iconimage - Fotolia

IoT success stories abound, but few could be called transformative

Count Rockwell Automation as one of the IoT success stories. But then its IoT prowess has been decades in the making. What will it take for other businesses to catch up?

Rockwell Automation Inc. has 300,000-plus catalog numbers representing the various components that go into the...

products it makes for customers.

Given the size of its catalog, its customized products and global footprint, it's not surprising that the Milwaukee-headquartered company had a two-month turnaround time from order to delivery.

But over the past few years, Rockwell, which provides industrial automation and information products to businesses in more than 80 countries, slashed that time from eight weeks to eight days.

Paula Puess, the company's global market development manager for information solutions, credits IoT for the improvement.

"Seeing all our supply chain and knowing what's happening on our [manufacturing] floor reduced lead time, and that immediately equates to customers getting their materials quicker," Puess said.

That has boosted business, too.

"We quote a 5% productivity gain year over year with these systems," Puess said.

The networks at 115-year-old Rockwell Automation connect what happens at the machine level to the shop floor to other systems throughout the enterprise. The company's increasingly ubiquitous connections, decades in the making, allow it to have the right information at the right time, analyze the data for insights and then use those insights to improve its own processes and procedures -- and business in general, Puess said.

Chalk it up as one of the IoT success stories.

Analysts and business leaders increasingly point to the internet of things as one of today's transformative technologies. Consider a recent survey of 750 decision-makers in 16 countries on the topic of digital transformation by IFS, a global enterprise applications firm. IoT was one of the top three areas of priority for funding, along with ERP systems and big data and analytics. Companies indicated that they see IoT as paramount to supporting digital transformation and delivering competitive advantages.

Yet, most IoT use cases today have yet to yield radical digital transformation, even as companies continue to invest more and more money in the technologies that enable it. Instead, companies are using IoT to bring about incremental gains and improvements to internal processes. Indeed, the IFS survey found that identifying internal process inefficiency was a driving force for the North American companies polled, with 37% investing in IoT to deliver results.

Compound and complex IoT applications

Harry Pascarella, a consultant and project manager at Harbor Research who specializes in the industrial internet of things (IIoT), said his firm uses the term smart systems instead of IoT to underscore that this transformative technology is not about a single connected device.

Harry Pascarella

Moreover, Pascarella stressed, smart systems don't have to be connected to the larger internet. An organization can use a closed network as well, to reap the benefits of a sensor-enabled work world.

"It's really devices connected to each other and to people and to processes. And it's about the intelligence and processing power that that encompasses," Pascarella said.

However, most organizations aren't that advanced when it comes to this technology. "Most of what's out there today are just point applications of connected devices," he explained.

A connected thermostat, for instance, is connected but not necessarily part of a smart system. That's a simple application.

The next step up is what he calls compound applications, where different devices communicate with each other and the outside world, yielding data that shows different trends across the devices. Pascarella said a modern refrigerated tractor-trailer truck is an example of a compound application, with the systems that power the vehicle and the systems that power the refrigeration tied together and connected to other systems, such as those providing telematics.

The next evolution, he said, is complex applications. "This is where they all come together in a conjoined system," he explained. He pointed to a smart city as an example. "In a truly smart city, all of it is connected, cars understand pedestrians and traffic lights and everything around them."

He added, "Nobody is quite there yet. But there are pockets that are close."

What's putting the crimp on IoT success stories? Analysts and researchers said multiple factors are holding back wider, more transformative IoT projects, including lack of skilled workers and other resources, security concerns and the presence of legacy systems that don't integrate easily, if at all, into the connected enterprise.

There's also a lack of strategic vision on how to leverage the insights that come with the massive amounts of data coming from IoT ecosystems, analysts said.

"There are a lot of people trying to bring these technologies to the market today and they think just throwing technology at the problem will lead to adoption," Pascarella said. "But you need to understand what your enterprise needs and what your customers need … before any of this can come to fruition."

IoT success story, decades in the making

Rockwell Automation has been laying the groundwork for its connected enterprise for decades, Puess said, adding that the manufacturing sector adopted networked technologies and sensors long before other industries did.

But while the building blocks have been present at the company for years, Puess acknowledged that the company in recent years had to invest in more cutting-edge components to move more fully into IIoT.

The company implemented a converged plant-wide Ethernet about 10 years ago, replacing an older LAN technology. It took a strategic view of the data it's collecting and set up analytics programs to better leverage insights from the information. And it expanded the scope of its connections when, in 2014, it implemented new ERP software and tied it in with other systems such as those from the manufacturing floor.

Chris Rommel

Indeed, the concept of a connected factory (also known as Industry 4.0) has been around for decades, said IoT and embedded technology analyst Chris Rommel, an executive vice president of VDC Research Group Inc. This timeline explains why manufacturers and companies in heavy industry are farther ahead than businesses in other verticals when it comes to harnessing IoT to produce real ROIs.

Still, most of those ROIs come from efficiency plays and not new revenue streams, experts said.

"The use cases driving investments so far have been around optimization and cost savings, and that's because, in those industries, people have a clear understanding of what it costs them to run and what it cost them not to run," Rommel said.

In addition, leaders can more easily get support for technologies that they can show will save money than for a visionary idea that could make money but also carries a higher risk of failure.

Pushing beyond efficiency gains

Matthew Cooney, director of social media and emerging technologies for Nickerson Cos., a Boston-based public relations, design and social media firm, advises the firm's clients on IoT and its benefits, particularly around smart buildings and smart cities.

"But in the phase we're in right now, a lot of people are considering individual connected devices for the purpose of efficiencies and typically lowering costs," he said.

Matthew Cooney

Cooney said he tries to move his clients beyond that. He pointed to smart parking garages as a particularly persuasive use case for those in the real estate space. A smart garage that connects to drivers could quickly direct them to available spaces and adjust lighting and HVAC units to work only where and when people need it, thereby saving time, energy and, ultimately, money. It could also create a competitive advantage, attracting drivers to the garage for its ease of use.

However, Cooney said, even when developers and building owners buy into that kind of vision, they often struggle with execution.

"Each of those is a touch point, and all of those components require sensors and they need to communicate with each other to aggregate ... and analyze data to react accordingly. But there's not one central provider that will pull together all the IoT components. That's why it remains a very conceptual thing," Cooney said.

There aren't as many clear transformation wins as one would have hoped or expected, but a lot of those are coming. The technology has caught up to the vision now.
Chris RommelVDC Research

He added, "There's a lot to take in, and, generally, people aren't sure where to start and what value connected devices represent. Their degree of receptiveness is proportional to how well you can articulate savings."

That could soon change. Rommel and other analysts said IoT technologies have reached the point where businesses can use IoT to support disruptive initiatives that drive more top-line growth and create more IoT success stories. That's provided company leadership has ability and willingness to develop the strategies to do so.

Rommel pointed to one modest example: The once-humble sewing machine when connected can now download patterns (which were once sold separately) and be programmed to replace a fully manual mode.

"There aren't as many clear transformation wins as one would have hoped or expected, but a lot of those are coming. The technology has caught up to the vision now," Rommel said.

Next Steps

IoT takes off: What's holding CIOs back?

Honing the IoT business model

Graphene sheets: The fabric of IoT?

Interoperability drives IoT success stories

Dig Deeper on Internet of Things (IoT) Strategy