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Integrating IoT and ERP data to achieve performance excellence

Implementing an IoT program is far from a one-stop purchase. In fact, by some estimates, it can take up to 25 partners to drive a complete IoT customer system.

That stat sheds light on a story defining the IoT space right now — the increasing number of partnerships between information technology (IT) and characteristically operational technology (OT) vendors. Across the board, from GE and Oracle to Rockwell Automation and PTC, global tech giants are partnering with one another, systems integrators and startups to deliver deeply integrated systems that will ease the process of deploying IoT projects.

Why? Because linking IoT and transactional data is the gateway to digital transformation, despite the complexities involved. In a recent IFS survey, only 16% of the 200 manufacturing and contracting executives surveyed said they consumed IoT data in their ERP systems. That enterprise software must help facilitate IoT projects was one of the study’s key findings. But, in fact, it’s doing the opposite with the majority of those surveyed blaming inflexible and legacy ERP software, or challenges in selling the value internally.

Cloud ERP eases IoT integration

In addressing that first challenge, there’s growing recognition that a robust, IoT-enabled ERP system must be cloud-based. Because cloud ERP is built on open standards with open APIs, those with cloud ERP have a significant advantage in integrating data generated by operational technology.

Enabling data access by plant managers and line-of-business leaders alike will unlock the true value of the data generated by things. Enterprise software can automatically operationalize IoT data, issuing work orders when certain equipment conditions are present, scheduling technicians in the field according to their proximity to a call, or adjusting production schedules depending on fault reports and overall equipment effectiveness calculations, according to the IFS report.

IT and OT convergence key to success

Easier-to-deploy technologies, prebuilt integrations, and optimized software and hardware are the keys to deeper IT/OT convergence. But as with most technology projects, it’s not only about the technology. To ensure the integration of software delivers the most value, it’s important to focus on strategies for bringing IT and OT teams together who have typically done their jobs in separate spheres.

The benefits are huge — significant improvements in business and financial performance can be achieved by linking real-time IoT and industrial IoT information to your ERP system.

For instance, traditional ERP systems are missing a critical ability to identify operational anomalies and uncover the root cause. Real-time IoT and IIoT data can help identify anomalies and outliers at the moment — enabling decisions that can have an immediate impact on business processes. For example, if operating efficiency is lower than planned or conversion cost for a specific SKU is higher than targeted, properly configuring IoT and IIoT data with ERP data can help to identify which specific attribute or element of the process had the strongest correlation to the outcomes of interests, i.e., costs, quality, service. This allows for targeted improvement initiatives to be launched and minimizes the impact of variation. Less variation means lower operating costs, higher profits and better attainment of performance objectives. Moreover, integrated IoT and ERP can have a positive effect on the end customer as well, from improved service levels thanks to sensor monitoring or predicting equipment performance to seamlessly accounting for outages or repairs in the billing cycle.

When we have more data, we can use technologies like artificial intelligence to analyze, predict and even automate action. Only then can ERP systems move from being systems of record to enablers — predicting and guiding organizations to be more proactive in their pursuit of performance excellence.

All IoT Agenda network contributors are responsible for the content and accuracy of their posts. Opinions are of the writers and do not necessarily convey the thoughts of IoT Agenda.

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