT devices can not only cut processing costs, but also anticipate and/or alert you to issues before they happen.
4. Build in security
IoT is one of the reasons that manufacturing is now one of the top three industries targeted in cyber-espionage and at a greater risk of cyber-attacks overall. Not only has the number of attacks on legacy industrial control systems sharply increased as they are increasingly connected to corporate networks and the internet, but the shift to producing connected devices has also introduced new risks.
For example, Chinese manufacturer Hangzhou Xiongmai Technology Co Ltd recalled some of its products sold in the US in 2016 after security researchers identified it had made parts for devices that were targeted in a major global hacking attack. Hackers unleashed a complex attack on the internet through common devices like webcams and digital recorders, and cut access to some of the world’s best-known websites in a stunning breach of global internet stability.
5. Think human
Last, and by no means least, some of the biggest barriers to IoT success do not involve technology itself, but human factors including culture, organisation, and leadership. Successful IoT projects include a significant degree of collaboration between IT and the rest of the business and beyond, to an often-complex ecosystem of third parties, which is often difficult for manufacturers where operational managers are used to making decisions aboutplant-floor technology.
The shift to IoT means IT needs to become part of the culture, with IT embedded in every aspect of strategy rather than being the role of a function that is far-removed from the decision-making.
Expertise and skills (or lack of) can feel insurmountable, particularly for smaller manufacturers, yet the shift to digital manufacturing is already underway, and those that do not upskill, update their recruitment policies or supplement in-house skills with those of partners will increasingly get left behind.
So concerned is the UK government about the development of the nation’s skills in this area that it forms a key track within the ongoing Industrial Digitalisation Review, which was announced as part of the government’s new Industrial Strategy early in 2017.
The SME challenge
While it’s easy for smaller manufacturers to feel that the chasm between them and their larger counterparts is too great to bridge, in an area such as IoT, which is relatively new and fast-moving, they are at less of a disadvantage than they might think.
The rate of project failures quoted earlier in this article demonstrates that few in-house IT departments can boast many staff with in-depth experience of IoT project deployments.
Yet outsourced IT providers, relied upon by much of the mid-market, are more likely to have this resource, and they can not only work with you to share that experience, but also can work more intuitively, free from some of the red tape of larger manufacturing organisations that often hinders agile projects.
Having a management team that’s open to ideas and the possibilities of IoT (not to mention the impossibility of not responding) is actually half the battle won.
Learn from the success of others
As you develop your own IoT strategy, it’s useful to look at a variety of business cases. Each one will shed new light on the scope and scale of the IoT opportunity to determine what it can mean for your business.
For more ideas and insights from leaders at the forefront of the IoT revolution, check out IoT success stories among your peers and in other industries.
Involve your technology and supply chain partners early on as they can add not only a different perspective, but also share the benefit of experience of other projects that just might save yours from falling into the ‘failed PoC’ category.