Impact of the Internet of Things on Manufacturers
We live in a smart, connected world. The impact is a fundamental transformation of how manufacturers create and exchange value with customers. For those that get it right, the future represents a huge opportunity.
The number of things connected to the Internet now exceeds the total number of humans on the planet, and we’re accelerating to as many as 50 billion connected devices by the end of the decade. For manufacturers, the implications of this emerging “Internet of Things” are huge.
According to a recent McKinsey Global Institute report, the Internet of Things (IoT) has the potential to unleash as much as $6.2 trillion in new global economic value annually by 2025. The firm also projects that 80 to 100 percent of all manufacturers will be using IoT applications by then, leading to potential economic impact of as much as $2.3 trillion for the global manufacturing industry alone.
The rise of the IoT has been driven by the convergence of market forces and parallel innovation of enabling technologies. As products have evolved, their capabilities have multiplied, creating new forms of value and even doing things well beyond their primary function. This transformation is shifting the sources of value and differentiation to software, the cloud, and service, and spawning entirely new business models.
To capture this great wave of value creation opportunity, manufacturers have an urgent need to rethink nearly everything — from how products are created, operated, and serviced. Those who don’t, place their current competitive advantage at risk.
- PTC Advantage
- Other Resources
- Smart, Connected Products
In the IoT era, PTC's customers are bringing to market increasingly smart and connected products which generate new sources of value for customers and manufacturers as streams of data are captured, analyzed, and shared in real-time.
PTC’s strategy and technology enabled solutions transform the way smart, connected products are created, operated and serviced. Application Lifecycle Management (ALM) solutions help companies to manage the development of all software that goes into and along with the smart product. Product Lifecycle Management (PLM) solutions helps companies manage the entire definition of the product, mechanical, electronic, and software, that fit together in increasingly complex configurations and undergo continuous change. Service Lifecycle Management (SLM) solutions help companies manage and optimize the increasingly important processes that happen after the product is delivered to the customer through an ongoing service relationship.
PTC’s recent acquisition of the ThingWorx platform will speed the creation of high value IoT applications that support manufacturers' strategies, such as predictive maintenance and system monitoring, and enhance PTC's existing service ALM, PLM and SLM solution portfolio. PTC will also now offer its customers a means to establish a secure, reliable connection to their products as well as a platform to rapidly develop applications for maintaining and operating them - and ultimately for finding ways to create new value from them.
Author(s): Michael Chu, Markus Löffler, and Roger Roberts
Date Published: 2010
Chu, Löffler, and Roberts introduce a new information technology concept specified as the “Internet of Things.” This information system refers to objects in the physical world that are embedded with sensors and actuators and linked via wired and wireless networks. Because they can now sense the environment and communicate, these objects become tools for understanding complexity and responding to that complexity swiftly (often without human intervention). Access to real-time data creates opportunities for companies to gain competitive advantage against competitors that do not:
- Companies can adjust pricing in real-time at a specific location based on a customer’s buying preferences to increase the odds of a purchase
- Companies can offer different pricing and deployment models now that they know how often or intensively a product is used
- Manufacturing processes studded with a multitude of sensors can be controlled more precisely, increasing efficiency
- Companies limit risks and costs by taking correction action when operating environments are monitored continuously for hazards
The authors argue that as wireless networking technologies mature, communication protocols standardize, and sensors become less expensive, the range of corporate deployments will increase. They identify six distinct types of emerging applications, which fall into two broad categories:
- Information and Analysis: The information and analysis segment is aimed at improving networks linking data from company assets, products, or the operating environment to enhance decision making.
- Automation and Control: The automation and control group is aimed at converting data and analysis collected through the system into instructions to feed back into the network to connected actuators that modify the processes.
Cambridge University Press
Author(s): Mary J. Cronin
Date Published: 2010
Mary Cronin argues that the proliferation of embedded intelligence or “smartness��� in consumer products requires companies seeking a competitive advantage to use that “smartness” to offer customers a strong value proposition. Cronin goes on to further discuss the characteristics of a smart product: data-collection, processing, reporting capabilities, and connectivity to a network that enables remote updates. Throughout this book, Cronin emphasizes the operational efficiencies, productivity, and product improvements benefits a vendor generates from embedding intelligence in products, but argues that consumers will not pay a premium for such products if the vendor accumulates the majority of the value.
Cronin describes four different ecosystem strategies for designing and launching smart products:
- Hegemon – Well-established incumbents that are looking to control the product from design to use, stifling and slowing product innovation within the industry
- Charismatic Leader - Existing firms that are most likely from a different industry with strong brand recognition that enables them to enter completely new or adjacent markets and recruit partnerships
- Federators - These companies look to accumulate a large number of industry-established participants who support a core, standardized technology
- Transformers – These companies are looking to disrupt and challenge established industry models utilizing non-traditional ecosystem partners
After analyzing the past and current smart product activity in the automotive, smartphone, energy, and smart home industries through the ecosystem framework, Cronin transitions to a more focused discussion on the characteristics a smart product requires for a company to be competitive. Those characteristics include a value proposition that focuses on how product intelligence can be used to benefit the consumer as well as the importance of privacy and security.
Economist Magazine (Special Supplement)
Author(s): Ludwig Siegele
Date Published: November 4, 2010
Over the course of several articles, this special supplement outlines both the vision and the practical implications of a world of smart, connected products – a world described as a set of “smart systems.” The topics covered range from the enabling technologies (e.g. sensors, virtualization, digital storage, active RFID tags) and technology vendors to the industries affected and business model implications (e.g. “crowdsensing” and products as a service). The supplement concludes that a world of smart systems will impact businesses in three key ways: improved pricing and allocation of resources; an acceleration of the shift from physical goods to products as a service; and value will migrate to data and the algorithms used to analyze them.
“In fact, data, and the knowledge extracted from them, may even be on their way to becoming a factor of production in their own right, just like land, labor, and capital.”
Beyond the enabling technologies, Siegele reports that “what is most exciting about smart systems is the plethora of new services and business models that they will make possible.” Initially, service itself will be transformed, “making the old stuff run better will be the most important benefit of such [smart] systems in the short run.” In addition, companies may look at new business models, such as products being delivered as a service. “Already, some makers of expensive and complex equipment no longer sell their wares but charge for their use,” such as Joy Mining Machinery which charges for support by the ton. HP’s chief of sensor development, Stanley Williams, predicts “eventually, everything will become a service.” Further, smart systems will cause many companies to “suddenly discover that their main business is data,” according to Silicon Valley futurist Paul Saffo.
Author: Dave Evans
Date Published: 2011
(Abstract) The Internet of Things (IoT), sometimes referred to as the Internet of Objects, will change everything including ourselves. This may seem like a bold statement, but consider the impact the Internet already has had on education, communication, business, science, government, and humanity. Clearly, the Internet is one of the most important and powerful creations in all of human history.
Now consider that IoT represents the next evolution of the Internet, taking a huge leap in its ability to gather, analyze, and distribute data that we can turn into information, knowledge, and, ultimately, wisdom. In this context, IoT becomes immensely important.
Already, IoT projects are under way that promise to close the gap between poor and rich, improve distribution of the world’s resources to those who need them most, and help us understand our planet so we can be more proactive and less reactive. Even so, several barriers exist that threaten to slow IoT development, including the transition to IPv6, having a common set of standards, and developing energy sources for millions—even billions—of minute sensors.
However, as businesses, governments, standards bodies, and academia work together to solve these challenges, IoT will continue to progress. The goal of this paper, therefore, is to educate you in plain and simple terms so you can be well versed in IoT and understand its potential to change everything we know to be true today.
Author(s): Evans, Peter and Annunziata, Marco
Date Published: 2012
Evans and Annunziata describe the coming of the “Industrial Internet,” where the machines, facilities, and networks that arose from the Industrial Revolution merge with the recent computing and information innovations of the Internet Revolution. Together, this has the potential to reduce waste and inefficiency and improve safety and environmental sustainability, causing a new wave of increased productivity.
Revolutions in technology are needed to increase human productivity. The authors believe that the Industrial Internet is a second wave of the Internet Revolution, similar to how the Industrial Revolution underwent several phases, each with ever-increasing productivity gains. Today, the decreasing costs of sensors and data storage and increasing capabilities for real-time analysis of big data create countless new opportunities across different industries with the widespread adoption of the Industrial Internet.
The essence of the Industrial Internet is captured by three elements:
- The first of these is Intelligent Machines, which may include individual machines as well as entire fleets and networks, all equipped with data-gathering sensors and connected to a central repository of data.
- The next element is Advanced Analytics, which is the real-time and historical analysis of this data. The data analysis involves cutting-edge, physics-based algorithms enabled by a deep understanding of the key disciplines involved.
- This brings in People at Work, the final element of the Industrial Internet. Connecting machines to data analysis also involves connecting people across the globe in the analysis of that data and the implementation of the analytics back to the machines, fleets, and networks that form the Industrial Internet.
Substantial investments in the instrumentation of machines, in data centers capable of securely handling massive flows of data, and in a properly trained workforce are necessary to reap the full benefits of the Industrial Internet. The authors are confident that these investments in the Industrial Internet will pay off with immediate, long-lasting, and widespread benefits.
Products have evolved from purely mechanical and electrical components to complex systems combining processors, sensors, software and a digital UI that are now connected to the Internet and each other. As their definition evolved, product capabilities have multiplied creating new forms of value for manufacturers and their customers.
Today, these smart, connected products deliver extended functionality, improved performance and reliability and even do things well beyond their primary function. A collection of PTC blog posts on the Product Lifecycle Stories catalog examples of manufacturers creating product and service advantage from smart, connected products.