Processes determine efficiency. Efficiency drives profitability.

Around the world, companies are under constant pressure to deliver more with less by both shareholders and customers. However, looking at any organization, only a certain level of inefficiencies can be eliminated from their existing processes (e.g. talent acquisition, supply chain management, etc.). This means that to stay competitive, companies must look externally to innovative and disruptive technologies to drive the next wave of optimizations. A good example of this is the Industrial Internet of Things (IIoT) – capable of providing real-time visibility on operations across an entire organization, helping companies make better decisions at the right time.

But how can companies determine whether an IIoT initiative will have the desired impact?  After all, there are inherent risks which accompany the implementation of new processes or technologies such as:

  • the upfront cost of the project
  • the uncertainty of the value returned by the solution
  • the timeframe in which the value will be delivered

These three variables determine what the project’s Return on Investment (RoI) for the company will be. Understanding these is crucial in determining whether the investment meets an organization’s benchmark for initiating a deployment. The most challenging of the variables to understand is the total value returned by the solution.

Let’s take a deep dive and consider which benefits to include when tracking the an IIoT implementation’s RoI.

Real-time business insights

It’s often said that data is the new oil. Although the phrase traces its roots from consumer insights (e.g. marketers), it holds true for industrial companies as well. With up to the minute insights, organizations can ensure the decisions they make are both timely and comprehensive, ensuring the continuity of operations. Take, for example, a water utility whose mandate is 100% uptime of freshwater delivery. By knowing the condition of all the assets at each pumping station, even their most remote ones, their maintenance teams can identify problematic assets and service them before they begin affecting the company’s operations. Access to these types of real-time insights enables organizations to understand their exposure to risk now and in the future and take corrective measures to mitigate it.

Cost savings

Smart, connected devices can help fill the visibility gap that afflicts most companies, enabling operational and maintenance teams to remotely monitor key processes or assets and helping them optimize their workflows. Over time, this translates not only into direct gains (reduced spend on spares, maintenance, etc.) but also in indirect gains (improved service to customers, improve competitiveness, etc.).

Increased revenues

Rolling out a new IIoT service can benefit multiple stakeholders in the value chain, and it’s the owner’s responsibility to determine how best to monetize the solution. For example, a marine engine manufacturer may offer its customers a paid monitoring solution, since the risk and cost to the customer of experiencing a transoceanic engine failure would be catastrophic. Or, conversely, a pump manufacturer may pay for the service themselves, knowing that having the visibility on their customers’ assets will enable them to distinguish their service contracts by offering a guaranteed SLA, grow their aftermarket business, improve the customer’s experience.

Improved customer satisfaction

Solutions that remotely identify, predict and guide a best course of action have been made possible with IIoT. Take, for example, the connected tractor. Ask any professional farmer, and they’ll swear by a single brand. In an industry where timing is so critical, they need the highest possible uptime to ensure their return per acre is maximized. Looking at the landscape of manufacturers, (John Deere, Caterpillar, AGCO, CNH, etc.), all offer a connected solution to remotely identify, predict and remedy any issues with their machinery. Without such offerings, their customers’ satisfaction would plummet quickly followed by their market share.

Better forecasting

Much can be determined by monitoring the utilization of assets. Just before the mini-recession of 2013/2014, most industrial goods manufacturers did not understand that an economic downturn was in the making. All except one. Yamaha’s suite of connected assets pushed data to both their customers and the corporate headquarters. Looking at this data, the company saw an overall reduction in the utilization of their assets and, by reading between the lines, understood that over production in several of their customer target segments had decreased. Consequently, this meant that CAPEX investment in new assets would also decrease in the near future. With this information, they were able to scale back production and avoid the predicament many of their competitors found themselves in: billions of dollars’ worth of inventory sitting in warehouses.

In the end, before starting a project, it’s important to consider the various aspects of your business which will be impacted by adopting new technologies. By creating a framework for tracking or creating the KPIs to gauge the real-world impact, and validating this with a limited scope Proof of Concept (PoC), you’ll have a more complete understanding and expectations of how a company-wide deployment will affect your business.