BARCELONA, SPAIN – At Mobile World Congress (MWC) 2017, a number of senior industry figures have mused over the various challenges faced by the Industrial Internet of Things (IIoT).
These range from the cultural shifts that enterprises need to make in order to exploit its true potential, to concerns over data privacy and security and the ability of companies to embrace new technologies at scale and at speed.
Venkat Atluri, a senior partner at strategy firm McKinsey & Company, moderated two sessions on the IIoT at the Fira de Barcelona venue.
“The opportunity not just to create value, but to leverage IoT and the Industrial Internet is enormous,” he told attendees, citing McKinsey’s own research indicating that this is potentially a $4 trillion market (rising as high as $11 trillion).
“Where would that rank on GDP?” he asked, before continuing: “That would roughly rank number three or four in the GDP of nations, [which is] roughly the size of the Japanese economy. That’s mind-boggling.”
New business models?
Atluri went on to explain that this forecast rise is even more considerable, given that McKinsey’s research has found that only a quarter of firms are currently piloting or trialing IIoT technologies, and that companies are only just starting to leverage the data being generated by these millions of IP-connected devices worldwide. There will be plenty more opportunities going forward, he suggested.
That raises the question of new and emerging business models, so it was interesting to hear Brad Keywell, former co-founder of Groupon and now CEO of Uptake, an IoT start-up with a $2 billion valuation, describe options that are now becoming available to industrial tech providers, as well as areas in which they may be going wrong.
“A lot of companies are trying to connect different pieces and technologies, but what’s needed right now is a solution to a problem,” he said, claiming that Uptake provides value to its clients by “selling an answer” through its predictive analytics software platform.
“You’re answering a problem and selling it through subscription,” he said.
A second model, he explained, sees Uptake work with heavy machinery manufacturer Caterpillar, using the latter as a go-to-market partner to provide an end-to-end analytics platform on Caterpillar machinery, but also on third-party equipment.
Yet Keywell suggested that market realization of the IIoT opportunity has been slow in some parts (in part due to the issue of legacy integration), even warning that traditional industrial industries could be at risk of cannibalization should they fail to embrace this fourth industrial revolution.
“In real time, we are witnessing the world’s iconic companies coming to a refined understanding of the opportunity leveraged through insight,” he said. “I believe they have to sell insight as they are the best equipped to sell [it].
“There are other approaches where companies in more traditional industries don’t buy into it – they don’t believe in insight, or that it creates value.”
He warned those companies face an “existential crisis” if they get left behind by the Industrial Internet, and will be vulnerable to more agile competitors seeking to enter new markets.
IIoT: Opportunities and challenges
Doug Brent, vice president of technology innovation at Trimble Technology, agreed there are further opportunities to drive efficiency.
He said that one particular client, a North American truck OEM, saw the immediate benefit of IIoT through using it to change the behavior of drivers, get better performance from trucks and improve routes, but believes more can be done to ‘join the dots’ going forward. “I would say we are in early days of these business models.”
This is not to say that the IIoT opportunity is a home-run, though. An earlier panel, comprising executives from telco giant AT&T, real-time data management software company OSIsoft and Dat-uh, a provider of cloud-based IIoT analytics services, pointed to numerous concerns around information security, data sharing and culture – with speed to adoption a pivotal point, considering most enterprise IT projects can take 12 months and more.
Perhaps one example that industry could learn from is that of agricultural equipment company John Deere, which has already done a great deal on IIoT, from tracking equipment and crops with its Seedstar iOS app to using Telit’s deviceWise IIoT platform in its factory operations and tracking thousands of sensors on machinery.
Dr Thomas Engel, the company’s manager of technology innovation strategy, spoke of the “long-term, strategic decision” to equip large equipment with wireless connectivity to collect data and parse to the cloud, and urged others to follow suit.
It also appeared as if John Deere has settled on an approach to the tricky subject of data ownership, with Dr Engel suggesting that this essentially comes down to analyzing the data you hold and identifying which is most sensitive/important to your customer.
He explained that John Deere customers are generally willing to hand over some kinds of data (for example, information that helps improve machinery and drives precision farming), but typically less keen in other circumstances (for example, specific data on their own crops). These, of course, are issues that every company will need to work through for itself.