JILL Online Course: Industrial Internet of Things

By Dr. Albert B. Jubilo

Session 2. Industrial Internet of Things in Evolution: from Operational Efficiency to Innovation

[April 29 – May 5, 2020]

At the end of the session, the students will be able to: (1) describe IIoT core focus; (2) discuss industrial
internet of things across major industries; and (3) discuss IIoT in Other Industries.

IIoT Core Focus

The core focus in most Industrial Internet of Things deployments and in the majority of organizations de
facto is still on operational efficiency, along with cost optimization. Or as IDC called it: efficiency
optimization and linking islands of automation as key drivers. However, a more holistic approach with
additional revenue and innovation goals is needed.

Such a holistic strategy already exists in more ‘mature’ industrial organizations, which have shifted to
the business model, service and new revenue opportunity side with tangible results and innovative
solutions. They are poised to be disrupters in their respective industries where competition is already
intensive and market conditions uncertain and complex.

On the other hand, in order to move up in the IIoT maturity and possibility/opportunity reality, industrial
organizations obviously need to start somewhere. Knowing the market challenges and the lowest
hanging fruit in many industrial markets it’s normal that in initial stages connectivity in the IIoT space is
focusing on a restricted set of goals and benefits. Yet, it’s important to have a roadmap or plan for the
longer term. It is not a coincidence that the holistic challenge we see in the evolution of IIoT is exactly
the same as the one we see in the digital transformation of manufacturing, the main IIoT market.

Last, but not least, optimization and automation are not the enemy of customer-centricity in the larger
industrial context where speed and enhanced processes are what customers expect.
Industrial Internet of Things across Major Industries

The Industrial Internet of Things can be defined as ‘machines, computers and people enabling intelligent
industrial operations using advanced data analytics for transformational business outcomes”.

In this Industry 4.0 or ‘Industrial Internet’ context, where we essentially find the IIoT as part of an
integrated approach where it takes center stage, data is a key asset and analytics a necessity in the
connected sphere of products (across their full life cycle), production assets and more.

The Industrial Internet of Things is the biggest and most important part of the Internet of Things now
but consumer applications will catch up from a spending perspective, mainly starting 2018. Still, the
Industrial Internet of Things is far more important and advanced in the overall IoT picture.

According to IDC’s 2017 IoT spending forecasts, the three industries that are poised to invest most in IoT
until 2020 globally (there are regional differences) are all part of the Industrial Internet market.

Manufacturing: The Largest IIoT market

The first one is manufacturing. It is also the largest industry from an IoT spending (software, hardware,
connectivity and services) perspective.

In 2016, manufacturing operations alone accounted for an IoT spend of $102.5 billion on a total of $178
billion, all IoT use cases in manufacturing combined. With a total spend of $178, manufacturing overall is
by far the largest industry in the Internet of Things AND of the Industrial IoT and the segment of
manufactoring operations outweighs all other IoT use case investments across all industries, consumer
included.

Two other IoT use cases which are important in manufacturing from a spending perspective, on top of
operations, are production asset management and maintenance and field service, according to the
mentioned research by IDC, released early 2017.
The IIoT in Connected Logistics and Transportation

Transportation represent the second largest market from an Internet of Things spending perspective.
Transportation and logistics (T&L) firms are looking to move up the value chain with advanced
communication and monitoring systems, enabled by IoT.

The transportation market reached an IoT spend of $78 billion and is poised to continue to grow rapidly,
just as is the case for the IoT manufacturing market. The main use case in transportation is freight
monitoring, good for a large majority of overall transportation IoT spend with a total of $55.9 billion and
remaining a key driver in the market until 2020.

If we look at the overall IIoT evolutions in transportation and logistics, we see the growing emergence of
a digital supply chain and connected logistics reality, which is at the same time one of the challenges for
the manufacturing industry and the T&L market as such as many players don’t have a digital strategy in
place and are urged to speed up their digital transformation efforts. As you can read here, about 20
percent of digital transformation costs in T&L will be allocated to supply chain transformation. It’s clear
that the Internet of Things plays an important role here.

This is also the case for the four pillars of a connected logistics system as Technavio defined them: IT
security, communication systems, supply chain monitoring systems and vehicle/transport tracking.
Along with the cloud and analytics, the Industrial Internet of Things is a driver in the connected logistics
landscape and freight monitoring leads the pack.
Smart supply chain management (Logistics 4.0) is also a data-intensive and IoT-intensive given with a
focus on (semi-)autonomous decisions.

IIoT in Energy and Utilities

Oil and gas, smart grid and plenty of other evolutions and use cases in the energy and utilities market
overall are also a main part of the Industrial Internet of Things market.

According to the earlier mentioned data from IDC, utilities alone is the third industry from the IoT
spending context, having reached a total of $69 billion in 2016. Here as well there is one area of
investment that clearly sticks out: smart grid for electricity and gas, which accounted for a whopping
$57.8 billion in 2016.

The Industrial Internet of Things plays a key role in the overall digital transformation towards a digital
supply chain in many parts and value chain components of the large ecosystem, which obviously also
touches retail/consumer-facing aspects.
However, from the sheer Industrial Internet perspective, smart grids are key in supply and network
transmission/distribution. Others include plant effectiveness, maintenance and data-driven
opportunities as a result of smart grids and IoT-enabled operations and services.

IIoT in Other Industries

Maintenance and services, enabled by the IIoT are two key areas in virtually all Industrial Internet
industries.

Predictive maintenance, data-enabled services and remote possibilities in several areas, from service to
control and optimization of operations, also come back in many other IIoT use cases across industries
such as healthcare (remote health monitoring, equipment maintenance, etc.), aviation, robotics and
cobots, oil and gas, mining, metals and more.

As mentioned, depending on the industry body, the broader context of IIoT is also often used for use
cases in areas such as agriculture, smart cities and so on.

Assessment:

1. The site for your assessment will be sent to your email.

2. Answer them completely.
3. Due date: May 5, 2020
4. Rating will be sent to your email address as soon as the checking is completed.