3 keys to financial success in the Industrial Internet of Things

The Industrial Internet of Things (IIoT) is moving into high gear. You can tell, and this might sound counter-intuitive to some, because we are seeing meaningful value created with simple solutions. Caterpillar Marine “focused on small improvements” to turn small savings to big money across the many vehicles in its customers’ fleets.  Amey maintenance service teams in Hampshire, UK are using low cost sensors to monitor road surface temperatures to better predict and manage icy road conditions. 

Over the last five years the IoT has been extolled as bringing disruptive innovation with “moon shot” prognostications promising everything from operator-free automated manufacturing with integrated supply chains to artificial intelligence systems that make doctors obsolete. The problem with moon shots is they are expensive and take time when winning in today’s marketplace requires speed and adaptability. The conundrum of moonshot thinking was visible in the recent IoT World News article, “When Will the Industrial Internet of Things Floodgates Open?”The author unintentionally casts IIoT development as a “Catch-22.” He points out that there are not many IIoT case studies showing accelerated market momentum, largely because these companies struggle to justify the Return on Investment (ROI) and are slow to get needed executive leadership buy-in. He then sites IoT experts stating that “these IoT implementations are very expensive, hard to implement, and lengthy in duration.” It is not surprising that companies find it hard to justify an ROI when they start with such a huge investment denominator. 

Fortunately, not everyone believes that you have to start from scratch and build new infrastructure to benefit from the IIoT. Companies like Caterpillar and Amey are integrating legacy systems as part of their IIoT solutions rather than replacing them.  The advantage of this point of view is that it switches the focus of developers away from the technology in favor of innovations that create value by solving critical real world problems. Innovation comes from enabling small changes in the way we do things to accomplish things we could not do before.

“Systematic innovation consists in the purposeful and organized search for changes, and in the systematic analysis of the opportunities such changes might offer for economic or social innovation.” – Peter Drucker, Innovation and Entrepreneurship

Such is the approach of Barry Nelson and his FactorLab team. (Disclosure: My company Reuleaux Technology is a technology adviser to FactorLab.) As experienced technology developers, they felt the opportunity with the IoT was to deliver real improvements in speed, quality, efficiency, and risk reduction today with existing technologies and within their customers’ current business strategies and operations.  FactorLab didn’t jump onto the bandwagons and slogans of “we need to connect 50 billion connected things” and “having everything at your fingertips.” They started by connecting a few legacy machines to a few people in places where a little bit of information makes a big difference — and are now scaling from there. 

The FactorLab system uses common IoT building blocks integrated with existing production machines and infrastructure to give machine maintenance workers anytime-anywhere access to information that they previously could only get machine-side.  The system also enables plant managers to view machine status and performance in aggregate giving them a more comprehensive view of operations. Most important, FactorLab accomplishes this by adding these building blocks to their customer’s installed, fully operational systems with minimal cost and operational disruption. 

The FactorLab approach provides a tutorial on how to create business opportunity with IIoT by hitting hard on three key practices.  

Retrofit starts the data streaming

The industrial IoT is a retrofit market. In 2014 Intel pointed out that 85 percent of existing manufacturing equipment is not connected and that equipment has life spans of 15 to 25 years. Existing machines and data streams must be integrated into the new connected applications to maximize the return on the new investment. FactorLab addresses this challenge with low cost, off-the-shelf wireless sensors that connect and monitor existing equipment quickly and efficiently. They leverage existing cellular connectivity to get the new data to the Internet without imposing on the operational information systems of their customers — an IT-free installation. Finally, the Factorlab Engine publishes a simple Application Programmer’s Interface (API) to enable customers to bring any existing equipment or operational data streams into the analytics engine to support new reports and alerts. 

The quality of a retrofit approach relies on two attributes. The first is knowing what type of data has value, e.g. on/off, vibration, temperature, and finding easy ways to sense that data and get it to an analytics engine. Fortunately, Moore’s Law and mobile technology have exploded the availability of sensors while ever decreasing cost.  The second key is installation. This is where the IoT ecosystem comes to bear as low power, wireless MEMs technology has made many of the most valuable sensors “bolt on” easy.

Leveraging standards to maximize opportunity

Perhaps the biggest challenge of retrofitting compared to new infrastructure is adapting to preexisting conditions and networks versus installing designed and integrated solutions. However, this is also where retrofit disrupts the cost of getting the data. FactorLab addresses this challenge head-on by appropriately using communication standards like Bluetooth and Wi-Fi. Appropriate use of standards maximizes interoperability with existing user devices like smart phones and desktop computing while not straying into areas where the standard fails to meet application requirements, e.g. closed loop control of critical functions. Perhaps even more important it maximizes the availability of sensing, connectivity, and computing solutions that can be easily made part of a FactorLab solution. Not only is there a wide array of Bluetooth and Wi-Fi based sensors available off the shelf, suppliers are more willing to customize solutions because they can leverage reuse of the development. Hardware interoperability and device availability allows the FactorLab team to focus on software customization and integration to adapt each solution to customer legacy systems while providing new operational value.

Making people more valuable

One of the most frequent misperceptions about the IIoT is that it is all about the machines. Traditionally automation saves cost by reducing the number of people required to operate the line. The machines are important, but today operational improvement, particularly of legacy systems, comes from leveraging and facilitating human knowledge and action. FactorLab clearly had this focus from the beginning, concentrating development efforts on the capture and conversion of data into actionable information for people in multiple levels of the operating entity.  “Our goal is to make people more valuable” remarked co-founder David Esser. The FactorLab system begins understanding what data and information people within the organization need to do their jobs better and improve company performance. They bring new hardware sensing and communication to the machines, but the focus of the application is the actions of the operator and maintainers of the production equipment of their customers.

A people-focus defines the value propositions of an IIoT. Complex situations are simplified to improve the timeliness and effectiveness of human interaction with the manufacturing equipment. All operational data analysis is put into proper context via the use of beacon technology installed on the machine that associates the identity of the machine to that of the operator. Finally, the software-centric system architecture enables flexibility and adaptability to accommodate both customer specifics and technology improvements over time. FactorLab delivers all of these.

Moving forward

Companies are embracing the IIoT more than ever. But the IIoT is not just for multi-billion dollar internationals who can afford to tear up and lay down infrastructure. Small changes in the way equipment is used enabled by new data streams from retrofitted equipment are providing big savings and big ROIs for the small and mid-sized enterprise. The IIoT has moved into an innovation grind — “a purposeful and organized search” for economic benefit. FactorLab is an example of a system and a business model designed to facilitate and succeed in such a search.