Some Valuable Takeaways from the Smart Industry Conference 2016

Mission Data’s CEO reflects on last month’s Smart Industry Conference, where the pace of innovation for the Industrial Internet of Things was surprisingly slow, calculated, and customized.

I very much enjoyed reading my colleague Josh MacFarland’s thoughts on the SmartIndustry 2016 conference. As his recap and perspective match mine to a great degree, I won’t be retreading any of that ground. Instead I’ll focus on some of the overarching themes and key learnings I gained from the three days in Chicago.

The conference was focused on the Internet of Things (IoT) for large industrials like Siemens, ExxonMobil, and Rolls Royce — not manufacturing in general. These are companies who make machines that bend metal and process chemicals across the globe. They are extremely sophisticated and have relied on automation for a long time. That means getting real-time information on a manufacturing process isn’t a new concept, but the solutions don’t often use commercial off-the-shelf components. Their manufacturing environments are as finely engineered and precise as the products that they create; infrastructures that are custom designed.

Expansive Definition of “I”IoT

Given the type of companies involved, they use the term Industrial Internet of Things (IIoT) rather than just IoT. My observation was that they augment the acronym with the extra “I” to give industrials the freedom to have an expansive definition of IoT. Certainly way beyond the more general view of device-to-device or device-to-device-to-human interactions. At the conference, much of IIoT focused on the collection of data from sensors in the manufacturing environment for the eventual use of offline analyses by data scientists or as non-real-time feeds to backend business systems (e.g., ERP, logistics). For some reason, IIoT also included augmented reality as applied to training workers who perform small parts assembly. All cool stuff, but certainly not the IoT that’s associated with retailers like Kroger or consumer concepts like the connected home or car.

I do not mean to diminish these great companies by saying they have a somewhat expansive and rather uninspiring view of IoT. Their perspective is that they need to move more slowly and cautiously than smaller and more nimble entities. After all, they are global and high volume-oriented. Even a small change can cost tens of millions, require a long time to implement, and result in a questionable ROI. They need to be cautious and risk averse.

Learn IoT Lessons on a Small Scale

The need to move more slowly was one of my biggest learnings from the conference. At Mission Data we’re focused on companies, markets, and solutions that often need to embrace change in a somewhat accelerated manner. Although we’re involved with product manufacturers, we don’t do much work with large industrials. We know from our retail, mid-market product manufacturing, media, and consulting/information services clients that their competitive landscape requires much more rapid technology adoption than the larger industrials. Much of the need for speed in these environments comes from the rapid pace of consumer adoption of new tech, additionally the ROI of implementing change is swifter given that their infrastructures are far less specialized.

That notwithstanding, the concept of using experimentation and proofs of concept discussed by many at the conference is an important first principle. The actual value of IoT can be evaluated within smaller and more controlled projects — focusing on incremental discoveries through small investments or POCs. We’ve seen that in our own two-weeks-at-a-time Labs experiments. Given the large spectrum of potential implementations of IoT along with the highly speculative value of the technology, using POCS to prove that the tech works and provides the anticipated results is a logical first step. It was nice to see this emphasized.

Increased Customization in the Manufacturing Environment

An interesting driver for IoT in the industrial world stems from the need for more customized products coming off of the assembly lines or from the large process manufacturers. Although easily accomplished in the digital consumer world in which personalization and customization is expected in both devices and apps, the industrial world has seen the same major trend. IoT is considered a major enabler to ensure that the machinery and processes associated with manufacturing interact so as to ensure that the end products meet the unique specifications of the buyer.

A discussion regarding discrete manufacturing indicated that “Henry Ford’s Assembly Line” is slowly being replaced by factories that assemble product in place. In lieu of moving down a line, the vision is that in a particular place on the factory floor, a unique, custom product will be created. Through IoT the machinery and personnel in the factory will deliver the required and specified parts. Broadly, the vision of Michael Dell for personal computers is being applied for larger and more complex products.

New Sources of Revenue and Improved Distributed Workforces

As Josh mentioned in his write-up, nearly every presentation emphasized that IoT solutions should focus less on improved efficiencies within the “four walls” of the plant and more as an enabler of new revenue sources. Further, these areas of revenue should include a shift from thinking in terms of product to thinking in terms of services. Services such as fleet/product tracking and monitoring, product maintenance, parts/component repair and replenishment, and finally providing critical big data services on product use and effectiveness.

These are perfect considerations for IoT and could clearly change the game in terms of shifting the manufacturer’s view of selling units to having renewable and high margin service offerings. We’ve seen these new revenue concepts work for some of our non-industrial clients. Unfortunately, the presentations and case studies focused almost purely on driving efficiencies in creating products. There was very little on enabling the distributed workforce with the digital tools to provide field services or similar value added subscription services.

This was a bit disappointing as these use cases can really change the landscape for the manufacturers and for the organizations that use their products. It doesn’t take considerable vision to see how their rather large and dedicated ecosystems of parts suppliers, distributors, and service could all participate in a large menu of revenue offerings that could figuratively lift them all to new market-wide revenues.

Great Time and Practical People

Reflecting on Smart Industry 2016, I’m extremely glad I attended. The participants were highly qualified and quite insightful. I gained a huge appreciation for large industrials that I didn’t understand before, and despite the rather cautious and slow pace of the companies I did notice a very innovative and supportive group of vendors and partners ready to help with their products and their insights. I personally see great potential for the use of IoT in this world and will be tracking it much more carefully than I had in the past.

If you’re interested in learning more about the Smart Industry Conference, you can follow highlights on Twitter by searching #SmartInd16. Have a vision for an IoT product you want built? Drop us a line at info@missiondata.com.