The Gold Rush days are coming back. Except this time, it is on the Industrial Internet-of-Things (IIoT). Why is the industry buzzing about the IIoT? For some, it represents limitless potential and opportunities. This is bigger and better than the dot com era. Dan Isaacs, Director, Connected Systems and IIoT Ecosystem at Xilinx, points out that IoT will provide smart solutions to medical, energy, automotive, manufacturing and other industrial segments. It can potentially reduce unplanned down time and reduce costs of manufacturing. Dell agrees.
By John Koon
Welcome to Industry 4.0, the future of manufacturing. (1.0 was mechanical assistance, 2.0 was mass production, 3.0 included electron and process control and 4.0 is the beginning of M2M and IIoT). This new smart manufacturing called Industry 4.0 promises massive opportunities and it has captured the attention of the industrial world and the developing countries. According to a 2015 European Union paper, Industry 4.0 was intended to provide rapid transformation to manufacturing to reverse the decline in industrialization to a targeted 20% growth. An ambitious goal indeed. According to German Chancellor Angela Merkel, Industrial 4.0 is “the comprehensive transformation of the whole sphere of industrial production through the merging of digital technology and the internet with conventional industry”. The World Economic Forum, with its leadership from corporations with revenues over $5 billion and various government bodies, endorsed IIoT. The business trustees include Marc R. Benioff, Chairman and Chief Executive Officer, Salesforce, Jack Ma, Executive Chairman, Alibaba Group Holding Limited, Jim Yong Kim, President, The World Bank, Christine Lagarde, Managing Director, International Monetary Fund (IMF), Indra Nooyi, Chairman and Chief Executive Officer, PepsiCo Inc. and more. In its 2015 paper, it defined the adoption and impact path of the Industrial Internet into four different phases. Near term goals included Operational Efficiency and New Products and Services with long term goals aimed at Outcome Economy and Autonomous, Pull Economy. IIoT is not just a clever idea from one country, it is a worldwide movement. There are many other opportunities besides smart manufacturing; Smart Cities, Smart Buildings, Energy and Smart Grid management, Connected Cars, Healthcare, Process Control and more.
How Big is The Market?
According to BI Intelligence, the IoT market will experience exponential growth to reach 34 billion connected devices in 2020 up from 10 billion in 2015. Within the 34 billion devices, 70% will be directly related to new IoT devices and the rest are traditional smartphone, tablets and smart wearables. VDC predicts the IIoT and connected factory market will grow from $6 billion in 2015 to $20.7 billion in 2020, a CAGR of 28.1%. Figure 1. VDC further explains that various industrial segments including automation & control, energy and utilities would provide the biggest opportunities for IoT gateway and services providers. Cellular and analytics services will reap benefits from the IIoT service segment. The market is big enough for everyone.
IIoT and Connected Factory market will reach $20.7 billion in 2020 at a CAGR of 28.1%. Source: VDC
What is IIoT?
In simple terms, IIoT is a way to connect many devices or sensors together using Internet commonly known as the Cloud. Internet-of-Things covers everything under the sun including consumer products such as smart watches and other fitness wearables. IIoT has a similar definition of IoT except it focuses mainly on the industrial aspect such as manufacturing, connected cities, cars and health. Even though some authors may use the term IoT in this edition, its focus is on industrial segments. Typical IIoT architecture consists of four major components as shown in figure 2. Things refer to the intelligent devices or sensors. Local Networks include the network and gateway hardware connecting to Things. What we don’t see but included here are the software layers. The Internet is all the connections between Local Networks and the Back-End Services which include servers, analytic software and other devices used to access the Internet.
Typical IIoT connection consists of four major components; Things (smart devices or sensors), Local Networks including gateways, The Internet (Cloud connection) and the Back-End Services. Image courtesy: Micrium
Why the excitements? The connected “things” can create optimal performance and increase productivity worldwide. That is why Industry heavyweights like Dell, GE, IBM, Microsoft, Intel, SAP and Cisco are full steam ahead. Some see it as the next industrial revolution. The big question is what is the ROI?
Where are the opportunities?
Smart Manufacturing Leadership Coalition defines smart manufacturing as “the integration of network-based data and information that provides real-time understanding, reasoning, planning, management and related decision making of all aspects of a manufacturing and supply chain enterprise.” Smart manufacturing can potentially shift the paradigm. About 50 years ago, industrial countries figured out the way to increase margin was outsourcing manufacturing to places with low labor costs such as China. Today, the skill level of the Chinese labor has increased and so have the costs. Foxconn, the world’s largest contract manufacturing company, builds products for Fortune 500 companies including Apple’s iPhone, with headquarters in Taiwan and manufacturing facilities in China, Eastern Europe and other parts of the world, has recently replaced 60,000 human factory workers with robots. Companies can no long compete based on cheap labor only. They have to rely on IIoT intelligence and automation in the future.
IIoT can solve problems in many other industrial segments. For example, it can reduce the costs of energy of industrial buildings. Today, Heating, Ventilation and Air-conditioning (HVAC) systems in large commercial buildings use building management systems (BMS) made by companies such as Johnson Controls and Honeywell to optimize system performance but BMS can be an expensive investment that take years to breakeven. Mid-size and small firms cannot afford it. IIoT can potentially solve that problem. HCL Technologies uses the Intel-based gateways and sensors to monitor the building edge devices including HVAC, security, lighting, water and electrical equipment to optimize energy efficiency using the cloud. Large building control companies are rushing to invest in the IIoT.
Smart City is another segment gaining momentum. IIoT can optimize city lights, traffic and synchronize the communication of emergency vehicles. That is why many cities around the world are joining the IIoT movement. Vietnam’s capital city, Ho Chi Minh City, cities in Sweden, Norway and Denmark are among those to pioneer Smart City. An efficient city means less traffic jams, safer and costs less to run. Emergency vehicles such as fire trucks and ambulance can get to destinations quicker with synchronous traffic signals control by IIoT and the emergency crews can be dispatched more efficiently. Connected car is an area with potential. Only a few automakers are using IIoT as a mean to connect the vehicle to monitor the performance and provide better customer services. Hunyadi now has a solution to allow owners to remotely control some of the functions of the car such as locking and unlocking. Soon cars will be able to communicate with each other to warn other cars of accidents ahead. ATT is getting serious with smart city and has already started its pilot program in seven locations including Atlanta, GA, Chicago, IL, Dallas, TX, Georgia Institute of Technology, Miami-Dade County, FL, Montgomery County, MD and Chapel Hill, NC. They are also investing in connected car, wearables, connected home, connected health, IoT Security and Industrial.
Future healthcare will depend more and more on wireless connection for patient monitoring. Connected hospitals will have control rooms to monitor the vital signs of patients 24 hours a day wirelessly to provide better patient experience. Stroke patients can be discharged from hospitals after being stabilized and can still be monitored remotely by their caretakers. These are only a few illustrations of things to come.
What is The Formula For Success?
Companies are trying hard to develop formulas to carve out a piece of the IIoT pie. Here are a few examples of how some Fortune 500 companies do it. Under the leadership of Satya Nadella, CEO of Microsoft, the company has transformed from Windows to an internet company with Azure as its platform, just in time to stop the revenue decline. IBM uses Watson as its platform to drive AI and IIoT. In March of 2015, IBM committed to invest $3 billion to bring cognitive computing to IoT. In December of 2015, IBM announced that Munich, Germany as the global headquarters for IBM’s new Watson IoT unit. It was IBM’s largest investment in Europe in two decades. It has an army of 1400 IoT business partners to help sell its services. GE introduced the Predix as the industrial internet platform and formed partnership with Microsoft. “Companies don’t want disparate, disjointed systems; they want technology that brings things together,” says Abhi Kunté, global head of technology strategic alliances at GE Digital. “This partnership with Microsoft will provide seamless integration of our technologies that will drive a lot of efficiencies for our customers.” Additionally, its Predix Transform conference has attracted strong support from Deloitte, Intel, Hewlett Packard, Accenture, Dell and more. Most companies will admit that they cannot do it alone. That is why companies are forming partnership. GE is an Operational Technology expert in the Oil and Gas industry. To succeed in providing a total IIoT solution including IT, it partners with companies such as Cisco, Dell or Hewlett Packard to do the job. The IT companies would partner with OT companies for the same reason. Cisco, an IT company, for example, would team up with Rockwell, a manufacturing and process expert, to provide an end-to-end solution to manufacturers.
Have You Found Gold Yet?
While there are ways to generate revenue from IIoT, have you found gold yet? Greenwave Systems, a 280-employee company, has offices in Singapore, Irvine, CA, Demark and Korea. Its AXON platform is aimed at smart home, network (both IP and IoT), media entertainment and mobile IoT. The software platform serves as a translator that allows disparate devices in the smart ecosystem to work together seamlessly and has also helped telco companies such as Verizon to capture detailed performance information from devices like wireless hubs. Before customers experience device problems, AXON has already reported the performance data to the service provider. This allows the service provider to be proactive. The future is bright for Greenwave. Earlier this year, the company received another round of funding of $60 million. When Jim Hunter, Chief Scientist and Technology Evangelist, was asked, “In the IIoT Gold Rush, have you found gold yet?” Yes was his reply.
Another area of demand is analytic and creating meaning information from the sea of raw data. SaM Solutions, a 600-employee, software consultancy with offices in the USA and Eastern Europe, provides IIoT and Open Source solutions to manufactures have also found gold. According to Alex Vilner, managing partner of SaM Solutions, “IIoT in manufacturing provides management with meaningful data so they can manage and optimize the performance of the connected factories to maximize profit. In the past, manufactures have to rely on old software or manual labor to get the information.”
Others are still searching!
It is not easy to navigate through the IIoT maze. There are still challenges ahead. (1) The much needed secured end-to-end connection is easier said than done. Increased connection will only create more opportunities for hackers. (2) The challenge of creating and using meaningful big data cannot be underestimated. With projection of multiple billion “things” to be connected by 2020, massive data will be generated. Who has ownership of these data? If not managed well, big data can potentially cause chaos. (3) Lack of international standard is another big challenge. Today there are quite a few standards being proposed. It will be interesting to see how these standards” will evolve. In summary, IIoT presents both opportunities and risks. Will it be smooth sailing or a long and winding road? Finding the path to generate meaningful ROI is the key.