The industrial Internet of Things (IIoT) is a major trend with significant implications for the global economy. It spans a vast amount of different industries, from manufacturing, mining and agriculture, through to oil, gas, and utilities. It also encompasses companies that depend on durable physical goods to conduct business, for example, organisations that operate hospitals, warehouses and logistics
The potential payoff of industrial Internet of Things is enormous. The most conservative independent estimates place spending on the IIoT worldwide at $20 billion in 2012, with spending expected to reach $500 billion by 2020. More optimistic predictions of the value created by the IIoT range as high as $15 trillion of global GDP by 2030.
The key attraction of the IIoT is operational efficiency and early adopters are certainly focused on these benefits. However, there is more to the story as the IIoT also offers rich potential for those who make equipment and products to introduce new digital products and services, generating entirely new sources of revenue to improve both the top and bottom lines.
Boost revenues by increasing production and creating hybrid business models
The IIoT presents companies with the opportunity to upgrade and offer new services, improve products, and enter new markets. This is achieved through digital services, i.e. offerings that combine information, transactional and professional services, and some companies are already in the process of converting products into product-service hybrids.
uccess as a purveyor of hybrid product-services will not come easily. Companies must compete and collaborate with players from different industries, all attempting to find a competitive edge with digital technology. A recent report by Accenture, ‘Driving Unconventional Growth through the Industrial Internet of Things’, found the following necessary to create new value and foster growth:
- Think unconventionally about customer value.
- Be the most valuable information provider.
- Share more equipment data with partners.
- Treat services as R&D for products.
Exploit intelligent technologies to fuel breakthrough innovations
Innovation is critical to developing and delivering differentiated new product-service hybrids that drive growth. To reap the full benefits of the IIoT, companies will need to excel at exploiting three technology capabilities:
- Sensor-driven computing
- Industrial analytics
- Intelligent machine applications
By deploying these capabilities, companies can weave together previously unavailable, or inaccessible, enterprise and machine-generated data to create new monetisation opportunities.
Transform the workforce for IIoT
The IIoT will also open up new workforce needs as it creates redundancy in others. Yes, it will computerize certain tasks and workflow, in particular, repetitive jobs that have so far resisted automation. To capture the bigger opportunities presented by the IIoT, companies will especially need to look for skills in data science, software development, hardware engineering, testing, operations, marketing and sales. Moreover, they will need this expanded talent base to handle three critical activities:
- Creating the new Industrial Internet of Things service sector
- Supporting users of industrial products and services
- Mastering new ways of working
Seven steps for moving forward
Offering product-service hybrids, exploiting intelligent technologies and transforming the workforce will require up-front preparation. Executives can get ready by taking these steps:Think boldly about value
- Think boldly about value
- Think about tomorrow’s partner ecosystem
- Start now to design and develop your platform
- Closely study the financials
- Sell your sales channel on promoting new digital products and services
- Clarify legal rights, obligations and secure access to information about your installed base
- Put people at the centre of executing your strategy
The IIoT is bringing new growth opportunities to companies that prepare themselves now. It is still early; there are technology challenges and important hurdles to overcome, particularly in connectivity and security. Not all products can or need to be connected and intelligent right away. But amid the new, an old truth remains: Business customers need products and services that create more value for them than those on offer today.
Posted by Paul Daugherty, Chief Technology Officer at Accenture
Follow Paul at @pauldaugh