By Alex Guillen, Go-To-Market Manager, Insight UK.
It’s staggering to think that this year more consumer devices will be sold than there are people on earth – and, as time marches on, the democratisation of the Internet of Things (IoT) means in a few years virtually all of the devices sold will be internet connected.
This means near-endless possibilities for manufacturers to create and monetise new experiences, not to mention the level of disruption that will result from companies that get ahead of the curve quicker than others and embrace the explosive growth of IoT.
As a manufacturer, if you are not going down this path of innovation, some other company – whether it exists today or emerges tomorrow – surely will, and will be keen to take your place. Consider how more than half of the names on the Fortune 500 list have disappeared this century, as newer, often more digitally-agile competitors take their place. The democratisation of the internet has created a glut of new business models in every industry, and the same will happen in the manufacturing industry as IoT proliferates.
How will this change be powered?
One barrier to developing IoT products has been the complexity involved: traditionally, everybody rolled out their own IoT solutions, designing everything from the chip to the software on up, whether alone or with some support. However, this is changing rapidly: last year Microsoft launched its Azure Sphere solution, which has three components: a microcontroller chip to govern specific operations in devices such as robots, vehicles and consumer products, a secure operating system that runs on that microcontroller, and a secure cloud – the Azure IoT framework. The easiest way to describe it is a secure-edge IoT solution that is piloting in a new era of IoT in the manufacturing industry.
This isn’t the only such innovation: recently Microsoft teamed up with BMW to create its Open Manufacturing Platform, driving innovation in industrial IoT. What this means is that for a traditional manufacturer of non-connected, non-digital products, the path to smart devices is now much easier. All that previous effort has been reduced to an effective and nearly out-of-the-box solution. Microsoft may have been the first to launch such a user-friendly solution, but it certainly won’t be the last.
Where will it be used?
One question is where IoT will provide the greatest value to manufacturers. R&D and operations will be two areas within organisations with particular interest in tapping up IoT’s potential. For the former, R&D product managers may think about how to leverage a solution like Azure Sphere to create new features and new consumer experiences. For the latter, operations professionals responsible for the manufacturing process can use IoT and data fed from devices to optimise those processes.
Regardless of which business unit adopts IoT, they need to ask the same initial question: What can I do to gain better business outcomes from IoT? This will start a chain reaction of other questions that will ultimately help transform the business. The issues that need to be considered include: how the organisation can monetise data, instead of just grabbing it; how to use IoT to create new user experiences and products that drive new revenue streams and allow the business to keep pace with, or even change, consumer tastes; how to use data to not only connect with the customer in new and interesting ways, but ultimately predict failures and drive down costs; how can the organisation integrate intelligent information about its devices into the customer service experience; and how to take into account other factors, such as energy or weather, to improve inventory tracking or optimise the supply chain.
Making it work
It may seem obvious, but while there is so much potential to transform a business, adopting IoT solutions to improve operations or introduce new products to the market is not without its challenges. Too many organisations often overlook the basic step of developing a strategy, and within that plan, the need to choose the right technology enablers. This calls for charting out the change and organisational management that needs to happen to launch a new product or review operational processes. Because IoT-enabling products or operations inevitably changes how a business functions, it’s essential to get it right from the beginning.
For example, manufacturers of household appliances excel at developing high-end refrigerators, ovens, microwaves, and so on. Yet they’re not software companies – even though that’s what any IoT-focused business becomes once they begin developing connected products. The way they manage that transformation will be crucial to their competitiveness.
The security question
Adopting IoT inevitability leads to the amount of data running through the business swelling – all of which needs to be managed and secured. While alarming headlines on data breaches are a regular occurrence, the good news is that data security in the cloud continues to improve. Borrowing from practices already established in highly regulated industries – such as financial services and healthcare providers that hold highly secure, critical and confidential data in the cloud – will help organisations to begin mitigating the risks from processing and creating more data.
At the same time, modern, fully integrated IoT solutions like Azure Sphere, push data processing down to the edge where the device itself sits: eliminating opportunities to breach the information. Unlike solutions of the past, security in modern IoT devices is turnkey: built into the hardware and extending to the cloud, removing the need for investment in additional infrastructure and staff to secure smart devices. As the market develops, we will likely see ongoing consolidation among cloud and IoT platform providers to a few highly-trusted organisations that can secure data and devices to the highest levels.
While Azure Sphere is the first out-of-the-box IoT solution, no doubt more will come – making it far more simple and cost-effective to integrate into devices and manufacturing processes. While this will completely change the manufacturing industry, as in many other spheres of life great change brings great risk. Integrating IoT successfully comes down to viewing it as a catalyst for producing beneficial business outcomes. It requires building and executing against a strategy that accounts for how the technology not only changes the nature of a product or process but transforms the business itself into a technology company overnight. This is how manufacturers win in the IoT revolution.