3 Ways To Get Results From Your IoT Strategies

The Internet of Things (IoT) has the potential to free millions of manufacturers from the price wars they’re fighting with commoditized, undifferentiated products every day. Creating and selling smart, connected products is going to revolutionize manufacturing and enable new business models that capitalize on rich, real-time data streams to deliver new sources of revenue. Capgemini estimates the size of the connected products market globally will range between $519B to $685B by 2020. Their recent report, Digital Engineering: The new growth engine for discrete manufacturers, found that manufacturers expect close to 50% of their products to be smart and connected products by 2020. The era of smart, connected products is here, and there’s going to be quantum increases in manufacturing growth as a result. Capgemini predicts digitally transformed factories will see a 7X increase in overall productivity by 2022.

3 Ways To Get Results From Your IoT Strategies

In just two years, manufacturers adopting IoT into their product strategies predict 67% of their entire product portfolios will be smart, connected products. Cumulative revenue growth rate for manufacturing from smart, connected products is projected to grow by 16.22% from 2017 to 2022.

What separates the IoT early adopters who are succeeding in redefining their businesses from the millions of others who aren’t? McKinsey was intrigued with the question and recently surveyed IoT executives at 300 companies, qualifying the respondents as those who have moved beyond experiments and have scaled up IoT use in their businesses. The results of their research are provided in the article, What It Takes To Get An Edge In The Internet Of Things. McKinsey finds three ways to get results from IoT strategies, oriented towards manufacturers looking to reinvent themselves in the new era of smart, connected products.

• Scale new product development from existing, proven and well-known product platforms instead of trying to invent new platforms for new markets. McKinsey found that the most successful IoT initiatives and product development programs capitalized on known, proven and scalable product platforms that have been in place for years and even decades. Manufacturers who play to their market strengths have a higher probability of succeeding. Manufacturers are lagging and failing in their IoT efforts attempt to develop new products and services that don’t capitalize on their core strengths earned over years of successful operations.

• IoT leaders are scaling the learning curve faster than peers by implementing on average 80% more IoT applications.McKinsey’s survey quantifies the learning curve every company adopting IoT needs to progress through if they are going to see results from their IoT strategies. While all companies have a perennial lack of resources, McKinsey notes it’s those organizations with the greatest number of use cases that attain the greatest economic successes from their IoT strategies. The study found a transportation-equipment manufacturer whose initial IoT deployment was limited to just four minimum viable products (MVPs), and there weren’t any appreciable results being attained. 11 MVPs were initiated that led to a much greater sense of urgency about getting results. Soon there were a broad base 30 IoT scrum teams that needed greater decision-making flexibility. Senior management removed bureaucracy layers, and the teams eventually delivered over $1B in new product revenue from IoT-enabled products.
• IoT leaders are 3X more likely to take a selective, focused approach to business process engineering and process-redefinition to the machine and floor level if needed. Having started working with IoT early on, those organizations who are IoT leaders have developed advanced skills and techniques for streamlining the business process definition and re-engineering process. It’s common to find the latest smart production machines capable of providing a continual stream of data on their current state, throughput, quality levels, and maintenance levels on shop floors today. On a recent trip to a state-of-the-art medical products manufacturer in Colorado, I had a chance to see the latest generation of smart machines in action. They’re providing a real-time data stream that enables lights-out manufacturing, meaning production can run on a continuous 24/7 schedule if needed. Each machine is also capable of reporting Overall Equipment Effectiveness (OEE) and many other key metrics. The following is a roadmap many IoT-enabled manufacturers use to improve OEE levels, stabilizing and scaling production in the process.