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Creating new business opportunities means finding the lines that connect the dots

For OEM’s, with Industrial Internet comes the opportunity to gain a competitive advantage by shifting their focus from developing features to identifying completely new service models. According to Alexander Damisch, Senior Director, Business Transformation at Wind River, coping in the ever-intensifying competition requires changing the entire approach to how and where business happens. Using Industrial Internet to data monitoring can help detect aspects that turn out to have a crucial impact on the overall process. However, achieving breakthrough results calls for thorough digital understanding on different levels.

Original Equipment Manufacturers at the forefront

Damisch states that equipment manufacturers are the true ambassadors at the forefront of the Industrial Internet. However, most of today’s equipment manufacturers aren’t making full use of this opportunity, but instead focus on competing on a feature level with the rest of the operators in the market. This is something that Damisch sees as a hindrance.

“Back in the day manufacturing of many industrial components, such as control systems and electrical drives, used to be rocket science, so to speak, but not really anymore. There are multiple smaller players in the field challenging the traditional giants with their offering, meaning that there is a constant pressure to compete on price,” Damisch says.

Lower-cost manufacturers who manage to produce components and services that are basically good enough to fit the needs of the industry put OEM’s in a fairly unpleasant position. Especially for the so-called high-end brands simply lowering the price for individual products is not really an option.

“Cost reduction is anything but straightforward. You don’t just decide to start selling Rolex watches at a cheaper price. You need to either find a way to reduce costs on the operational level, or learn how to scale your products in a different way.” According to Damisch, the key is to focus on creating new opportunities for generating revenue. This is where IoT plays a crucial role. “Basically you need to let your client know that you no longer will sell them a vehicle, but instead you sell them the ability and the know-how to manufacture one faster, better and for lower OPEX than anyone else.”

As an example of a successful change of the entire business model enabled by IoT Damisch recalls how Rolls Royce switched from selling actual jet engines to leasing engine operating hours. As a manufacturer Rolls Royce moved towards a service-oriented business logic, in which customer pays for the expertise that enables them to use the machinery. Hitech is no longer only in the component itself, but in the service system that the engine communicates with informing the service provider of exactly how and how much the jet engine is used, and when it needs to be maintained.

Revealing the unseen

Moving from preventive maintenance to predictive is the classical example of how industrial internet can benefit businesses. Unscheduled halt in any industry can be extremely expensive, and therefore predicting the equipment’s need for maintenance and repair can result in huge cost savings by minimizing downtime.

Furthermore, closer monitoring and detailed communication between different systems and components can help improve the overall production process and increase manufacturing yield.

“Industrial Internet makes us become more aware of the surroundings of a certain process. It enables us to find connections that we didn’t know existed,” Damisch summarizes.

Silicon wafer manufacturing in the semiconductor business is one example of how recognition of a formerly unknown connection can transform the whole production process. Closer monitoring of the surrounding conditions of the manufacturing process revealed that only a two tenth-degree difference in water temperature in the factory had a significant impact to the manufacturing yield.


“Industrial Internet makes us become more aware of the surroundings of a certain process. It enables us to find connections that we didn’t know existed.”

“You would never realize those kind of things by only looking at one element or component of a machine, because it doesn’t show you the correlation between data sets. Getting all the information at once allows us to tweak even the smallest of things at the very beginning of the production chain without huge investments to new machines or major changes to the overall process.”

In addition, getting a clearer view of the entire production process can help companies achieve their aim to optimize their existing efforts, and at the same find new opportunities to maximize revenue. All this plays a major role in production facilities’ future investment planning. With new technology companies have seen the value of investing into IT.

IT/OT convergence for smarter business

Simply getting access to more data isn’t enough to transform entire processes and business models. Companies must of course also know how to make use of it on different levels of the organization, which in practice means fostering open source culture.

CIOs play an important role in helping companies harness digitization and big data, and thus shift towards industrial internet. As the world gets more digital it also becomes more complex, and this requires utilizing different skill sets within organizations.

“The challenge with big data is that if you look at highly complex industrial systems, the collected information is so extensive that converting it into real knowledge usually requires very specific expertise. In my opinion, CIOs tend to have a good understanding of the business decision making systems. However, their knowledge about the operational processes in the production facilities can be limited,” Damisch ponders.

In order to ease the transition towards utilizing Industrial Internet, Damisch’s advice is to integrate the operations technology and IT technology understanding within a company more thoroughly.

“A process controller can’t be shut down if there is doubt of it being infected by a virus. Very different measures apply at the factory floor. There needs to be a mutual understanding between the OT and IT experts inside the company”.

And as standards might change over the years, Damisch also recommends utilizing open source thinking from the beginning.

“Make sure that whatever you build is based on open interfaces or you risk it turning into a graveyard of information at some point. Using open standards, like a Hadoop system for long term data storage, you make sure you stay open to extract the value later on”.

Alexander Damisch works as Senior Director, Business Transformation at Wind River

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Interview w/ Alexander Damisch

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Five guidelines for fully leveraging the Industrial Internet

”Business processes tied to the Industrial Internet (part of the Internet of Things) are projected to deliver efficiency gains of at least one percent. So far, measured implementations have been delivering 20 times that original hoped-for result”, Joe McKendrick writes for Forbes, analyzing the recent advancements in the field of the Industrial Internet.

One of the examples comes from Michelin. The company has turned their business from a tire manufacturer towards services. By doing this, they can also act as a fuel savings partner, and provide excellent analytics to companies on how their fleet is operating.

Referencing the findings from a recent report by Accenture, McKendrick gives five guidelines for fully leveraging the Industrial Internet.

Read more at: http://www.forbes.com/sites/joemckendrick/2015/11/23/embrace-the-quietly-advancing-industrial-internet/

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2016 – The year of analytics

In the evolution of the Industrial Internet we have now moved on to the stage where many companies are already either in the process of experimenting or introducing different kinds of new products and services. At the moment the burning question is how to produce value around these innovations. Juha Pankakoski, CDO at Konecranes looks back at the year 2015 and forecasts the hot topics in 2016.

In the past year the floor has been taken on multiple occasions to ponder on the questions of how to create the right revenue models, and how to productize the collected data. In other words, the general interest has shifted from the technology itself to the impact it will have on the existing business models and business logics.

Collecting data alone is not enough. Neither is being able to utilize it and developing it further into new knowledge and insights. All of this needs to be done in such manner that certain, concrete actions come out of it. Think of it as a loop that needs to be closed: already before heading to the first curve you need to know how to close it.

We are now beginning to understand how certain functions in older products can be utilized to serve some of the new goals. In elevators, for example, there is a statutory alarm system that needs to be checked every day. All elevator cars must be equipped with an emergency button that at any time, once pressed, connects the elevator to the service center. So basically what we have is an existing connection and a platform that can be expanded into new functions by adding sensors, data collection features, and such.

Another very concrete example is the troubleshooting on offshore oil rigs and large cruise ships. With new remote monitoring systems any problems or faults in marine vessels can be detected and even repaired from mainland using remote connection. Analyzing the data sent from the offshore vessels also enables a more preventive approach on maintenance planning when the ship is ashore.

The year of the hackathon

Hackathons are events where coders and designers assemble to collaborate intensively for a certain period of time to create new digital software and solutions. One of the main goals of setting up hackathons is to make it easier for different companies and businesses to encounter despite of their size. And luckily this is something that truly has been achieved with these events in the past year. Forums where different actors all come together and utilize each other’s know-how to find new solutions and overcome obstacles have really increased the understanding of what kind opportunities are at hand.

Augmented reality was another hot topic in 2015, and a lot has happened on that front. Companies are pushing out products, such as virtual reality glasses, at an accelerating pace. Many of these still need further development before qualifying for industrial use, but they are close. I believe that breakthroughs are just around the corner.

Using augmented reality in business can mean, for example, being able to better utilize expertise throughout the organization and especially in the field. Consulting and supporting colleagues conducting customer visits becomes easier from a distance, for instance, when the absent can get a realistic view of the situation at hand onsite. This not only helps increase and share knowledge inside the company, but also improves quality from the customers’ perspective.

“The role of data analysts and scientists will surely become more important in strengthening and further developing companies’ competitiveness”

The importance of analytics

The focal thing that is likely to gain a lot of attention in the near future is the importance of analytics expertise. As said, in 2015, the focus was mainly on building the suitable technology that enables monitoring and data collection, whereas now the main motivation is to process that data into new kind of operation, which then generates value. As a result, the role of data analysts and scientists will surely become more important in strengthening and further developing companies’ competitiveness. Also, we will undoubtedly be introduced to numerous new concepts that draw from machine learning, pattern recognition and so on.

Finally, a trend that will most likely continue to shape the industry in 2016 is the ongoing discussion about dominant standards and platforms. I believe that it is still too early to expect any system to gain superiority over the others. However, I do think that more and more actors have realized that the chances of survival for closed systems are rather weak. From where I stand, the future is in open source software and modularity.

All in all, finding out what works and what doesn’t is basically about learning things through trial and error. This is why we need to keep putting our heads together for the greater good.

Juha Pankakoski works as CDO at Konecranes

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Juha Pankakoski
Juha Pankakoski works as CDO at Konecranes

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Equip, utilize, make it actionable – steps to realizing the Industrial Internet

Data doesn’t lie, according to Harvey Shovers, the President of MSI Data. In baseball, for instance, it’s a commonly known fact that all of the teams today analyze huge amounts of data that is produced on the field. In 2013, the Pittsburgh Pirates managed to break their 20 year losing spree by applying sophisticated data analytics to the baseball field. The same idea can be applied to different manufacturing industries like the steel industry.

“With the steel industry being one of the oldest industries out there, you can imagine it is very traditional when it comes to managing. These kinds of industries have been pretty reserved of the idea of managing by data.  But the steel industry, just like everybody else, is going to benefit from the capture and analysis of that data”, Shovers says.

If you take the right mix of experience and reliance on the data that you have never been able to act on before, the steel industry, like any industry, is able to make better decisions that can more quickly affect the manufacturing process.

As an example, for service technicians, having the right data means that they can update their old methods of doing maintenance.

“It isn’t beneficial for the service technician, or the customer, to come on site and not be able to identify the problem, and then have to come back again and again. It’s expensive and it doesn’t drive good relationships with the customer. Now, with the proper data, the technician can come and fix the problem before it occurs and come equipped if a problem does occur. With access to machine data, the technician knows exactly what the problem is and how to fix it. This way the first-time fix rates go up and the service technician gets his job done faster, better and more professionally. This improves the relationship with the customers. It’s a win-win-situation,” Shovers says.

Getting everyone on board is key

Speaking on the hot topics in Industrial Internet, Shovers mentions that there’s a difference in the emphasis between the consumer side of the IoT and the Industrial Internet. When thinking about the Internet of Things, people tend to associate it with consumer-type applications.

“For most people, they like to think of things you can do with your smartphone. The Internet of Things makes day-to-day activities for people easier. We now have apps to control the lights in our apartment, to record TV-shows and to change the thermostat. On the industrial side it’s more about collecting big data.”

According to Shovers, the companies on the leading edge are the ones who are already capturing data and are starting to utilize it. The main problems companies face in getting to this point is getting the whole company on board and having a clear vision as to why other companies are already collecting data and most importantly being able to see what the payback is.

Three steps to an Industrial Internet

For Shovers, the implementation of the Industrial Internet takes place in three distinct phases. The first one is making everything internet-enabled. For example, in the auto industry, most cars that ship today are equipped with some kind of data-collection and telematics devices.

“Not all of the data that can be collected from devices is actually used today, but everyone is putting hardware and software into their products,” Shovers says.

The second phase is capturing the big data, and then being able to utilize it.

“That data helps companies drive their business decisions, or manufacturing and design decisions faster.”

The third phase is making that data actionable. The end result might be, for example, that we have a car that drives itself, compared to cars now that can already change lanes for you automatically, or notify you if something negative is about to occur.

What kind of advice would Shovers then give for company CIOs in charge of implementing any of these three phases?

“The point would be to get started now; don’t wait. The technology is already here, and if you wait two or three years for the perfect solution to become available, you’re going to be behind everybody else”

“I’m a big proponent of taking steps to get things started now, because you can talk about these things forever, just like anything else,” Shovers says.

According to Shovers, an ideal scenario for a company would be to come up with a multi-year plan of where the company aims to get to and of the results they aim to achieve with the implementation of the Industrial Internet.

On the way there they should be able to report back to their stakeholders every step along the way, within or outside the organization, of the progress they’re making towards achieving these long-term goals.

“The point would be to get started now; don’t wait. The technology is already here, and if you wait two or three years for the perfect solution to become available, you’re going to be behind everybody else”, Shovers says.

Finally, coming back to baseball, only 20% of the data-collecting teams make their decisions based on it. The ones using data to guide decisions also happen to be the ones leading the surge and becoming the winners in their sport.

Harvey Shovers is the President of MSI Data, a Wisconsin based company that is the leader in field workforce automation software.

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Interview w/ Harvey Shovers

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Arranging hackathons to make IoT-innovation easy

Hackathons have been making their mark as a way of offering novel solutions to industrial companies. One of the most interesting concepts is Industryhack, a Finnish start-up which aims to shake up the traditional hackathon formula by arranging weekend-long events for teams of coders to come up with promising new solutions for industrial partners.

“[We] were started to create concrete IIoT experiments and learn what it really means for different industries”, Ville Riikkala, co-founder of Industryhack says in this ZDNet article. Read more about the current state of hackathons at: http://www.zdnet.com/article/industrial-iot-from-cranes-to-prototypes-how-hackers-are-digging-out-new-openings/

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