Industrial IoT Strategy, The Transference of Risk by using a Digital Twin

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The Internet of Things (IoT) is all about getting in-depth insight about your customers. It is the inter-networking of physical devices, vehicles (also referred to as “connected devices” and “smart devices”), buildings, and other items embedded with electronics, software, sensors, actuators, and network connectivity which enable these objects to collect and exchange data.

For me, IoT is an extension of data integration and big data. The past decade I have worked in the integration field and adding smart devices to these systems makes it even more interesting. Connecting the real world with the digital one creates a huge potential for valuable digital services on top of the physical world. This article contains our vision and guidance for a strategy for The Internet of Things based on literature and our own experience. 

Drivers for business.

Everybody is talking about The Internet Of Things. This is going to become a billion dollar business in the near future. IoT has become a blanket term for smart, connected devices. Technology is giving these devices the ability to sense/act for themselves, cause an effect on the environment and be controlled by us.  Especially in the industrial world the application of smart sensors has the potential to change the landscape of current supplier of large scale industrial solutions. 

This is the perfect storm

For decades we have had devices with sensors and connectivity,  but these devices never reached the market potential they currently have until now. IoT is slowly becoming a mainstream technology. Only 2 years ago there were technical limitations in processing power, storage, connectivity, and platform accessibility hindering the growth of the usage of IoT devices.

Now we see a perfect storm: The advances in cloud computing, big data storage, an abundance of fast internet access, machine learning, and smart sensors come together. The past economic crisis has made businesses start focusing more on lean manufacturing, measuring and real-time feedback. And finally, our addiction to social media and direct interaction makes us accustomed to instant feedback. We demand real time process improvement and in-depth, highly personalized services. This can only be achieved by probing deep into data about the behavior of consumers.

Digital Transformation changes our economy.  

Smart devices are a driver for efficiency. On one hand, we can save power usage – by switching off unused machines for example – and boost effective usage of machines by optimizing their utilization. For example: have cleaning robots to visit rooms with a lot of traffic more often, instead of the same schedule for all rooms.  Intensive data gathering offers the possibility to optimize our processes and apply effective usage of machines and resources.  These solutions are aimed at saving money. Your customers expect this process data as an inclusive service on top of the product they buy from you. In practice: look at the Nest thermostat; the dashboard and data are perceived as part of the device. Nobody is going to pay extra for the Nest dashboard.  

Create value using a digital twin of your customer

You can make a real difference with IoT when you consider the long term strategic goals of your company. Smart devices make it possible to acquire extensive data of your customer.  This information is very valuable, especially when you combine individual sensor data of each customer to a complete digital representation of the customer (also called digital twin). This is very valuable for both B2B and B2C businesses.  Having a digital twin of your customer helps you know exactly what your customer needs and what makes them successful.  You can create additional services and better a user experience with the data you acquire.  Your customers are willing to pay for an add-on when you are able to convert their data into valuable content and actions. This is how you create more revenue.

IoT is all about transference of risk and responsibility

I predict IoT will transform the economy. With IoT, you are able to influence your customer and their buying habits. You are able to measure the status and quality of a heating installation, car engine or security system. You are able to influence the operation of these machines and warn your customer up front about possible outages due to wear and usage. Next logical step for your customer is to transfer the responsibility for these machines to you as a supplier.  This has huge consequences for the risk profile of your company and the possible liabilities connected to it. Having an extensive sensor network and operational digital twin of the customer makes it possible to assess and control this risk. You can implement predictive maintenance and reduce the risk of an outage. Since you can predict possible malfunction since you have a vast amount of data and trained algorithms to predict the future state of the machines and your customers. Customers are prepared to pay an insurance fee if you can guarantee the quality of the their products and services.

How to create a profitable IoT strategy?

The first step is to determine what kind of company you want to be in the IoT realm. According to  Frank Burkitt and Brian Solis There are 3 types of companies building IoT services:

  • Enablers
    These are the companies that develop and implement IoT technology; they deliver pure IoT solutions. Ranging from hardware to all kinds of cloud systems. They have no industry focus and deliver generic IoT solutions. The purpose of these companies is to process as high as the possible volume at a low price. The enablers focus on delivering endpoint networks and cloud infrastructure. This market will be dominated by a small number of global players who deliver devices, sensors, and suitable cloud infrastructure.
  • Engagers
    These are the companies who design, create, integrate, and deliver IoT services to customers. They will interact directly with the end users. The purpose of these companies is to deliver customer intimacy by adding close interaction with the end users. Usually via one specific industry or product stack. The engagers will focus on hubs and market-facing solutions like dashboards and historical data. This market will contain traditional software companies able to offer dashboards on top of existing systems and connecting IoT devices.
  • Enhancers
    These are the companies that deliver value-added services on top of those services delivered by the Engagers. The services of the Engagers are unique to IoT and add a lot of value to their end user. Their goal is to provide a richer end-user engagement, and surprise and delight the customer by offering them new services using the data from the customer themselves and third party sources. This market will be dominated by innovative software companies able to bridge the gap between IOT, Big Data and Machine Learning. These companies need to have an excellent technical and creative staff to offer new and disruptive solutions.

How to be successful in the IoT World?

  1. Decide the type of company you want to be: Enabler, Engager or Enhancer? Make sure if you are an enabler you need to offer a distinctive difference compared to existing platforms and devices.
  2. Identify your target market as you need to specialize in making a significant difference.
  3. Hire a designer and a business developer if you aren’t any of these.
  4. Develop using building blocks.
    Enhance existing products and services. Be very selective about what you want to offer. Do not invent the wheel yourself and use existing products and services and build on the things that are already being offered as SAAS solutions.
  5. Create additional value
    Enhance existing services with insight and algorithm. Design your service in such a way that you create additional value in your network. Create new business models and partner with companies outside your industry.
  6. Invest in your company
    Train your employees and build relationships with other IoT companies.
  7. Experiment with new ideas, create an innovation lab and link to companies outside your comfort zone to add them to your service

You are welcome to contact us if you want to know more about adding value to your products and services using IoT.
We can help you make your products and services smart at scale.  Visit our IoT services page

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About Author

Robbrecht van Amerongen is Business Innovation Manager at AMIS Services. He has a vast experience in managing software development and delivery projects and growing the development unit of AMIS. He is able to utilize new technologies and methodologies to valuable products and services for his customers. His expertise lies in all aspects of software engineering; ranging from continuous delivery, provisioning, cloud computing, user experience and wearables.Robbrecht is also an Agile coach and Certified Agile Master. He has experience in managing Agile projects with Scrum (first with DSDM) ranging back to 1999. Robbrecht is a strong proponent of the agile principles. Robbrecht is agile examiner for the agile foundation, practitioner and master certificate.

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