posted: June 17, 2021 

Industrial IoT: What is the Industrial Internet of Things?

"Industrial Internet of Things" isn’t a buzzword or a fad. It’s an important aspect, if not the most important for organizations today. It promises to empower organizations to break operational barriers and deliver excellence, but understanding how this is possible can be challenging.

What is the Industrial IoT?

The Industrial Internet of Things is the convergence of smart technology that enables organizations to solve critical business problems and improve operational efficiency. Through the integration of hardware, software, data aggregation, advanced predictive and prescriptive analysis, decision making, and reporting, organizations can evolve by leveraging devices and real-time insights on business performance.

But solving the biggest operational challenges isn’t easily done. Organizations find themselves asking critical questions about adopting industrial IoT. These include, but are not limited to:

  • What are the most pressing challenges we face?
  • Which problems can we address with IIoT?
  • What would an industrial IoT solution look like?
  • What will an IIoT solution cost?
  • How do we roll one out?

This article covers what the Industrial Internet of Things is, and how it relates to and is different from the Internet of Things. It will also touch on challenges IIoT solves in various environments and introduces key considerations, benefits, and best practices for the adoption of IIoT. But first, let’s look at how the industrial IoT ecosystem is similar to and different from IoT.

Industrial IoT vs. the Internet of Things

The Internet of Things is all about consumer products and how they come together, offering consumers an interconnected experience. Industrial IoT is related to industrial equipment. Like IoT, IIoT focuses on the interconnectedness of hardware and software, but in a business context, and how technology is used to deliver products and services.

Industrial IoT is broad enough to account for all sorts of devices and equipment. These include interconnected IoT sensors, devices, machinery/equipment, and the software that powers them. IIoT also relies on business intelligence software like predictive and prescriptive analytics solutions and reporting. These AI- and machine learning-powered solutions are game-changers. They enable deeper insights and smarter, faster decision-making that drives operational efficiency at an industrial scale.

What can you expect when considering an industrial IoT solution?

Challenges with adopting the Industrial Internet of Things

IIoT can improve business performance, but like all new ideas, there are obstacles organizations experience when trying to implement IIoT solutions. These include everything from identifying the most pressing business issues to tackle, to finding or upskilling people and building the right teams to effectively leverage your new IIoT ecosystem. If your business is considering IIoT, here are five challenges to be aware of before setting out on your journey:

1. Understanding which business problem to tackle first

Not all business challenges are equal. And likewise, not all challenges are long-term or require heavy capital investment. But when it comes to uncovering which problems your organization must solve first, prudence is essential. You must find a simple and repeatable method for identifying issues that cripple efficiency or change will not manifest as timely as possible or be the change your business needs to thrive.

McKinsey & Company recommend weighing business issues according to financial impact and ease of implementation. They urge business leaders to determine:

  • The cost of the problem over time
  • How much it would cost to solve the problem, and
  • How long it will take to solve the problem

These are simple enough concepts to grasp and McKinsey’s grid shows the sweet spot for organizations as quick pay-off use cases that have a high financial impact, yet are easy to implement.

Quick pay-off use cases that have a high financial impact must be prioritized over all else. This includes seemingly more important and larger strategic goals, and those that appear easier to take care of (and are more attractive), yet yield less financial impact. This approach delivers the perfect balance for results-driven firms.

As a side note, McKinsey’s model serves as a great starting point, but you’ll need to get more granular to uncover where your business is on the road to IIoT greatness (more on this later).

McKinsey’s grid:

2. The cost of adopting Industrial IoT

Industrial IoT solutions are broader than the technology ultimately implemented. Hardware and software are givens, but to realize operational efficiency, you’ll need to dedicate resources to training and educating your people, too.

As your organization identifies new hardware or software, be sure to account for the cost of upskilling people and/or hiring for your new environment. This "total cost" approach means greater planning, but also leads to a stronger and sustained competitive advantage over time.

As author Gino Wittman states in his best seller Traction, you want to employ people who are "GWC compliant". These are people who "get it, want it, and are competent enough to do the job".

With a team of people who understand where your organization wants to be, want to be a part of the new and improved unit, and are competent enough to deliver results, business takes a new form. It moves from the grey area of planning and projecting outcomes and into a clear, predictable results-oriented space.

3. Finding the right technology for your organization

Finding the right solution often involves tire-kicking. It takes a considerable amount of resources to unpack solutions, and without due diligence, the results can be catastrophic. Searching for a solution must include a complete assessment of your current environment. Establish what you expect to be able to do with the new solution, where your environment needs to evolve to adopt the solution (if need be), and how easy the solution is to use.

A note on technology shopping: assessing your environment is about more than just the technology you use. You’ll have to consider how well it plays with processes and people, too.

4. Security and your expanding technology ecosystem

Security is a non-negotiable today. As IIoT presents a world of opportunity for gains, it also opens your ecosystem to threats. Malicious attacks are waiting at every turn. They access networks through vulnerable hardware and software, meaning your industrial IoT investment must include a threat prevention and remediation solution.

And this can present ambitious organizations with a series of difficult decisions to make. Should you replace all technology, build your own solution, hack together something including what you already have, or invest in something new altogether? Whatever your decision, prioritize security.

Smart organizations realize the need to integrate security from the ground up. Be it building your IIoT system in-house or rolling out a solution, make sure security protocols can be applied to your entire ecosystem, leaving nothing to chance. Investing in sophisticated solutions that manage threats at all entry points of your infrastructure is a must.

5. Your people and processes

IIoT adoption is about more than new technologies, it also leans heavily on making work simpler to complete in less time. Most IoT technology comes with a great deal of automation but your people need to know how to work with it and processes need to be analyzed for value. If processes you used to use no longer add value, they must evolve to play well with your new tech.

As with assessing the cost of adopting a new solution, be sure to account for the learning curve. Organizations adopting new technologies are often caught off guard. New processes will appear almost counterintuitive, and growing aches and pains can lead to lower productivity levels.

Remember that IIoT’s major win is operational efficiency, but that can only happen with the processes and people who know how to use them.

Benefits of adopting Industrial IoT

IIoT solutions take various forms but the results can transform organizations. While no two businesses are the same, the benefits of a well-planned and executed IIoT solution can lead to cost reductions, time savings, improved product and service delivery, and bottom-line gains.

Coiote IoT Device Management is a perfect example. It’s a highly scalable platform that enables enterprises, chipset vendors, and telco operators to quickly and easily deploy new IoT solutions. It also makes rollout smoother by identifying issues like device security vulnerabilities and operational obstacles before they become serious roadblocks.

What does the successful rollout of an industrial IoT environment look like? Here’s a look at seven use cases:

Realize greater business agility using real-time analytics deliver

At the turn of the century, larger businesses recognized the need to take a chapter from smaller, more nimble outfits. Agility, they soon found, is a product of smart processes, people, and technology. IIoT and the power of automation can supercharge larger brands, giving them the flexibility and responsiveness of smaller companies. And these benefits can be realized in all spheres.

Advanced analytics solutions can make data aggregation from all parts of an operation simpler and easier. And by asking better questions, businesses can uncover patterns in transaction habits, customer feedback, and market sentiment, offering the kind of operational efficiency needed to develop a stronger competitive advantage.

Elevate product development & quality controls

Product design and development don’t happen in a vacuum. Customer sentiment, quality, and external factors like transportation, carbon footprints, and the type of materials used are all major factors.

Integrating the industrial IoT into a product cycle makes for a more exacting exercise in product development. Third-party data on the product cycle can offer actionable insights. Where waste might have been overlooked or was just another incalculable problem, it can be better managed, so too can the impact of production on the environment. And the gains don’t stop there. Layering product cycle insights with customer feedback can lead to a stronger customer-product fit.

Enhance supply chain visibility

Manufacturing operations are impacted by several influences. From raw material availability to natural disasters and civil unrest, predicting when products will be produced can be less than scientific. Real-time supply chain data can make a difference. Forward-thinking manufacturers can gain more insight into what’s adversely affecting their operations.

Previously hard-to-do and nearly impossible tasks become easy. Tracking materials, manufacturing cycles, and stock levels provide a highly accurate representation of the state of a business. And these gains have a positive trickle-down effect. Client expectations are better managed and purchasing decisions are made much sooner.

Improve inventory management

Inventory management is often plagued by waste and shelf space occupied by excess stock due to over-ordering. In an IIoT-enabled environment, these become easily managed gremlins. Using sensors capable of triggering alerts, inventory managers can track stock expiration, levels, and even temperature to prevent wastage. And because IIoT solutions are designed to automate these and other worker-driven responsibilities, staff are free to focus time on other important tasks.

Cut costs with location tracking

Location tracking isn’t a new concept, but it can save manufacturers and any business dealing with large volumes of stock or machinery a lot of money over time. The National Insurance Crime Bureau found that theft of commercial equipment alone costs businesses anything from $300 million to $1 billion a year.

It’s not uncommon for devices and equipment to go missing, especially in busy operations. And while missing devices and equipment can be written off, businesses lose more than equipment. Missing equipment leads to downtime, and downtime eats into your bottom line. Location tracking can simplify device and equipment management and tracking. In its basic form, you’ll always know where all devices and equipment are, saving you time to locate and put them to work.

Reduced downtime and repair costs via predictive maintenance

Maintenance is something easily managed in a logbook. But what about sudden machinery or device failure? Aberdeen discovered that unscheduled downtime can cost businesses as much as $260,000 per hour.

IIoT can help turn the tide. Sensors can be used to track any anomalies or uncommon equipment behavior. Applications include anything from monitoring heat and moisture to erratic movement. Through preventative maintenance, organizations can stave off potential operational delays and make significant cost savings and bottom-line gains.

Stronger, more effective safety and compliance

IIoT can also create a safer and more compliant environment in any setting. Take manufacturing plants. Sensors can shoulder the load of monitoring energy consumption, room temperature, moisture, or excessive pressure levels that can lead to catastrophic events.

Sensors can also monitor the proximity of workers to large machinery, preventing injuries onsite. These and other potential operational safety hazards can be easily dealt away with and driven by automated alerts for a safer environment.

Best practices for adopting the Industrial Internet of Things

Committing to an IIoT environment requires investment on all levels, from hardware and software to people. For all intents and purposes, embracing IIoT is an exercise in business transformation. While the outcome can lead to major wins, an implementation must be accepted and coveted as a daily practice and not a one-time thing.

What best practices should your company adopt? Here are four foundational best practices. They underpin a holistic approach to IIoT to help organizations realize the greatest gains.

Understand the holes in your business

An IIoT roll-out requires a deep and intimate knowledge of a business. This can be a difficult experience for businesses that haven’t spent time developing their processes and people in the pursuit of operational excellence. But it isn’t altogether out of reach.

To tackle your organization’s weakest links, you’ll have to start with an assessment. You must identify where your business is and why your current ecosystem is failing to address it. This is a crucial exercise that can save you from wasteful spending, as much as it can help you implement a truly empowering and highly effective IIoT solution.

How? A smart place to start is with a basic scorecard assessment or perform a SWOT analysis. Balance scorecards are designed to deliver learning and growth opportunities by unearthing weaknesses directly associated with key deliverables. They serve as a health check for business processes, customer perspectives, and financial data.

For your scorecard exercise, think about your entire business, then get granular. It’s common for businesses to think of their current technology ecosystem as the problem, but that’s often a symptom of a much larger problem. It’s essential to focus on key operational deliverables and processes, what they look like, the results they generate first, and then on the tools you use.

Once you’ve identified performance hurdles, begin to think of a perfect outcome. What would operational excellence look like in your setting? Having visualized and documented an ideal scenario, find technology that will meet your requirements.

Should you opt to complete a SWOT analysis, you’ll be able to find your organization’s Achilles heel by digging into its weaknesses. And while weaknesses will be telling, be sure to complete the entire SWOT analysis. Strengths can sometimes be perceived as positives, but upon closer inspection, the processes and people that contribute to them may lack what your business needs to grow to the next level.

Remember, you must examine all parts of your business; financial, operational, and customer experiences to truly understand where your challenges lie.

Prioritize security

Security can be a murky topic. For many, quantifying risk is the real challenge and is often hard to identify until an exploit has taken place. As IIoT evolves, so too does the threat landscape. Today, threats can take the form of malicious attacks that can cripple facilities.

Exploits are designed to target operating systems, hardware, and include data breaches. They’re also relentless. According to Ponemon research, 90% of operational technology organizations suffered at least one severe cyberattack in the last two years, where 62% experienced two or more. Can your operation afford a setback of this magnitude?

Older devices and machinery also present risk. As they become integrated with newer technology an organization’s risk factor increases. This underlines the importance of implementing and maintaining IoT protocols that handle security.

As you design or shop for an IIoT solution, think of security as a fence that protects your organization. It must protect your operation from the threats (big and small), to create an environment that supports operational excellence. Be sure to examine how your IIoT solution plays with your current environment. The cost must be considered when calculating potential loss of continued exposure and should you decide to replace older with newer and more secure equipment.

Develop a change management strategy

Change management that’s poorly planned fails miserably. Harvard Business Review reports that as much as 70% of all change initiatives never reach a satisfactory outcome.

Transformation is hard. It also can’t happen as a one-time event or influence just one part of your organization. And when considering the positive impact of a successful industrial Internet of Things solution, nothing can be left to chance. Organizations must think about IIoT as an exercise in elevating their technology, people, and processes.

A complete, organization-wide change management strategy is the surest path to success. Performing one involves an all-hands-on-deck approach. The scale of truly effective IIoT solutions involves identifying the state of your business. Interviewing staff at various levels, reviewing processes and technology requires diligence.

Change management is also an ongoing exercise. Having identified what needs to change is just one part of an organization’s transformation strategy. Your business culture and how your people adapt can’t be overlooked. Businesses evolve according to their size, agility, and resources. Make sure you have taken stock of your organization’s position in each sphere to manage your transition into an industrial IoT-driven operation as predictable as possible.

Once a solution is in place, people are trained, and processes are replaced with more effective business practices, tracking performance to tweak and perfect your operation is the next step. Commit to total quality management and ensure quality control mechanisms are in place. Together, TQM and quality control will help your organization stay the course and deliver the kind of results you set out to realize.

Fill your IIoT skills gap

Microsoft’s IoT Signals Report offers a sobering take on the skills shortage many IIoT-enabled businesses must tackle. The report shares that only 33% of companies are equipped with the talent they need to run effective IoT ecosystems.

This finding, while a little unnerving, underlines the importance of IIoT-hungry organizations upskilling and headhunting talent if they want to become leaders in their industries. At the forefront of the skills shortage, positions for data science professionals with experience in AI and machine learning are two increasingly important disciplines that tomorrow’s businesses need. Fostering talent internally is always ideal but companies may also need to consider outsourcing their IIoT management. In many ways, doing so could lead to greater capabilities, less risk, and better results in a shorter time frame.

Excellence is possible

IIoT presents a chance to evolve. It makes it possible for organizations to become the most competitive versions they can be. But for that level of excellence to be realized, businesses must understand IIoT. They must pull back the layers that weigh down current operations and commit to transformation.

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