HOW & WHY THE IOT IS - DMI - The First Integrated, End...

How & Why The IoT Is Transforming Manufacturing · 1

HOW & WHY THE IOT IS TRANSFORMING MANUFACTURING

How & Why The IoT Is Transforming Manufacturing · 2How & Why The IoT Is Transforming Manufacturing · 2

INTRODUCTION

The Internet of Things (IoT) is starting to fundamentally change the way some big companies operate and this is especially true for manufacturing.* In gaining benefits from the IoT, industrial manufacturers are far ahead of 12 other major global industries. According to Tata’s research, they reported:

• The largest average revenue increase from their IoT initiatives last year (29%)

• It was also forecasted that they will have the largest revenue increase from the IoT by 2018 (27% over 2015)

• Industrial manufacturers were also in the lead for using sensors and other digital technologies to monitor the products they sold to customers (with 40% of the companies surveyed doing so)

Companies with the greatest revenue increases from IoT initiatives reinvented their business models rather than just mobilizing them. They reimagined their businesses digitally and produced substantial value for customers – not just value for themselves. They deliver that value through new business models,

product and service offerings, and data. We’ve experienced this ourselves with successful clients such as CEMEX, Heathrow, Warburtons, as well as one of the largest industrial cleaning companies in the world. Consequently, we’ve also seen companies that simply took existing business processes and mobilized them and although the ROI is still positive, they are by no means leveraging the full potential of IoT.

This white paper summarizes:

• Why IoT is so popular among manufacturers

• The most common use cases of IoT

• The benefits of IoT

• How IoT is changing business models

• Platform requirements

• Challenges, risks and why companies fail with IoT

• Key attributes to success

The report uses the broad definition of IoT, including connected devicesin the enterprise, Machine-to-Machine (M2M) technology and mobile enterprise applications.

“GE IS INVESTING MORE THAN $1 BILLION OVER FOUR YEARS IN THE INTERNET OF THINGS AND TWENTY-SIX OTHER COMPANIES (INCLUDING 14 IN THE U.S.) PLAN TO SPEND $1 BILLION OR MORE EACH ON INTERNET OF THINGS INITIATIVES.”

TATA CONSULTANCY SERVICES, JULY 20151

*For the purpose of this white paper, manufacturing is comprised of a broad scope of industries including: manufacturing of machinery, products, consumer goods, oil and gas, forest and paper and adjacent products and services with similarities.


WHY IS THE IOT SO POPULAR AMONG MANUFACTURERS?

A study by a global advisory service EY in 20144 states that IoT has now become a differentiator in top manufacturers

because it helps maximize productivity while reducing quality losses. It is useful for all aspects of manufacturing, but

is particularly applicable to packaging, where it easily discovers packaging slowdowns.

A summary by IoT Analytics of research from Harbor Research, Gartner, Cisco and Global Insights shows manufacturing as the leading industry after consumer products and services.

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WHY IS THE IOT SO POPULAR AMONG MANUFACTURERS?continued...

And IDC concludes similar results in their 2014 IoT forecast by industry.

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Based on some of the insights presented in the introduction of this white paper, it’s clear that manufacturers are already

spending considerable amounts of money on mobilizing the enterprise, including connecting employees, products,

services and machines/vehicles. Digging deeper, we can see how and what functions in the business they’ve tackled first.

The fact that mobile apps are the starting point shouldn’t come as a surprise, as this is where organizations can achieve

the fastest results with the smallest investments. Involving customized software such as sensors, connected meters and

connecting existing equipment and machines immediately make it more complicated. However, mobile applications are

HOW DO MANUFACTURERS USE IOT TECHNOLOGIES?

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HOW DO MANUFACTURERS USE IOT TECHNOLOGIES?continued...

usually used in conjunction with standard hardware including NFC chips, beacons and connected equipment that provide

information/data to the business. The mobile apps are a window and a data input mechanism for the manufacturing

process.

This is also aligned with the focus of most IT organizations improving applications to better fit the business processes.

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WHAT ARE THE MOST COMMON USES OF IOT?

So we’ve seen what organizations say they do and what

they are planning on doing, but what does this mean in

practice for a manufacturer? Here’s a quick summary and

examples of what organizations are doing in each area.

PRODUCT MONITORINGTracking products and services after they have been sold.

One of our key clients is a global manufacturer of indoor

and outdoor environmental cleaning solutions and specialty

floor coatings. They needed a way to consolidate and

analyze their cleaning machine telemetry data as well as

making this data more actionable by delivering it to their

internal management team, customers and field-based

operators in real time. DMI’s solution architecture team,

working with SAP solution providers, designed a logical

architecture, which allowed for the integration of machine

data, SAP ERP data and other sources with minimal

architectural impact to the client. The architecture also

provided high-speed and performance movement of data

from the machines to the reporting layer. This enabled the

effective delivery of information as well as allowed the

retirement of maintenance-heavy legacy systems that were

not scalable.

The company’s customers can now review machine data to

check whether proper cleaning has taken place as well as

locating their precise position, review fleet service metrics

in turn allowing them to optimize operations. This has meant

a competitive advantage for our client, both in the United States

and Europe, as similar companies try to keep up with IoT.

CUSTOMER MONITORINGMonitoring the status of customers through apps, sensors

and wearables, while using the product/service.

London’s Heathrow Airport (LHR) is a major international

hub, with over 180,000 travelers flying between more

than 90 countries passing through each day. All these

people need timely and relevant information, especially

with London’s unpredictable weather, which frequently

affects airline passengers. To continue Heathrow’s tradition

of “making every journey better,” DMI created an airport

application that provides passengers with important

information, as well as making their experience at LHR

unique and memorable.

We started with the basics of travel, for instance keeping

airline passengers informed about the status of their flights

and other information directly related to their journey and

stopovers.

Once passengers arrive at Heathrow, our app gives

them access to the information they need most, like

updated flight statuses and terminal maps. However,

with geolocation, Wi-Fi and beacon use, the airport can

now keep track of where people are within the airport in

order to improve customer service and flows and provide

information on Congestion Areas, Retailer Proximity,

Assisted Wayfinding, Promotions and Location Based Offers

as well as Boarding Gate and other information, delivering a

personalized experience based on your precise location.


SUPPLY CHAIN MONITORINGTracking product and/or service operations (production,

warehouse, distribution).

We are currently working with CEMEX, one of the largest

companies in the world in the cement and concrete

business. Via an innovation accelerator, we are driving

innovation from various inputs (customer insights,

technical innovation, local markets, business strategy and

eventually outside partners). Through the use of IoT and a

responsive web portal with hybrid applications for iPhone,

iPad, and Android smartphones, CEMEX is now able to

track all details about their customers, orders, invoices,

and deliveries on a daily basis. This covers all aspects of

production, warehouse logistics and distribution, which

has been key in increasing productivity, levels of customer

service and cost savings.

PREMISES MONITORINGTracking the customer experience at the site where the

product/service is being used (e.g. home, office, branch,

and store).

Warburtons is Britain’s favorite bakery brand with 20,000

stores in the UK carrying their products as well as 4,500

employees. Before their Retail Field team would be on the

road most of the week visiting stores and checking product

inventory. They were also responsible for discussing and

presenting the product catalogue with the store managers

with the aim of expanding the range of stock. However, all

of this was done on paper and the data gathered would

then require a week to input into the system.

To enhance employee productivity, DMI developed an

Android tablet application which eliminated the need

for the Retail Field team to capture store-specific data

on paper. This helped mobilize the business process of

capturing in-store product data and equipped the team

with real-time store card details, access to promotion

and marketing collateral as well as an interactive product

catalogue. Not only did this help save time and create front-

line efficiency, it also updated corporate back-end systems

automatically.

SAFETY/SECURITY MONITORINGMonitoring the safety of employees or customers in

production or using the product/service.

DMI has built a solution for U.S. field workers - government

personnel, security personnel and people in dangerous

environments - that provides an alert to a central monitoring

system, in case anything happens that might pose a risk or

if the person falls. The solution that works with apps and

wearables automatically asks the person to confirm if s/he

is OK, by using secure biometrics (voice, fingerprint and eye

scanner) and if there is no response it alerts the appropriate

authority to the location.

WHAT ARE THE MOST COMMON USES OF IOT?continued...


Before an organization starts any IoT project they should

make sure that everyone is clear about the problem they

want to solve. Secondly, it’s a question of defining the

solution and the expectations on results, or KPIs, that the

organization will achieve. Be realistic about this, as most

organizations have a tendency to overestimate the benefits.

As you will see below, this can be improved by IT and the

business units working closely together.

When done right here are some examples of the benefits

that we’ve seen customers achieve:

› Predict and keep the customer informed about

maintenance, purchasing new products/services

› Improve product/service based on usage and feedback

› Better customer segmentation based on usage

› Better service thanks to informed sales and service reps

about usage of the product/service

› Increase in revenue thanks to automatic reordering,

better product display and more informed customers

› Reduction in cost of sales due to more effective customer

interaction based on usage and customer information

WHAT ARE THE BENEFITS OF IOT?


Too many companies are still taking an existing business or manufacturing process and mobilizing it using IoT technology.

However, according to research by Tata (see illustration below) most businesses believe that their business model will

change thanks to IoT.

HOW IOT IS CHANGING BUSINESS MODELS FOR MANUFACTURING

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The most common new business models are:

› Moving from selling a product to a product-as-a-service

model

› Adding value-added services on top of a product

Examples of real business model changes due to IoT that

we’ve seen include:

LEXMARK: CHANGING THE PRODUCT LINE

Customer demands are changing- they no longer want to

buy a product that carries out a single, specific function, but

rather, want tools and services to solve a particular business

problem. Lexmark, well-known for producing computer

printers, has leveraged this shift in customer demands and

now sells printing solutions of which hardware is merely

one element, to help their customers manage information in

various formats, whether it be videos, invoices, sales orders,

etc. Lexmark has invested more than 1BN in innovative

technology to ensure its product can convert information

coming from smart devices, and now has a flexible portfolio

of mobile printing technologies (including Google Cloud

Print, AirPrint and other mobile print offerings).

The business model in terms of revenue has also changed

in that it no longer consists of a large payment upfront,

with minor updates throughout the years. Instead, Lexmark

is able to get close to its customers and help define their

solutions, with an ongoing, regular income via subscriptions.

It is through the innovation and fundamental change in

what a company produces and how they connect to smart

devices and other sources of information, which keeps

brands like Lexmark competitive in a changing business

environment.

HOW IOT IS CHANGING BUSINESS MODELS FOR MANUFACTURINGcontinued...

PHILIPS HUE: REINVENTING A 140 YEAR OLD PRODUCT

The thinking behind Philip’s reinvention of the common light

bulb is that despite how much our homes have changed

over the past century, the technology to light them hasn’t.

By leveraging IoT and connecting to other devices and

sensors, Philips Hue is much more than an ordinary

lightbulb. A single Hue bulb has all colors in the spectrum,

in varying intensities. The light bulbs not only allow you

to set and personalize different lighting in your house, the

Hue has been reinvented to do and be so much more. It

can help with health and wellness by setting specific light

environments throughout the day, as well as notify you with

changing light whether the oven timer has sounded or an

email has arrived. It can also be remotely controlled and

linked to your house alarm to secure your property and

make it appear as if you are at home. What is key here is

that Philips went beyond simply modernizing the lightbulb-

they leveraged new technology to reinvent a product that

has been in use for more than a century.


THE IOT PLATFORM

IoT is not only about connecting smart devices to the Internet. Typically an IoT solution will require all or many of the

following components as a foundation:

Intel, Cisco and IBM have done very well promoting themselves as IoT platform leaders, but the components above

could come from any of the thousands of companies helping to shape the IoT ecosystem. DMI works closely with

companies ranging from Microsoft, SAP and Oracle to device manufacturers such as Apple, Samsung and Blackberry,

as well as start-ups.

PHYSICAL DEVICES (machines, smartphones, tablets, computers, appliances, sensors, vehicles, wearables)

BIG DATA ANALYTICS

WEB SERVICES/APIS (internal and external developers)

CONNECTIVITY (GSM, Wi-fi, Bluetooth, Wired, Digby)

DEVICE REGISTRATION & CONNECTIVITY (including security and privacy, asset management)

CLOUD LAYER (including data storage and databases)

APPLICATIONS (dashboards, monitoring and predictive analysis, automated processes, tracking)

SUPPORT & HELPDESK

CORE COMPONENTS


The biggest challenges related to IoT are security and

privacy, lack of interoperable standards, storing and

managing data, and timelines.

SECURITY & PRIVACYWith recent hacks of cars, government agencies, retailers,

dating websites and startups, as well as privacy issues

when companies track employees, most IT managers say

that they are aware of the risks9. Manufacturing is facing

very real threats when exposing equipment, machinery,

products, devices and services to the Internet.

Similarly, protecting employee and customer privacy is

a challenging balance when companies want to monitor

everything going on to optimize and transform operations.

This shouldn’t stop companies from going ahead with IoT

initiatives but it means that security and privacy need to

be part of the requirements, solution design, testing and

monitoring post launch.

LACK OF INTEROPERABLE STANDARDSWith today’s systems and applications, we are used to fieldbus

standards with interoperable device information profiles,

information standards for applications use – like OPC/OPC

UA, and higher level manufacturing information integration

models such as OAGIS, MIMOSA, ISA 88 and ISA 95.

In the IoT world there are proposals to standards and

standardization organizations but there isn’t an established

standard yet. IBM’s MQTT (MQ Telemetry Transport)

protocol is becoming common in small computing footprint

CHALLENGES – WHAT ARE THE RISKS AND WHY DO COMPANIES FAIL?

devices. Similarly, Microsoft supports IoT with existing

platforms and protocols and is promoting its strength

in intelligent systems including Windows Embedded

operating systems. The Industrial IP Advantage coalition

is addressing the secure use of standard Ethernet and

Internet Protocols for industrial purposes but they began

only recently and there are still a lot of details missing.

STORING & MANAGING DATAWhile IoT applications can be developed in isolation,

the backend for storing and managing data cannot. For

organizations that haven’t yet moved their infrastructure

to the cloud, this is a huge challenge as it requires legacy

IT system integration in parallel with the development of

applications. In essence, this means that organizations

planning on deploying multiple IoT applications need

to have a data storage and management strategy and

infrastructure.

TIMELINESFor most organizations projects of the complexity of a

common IoT initiative require 18 months from start to

finish including research and analysis, requirements

gathering, business cases and budget approval, solution

architecture, UX/UI design, development and integration,

device deployments, big data analytics, deployment

and acceptance testing. Add normal project overruns,

inexperience with IoT and the timeline easily hits two years.

For mobile and IoT projects this is bound to fail. Instead we

recommend 5-6 month MVPs (Minimum Viable Product)

projects to test, evaluate and optimize/iterate.


In addition to these challenges, many organizations struggle

to successfully deploy IoT initiatives due to a combination of:

a) Lack of knowledge and experience among decision

makers and/or staff carrying out the projects

b) Partners/vendors with limited knowledge and

experience of IoT that uses the customer as a pilot

c) IT and Business functions not working together to solve

the business problem (see figure below)

CHALLENGES – WHAT ARE THE RISKS AND WHY DO COMPANIES FAIL?continued...

d) Unclear objectives, scope, targets

e) Big ambitious projects with 18+ months’ timelines instead

of smaller pilots to prove that the technology solves a

business problem

The following illustration by Gartner shows how business

departments working in isolation usually fail to realize the

full potential and competitive advantage of IT projects.

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How & Why The IoT Is Transforming Manufacturing · 15How & Why The IoT Is Transforming Manufacturing · 15

WHAT ARE THE KEY ATTRIBUTES TO SUCCESS IN IOT PROJECTS?

With all the challenges and risks how do you succeed with your IoT strategy and projects?

To start with, as per the insights and research at the start of this paper, don’t just digitize existing business processes. Instead think about how you can use IoT and mobile technology to transform your business.

Other key attributes of successful IoT projects are:

› Clear objectives, KPIs and measuring of results

› Short iterative projects of maximum 5 months from start to MVP (Minimum Viable Product) launch

› IoT implementations supported by lean continuous improvements

› User involvement throughout the development process

› Training and education of employees, getting everyone involved.


SOURCES

1. “Internet of Things: The Complete Reimaginative Force”, Tata Consultancy Services, July 2015,

http://sites.tcs.com/internet-of-things/

2. “IoT Market Segments – Biggest Opportunities in Industrial Manufacturing”, IoT Analytics,

October 2014, http://iot-analytics.com/iot-market-segments-analysis/

3. “Worldwide Internet of Things Spending by Industry Sector 2014–2018 Forecast”, IDC, July 2014,

http://www.idc.com/research/viewtoc.jsp?containerId=249736

4. “Unwrapping the Packaging Industry: Seven Factors for Success”, EY, 2013, http://www.ey.com/

Publication/vwLUAssets/Unwrapping_the_packaging_industry_–_seven_factors_for_

success/$FILE/EY_Unwrapping_the_packaging_industry_-_seven_success_factors.pdf

5. [Same as 4.]

6. “2015 IT Budget Trends”, Tech Pro Research, September 2014, http://www.techproresearch.

com/downloads/2015-it-budget-trends/

7. [Same as 4.]

8. Gartner, 2014, http://www.zdnet.com/article/it-budgeting-in-2015-what-the-surveys-tell-us/

9. IDC survey, September 2014


CONTACT US TO LEARN MORE:

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DMI Sales Team • U.S. Sales: 855.963.2099 • Int’l Sales: 240,200.5848 • [email protected]

DMInc.com

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› We offer brilliant creative and user experience: Our mobile app development group was named the Best Developer of an Enterprise App at the 2013 Mobile Entertainment Awards.

› We have 900,000 devices under management for 100+ clients, including many Fortune 500 companies—like Johnson & Johnson, Sears, The Associated Press, Allergan, and more.

› We provide 24 x 7 x 365 mobile service support. DMI is the one call our customers need to make to resolve any issue—devices, apps, infrastructure, even carriers.

› We deliver secure mobile and eCommerce solutions for more than 50 leading consumer and business brands.

› We offer a full range of security options that include Federal-grade hardware-based security, two-factor authentication, secure container, and sophisticated encryption solutions.

› With our expertise and economies of scale, we can provide mobility management at a higher service level and on average 20%-40% lower cost than most companies can do on their own.

› Pervasive excellence is our commitment to quality service. DMI is one of only a handful of companies that is CMMI L3 appraised for both application development and services, as well as ISO 9001:2008, ISO 27001:2005, and ISO 20000 1:2011 certified. Our average D&B Open Ratings performance score from our clients is 95/100.

REINVENTING BUSINESS THROUGH MOBILITYDelivering successful mobility solutions requires a variety of distinct skillsets. Between mobile strategy, UX and app development, brand and marketing, big data analytics and device and app management, there’s a lot to coordinate. At DMI, we’ve brought together all of these services to create the first end-to-end mobility company. Our integrated approach allows us to take care of everything for our clients, from start to finish. That means no more back and forth with multiple vendors.

Mobility isn’t just part of what we do, it’s why we exist—to reinvent business through mobility.

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