There is no doubt that IoT has created a marketing storm. The phrase has eclipsed machine-to-machine (M2M) connectivity in many ways, and there also seems to be a misconception regarding the purpose of both. M2M has been around for over ten years and has been particularly beneficial in industrial markets. In its basic form, M2M has provisioned the sending of monitoring and control information to and from automation equipment such as industrial robots and other production machinery. While it provides an efficient way to manage production, it doesn’t add much in the way of intelligent information from which to further optimize the whole production process across many disparate production lines, and potentially multiple sites. In many cases, M2M has been viewed as a retrofit to existing infrastructure.
Compared to M2M, IoT has the capability of a much more holistic approach to managing the entire scope of production assets in a “smart” and optimized manner. To do this it needs access to the collective end-to-end data in order to run systems in a far more efficient manner. While this is entirely possible by equipping your production facilities with lots of sensors and intelligent machinery, the organisation itself, while far more efficient, is still manufacturing and selling products in the same way they have for many years. The implementation of IoT, in this example, is hardly transformational.
The basic premise behind IoT, viewed at a strategic level, has a far more significant and disruptive influence than many organisations give it credit for. The transformative effect is not just about, taking the industrial example again, making your factory more efficient and “smart”; it is about changing the whole way that your company goes about making money by adapting your revenue model such that a single product sale becomes an on-going service. But the reasons for making, what many companies would consider the most significant change in their entire history, are not just because the technology to deliver IoT is now available. Many of the businesses and industrial manufacturing organisations that are at the centre of this, are feeling the disruptive effects that changing market conditions, new entrants, and technology shifts are having. As they say, change is constant.
For example, industrial robots used to have a planned life of 15 years or more, but the rate of manufacturing process changes dictate increased robot precision and agility. A robot service life is more likely to be 3 years now before the production requirements are revised. So much for making a major long-term investment! Manufacturers find themselves faced with a huge challenge; robot manufacturers are keen to avoid customer churn. The more astute robot manufacturers are seizing the challenge and offering to provide the robot as an on-going service provision; specifically, taking care of maintenance, and more importantly, ensuring it always meets the needs of your ever-changing production line. For both parties this represents a significant transformation. The implications are far reaching. The robot user no longer needs to make provision for major capital investments. It also makes their business far more agile, be able to take on new customers and adapt production facilities rapidly. For the robot manufacturer being responsible for the running, maintenance and upgrade of the robot means that remote access to operational data is critical. Your revenue model depends not on how many robots you sell but how many you are running. The promises of what IoT can deliver make it a fundamental component of business transformation. Suddenly IoT has a place, and a critical role to play.
So can a business afford to ignore such market changes? Those with a large installed base or a dominant market position might feel tempted to resist, but they should take heed that the market, in the words of the famous U2 song, is going to change ‘With or Without You.’