The dawn of Industry 4.0 : A Startup business opportunity

Smart Industry 4.0

“This is nothing less than a paradigm shift in industry: the real manufacturing world is converging with the digital manufacturing world to enable organisations to digitally plan and project the entire lifecycle of products and production facilities.” — Helmuth Ludwig, CEO, Siemens Industry Sector, North America.

The three modern industrial revolutions of the past were altogether activated by specialised advancements: the commencement of mechanical assembling toward the end of the eighteenth century, the division of labour and assembly line production toward the start of the twentieth century and presentation of programmable logic controllers (PLC) for computerisation purposes in assembling made industry automation in 1970's.

In the following post, I shall try to present the R&D concept, market opportunities and business models in Industry 4.0 space. This is currently one of the much-discussed topic that has potential to change the way we live and work. For a broader view, see article about the smart factory ,Scientific Journal or watch video about next generation engineering

Four stages of Industry revolution (Source: Marcus drilling)

Industry 4.0 concept and integration

In the last two decades several R&D works has been done and published. But the all those humongous research is being adopted only recently. Now let’s understand some of the most interesting components of Industry 4.0 revolution:

1. Horizontal and Vertical system integration

Most of today’s IT systems and hardwares are not fully integrated. Companies, suppliers nor the engineering departments are well connected. From the enterprise to the engineering itself and from products to plants to automation lacks complete integration. But with the introduction of Industry 4.0, companies, department functions, and systems will become much more unified or centralised, and there will be seamless data transfer between various stake holders.

2. IoT and cloud integration

With the introduction of MEMS based nano sensors (STmicro), the possiblilty to develop electronic hardware from the scratch. The availability of cloud based service like AWS makes it possible for seamless integration of data to PC’s. For much more knowledge on IoT, see predictable-designs (a great website for prototype development)

3. Data analytics, Edge computing & Machine learning

If there is one major force behind the possibility of faster adoption towards industry 4.0, big data analytics has to be the key. The introduction of TensorFlow and GPU based processing has made it even more possible for a large spectrum of entrepreneurs to develop SaaS platforms. The edge computing platform has provided service companies with secured data management centres and transmission.

Tensor flow for machine learning (Source: tensroflow.org)

4. Block Chain and smart contracts

This may be a surprise addition to the Industry revolution. But, there is scope and space for integrating payment platforms (a.k.a smart contracts) between vendors and suppliers.

5. 3-D printing (Additive manufacturing)

With the advantage of customised products, the company/startups can focus to make new designs or customer oriented approach rather than conventional way of design-mould-manufacture.

Market Opportunity

If we analyse every decade from 1970’s till now, there will be always a new market opened up and startup companies from garages overthrow established companies. These new companies being ahead of the curve ends up being monopoly in each sectors (read: Apple, Microsoft, Google, Facebook and so on). Here opens a vast ocean of opportunity for startups to take a leap of faith and plunge to Industry 4.0 revolution. Some of the field one can look up to:

Market Share (Source: https://www.mips.com/)

1. Wearables: The fast moving consumer market is lucrative for any business opportunity. The proven marketing and Biz models makes the road map worth looking. See the startup from India working on Smart watches. (Muse wearables)
2. Connected Home: The integration of the appliances and utilities can provide the customer save money and stay connected with home. The Biz might be suitable in developed countries and not in developing countries.(please comment if you feel other-way)
3. Healthcare: This is billion dollar vertical inviting young people to change the world and provide better medi-care to people. Every doctor might agree the need to introduce PoC services to vast population. See the StartUps Merkel-Haptic, Paige.Ai
4. Industrial IoT SaaS: The wave of digitising industries started around 2009 by C3IoT, SpaceTime, MAANA. This was followed by other startups like Tachyus, GroundMetrics and so on. There is still space for such companies in developing economies like India, Brazil, China.
5. Predictive maintenance: Just like we go to see doctors, machines also need maintenance engineers. But tracking the health of large number of assets may not be always feasible by human resource. Here ML combined with vibration/acoustic monitoring helps to detect early stage defects in machines. See Augury, PetaSense, Dravak
6. Energy monitoring: The application of tracking energy use can help to save companies cost. Monitor. Analyse. Optimize

Shift In Business Models

If you think about a founding a startup, then critical analysis of Service vs Product biz models should pique your interest. Here’s Why ?

“Due to the requirement of machines and manpower, investment is usually high in product firms from the prototype phase onwards. That’s the reason, they require a large amount of funding from investors. Service firms can be started from a comparatively much smaller amount than product firms. If they get less funding from investors, then it does not have the severe effect on service firms” (Source: Businessalligators).

From many combinations, there are possibly two ways one can develop a hardware/software IIoT company:

1. Prototype- MVP- Test- Marketable product- After sale service and issues-Update the product
2. Prototype-MVP- Test- Service product- Update any data processing issues- iterate the product

For the product platform, Initial investment and lack of confidence from customers can drag back the startup progress. While service industry can get initial customers far easy than former case. The choice of Biz model always hinge upon the founders and advisory board.

What should budding IIoT Entrepreneurs do ?

1. Problem statement: The whole idea of Industrial IoT is not only about implementing python codes, IoT hardware but validating the problem statement within the industrial community. The defined problem and the related solution should be iteratively checked and again checked. If possible, Understanding the degree of replicability of your product is key.
2. Customer focus: Work closely with the industries and present your ideas to conferences and events. Understand the customer problem and provide solution
3. Hardware or Software: Yes. It seems difficult to develop hardware for solution. But, there are far less competition compared to SaaS model. Always do remember: People never buy IoT, but they need solution.
4. Product or Service: Every biz model has pros and cons. But choose what your are comfortable. Test the market and proceed. Never jump to conclusions
5. Avoid too much spending: Be bootstrapped. Investors like founders who know value of money. Use open source rather than paid services.
6. Make MVP: If time permits, read The lean startup blog rather than any other. Worth Gold.
7. Pitch : Read Guy Kawsaki to know the Art of pitching and get Airbnb pitch deck for slide layout.

As a conclusion, We should acknowledge the work done by many experts, but still Industry 4.0 or Smart factory is always fuzzy and disorganised. There needs much larger understanding of various business sectors and value addition by IIoT. If you want to launch an IIoT startup and change industrial sector, we would be happy to hear.

Thanks for reading! :) And if you like or dislike the article, make sure to throw some feedbacks or critics. Always happy to update and improve.

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