Unless you keep a constant eye on the Industrial IoT market (IIoT), you may have overlooked the first-ever Smart Industry Conference that was held in Chicago October 5 through 7. I suspect this will soon change, as the multi-day conference did a great job of showcasing the current state of affairs of one of the most dynamic environments of IoT application and innovation today. IoT players like GE, Microsoft, Cisco, PTC, Rockwell, and Emerson (among others) were on hand to present IIoT capabilities to a wide ranging and eager audience. For those of you who missed it, here is a quick recap of five key themes from the conference:
1. Industrial Companies are Transforming into Software and Analytics Companies
“If you went to bed last night as an industrial company, you’re going to wake up this morning as a software and analytics company.”
This statement from GE CEO Jeff Immelt at last year’s “Minds + Machines” event served as the principle mantra of the Smart Industry Conference. This shift is effecting nearly every industry, from taxis (Uber) to hotels (AirBnB), but will occur on a potentially unprecedented scale in the industrial and manufacturing space. From a volume perspective, the industrial/manufacturing segment generates more data than all other segments, including governments and cellular carriers, so the opportunity is huge. To achieve this transformation, industrial concerns are preparing to embrace advanced software orchestration and analytics in a BIG way. The conference was abuzz with excitement and nervousness at the prospect, which is of particular note given the industry’s self-acknowledged track record of lagging behind the innovation curve.
2. The IIoT Market Is Being Pulled, not Pushed, to Innovate
Unlike the connected home space where technology has largely been developed before a mass consumer market willing to adopt it has emerged, the industrial and manufacturing space is actively driving itself and vendors of enabling technology towards further IIoT innovation. At least two innovation consortiums have been established—the Digital Manufacturing and Design Innovation Institute and the Industrial Internet Consortium—to facilitate greater investment in and design of IIoT-specific solutions in as collaborative and open source a manner possible. The Industrial Internet Consortium includes over a hundred organizations in the space, from industrial concerns and enabling vendors both large and small to nonprofit, academic, and government organizations. In this regard, the development of the IIoT market bears closer resemblance to the way software defined networking (SDN) and network functions virtualization (NFV) initiatives are developing in networking and telecommunications.
3. GE and its Predix Platform Took Center Stage at the Conference
There were many substantial IoT players at the conference showcasing their recent work in IoT, including GE, Cisco, and PTC/ThingWorx. However, it was GE and its Predix platform that took center stage through much of the conference, outlining the most wide reaching IIoT vision there. While Predix is an operating and orchestration platform like most others, GE has much larger plans in store for the platform. It aspires to leverage Predix to become for IIoT what iTunes is for music, what Amazon is for retail, and what Google is for search. GE’s goal is to become the one source of truth for industrial analytics and business-value-driving applications in this space. Given the company’s long and distinguished history in industrials, this ambition comes as no surprise. Executing on this vision, however, will be no small feat. GE acknowledges that it can’t singlehandedly pull off a complete solution in the near term and has established partnerships with several vendors, including bigger players like PTC.
4. Bringing IIoT to Life Will Require Significant Innovation Across the Spectrum of Technologies
Given the volume of data at play and the pull dynamic of the market, the industrial space will be a driver of continued innovation across a variety of enabling technologies. In fact, there was an entire series of presentations at the conference focused on illustrating the technological implications of making IIoT functionally real. One of those presentations illustrated how the sheer volume of data available in the industrial and manufacturing world will need to leverage fog computing. This next generation cloud architecture framework will enable analysis and the ability to act upon data inputs closer to the devices in question rather than at a central point within the cloud. There were similar presentations made on security and network innovation.
5. While the Business Case for IIoT Is a Work In Progress, the Prevailing Mantra Is “Just Do It”
Industrial firms see the value from IIoT emerging either from cost savings (e.g., through preventative maintenance, performance efficiency, etc.) or new revenue generation (e.g., through better product development, quicker time to market, etc.). Given the early state of the market, most case studies presented at the conference demonstrated cost savings or efficiency gains rather than new revenue streams. Most of these early IIoT pilots and programs are looking for modest results…a half a percent cost efficiency gain here or there. While this may seem insignificant, when you factor in the scope of dollars at play in an industrial environment, a half a percent of a very large cost base can result in huge savings. The general sentiment amongst conference attendees was that starting small, achieving early modest results, and learning from your mistakes was far preferable to starting last.
It was clear from the conference that the industrial and manufacturing world is on the cusp of dramatic innovation. At Waterstone, we look forward to the exciting developments and opportunities that will emerge along the way in IoT, networking, security, and cloud computing. It will be interesting to see what progress is made between now and next year’s Smart Industry Conference.
If you would like to discuss these takeaways in greater detail, feel free to contact me at firstname.lastname@example.org.
Steven Michalkow is an Associate with Waterstone Management Group, a boutique management consulting firm that helps technology companies and investors create measurable value by identifying and capitalizing on disruptive growth opportunities and by driving excellence in Services, Cloud, and Customer Success performance. Steven helps Waterstone clients achieve their business goals through a variety of initiatives, including new offer design and launch, acquisition due diligence, organizational and process improvements, market research, and product and firm strategy.