April 14, 2019 - 444 views|
The IIOT 'value problem' is not a technology issue but a failure among businesses to invest in process redesign and intelligent automation.
Not since the dot-com boom of the early 2000s has there been a topic as ubiquitous in business circles as digital transformation. That’s likely because so few companies have truly found their groove in reimagining and rearchitecting their capabilities for the Fourth Industrial Revolution. It remains a battle even for those organizations that have been at it awhile or achieved some modicum of success. This is especially true among manufacturers of all types.
We recently engaged in a fascinating conversation with our colleagues during an airport ride following a roundtable discussion on digital in manufacturing. Our teams at Cognizant and Pegasystems often partner to enable mutual clients with automating their end-to-end manufacturing operations, delivering next-generation aftermarket services, and enabling hyper-personalized customer engagement at scale – elements critical to the digitization of their organizational processes, technologies and experiences.
In comparing notes about digital efforts that failed to live up to expectations, it became abundantly evident that Internet of Things (IoT) and Industrial Internet of Things (IIoT) were at the top of our lists. We laughed uncomfortably as we discussed the phenomena each of us has observed in every sector as “random acts of IoT,” or as one client described his IIoT efforts to date – “a four-letter word.”
To date, IoT has lagged expectations. According to the “2018 World Manufacturing Forum Report,” 59% of global executives surveyed believe IoT is a top supply chain innovation. However, adoption rates hover at roughly 20% – despite IoT’s notoriety following Carnegie-Mellon University’s demonstration of a network-connected Coke machine back in 1982.
But why have companies failed to realize meaningful business value despite the advancements and lessons learned over the intervening years?
Our conclusion, informed by discussions with clients across multiple industrial sectors and our experiences living through numerous hype cycles, is that the IoT value “problem” is not substantially a technology issue or its provenance. To us, it’s a combination of factors, ranging from a lack of sustained investment in a full-scale transformation program, to a failure to pay enough attention to real business process redesign.
The reality is that the IoT should ultimately be viewed as an ever-present ingredient in an organization’s business architecture that makes reimagined operational outcomes possible. In other words, it’s a part of the story – not the entire narrative. Seems simple enough, but it’s anything but.
For most manufacturers, digital business change is an unfair fight. While an organization’s business leadership is often focused on the “arms race” to digitize and optimize the business with the latest and greatest “shiny object” innovations, most IT investments and human capital are trapped with the task of keeping existing operations running.
It begs the following questions:
And more importantly:
Your operations are already instrumented with sensors everywhere. This creates expectations by customers, partners and associates that your organization is already acting on its IoT data for their benefit. Moreover, as new business scenarios emerge, your organizational design principles must focus on a creative revamp and a full deployment of all resources at your organization’s disposal.
In fact, as customer demands increase in expectation and complexity – and since there is no cavalry of new headcount coming to the rescue – these scenarios will mandate that current associates be supported by much greater degrees of intelligent automation and productivity assistance.
It’s the combination of existing IoT data and intelligent automation that will enable you to deliver on the promises you’ve made to employees and customers of seamless, effortless and connected processes, products and experiences. Among many examples, this might include:
This goes beyond the promise of action and outcomes to instantly executing them at scale. And unlike in the past, it’s not only possible to make this happen; it’s required that you deliver these outcomes in weeks and months, not years from now.
Too much already on your to-do list? Unfortunately, doing nothing, abandoning or de-emphasizing IoT as another overhyped technology is not an option either. In fact, according to a recent MIT Sloan Management Review report, your peers and competitors believe IoT has clear business value:
The issues that often prevent adoption boil down to IoT being treated as an end unto itself. However, this makes little sense when, according to the World Manufacturing Forum report cited above, IoT adoption hurdles preclude any bona fide assessment of its true business impact and scaling potential. Top barriers include:
These obstacles don’t just manifest themselves in survey results or a lack of progress. They show up in the kind of frustration that slows, if not stops, innovation – and corrodes cultures. The reason is a lack of confidence: No one truly believes that creating new value is possible in their own enterprise.
So how can a connected industrial enterprise scale and finally reap benefits from IoT and IIoT? The answer lies at the intersection of your existing IoT investments and the orchestration of your most critical business processes.
Also see our insights on “how” to unlock IIoT value at scale in Part 2 of this discussion.