While Internet of Things was appointed by Gartner as the most hyped technology in 2014, I believe that Industrial Internet of Things IIoT has even bigger potential and will change the business models in the industry entirely in the next decade.
World Economic Forum in collaboration with Accenture released a research paper “Industrial Internet of Things: Unleashing the Potential of Connected Products and Services” which brings more light to the future based on the IIoT.
Here you will find the key points from the research regarding the business models, opportunities and problems:
“Opportunities and benefits according to the research are:
- Vastly improved operational efficiency (e.g., improved uptime, asset utilization) through predictive maintenance and remote management
- The emergence of an outcome economy, fuelled by software-driven services; innovations in hardware; and the increased visibility into products, processes, customers and partners
- New connected ecosystems, coalescing around software platforms that blur traditional industry boundaries
- Collaboration between humans and machines, which will result in unprecedented levels of productivity and more engaging work experiences “
“…the vast majority (88%) of respondents say that they still do not fully understand its underlying business models and long-term implications to their industries.”
“…the number of sensors shipped has increased more than five times from 4.2 billion in 2012 to 23.6 billion in 2014.”
“Much attention is drawn to the efforts by large companies such as Cisco, GE, and Huawei, and government initiatives like Industrie 4.0 in Germany.“
“… increasing levels of venture capital, with an estimated $1.5 billion in 2014“
‘… 72% of respondents believe that the development of the Industrial Internet will be disruptive to their businesses and industries, and more (79% of respondents) think those disruptions will ccur within the next five years.”
“… [the] survey indicates that companies are turning to digital technology either to drive down cost or increase top-line growth: 79% of respondents indicate that “optimizing asset utilization”
is a “very to extremely important” driver for adoption, while 74% say the same about creating alternative revenue streams through new products and services. “
“.. almost two-thirds of respondents agree with the widely-held view that security and interoperability are the two biggest hurdles. Other significant barriers cited include the lack of clearly defined return on investment (ROI) (53%), legacy equipment (38%) and technology immaturity (24%)“
“With the Industrial Internet, manufacturers are already using new software capabilities to improve operational efficiency through predictive maintenance, and achieving results such as savings on scheduled repairs (12%), reduced maintenance costs (nearly 30%) and fewer breakdowns (almost 70%)”
“Concerns and challenges:
- Lack of vision and leadership
- Lack of understanding of values among management or C-level executives
- Lack of proven business models (e.g. outcome-based revenue sharing or profit sharing)
- Rapid evolution of the technology causing companies to delay large investments
- Requiring heavy upfront capital investment
- Requiring business process change
- Not enough awareness about the current state of
- Inadequate infrastructure
- Lack of application development tools
- High cost of sensors.”
“This new world is called the “outcome economy,” where businesses compete on their ability to deliver quantifiable results that matter to their customers in a specific place and time. To achieve these goals, companies will increasingly rely on business partners, connected ecosystems, advanced analytics and new data streams from smart products in the field to gain timely insights about customer needs and behaviours.”
“In the outcome economy phase, companies will shift from competing through selling products and services, to competing on delivering measurable results important to the customer.“
“.. companies will need to shift their business practices and begin thinking in terms of ecosystems.. ecosystems are critical to the success of the outcome economy…”
“… the outcome economy is transforming how companies create value for customers and how they compete. To be successful, companies will need to have a clear strategy on how they want to participate in emerging industry platforms and ecosystems..”
“The picture for industrial markets is still murky.”
Further on, the research is focusing on the challenges related to the jobs, the new skills and professions and finishes with some recommendations to the stakeholders.
I strongly recommend this paper to anyone who’s interested in business models enabled by the Industrial Internet. Have a great read!
HutGrip is an industrial IoT solution developed and owned by IndigoVerge. If you are interested in IIoT consulting and implementation for a similar or another IoT project, please get in touch with IndigoVerge team.