A new ball game for manufacturers

Diego Tamburini, manufacturing industry strategist at Autodesk (pictured), says the industrial internet of things has triggered unprecedented opportunities

01 August 2016

By now, the mystery surrounding the Internet of Things (IoT) is starting to dissipate as more consumer and industrial products join the connected fray.

But even though the definition may be known, the implications of the connected future might still seem a bit murky. After all, what is the point of all of this connectivity if it’s not providing value? 

Crucially, once products have the ability to connect, manufacturers and third parties can deliver more value to their customers – well beyond the sale of the product – by providing a whole range of solutions and services. In my opinion, manufacturers need to wake up to this opportunity and act now. Here are a few options:

• Manufacturers can provide software applications to allow their customers to remotely connect to, control and monitor their products. They can also provide an application programming interface (API) to allow others to connect to it. This of course expands the value of the product by offering new functionality and new ways to interact with the product. Take Premier Deicers, a Wisconsin-based purveyor of aircraft-deicing equipment, for example. The company’s Guardian Angel Monitoring System provides remote access to 29 functions on the deicers, from fluid pressures to electrical components. Customers can access live readings of applicable functions on the deicers from anywhere with Internet service. They can monitor and keep a detailed record of exactly how much fluid is being used and how much is on hand at all times.

•  Another important way manufacturers can add value to products is by offering services attached to them. These services take advantage of the immense value of the data generated by the product when combined with data analytics techniques (which could be the “secret sauce” that gives them the competitive edge). Two types of IoT-enabled services that represent the biggest short-term opportunity in the industrial sector are predictive maintenance and energy optimisation. For example, ABB connects its robots to provide predictive maintenance services, resulting in reductions of unplanned downtime to their customers. In the energy optimisation area one example is GE’s Trip Optimiser, an “intelligent cruise control” that collects real-time information about a train’s geographical location, weight, fuel burn, and terrain information to calculate the optimal speed for a train to travel. This can save millions of dollars in fuel cost. 

The way manufacturing companies operate will never be the same again

The way manufacturing companies operate will never be the same again

• Taking this further, let’s consider how manufacturers can provide services attached to connected products from the individual product level to a system level – where we connect multiple (and potentially different) products. Here, a manufacturer or a third-party system integrator could monitor the performance of each device in the system and adjust their parameters and behaviour to optimise the performance of the system as a whole. There are a huge number of opportunities here! To name but a couple of options, the system could be composed of similar devices (such as a wind turbine farm) or different devices (such as a smart factory, or a smart building).

• To take one final point, another interesting way manufacturers can add value to their customers is by upgrading the products their customers already own. This type of service will increasingly be delivered via software upgrades, and will become more feasible as manufacturers solve more and more design problems with software rather than with hardware. The quintessential example of the upgrade model is Tesla. The electric-car company has been delivering over-the-air updates to its Model S for years and recently upped the ante with its Autopilot update. Deployed wirelessly to all Model S’s in the US throughout the course of a week, the update essentially turned each of those vehicles into autonomous, self-driving cars—that still require ultimate human control (for now). 

These opportunities are all important and exciting considerations for manufacturers adapting to our new, digital world. But we can go even further. Beyond these often standalone changes in approach, something for manufacturers to consider is how to implement new business models through these new services. For example, in a traditional model we, as the customer, pay for the product initially and pay later for spare parts, as needed. 

In a more sophisticated model, the customer pays for proactive maintenance services. In this situation, the manufacturer remotely monitors the product at the customer site; uses collected data to know when the product needs maintenance; and schedules and performs service and repairs before the product breaks down, normally during scheduled downtime. Because the maintenance is performed proactively, the customer saves money by avoiding unscheduled downtime for repairs. (And because the manufacturer assumes the risks of breakdowns, it’s incentivised to design more reliable products.) This model can also include upgrades of parts or software that make the product better. 

To further continue down this road is the product-as-a-service model. In this situation, the customer doesn’t pay for the product or spare parts, but rather “subscribes” to the product and pays a fixed amount on a predetermined schedule, be that monthly, annually, or quarterly. An example of this model is Philip’s Lighting as a service used by Washington DC to provide 13,000 lighting fixtures in all its parking garages at no upfront cost to the city under a 10-year contract. Philips gets paid from the savings the LEDs are expected to provide each year. The bulbs will automatically alert Philips when repairs are needed. PaaS puts the onus squarely on manufacturers to keep their products functioning—otherwise, they don’t get paid! There are a whole range of options available to manufacturers willing to embrace new tools and I’m excited to see what types of products emerge from this trend in the coming months and years. 

As the IoT becomes even more entrenched in everyday life, the value in the connected ecosystem and the data collected will become even more apparent. It’s estimated that by 2020, the industrial IoT will comprise 16 per cent of global GDP and manufacturers will spend more than $500 billion to seize more than $1 trillion in new ROI. And that’s a lot of value to be had. For manufacturers, I would urge a review of these opportunities alongside their product set to establish potential new lines of revenue but, at the very least, to ensure that they are delivering the best possible service to customers. Those who don’t may risk some more traditional lines of business drying up in favour of connected products.


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