In Analytics, Internet of Things

Operations and technology executives take notice when experts such as McKinsey project $11.1 trillion in economic value by 2025 as a result of linking the physical and digital worlds.  That’s a tremendous amount of economic value in a very short time, even if the experts might be a little off in their estimates.

The impact of the internet over the last 25 years certainly supports predictions of disruption and promise as the Internet of things (IoT) and Industrial IoT (IIoT) continue to connect the physical and the digital.  Organizations that transform themselves using IIoT can become giants; those who lag or fail in their execution may become mere memories. How do you ensure you and your organization land on the right side of this disruption?

Operational data is not a new phenomenon

Mentions of IIoT pepper nearly every operations- or technology-related conference these days.  Many traditional control system vendors are relabeling their offerings as part of the IIoT movement.  While industrial control systems remain critical components of operations in many industries, simply rebranding existing systems is certainly not going to going to deliver the trillions in economic value that McKinsey and others predict.  That magnitude of value creation comes only from truly transformative changes to how companies and industries operate.

Inherent risks in embarking on transformative change

Any large organization that can greatly benefit from the promise of an IIoT world has a number of existing critical assets, control systems, IT systems, processes, and skilled people that are essential to their operation.  Many industries have equipment and systems that have been acquired over several decades. Displacing all of these existing operational assets with a sparkly new, end-to-end IIoT-enabled operation is risky and typically not economically practical. Mergers, acquisitions, large IT projects and other attempts at transformative change fail at an astonishing rate. Estimated failure rates range from 30% according to the optimists to 70% from the pessimists.

If you are trying to create transformative change while relying on existing systems, processes systems, and people, you inevitably will face execution risks related to:

  • Lack of interoperability and openness of existing control and IT systems
  • Poor data quality in dependent systems
  • Lack of scalability, both technically and economically, of these systems
  • Insufficient internal talent, expertise, and bandwidth to manage a large project that touches the operations and IT sides of the business
  • Security exposures as you open up systems that have traditionally been on a closed loop system
  • Poorly defined objectives and accountability
  • Striking the wrong balance between building versus buying IIoT systems, ending up with either a solution that isn’t fit for purpose or a solution that exceeds cost and timeline estimates and doesn’t scale.
  • Difficulty maintaining balance of schedule, cost, ROI and executive support

How to end up on the winning side of IIoT

The risks and complexity make getting started with an IIoT initiative seem daunting.  But with this sort of disruptive change, playing the laggard is not an option. How do improve your odds for success?  Here are a few recommendations:

Think big but start small – Think big about how your organization can use new data sources and analytics to improve their operations and service uptime, but start small by first tackling a discrete, well-defined problem. Deliver value quickly and then consider another problem to tackle or extending the first solution to solve other related problems.

Clarify the problem, solution, and accountability – Ensure the problem, solution requirements and dependencies are clearly understood.  Appoint a clear, accountable owner for the project who has organizational support.

Prioritize vendors that have “skin in the game” – Many software, hardware and communications vendors will happily sell you the parts of an IIoT solution–platform access, software licenses, sensors, access points, gateways, network access, and servers–but leave you to sort how to assemble these parts into something that solves your problem and provides value. Prioritize vendors who provide ongoing service with lower up-front costs.  This enables you to ensure the service delivers on its promised value before you have committed too much funding.

Challenge traditional thinking in your organization – What got you here won’t get you there! Clearly for many industries existing levels of security, reliability and regulatory compliance must not be compromised. However, that shouldn’t mean that new approaches such as cloud computing, internet connectivity, open source software, and commoditized hardware should be dismissed.  These will be required in many cases to realize the potential value of IIoT solutions.  Many companies use these technology solutions successfully today while balancing the associated risks.

Get Started – Don’t get stuck in analysis paralysis – Obviously it is important to ensure a problem, the solution and potential value for solving it are well understood.  It is also critical to assess risks and get necessary organizational buy-in.  Once you have done that, get started, learn and improve.  The opportunity is immense and those who lead with successful IIoT solutions will have tremendous efficiency advantages in their respective industries.

Allan McNichol is the former CEO of GOFACTORY and Managing Director for Intelligent Energy

(Image courtesy zurijeta / 123RF Stock Photo )

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