10 IIoT Predictions for 2016 and Beyond

As we enter a new year, ARC's IIoT team has been thinking about developments we expect to see in the Industrial Internet of Things and Industry 4.0 space.  The top ten ideas are an interesting mix of positioning and technologies, but taken together, they point to continued momentum and acceleration in the direction the industry has embarked upon - embracing disruptive technologies to transform manufacturing.  Here are our top 10 predictions:

1. Expect to hear a lot more about "Digital Transformation."  This term seems to capture what's driving industrial companies to consider IIoT or Industrie 4.0 technologies.  From the start, ARC noted that terms such as "Industrial Internet of Things",  "Industrial Internet", or "Internet of Everything"  aren't ideal because they put people in mind of some limited, technology and network-focused aspect of the new industrial paradigm.  "Industrie 4.0" and "Smart Manufacturing" are somewhat better in this regard, but still miss the mark because they are at once vague and specific.  Vague because the names don't convey what's different, yet specific because each is built on a government program that sets out a particular set of definitions and activities.  "Digital Transformation" works because it reflects what ARC hears from end users who tell us that they can no longer continue to run their business with old technologies, processes, and business models, that things must change, even though they don't know where to start.  The power behind IIoT, Smart Manufacturing, and I4.0 is fundamentally about leveraging potentially disruptive new technologies to make positive changes, so "Digital Transformation" hits the mark.


2. Focus on customer relationships.  The internet of things will strengthen manufacturers’ hands in the battle for customer loyalty.  As it becomes cheaper to add sensors and microchips to products and to make them smart and connected, machine manufacturers will know lots more about how end-consumers are using them – including in-plant highly commoditized products. This will help them develop their products more rapidly, fix any faults more quickly and tailor products more snugly to an individual buyer’s needs. Example: General Electric uses sensors to monitor how its jet engines are performing in the air, and to diagnose emerging problems. Diebold likewise monitors its cash machines for signs of trouble, either fixing problems remotely using a software patch or, if that does not work, dispatching a technician.  IIoT provides manufacturers with a huge first mover advantage both for condition monitoring/uptime and obtaining operating data to improve the product design.


3. Platforms, platforms, platforms.  Suppliers of all kinds will tout the power of their 'platform' in 2016.  And many users will scratch their heads.  There are software platforms and hardware platforms.  Infrastructure platforms.  Connectivity platforms.  IoT platforms.  Embedded computing and communications platforms.  Analytics platforms.  And many other varieties of 'platform.'  This is a space that's likely to get more confusing before it sorts itself out, but ARC has several research reports in the works that will help.


4. External expertise improves APM.   Process plants owner operators will increasingly recognize that technology vendors and suppliers have greater knowledge and expertise of certain plant assets and can deliver that expertise - as a service - cheaper and with greater efficiency and accuracy than plant resources could do.  Vendors will increasingly leverage cloud services and predictive analytics fed by conventional and unconventional data to provide process optimization and maintenance cost reduction. The knowledge, skills and capability for supporting plant assets such as control valves, exchangers, and other plant equipment will begin to shift from in- sourced or contract direct hire to remote services.  This change also lessens the industry concern over retiring skilled workers.


5. Reference architectures rule.  One of the most-read blogs on our site his year was my post, The Industrial Internet Reference Architecture - First Impressions, and several other similar posts also garnered a lot of views. Reference architectures will continue to be a hot topic in the coming year, and will reinforce the ongoing convergence of IT and OT technologies.


6. Analytics everywhere.  No longer a new phenomenon, applied analytics will continue to appear within applications all throughout the enterprise, in production and engineering, in the boardroom and across the extended supply chain.  In many cases, these decision enhancement tools will be based on predictive analytics or machine learning technologies.  If we had to make just one analytics prediction for 2016 though, it would be this:  There will be an outbreak of companies saying "OK, we've collected the data, now what...?


7. Supply Chain Control Towers. Companies adopting 'control towers' to better manage their end-to-end supply chain will benefit from IIoT in at least two ways:  enhanced tracking and real-time alerts, and improved decision-making enhanced by predictive analytics.   IoT could be used to enable a more automated order-to-cash processes across a variety of logistics, trading partner, and predictive maintenance scenarios.


8. Cybersecurity.  Cybersecurity will remain a concern despite significant advances in technical solutions.  To take one example, ­a recent ARC report, Unidirectional Security Gateways Reduce Risk of Industrial Cyberattacks, discusses unidirectional security gateway solutions  that are specifically designed to help industrial organizations overcome the weaknesses of conventional perimeter defense strategies.


9. Greater protection for edge devices.  Network edge devices are a security weak point for both IoT and IIoT.  Industrial applications have a tougher time with this because they have a long life and so they refresh very slowly.  It’s impossible to replace an installed base – or even update it – without incurring a huge expense.  For these devices to be secure, it will be up to the network to provide protection and monitoring (many are in locations that cannot be physically secured).  Beginning in 2016, services using new network technologies like SDN and NFV will become commercially available from some carriers, and these new services can include greater protection for edge devices.


10. Wait, this is different!  A growing number of control engineers will finally begin to understand why the potential for digital transformation with IIoT/I4.0 is not the same as what they have been doing with SCADA and automation systems for 30 years, and the limitations of the old Purdue model will be more appreciated as more smart connected assets and devices are utilized and new approaches and business models are undertaken.  Naturally, these engineers recognize and relate to the device connectivity and control aspects of IIoT (see item 1 above), but software, scalability, analytics, and the possibility to reinvent business processes are what will really drive the uptake of technology and the coming digital transformation.