What’s Standing Between You and Asset Performance in the IIoT Age?

Feb. 13, 2017
Companies that use asset performance management as an entry point for digital transformation can expect better asset reliability, longer asset life, lower decommissioning and disposal costs, and lower operating costs.

The Industrial Internet of Things (IIoT), smart connected assets and digital transformation have been top themes for just short of two years. Organizations often view them as distinct focus areas, perhaps unwisely so. The asset is at the heart of each of these topics, making them inextricably related. Businesses that come to that realization position themselves for more pragmatic choices about technology architecture, empowering the workforce and business processes.

Because the asset is at the root of each, asset performance management (APM) is a prime target to lay the foundation for sweeping transformational efforts throughout the enterprise. LNS Research has studied the market and marked the success of organizations that have used APM as an entry point for digital transformation. Companies that follow in their footsteps can expect better asset reliability, longer asset life, lower decommissioning and disposal costs and, as a result, lower operating costs. They also gain competitive advantage—not just in cost structure, but also in greater uptime and availability, better on-time delivery and higher quality.

With so much to gain, why then do operations leaders face resistance and downright opposition when making overtures toward APM project or technology pilots? According to surveys conducted by LNS Research, the top three roadblocks are funding for projects, building a business case and understanding IIoT. There is a direct correlation between these three barriers—insight that hopeful or enlightened operations executives can exploit to advance their project.

Armed with the knowledge of what’s standing in the way of an APM project, what steps can organizations take to build the business case and get the funding? A good strategy is to start small with a pilot project. Small wins provide the opportunity to learn about the capabilities the market offers and proof points to illustrate value and help build a business case. As pilot projects take hold in a variety of industries, no one industry has the lead. Still, use cases are now emerging, and they also provide ammunition for expansion across more asset bases or different parts of the business.

As operations leaders strive to address concerns of executive leadership and to get buy-in to fund larger projects, data ownership also becomes a key consideration. Companies that have contemporary attitudes toward data leverage it to enable new business models. It’s still a novel concept, but nearly every week LNS analysts uncover stories about the opportunity it presents. Almost half of industrial companies (47 percent) have not deployed smart connected assets and therefore are not getting the APM-related data they so richly provide. Another split is the remaining 43 percent that do have assets that are generating APM data; just over half (22 percent) will not allow suppliers to access it. This is a missed opportunity in vendor relationships.

If companies and vendors share data with each other, they will undoubtedly reap future benefits like better product designs and proactive fixes to support warranty issues. Forward-thinking organizations do at some level share APM data, either with proactive or diagnostic-level support. Starting here allows asset-intensive organizations to understand how suppliers use the data and can be the first step in requesting smart services or usage-based asset models.

The shakedown toward digital transformation doesn’t stop at sharing data with vendors. Early adopters of smart connected assets demonstrate increased reliability. The proof point is in overall equipment effectiveness (OEE), the product of availability, productivity and quality. Asset reliability has an impact on all three factors, and operations with higher reliability achieve higher OEE. Organizations with real-time visibility of APM data exhibit a substantially higher OEE than those that do not, with a median OEE of 75 vs. 67.

Even with the knowledge of what an organization can expect from a pilot project, it’s important to document wins and failures along the way—it’s the expanded knowledge and building the business case that will ultimately have an impact on operations’ ability to get the funding for a full-blown initiative.

In today’s age of IIoT, APM is no longer a silo with only operations and maintenance responsible for the Plan, Do, Check, Act process. Assets will evolve digitally and physically, with more touch points with outside groups, and a huge appetite for data to help manufacturers, suppliers, sales and marketing, and customers. This forces everyone to think of APM as a platform. For industrial platforms to take hold, we must go beyond IIoT thinking and deliver the platform to the point of greatest value: the asset. It’s not just about connecting the asset, adding more sensors or enabling predictive analytics; it’s about creating as many connections to that asset throughout its entire lifecycle. This means connecting assets, services, workforce, suppliers, manufacturers, sales and marketing, operations and maintenance together on one platform, with many applications that span specific users or use cases, to enterprise apps for many.

Organizations that have targeted APM as the testing ground for the IIoT and digital transformation will undoubtedly lay the foundation for transformation throughout the enterprise. A thoughtful approach can be pilot projects that lead to an expanded initiative and a more holistic view of the relationships that exist around APM. The LNS Research agenda throughout the coming year will address the emerging issues and concerns around these topics. Organizations ready to act now should keep these key considerations in mind:

  • Begin the business case journey by preparing technically for what is to come. The best approach is a pilot. Understanding at a small scale how things work improves the plan and helps develop the value to move to a larger scale.
  • Vendor collaboration is critical for delivering smart connected assets; there is no “one size fits all” approach, so look to vendors with strong partnerships that can provide a broad reach across the platform.
  • Expand knowledge throughout the organization to overcome objections and concerns, particularly in the areas of data, smart connected assets, IIoT and digital transformation.

>>Jason Kasper, [email protected], is a research analyst with LNS Research, primarily focused on asset performance management with collaborative coverage across sustainability, energy management and IoT/machine-to-machine practice areas. LNS Research provides advisory and benchmarking services to help line-of-business and IT executives make critical decisions. Research focuses on IIoT, digital transformation and operational excellence. Learn more at www.lnsresearch.com/blog.

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