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Hannover Day 2: Companies Say the IoT is Very Real Already

Posted By David Brousell, April 15, 2015 at 6:07 AM, in Category: The Innovation Enterprise

hm_logo_col.jpgPTC, the product design and service software company, held a press conference on the second day of the huge Hannover Fair in Germany yesterday, but it was unusual compared with other technology vendor press conferences being held here this week. Instead of having its executives deliver prepared speeches backed up by endless slide decks, PTC instead brought in a panel of customers to talk about a gathering trend that is the topic of much conversation in manufacturing these days – the so-called Internet of Things (IoT).

The goal of the IoT, of course, is to Internet-enable all sorts of physical objects, network them, and then use the information generated from this connectivity to run the business better, even to create new business opportunities. Now, not every company or organization uses the phrase “Internet of Things” to describe the trend. ABB, for example, describes it as the “Internet of Things, Services and People”. Microsoft, to take another example, talks about “systems of intelligence.” Clearly, IoT competition is underway and companies are trying to find ways to differentiate their messages and positions. And, just as clearly, PTC, which acquired two companies – ThingWorx and Axeda – to build an IoT platform, is placing a big bet on the IoT trend.

Regardless, what is unmistakable is that the manufacturing environment is not only becoming increasingly connected and intelligent, it is also becoming far more integrated into other functional areas of the manufacturing enterprise. The IoT has the potential to generate much more information about production, products being made, and how those “smart” products behave once delivered to their intended end users. The possibilities of not only new and better products but also new types of services seem endless.

The panelists all agreed that the IoT represents a significant opportunity to both create new businesses as well as change and grow their existing businesses. They were also quite clear that their companies have little choice but to ride this technological wave. “You have to be connected,” said Christian Eras, Vice President of Global Service, at Ziehm Imaging, a mobile X-ray imaging products maker based in Nuremberg.

One company on the panel that has created a new business model was Smoove, a Saint-Gely-du-Fesc, France-based provider of a bicycle-sharing system. “We are pushed very much by smart city environments,” said Laurent Mercat, Chief Executive Officer of the seven-year old company. “There is new competition in the bike industry. [The IoT] gave us the chance to face this competition.”

For Torsten Leibner, also one of the panelists at the PTC conference yesterday, the IoT is already having many benefits for his company, Giesecke & Devrient, a 1.7 billion Euro developer of security technologies and products for the financial and government markets based In Munich. Leibner, who is Senior Product Manager for Cyber Security at G&D, said his customers want advanced services, and one that G&D is already providing is remote monitoring of its products. This is enabling G&D to deliver better service to its customers, and it is also benefitting G&D by reducing the necessity for on-site visits by engineers and the costs associated with them.

The opportunity to create new services as a result of the connectivity that comes with the embrace of the IoT was echoed by Uwe Gaim, Vice President and Head of Service Operations, at 165-year old Heidelberg, the 2.4 billion Euro manufacturer of printing equipment based in Heidelberg.

Gaim said that Heidelberg has connected 12,000 of its devices, generating 2 gigabytes of data each day about the company’s products that has helped them create a productivity benchmarking platform that is used to provide analysis-based performance services to customers.

In order to leverage the platform, Gaim said that the company conducted brainstorming workshops throughout Heidelberg, which resulted in the generation of several new business ideas now under development. “This was a case of machine data informing corporate strategy,” he agreed.

But Gaim also said the remote monitoring that Heidelberg is able to do with its products has required a change of mindset in the ranks of its service technicians, a change that isn’t easy or quick.

Another key issue with the IoT raised by the panelists was data security, a growing issue in all companies and all industries as the threat and sophistication of cyber attacks increases. All of the panelists agreed that data security and privacy is a key issue for them and, most particularly, their customers.

As companies deal with cyber issues as well as the challenge of getting employees accustomed to competing differently using IoT technologies, the IoT market, so to speak, will continue to develop and mature. But just how fast might this process occur?

The panelists agreed that the IoT is moving very fast indeed, heading into, said Rob Gremley, PTC’s Executive Vice President of IoT and the host of the panel, a “perfect storm” of technology, adoption and usage forces that will create what McKinsey, for example, estimates to be $3 trillion to $6 trillion in economic value by 2025, half of which will come from the manufacturing industry.

Whatever the eventual size of the economic impact, manufacturers should look at the IoT opportunity in a strictly business way and not be dazzled by technological innovations that don’t serve their customers. “The IoT strategy should always be in service of the customer,” said Gaim of Heidelberg.

Written by David Brousell

Global Vice President, General Manager and Editorial Director of the Manufacturing Leadership Council

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