No matter where you are in your digital transformation journey, the Industrial Internet of Things (IIoT) is likely on your radar. It’s a crucial piece of the fourth industrial revolution, aka, Industry 4.0. Activant Capital refers to it as “the central nervous system of Industry 4.0,” acting as “a sophisticated communication network,” capable of constant operational monitoring and response coordination.
The benefits that come from implementing IIoT technology in your manufacturing operations are impressive. It can open up opportunities for new business models, improve workplace safety and customer experience, and help make manufacturers more resilient.
When it comes to efficiency gains, Activant Capital research found that companies using IIoT software see up to a 24% decrease in energy use, a 52% increase in productivity, a 32% decrease in labor costs, and a 26% decrease in manufacturing costs. Altogether, they estimate that the global manufacturing industry could save approximately 25% of its COGS.
Like any technology, successful integration and execution come with challenges—especially for small and medium-sized manufacturing enterprises (SMEs) facing unique obstacles. Technology being adopted by the world’s largest manufacturers may feel aspirational and years out of reach. However, keeping pace with technological advancements is vital for SMEs that want to remain competitive and position themselves to thrive in an ever-evolving industry.
Fortunately, IIoT technology—along with the 4G and 5G networks that power it—has become more affordable than ever. Software solutions, in particular, are making it easier to implement and scale IIoT in manufacturing operations.
This means the key to unlocking IIoT’s real, measurable benefits lies in having the right strategy and planning. To help you take the next step with confidence, we’ve outlined a Roadmap to IIoT Success packed with the knowledge and insights you need to make it happen.
Establish a clear vision
One of the most widespread issues that has kept manufacturers from getting IIoT off the ground is what’s known as “the pilot trap,” where new technology is introduced on a small scale–often haphazardly. Often maligned organizationally as a “technical challenge,” the company fails to embrace the use case and appropriately shift people and processes. It’s also common to put the focus on specific technology or tools, and what they can do, without attaching these benefits or features to specific business needs.
The key to breaking out of these traps–and the key to IIoT success–is to get clear on your company’s vision for the future. This should include a clear understanding of your most critical business challenges and specific use cases that use IIoT technology to address them.
By developing and articulating a clear understanding of these items, you’ll then be able to ensure that the technology you are introducing is actually aligned with your organizational needs. That said, even at this beginning stage, stay open to the idea that IIoT implementation can even open up new ways of doing business–and that use cases can evolve as you go.
Realistically assess your current state
Another important piece to your beginning phase is a realistic assessment of your current state and IIoT maturity level.
It’s only by gaining an objective picture of where you’re starting from that you can then develop your next step–and the steps to follow to help you reach your vision for the future.
BDO has developed an Industry 4.0 Maturity Model to help manufacturers map their current state. Their model covers six different dimensions of Industry 4.0:
- Technology: What technology do you need to unlock insight and create business value?
- Data: How does your organization handle data management and information sharing internally? What about with your suppliers?
- Process: What processes are transformed by digitization or robotics and how do you optimize their value?
- Organization: How are you incentivizing cross-functional collaboration? How can you facilitate a culture of transparency?
- Governance: Is the management team engaged and on-board? Are you aligned around an innovation-centric plan or strategy?
- Security: What measures are in place to securely share information while minimizing cyber risks?
Even if you’re starting at ground level, understanding this helps your organization plan, one step at a time. Each of these six dimensions is critical to address as you build out your roadmap.
Set priorities and achievable goals for value creation
Once you know where you want to go, and where you’re starting from, you can prioritize the use cases you’ve developed, based on business needs.
A common issue is getting too focused on specific numbers you want to achieve. But you’ll see better success when you accept that achievable goals at the start may not be hard numbers, such as a 15% reduction in downtime, as you may not know what the root cause of the downtime is, and therefore, won’t know what percentage reduction is achievable.
A more practical initial goal might be to create a dashboard that manages and optimizes a specific process, helping you identify root causes of waste and downtime. By doing so, reductions in waste and downtime become the natural outcomes of your actions rather than the primary goal itself. To achieve this, start by working backward from your high-level needs and objectives. Ask yourself, “How can data availability, transparency, and automation unlock business value and help us achieve our objectives?”
Keep scalability in mind from the outset
Falling into the "pilot trap" often stems from not considering scalability from the outset, which can hinder the full potential of IIoT within your organization. To avoid this, it’s essential to focus on a few key aspects of scaling IIoT effectively.
Start by planning and prioritizing replicable use cases. While some unique, one-off cases are inevitable, most of your use cases should serve as building blocks that can be applied to other processes within your operations. This approach accelerates the expansion of your IIoT infrastructure, helps you break free from the pilot trap, and facilitates broader organizational adoption.
Another piece to scaling IIoT is connectivity. Connectivity–“the network infrastructure and communication technologies that allow various industrial devices, sensors, machines, and systems to connect and exchange data”– is critical to IIoT's success. From the very beginning, assess your network capabilities. Can your current network support the number of devices you are planning on adding? What will you need to add to support your IIoT ecosystem from the start?
Finally, IIoT will never take off if it remains siloed as a “tech” project, championed only by those in IT. Leadership buy-in is critical to both initial success and long-term scalability. Include leaders from all departments in high-level discussions about the benefits of IIoT, the challenges it will help your organization meet, and the cultural changes needed to ensure its success. From McKinsey analysts to Activant Capital investors, the research is clear that organizations who see success executing IIoT make it an organizational effort, with buy-in from all departments and levels.
Identify a champion and team
Aside from leadership, IIoT also needs a champion and a team to own the IIoT ecosystem and create clear accountability. The best champion is often not someone on the traditional management team, but someone closer to the operations.
Select a platform
While it’s true that it’s critical to flip your thinking from technology-focused to focus on driving business value and integrating with people and process, selecting the right IIoT platform for your company is still crucial.
Here are some important elements to consider:
- Device integration: Look for an integrated system proven to deliver real results, with seamless compatibility within and across networks of devices and sensors, and “simultaneous use of multiple connectivity standards, platforms, and back-end systems.”
- Compatibility with existing systems: This should include effortless connectivity and integration with your existing machines, systems, and applications.
- Data integration: With the ability to extract huge volumes of data from various sources, it’s crucial to consider how elegantly and easily the platform joins data together so it produces real insights.
- Data personalization: For the data to be useful, it should be relevant to the various use cases, teams, and roles. The platform you select should allow you to customize information to the audience.
- Industry experience: SME manufacturing has its own needs and challenges. Look for a platform with industry experience, and experience working with SME businesses.
- Cybersecurity: Cybersecurity should be a priority from end to end. Ensure the platform you select presents a multilayered and robust defense system to protect your data and your infrastructure from endpoint to cloud.
Communicate and manage change across the entire organization
While leadership commitment is critical, it’s crucial to manage change across every level of the organization. For IIoT to be successful, some degree of change in processes and employee behavior will be needed.
As you communicate the company goals and intended benefits, tier down messaging to different departments and roles and emphasize how IIoT will benefit them. Emphasize how it will help make their jobs easier–not harder–and make sure changes are incremental, which will not only help keep them from feeling overwhelmed but will also make it easier to move and adjust quickly.
For those impacted by the data IIoT will be collecting, the IIoT team should create dashboards within their chosen platform that are specific to different roles within the organization. Creating demos as the team begins company communication and rollout will also help communicate how IIoT will make data more available, transparent, and useful, and ultimately benefit them in their jobs.
Focus on shop rollout and process + monitor change and performance management
Focusing on the people and the processes impacted, instead of the technology itself, should continue throughout the rollout.
The IIoT team should own and clearly define new workflows, processes, and the rollout plan itself. They should also own communication and reporting, both to employees and to management. That also means that within the IIoT team, the champion, or team leader, should make sure that responsibilities are clearly defined and assigned. The team should also implement a daily management system to enable effective communication.
This should continue, with the IIoT platform monitoring how changes are being implemented. It’s also important to remember that employee communication and training should be ongoing; it’s not enough to train at the beginning of the technology rollout. To see success that enables the IIoT ecosystem to continue to grow, employees should receive consistent training and development. This enables a productive feedback loop.
From this point, the team can identify additional areas where initial use cases can be replicated, proactively expanding and building your IIoT ecosystem throughout the organization.
Final thoughts
Building a new technology ecosystem, regardless of your organization's IIoT maturity, can feel overwhelming. However, developing a clear vision, combined with a realistic assessment of your current state, helps align technology with your needs and drives measurable business value. Securing buy-in from leadership and stakeholders across the organization, while prioritizing communication, people, and processes, is essential for successful adoption. This will ensure the continued scaling and realization of results. Finally, create use cases that are easily replicable with minor adjustments, growing incrementally one step at a time to prevent the implementation process from becoming overwhelming.
