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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