The Industrial Internet of Things is not so quietly revolutionizing the world of industry in not only the way that machines function and communicate, but also how the businesses that are taking advantage of connected platform technologies operate.

The vast amounts of data, precise control needed, and expanded capabilities of internet-enabled devices present huge opportunities for profitability, business evolution, and disruption of industry. At the same time, there are also potential challenges within the areas of security, accountability, and investment.  Even with the true potential for industry only recently starting to be explored as the rate of change within IIoT continues to increase, its technology is becoming more complicated. If companies fail to strategically ride the wave of change, they are likely to be pounded against the rocks of obsolescence.

The Industrial Internet of Things

The IIOT, or Industry 4.0, is essentially the vast network of industrial machines that are connected in some way via the Internet. This connectivity allows the controllers and owners of the machines to control them remotely and precisely, to collect massive amounts of data in real-time, and to quickly analyze this data. The data can be shared and sold easily, enabling new levels of efficiency and optimization that were previously either too time consuming to be feasible or impossible to properly handle.

Most consumers now a days are well aware of smart home technology: controllable lights, fridges, thermostats, sprinklers, garage doors, etc. The IIOT is the same concept, just applied to industry: make it connect, make it talk, and make it more profitable. An example includes fully automated car manufacturing plants, where humans are rarely seen. This demonstrates the transformation from an industry in which many millions of people toiled at dull and repetitive tasks, to an industry that still employs millions of people, but for the most part, people doing more complex and interesting jobs.

The hopes are that the IIOT will evolve other industries as well, freeing workforces from menial labor and the health risks that it carries while also creating more free time, making products cheaper and more widely available, reducing waste and increasing efficiency, and generally making industry more versatile, creative, and easy-to-control.

As we will discuss here, there are costs and benefits to the IIoT; some are already understood, while others are clearly in the process of evaluation and our understanding of them. It is a sometimes confusing and often fast-paced rate of change, and often times it can be difficult to keep up with all of the latest developments. Whether the outcomes will result in increased inequality as a result of the owners of the machines pocketing a larger share of the profits or a fairer society in which citizens receive a “basic income” derived partly from the connected machines is difficult to tell. Legislation, societal pressures, and future progress are hard to predict, but we will attempt to give an analysis of the IIoT and its potential.

IIoT Potential

The potential for the IIoT reaches far beyond smart homes and autonomous cars. It has the potential to revolutionize how factories work, how governments interact with their citizens, and how businesses will evolve. There are also avenues for extraordinary coordination in scientific research, medicine, communication, and safety. On the other hand, a highly connected industry is also useful for totalitarian governments, may malign business interests, and has the potential for the destruction of privacy as we know it.

As part of the Internet of Things (IoT), the IIoT is set to become much larger, with the expected value of the market set to double or even quadruple (depending on who you listen to) in the next five years, with roughly $6 trillion set to be invested between 2015 and 2020 alone. Potentially dwarfing the IoT, 100 billion IIoT machines and devices are expected to be connected by 2020, which will generate vast amounts of data and enable industrial processes in ways that are not currently possible.

 

IIoT Today

To explore the future potential of IIoT and to understand the consequences for your business, it is important to understand where the technologies are now.

In 2018, there are an estimated 23 billion IOT devices currently in operation. This includes phones, PC’s, cars, manufacturing machines, and smartwatches. Endpoint investment in IIoT reached over $700 billion worldwide in 2017. Both of these figures are expected to rise substantially as the price of IoT devices falls due to a larger manufacturing base, higher demand, increases in additive manufacturing capacity, and lower operational costs. The current low price is the result of years of technical advances and materials science progress alongside the economies of scale.

Currently there are IIoT solutions in nearly every industry as its so far adoption has been widespread, with as many as 96% of respondents in one survey using cloud-based services and 87% of business leaders believing IIoT will create jobs. Whether this will be the case has yet to be seen (see Mechanization and Jobs).

In billions of dollars

A high number of differing IIoT protocols (the languages devices use to talk to us and each other) currently present challenges to software developers, but many predict that over the next few years a dominant protocol will emerge as the industry standard. Candidates for the top job include MQTT, CoAP, and OMA; all of which have their own distinct advantages.

Areas currently being transformed by IoT include energy production, where efficiencies are being made across the board; food processing, in which waste is being greatly reduced with products that are delivered more efficiently and recycling being easier to coordinate; manufacturing; security, and more. Wherever you look, there are opportunities for efficiency and connectivity.

IIOT Analysis

Data Collection, Analysis/Intelligence, and What to Do With It

Data volumes at this scale presents unprecedented difficulties for industry. Never before has so much data been so easily and widely available on the habits of consumers, the operation of machines in their environments, and the efficiencies of networks/machines. Getting a product made and installed is now the easy part; knowing what to do with all the data being produced is the new challenge for businesses. That is where the price margins will present themselves; where the avenues to future products, refinements, and efficiencies will manifest; and where a business will find itself competing.

 

Effective analysis of data is difficult, especially with such vast quantities. The newly evolving field of machine learning presents opportunities undreamed of even 10 years ago, but with machine learning still in its infancy and largely the domain of large internet companies such as Amazon and Google, the true benefits of algorithmic analysis on a large scale are only just being explored. This carries a sense of urgency with it: The businesses that gets there first and gets it right will have a significant upper hand in the fraught world of technological innovation.

DATA ANALYSIS

 

Massive quantities of data are produced by the IIoT, but without analysis, it is useless. To get meaningful answers, data analysts have begun building computers that mimic neural networks so computers can interpret data like a living organism would. This is called deep learning and offers the potential for massive understanding of data, predictive functions, efficiencies, and improvementsall from data collected by IIoT devices.

The Cloud

By enabling immediate access to vast amounts of data on any workstation, and for any machine or device, cloud computing has been a pivotal instrument in the expansion of the IIoT. Not only is data more accessible, but cloud service providers now offer extensive analytical tools for businesses to use, which helps them make the best use of this data. In recent years cloud computing has fallen in price substantially and is now utilized by a majority of businesses in industry. However, there is evidence that businesses are still not using the cloud efficiently and that potential IIoT applications are not being exploited as much as they could be. As competition heats up, this looks like it’s about to change. The businesses that utilize the cloud most efficiently, are the ones that will maximize their profitability and outperform their competition.

Security Concerns and Solutions

The concerns over customers’ data security are being realized as never before; scandals such as Cambridge Analytica have brought concern over the astounding amounts of data available on the web that can accessed by commercial interests, hackers, and governments alike front and center.

Any responsible IIoT development must have security at the forefront of development or risk damage to their reputation, loss of intellectual property, and illegal breaches in data protection laws. Technologies such as blockchains and advanced encryption are being explored to provide security for both businesses and consumers.

 

The inter-reliance of the IIoT also makes it vulnerable to attack. In the past, gaining access to a factory required that you were physically present; now anyone with a smartphone can potentially gain access to any factory or supply chain on the planet and disrupt it. Stuxnet was the first publicized large-scale attack in this manner, where an Iranian uranium enrichment facility was destroyed with a virus that infected the centrifuges, causing them to spin out of control and explode. Because the centrifuges were vicariously connected to the Internet, a virus released in one part of the world was able to spread until it found its very specific target. 

This particular attack was likely the doing of a government entity, but the potential for non-governmental actors to attack and disrupt the IIoT is also a clear and present danger. Protecting against attack involves effective security protocols as well as proper staff training. In general, when a business is hacked successfully it is the result of human error, not a fault in the security system.

A BRIEF INTRO TO BLOCKCHAINS

Blockchains are public ledgers, or “blocks,” that every computer in the blockchain has a copy of. This is a huge string of encrypted data that can store as much as the computer with the smallest amount of storage on the chain will allow.

To make a change to the blockchain, for example, to register a purchase and exchange of money, every “block” must be made to agree so that each is a copy of the other. This makes every change in the blockchain visible, public, and stored in an enormous number of different places. Bitcoin is the most famous example of a blockchain technology.

The benefits of a blockchain system are clear: They offer a secure, distributed, and fair way of recording information. The possibilities for its use are still being explored, but it is clear that the IIoT will have to incorporate certain elements of blockchains to remain secure.

Interoperability Problems

The bewildering array of different protocols currently available for the integration of IIoT devices makes effective large-scale software architecture for multiple device types extremely difficult. Competing platforms means there is a fast-evolving marketplace for IIoT protocols. While the range of prices and capabilities may be welcome, when it comes to effectively integrating them into one product or service, both safely and securely, it can present huge and potentially expensive challenges for a company.

Regulatory Environments

Regulation always follows much more slowly than innovation, and the regulations in most, if not all, countries are currently inadequate and leave consumers open to crime and corporate exploitation. An effective IIoT business plan will anticipate legal changes and regulations to ensure a futureproof platform that is adaptive, safe, and profitable in a changing regulatory environment. Regulations often change between countries and regions, and even with international standards being established, they are often out-of-date by the time that they come into effect, so a business must learn to anticipate future legal demands.

Redundancy and Adaptability

The internet was designed by the U.S. military to provide avenues for communication that would be hard to destroy because there were many routes a packet of information could take. This redundancy is one of the major benefits of the internet; when one part goes down due to a fault or attack, the others can step in and keep most services going. IIoT has this same potential advantage for industry.  When supply chains are more varied and resilient, the consistent supply of goods and communication is hard to disrupt.  For distributed industries such as the production of computers, which use components from dozens of countries in their construction, a fully integrated IIoT system can efficiently provide alternatives if a preferred producer or supplier is unable to manage an order. This already happens to some extent, but as more IIoT devices come online, the potential for ever more complex, and therefore secure supply chains increases.

Training and Education

The relatively complex nature of the IIoT requires a level of understanding that many employers and employees do not necessarily have.  In order to meet the requirements of a sophisticated IIoT system advanced training will likely be required and due to how rapidly IIoT technology is evolving, this training is likely to be ongoing. Training and education, as well as hiring consultants and experts to help optimize the system are expensive, which may for now put IIoT out of reach for some small businesses.  Conversely, the future of IIoT should be one of relative simplicity, with plug-and-play capabilities. Currently this isn’t the case across the board, but as protocols are unified, software is optimized, and technology is made simpler; less specialized individuals should be able to integrate IIoT technology into even complex industrial processes.

Future IIoT Trends and Possibilities

Future trends are notoriously hard to predict, especially with the disruptive nature of modern technological advances and the increasing pace of societal change. Here we will explore the present and probable future states of the IIoT, and what businesses can do to invest appropriately and protect themselves from competition.

 

NEW BUSINESS MODELS

Disruption is the mode du jour of the modern business environment; it is seen as a positive thing to upturn existing methods of doing business in the name of efficiency and profitability. There are plenty of proponents of this method, as well as plenty of opponents. Regardless, the IIoT looks set to disrupt not only the way we do business, but also how businesses form and the shapes they take.

Mechanization and Jobs

Widespread fears of the potential for robots to replace humans in the workforce are connected to the IIoT. While it looks like jobs are relatively safe in the short term, things do not look good for the people who do menial and repetitive tasks.

Connecting a machine to the Internet allows the machine to be controlled very precisely—much better, in many cases, than a human could do it.

No one is certain what to do about the millions of people who could be made jobless, but solutions like basic incomes could come into play as the IIoT reduces our need to work.

The communication coordination and reach made possible by the IIoT can also make it possible for a manufacturer to become the seller as well, eliminating the need for intermediaries. This approach is cheaper both for the producer of the product and for the customer, but it necessitates a re-thinking of the existing supply chain model. Instead of a series of manufacturers and companies all supplying parts of the service or product, one company would be responsible for the entire chain. This is already starting to emerge in companies like Amazon and Google, which increasingly are making, selling, and distributing their own products.

Integrated Security

As the integration of IIoT into the supply chain continues, the potential for a weak point in the chain causing the whole thing to collapse emerges. A refrigerator connected to the Internet could give hackers access to the entire smart house and everything connected within. Standards will have to be applied across the board at an elevated level to protect from threats.

Employee Monitoring

The IIoT gives employers unprecedented data about their employees; the sensors in everything from the machines they use at work to the smartphones they carry in their pockets tell an employer more information than ever before. This can include data on health conditions, marital status, stress levels, and how much work is being completed. Unless robust legislation is put in place, the chances for the IIoT to exploit workers should be a concern.

Growth

High estimates of what the IIoT will contribute to global growth are in the trillions of dollars. This is not exclusive to the Western world either. As economies in the East develop, they will implement the latest technologies to build their infrastructure, leap-frogging many of the established procedures and techniques the West first implemented. This puts these countries at an advantage when it comes to implementing the latest technologies; established infrastructure and legislation is costly and timely to replace, whereas putting it in from the get-go is much cheaper.

Revenues from the IIoT are expanding by double digits every year and look set to continue at this pace. These benefits are not only for those who implement the IIoT to expand and optimize their existing businesses; IIoT also presents huge opportunities for new companies as far as ideas for growth and profits. Modules and sensors, for example, have dropped in price and increased in quality and capability, further increasing the profitability and areas for growth in production.

There are already more IIoT devices than mobile phones; one estimate puts the number of connected devices per person at 3.4 by 2020. This is staggering growth and offers many investment opportunities.

Investing in the IIoT

There are several avenues for profiting from the massive growth and expansion in Internet-enabled devices:

  • Loans for upgrades to IIoT platforms
  • Investing directly in chipset and sensor makers
  • Investing in software developers that are making IIoT programs and apps
  • Looking for disruptive technologies to make investments within
  • Buying into cloud computing
  • Owning a share of a server farm for IIoT cloud operations

These are just a few of the potential avenues for possible investment; however, when looking to invest in IIoT potential, a few things can be kept in mind to ensure a successful transition or investment.

 

A Clear, Detailed Plan

If your company is transitioning to the cloud and investing in sensors and other IIoT tech, you need to understand how the technology can help, what the disadvantages are, and make sure that everybody who will use it, understands it. This takes a plan with defined steps and some available alternatives.

When looking to invest in any company, a good business plan is item number one. If it does not have a section on IIoT, it is unlikely that the directors have planned adequately for the future.

Integration

Does the platform and technology you seek to invest in work with your existing technology?  What about with your integrated third party systems or client’s tech? The multiple protocols available can sometimes make compatibility an issue.

Future Oriented and Adaptable

What are the possible economic and legal environments that this technology will be working in now and in the future? Can the technology withstand a few years of disruption, or will it need to be replaced too soon?

Profitability

The benefits of the IIoT devices and software you are planning to use need to be clear. Not every service will be of use to every company, and just because everybody else is doing it, does not necessarily mean that it is a good idea. The salesperson should have a clear cost analysis of the potential benefits to your company’s profit margin before any consideration to purchase is made.

Urgency

The case for rapid uptake of IIoT platforms cannot be stressed enough. A company that is six months or a year behind in implementation will likely lose customers and revenue to competitors that can offer a more streamlined and cheaper alternative.

 

Thank you for taking the time to review this whitepaper and we truly wish you the best of luck on your IIoT journey.  If you have any question about how IIoT or IoT can help your business, please feel free to call us (248) 344-2100 or email consult@softura.com

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