The Industrial Internet of Things (IIoT) era has arrived. Tractors are sending data on soil and weather conditions to be analyzed and used to optimize farming. In our homes, it seems anything equipped with sensors and internet connectivity can smarten up our daily lives. Indeed, one estimate places the number of all connected things globally at 8.4 billion at present, including everything from smart phones, sensors and actuators to vehicles, cameras and drones. Or, consider it this way: the global population of connected things now exceeds the world’s human population. Two-thirds of those “things” are consumer IoT devices, and about one-third are business and IIoT, such as manufacturing equipment, smart utilities or intelligent oil fields. That number is projected to balloon to 20 billion by 2020.
So, for industrial companies, where is all of this going? To get a clearer vantage, PwC recently carried out a survey of US industrial products manufacturers with the Manufacturers Alliance for Productivity and Innovation (MAPI) centering on the monetization of IIoT products and services. It unveiled a good deal about where IIoT adoption stands now, why it is expected to continue an inexorable rise, and – perhaps most important – how companies expect to score returns on IIoT investments and strategies. Here, we focus on where IIoT adoption stands now. Future posts will illuminate manufacturers’ IIoT go-to-market strategies and business models that open an altogether novel breed of revenue generation.
Most notably, IIoT adoption is mainstream. Nearly 90% of manufacturers are on their way, embedding data-gathering, internet-connected devices into their products that offer information about those products’ performance, such as preventative maintenance. Currently, 38% of manufacturers are now offering IoT-driven products and services, and an additional 48% are developing them. This compares to a 2015 PwC survey of US manufacturers which found 69% of manufacturers had either been embedding sensors in products that enable end-users/customers to collect the data or planned to do so in the future. Of the manufacturers already doing so, roughly half (47%) are selling customer-managed IoT platforms (i.e., selling a bundling of product and IoT service, related data-gathering and analysis technology, and software).
On the home front, manufacturers are also exploiting IIoT. Our survey found that about one in three manufacturers is making IIoT-related enhancements to internal operations in a variety of ways – including seeking out operational and supply-chain efficiencies and better maintenance of assets – and just over half are considering it. Interestingly, 23% of manufacturers surveyed are now both deploying IoT internally and offering IoT products and services to customers.
But IIoT adoption rates swing from industry to industry. A separate PwC survey found that 81% of automotive companies are making “substantial investments” in IoT technology, compared to 72% of industrial products companies and 65% of financial services firms.
What’s behind all this activity for manufacturers? Top factors for IIoT adoption are competitive pressures (61%), new revenue streams/return on investment (ROI) (61%), and customer demand (49%) [note that respondents could choose more than one answer to this question].
There is a race afoot: IIoT products-and-services open new paths for manufacturers to stand out from their competitors, tighten customer relationships and, yes, in the end, monetize. In our next two posts in this series, we will cast light on how companies are making progress on these very aspirations.