We have only seen the tip of the IoT iceberg
By Mark Milton, country manager, EDRMedeso
The Internet of Things (IoT) has been proclaimed to be one of the most important technologies for improving digital transformation. Gartner predicts that we will see more than 20 billion IoT endpoints in 2020, which can provide us with the data needed to offer new business insights.
Looking at the deployment of IoT, most cases have been about predictive maintenance. E.g. the scenarios where an elevator, a car, or a pump alert about the need for replacement of parts – before the machine brakes down. This way you can avoid breakdowns as well as using unnecessary resources on ineffective or unnecessary maintenance.
But IoT provides us with many more opportunities than just optimization of service and maintenance. The second wave based on IoT is predictive analytics, which gives companies the ability to predict a product’s lifecycle based on data about the use and environment. This can be very valuable when you have to estimate how much a product should perform in a specific period. In some cases, there will be a financial benefit of letting a machine perform above its maximum capacity to meet the demands – even though this approach might shorten the machine’s lifetime. In other cases, it might be better to spare the product to extend its lifetime.
Product-as-a-Service in the subscription-based era
However, it is not until the third wave of IoT – Product-as-a-Service – that the technology becomes really interesting and disruptive. The subscription economy, as we know it from streaming services or purchase of software in the cloud, gain greater acceptance in big industrial enterprises and pave the way for new business models. This means that manufacturing companies gradually transform into service companies. As a customer you no longer buy just a product, you buy a service that meets your need. For example, today you do not buy a heat exchanger but a service that delivers water between 55 and 58 degrees Celsius.
If manufacturing companies deploy IoT sensors, they can connect their products in the field to a digital twin – which is a digital replication of the product including all available data. The digital twin can be used for tests and simulation with real data from the physical product, giving the manufacturer even more insights about the use of the products. And with the right insights, the manufacturer can predict and meet the customers’ needs, whether they may be updates, maintenance or even new products. This is the reason why you should offer services instead of simply selling products.
Furthermore, customers expect that the products or services they buy will develop over time. This require the manufacturer to continuously improve their solutions and introduce new opportunities. IoT does not only provide the possibility to download data from the cloud to the R&D department, it also allows the manufacturer to upload new software to their customers’ products for instant improvements.
Why give away your revenue?
Many manufacturers will not get more earnings from their products once they have left the factory. This is because both service and maintenance in most cases are being handled by a third party, which means the manufacturers miss out on some heavy revenues throughout their products’ life cycles. Only 20-30 percent of the revenue from a product is based on the sale of the product, while 70-80 percent relates to the following operating costs such as service and maintenance.
A solution to this problem is to use digital twins. Digital twins – together with specific knowledge about the product – give the manufacturers the opportunity to develop the most ideal, customized service-agreements to their clients and customers, because they can include the next product generation through software updates. With all the data provided from a digital twin, the manufacturers will have unique insights in the real use of the products. This is invaluable knowledge when it comes to designing and developing new products and the next generations of existing products. In other words – using digital twins can help manufacturers change their development process and production to become more data driven, and accordingly they can change both their pricing and business model to be based on a Product-as-a-Service approach.
The future is for the fastest
In the years to come, manufacturing companies can revolutionize their business by using advanced IoT in their development of products and services. There was a time when the big fish ate the small fish. Today it is the fastest fish eating the slowest. The digital companies beating the analogue. Therefore, the message is clear: Be fast and willing to adapt. Harness the possibilities with IoT for more than just predictive maintenance – and do it today.
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