Making the Business Case for the Industrial Internet of Things (IIoT)

The Industrial Internet of Things (IIoT), often described as Industry 4.0, is how we refer to the future of technology in manufacturing.

Manufacturing Industry 4.0 and IIoT Technology includes connectivity concepts, like smart factories, big data and artificial intelligence (AI) and is now becoming a reality for many manufacturers worldwide.

This report from IQMS (DELMIAWORKS), in partnership with LNS Research, explores concepts around IIoT and digital transformation. It focuses specifically on why manufacturers should be investing in IIoT technology, and how the business case can be made for IIoT technological investment.

The current state of technology in manufacturing

This report estimates that 18% of the market worldwide are already investing in IIoT, with another 35% planning to invest within the next year. In fact, The Manufacturer’s Annual Manufacturing Report, which looks only at UK manufacturers, put those numbers even higher, with 23% of UK manufacturers already implementing Industry 4.0 technology and platforms, and a further 62% planning to invest in Industry 4.0 tools soon.

Whichever way you look at it, IIoT and associated technologies, like connectivity and automation, are rapidly moving away from the realm of ‘early adopters’ and into the mainstream. It is becoming increasingly essential for manufacturers to have introduced some level of IIoT technology, in order for them to stay competitive.

What is halting Industrial Internet of Things (IIoT) technology?

As IIoT, Industry 4.0 and Smart Factories become more prevalent, the incentive to invest in this technology should become more apparent, but a great many manufacturers (34%) are still citing ‘building the business case’ as the top challenge for investing in IIoT.

Logically, as the cost of IIoT technology rapidly falls whilst ease of deployment increases, the conclusion should point to a positive ROI from investment in IIoT.

We all know, though, that building a business case is not quite as simple as that – especially when it comes to relatively new and untested innovations.

Making the business case for Industrial Internet of Things (IIoT) technology

The IQMS and LNS Research report points to two key use-cases for the introduction of IIoT technology to manufacturing plants:

1. New Use Cases (created by the new technology)
2. Old Use Cases (improved by the new technology)

In some respects, it is easier to predict the benefits, or actual ROI, from using new technology to create a completely new use-case. An entirely new service or product is exciting to envision and plan, and the increased revenue benefits of a completely new addition (a new revenue stream, essentially) are clear-cut.

Somewhat harder to predict is the benefit of improving an existing use-case with new, connected technology. On the surface, it is easy to see that improving existing systems or processes with new technology should bring improvements to asset and production performance. But how can you accurately predict the benefit of an improvement to a production system that seems to be working just fine as it is?

Therein lies the challenge.

In the case of implementing new technology for old use cases, the report points out that building a business case is difficult because, as LNS suggests: you don’t know what you don’t know.

Leaders and decision-makers in manufacturing currently have to make a choice between:

• Doing Nothing
  I.e. not adopting any IIoT technologies at all, on the basis that they (the manufacturers) have already been working to make improvements to processes and systems with existing technologies and traditional methods (like MES, EMI, ERP, BI, Lean, and Six Sigma)
• Taking a Leap of Faith
  And making investment in new IIoT technologies (like Big Data Analytics, Machine Learning, and AI) with no real way to predict the ROI

Now that some manufacturers have pioneered the move to IIoT, another solution to the challenge is emerging. Manufacturing leaders and decision-makers can look to the early adopters to see what quantitative improvements those manufacturers who have already started implementing IIoT technologies have seen, and start to translate those improvements to the potential opportunities in their own existing processes and systems.

Use-cases for manufacturing Industrial Internet of Things (IIoT) technology

This report brings together six existing use-cases of manufacturers already implementing IIoT and Industry 4.0 technologies in their systems and processes, and the improvements brought by that. To really see the full effect of each case-study, download the report from our resources.

1. Redefining critical assets: Pumps valves and motors
2. A new approach to clean-in-place systems
3. Creative use of social, geospatial and asset data
4. Managing recipe variation
5. Safety: Machines and processes
6. Smart products and disrupting quality testing

The benefits of each use-case are transferable across sectors of the manufacturing industry. Building a business case needs to involve looking to the manufacturers that are already reaping the benefits of implementing IIoT technologies, and using the improvements they’ve seen to start making an educated estimate of the potential ROI for IIoT technology in your organisation.