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IoT Round Two—From Monitoring to Having a Say

Organizations must make sure their ERP software is IoT ready or risk being left behind by agile competitors.
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IFS Industries has benchmarked industrial IoT (Internet of Things) with two surveys, each a year apart. The 2017 survey found IoT had become widely adopted in manufacturing and other industrial sectors primarily for cost reduction within condition-based maintenance (CBM). This year’s research shows there has been a shift toward transformation of operations, with data now being used in automation and artificial intelligence engines. IoT for process automation is currently the most commonly reported use case, but respondents also reported using IoT to create new revenue opportunities. Asset performance management and leveraging IoT to create new field service management offerings is the next step in this evolution, but this puts pressure on companies to ensure their enterprise software can facilitate the demands of IoT.

IoT: Realizing its Potential
Manufacturers laid the groundwork for today’s approach to IoT by networking programmable logic controllers (PLCs) and supervisory control and data acquisition (SCADA) systems. This enabled industrial automation and CBM to be used in large enterprises as a cost-reduction strategy. CBM could be handled without any integration between a sensored device and the enterprise—an alarm or indicator on the equipment would alert technicians to required maintenance work.

Now, with IoT having more influence in process automation, companies can collect more in-depth data with little need for human involvement, enabling industrial organizations to take the next step and use IoT data to move beyond cost-reduction exercises on single assets and toward automated business transactions and frictionless business models.

Revenue Opportunities Born from Transformational Technology
The IFS study showed a dramatic increase in the percentage of companies using IoT for asset performance management. This enables companies to not only make decisions based on the condition of the assets in their portfolio, but also to determine how much capacity they must take on new projects, products or orders to maximize revenue potential of capital assets.

Data generated by IoT is not just used to identify when a piece of equipment is failing or likely to fail as a part of a predictive maintenance program. It is uncovering trends and triggering events directly as part of business processes. Not only can IoT identify a problem; it can now act to fix that problem by issuing a work order for repairs, ordering spare parts or even changing machine speed. No wonder some 55 percent of study respondents stated they plan to make additional IoT investments in process automation in the next 24 months compared with 44 percent in CBM, highlighting the shift away from IoT as a means of saving money, and instead, moving toward creating new business opportunities.

IoT Steps Outside
Aftermarket service contracting is perhaps the most significant example of industrial organizations expanding IoT into revenue generation disciplines. The 2018 report showed a 10 percent rise in respondents using IoT to monitor their customers’ equipment, which means these respondents can deliver service more profitably, with higher customer satisfaction, and automate the capture of performance data against service level agreements (SLAs). In this setting, IoT can also support a move to outcome-based models where the customer pays for uptime, capacity, or “power by the hour” instead of service. With IoT-enabled equipment, companies can provide condition-based or predictive maintenance, metered billing based on duty cycles of equipment, and gain better visibility into how customers are using a product for better-targeted sales approaches.

Enterprise Software Must be Up to the IoT Challenge
These new service offerings put a much heavier demand on enterprise software integration, because the aim is to use IoT data to automatically generate a work order or dispatch a technician to meet an emergent field service need.

The ability of enterprise software to make use of IoT data in a way that transforms the business still has some way to go. The 2018 study showed respondents were less impressed with their enterprise’s ability to handle IoT data than they were a year ago, declaring it as an “impediment.” Furthermore, the percentage of respondents that have integrated IoT data streams with their enterprise resource planning (ERP) software remains at only 16 percent. This means rigid ERP without a sound approach to IoT may be a barrier to new efficiencies and revenue opportunities.

Today’s connectivity cloud computing capacity can serve as a conduit for data from many sensors throughout the enterprise, and the right enterprise software can operationalize this data from networked devices. Most modern ERP can bring data in from connected devices through application programming interfaces (APIs). But to do this at scale in a rapidly shifting environment, a software vendor must provide streamlined and structured pathways for IoT data to flow into enterprise software to avoid a tangled mess that’s impossible to manage.

IoT is no longer only about cost savings. The data generated from connected devices can enable operations departments, maintenance departments and field service organizations to increase the value delivered to internal or external customers and create new product or service offerings. If organizations fail to embrace digital transformation and put IoT-enabled enterprise software in place, they will never get the best out of IoT and are likely to fall behind their more agile competitors.

To find out more, download the full IoT study here.


About the Author

Antony Bourne

As president of IFS’s Industry business unit, Mr. Bourne leads a team of global industry experts who cover the IFS focused industries and support sales, marketing and partner enablement. He is a lead spokesperson for IFS and represents the company in multiple internal and external events, analyst updates (including Gartner, IDC, and ARC), publications, blogs and press articles.



IFS develops and delivers enterprise software for customers around the world who manufacture and distribute goods, maintain assets, and manage service-focused operations.