2018: We’re Past Peak Hype and IIoT’s Just Getting Started

Companies that are well on their way with digital transformation or leveraging the Industrial Internet of Things will be forging new ground in three key areas this year.

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When it comes to the Industrial Internet of Things (IIoT) and digital transformation, most industrial companies now fall into one of three buckets: working on it, have a plan and getting ready to ramp up, or working to iron out a plan. We passed peak hype in 2017, and over the past year we saw some interesting case studies with powerful first results. There’s even continued positive momentum across the software vendor community.

Now that 2018 has arrived, senior executives with a plan clearly understand the business implications. Certainly, they’ll see cost savings and revenue uplift, but more importantly they’ll gain a significant advantage over competitors who are still trying to “figure it out” or, worse, who are non-believers. Companies that are well on their way with digital transformation or leveraging IIoT will be forging new ground in three key areas this year.

Three focus areas in 2018

Operational excellence is about to get a jolt of new thinking. Much of the IIoT hype over the past several years has zeroed in on assets and data, without much focus on people or process capabilities. That is about to change. Methodologies like Lean and Six Sigma will begin to fully capture the value of digital technology in manufacturing. Practitioners—indeed, entire companies—will look to dramatically increase traditional results delivered by incorporating new technologies like advanced analytics, augmented reality/virtual reality (AR/VR) and the digital twin. These new methodologies won’t go away, and they will become more fluid and begin to evolve at a rate faster than what we saw over the past generation.

Companies will step up adoption of IIoT platforms throughout 2018, but rapid value delivery through easy-to-deploy and easy-to-use applications will be what pulls through the platforms. Now that large companies like Italy’s largest utility, Enel, and Caterpillar Progress Rail achieved success through enterprise-wide IIoT platforms in 2017, platform vendors will start seeing more organizations making commitments. But don’t be fooled into thinking that a single platform architecture is going to rule. Just the opposite—most industrial companies will have multiple platforms to execute for several use cases. Inter-cloud connectivity is about to become both a requirement and a reality.

Both edge and cloud computing will have a record year. The market has started to realize that, when it comes to IIoT, edge and cloud are more symbiotic than competitive. Both markets will begin to grow harmoniously as vendors and end users start understanding how factors like bandwidth, response time and risk define which parts of various analytics jobs run where. Much of this new understanding will come from the variety of advanced industrial analytics startups that are much closer to the data source than ever before. This new hybrid analytics approach will ensure that the edge and cloud markets will grow by leaps and bounds in 2018, and we expect both to have a record year.

C-level execs: Do this now

If your company isn’t poised to take advantage of today’s digital innovations, or already working on it, you might be eating your competitors’ dust soon. 2018 is the year for manufacturers to figure out their use case(s), formulate a plan and get working on it to make some early headway. The hype cycle is over, and it’s time to stop talking and start doing.

The three things your company can do to make early and fast progress:

  1. Be the executive sponsor of your company’s industrial transformation initiative. Define the company’s competitive advantages and focus new digital investments on extending your lead.
  2. The digital transformation market has reached the level of maturity where it is possible to benchmark your company against peers and best in class. At the very least, look at what other businesses have done and see if you can apply similar use cases in your company.
  3. Get outside perspective, but not solely from your software vendor or system integrator. These companies are extraordinarily knowledgeable—they are, after all, on the front lines of most use cases. However, they also have a vested interest in seeing you sign on for their solutions.

>> Matthew Littlefield, matthew.littlefield@lnsresearch.com, is president and principal analyst of LNS Research.

 

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