HMI 2017: What’s next for IoT?

Last week flew by pretty quickly at Hannover Messe, but I had a great time learning a lot about how the Internet of Things (IoT) has gone from “disruptive innovator” to “essential technology” for companies looking to remain competitive.

For example, the term “predictive maintenance” (using IoT + advanced analytics to fix product faults before they occur) was everywhere at the exhibition this year. It even had its own section in one of the halls. To put that in perspective, Microsoft was one of the first companies to launch a predictive maintenance solution just two years ago.

Clearly the IoT market is maturing, and manufacturers are realizing they need to be using it just to survive. And while this is an exciting testament to IoT’s importance, I can’t help but ask: What’s next?

Since my day 1 post from HMI, I’ve spent some time talking with platform solution providers and their customers, the manufacturers, to figure that out. Here are a few things I heard.

Mass customization

What if you could take the customized craftsmanship you find on a site like Etsy.com and scale that model to Wal-Mart levels of volume? Being able to offer customized products at scale is a critical goal for Industry 4.0. Unfortunately for many businesses, especially smaller ones, the cost to invest in such a solution is beyond their reach. IoT can play a role by providing access to factory data that helps make customized production more cost effective, but it needs to be part of a comprehensive factory solution.

Standardization and interoperability

This year’s event made it clear that everyone and everyone’s mother has an IoT solution to sell you. That’s great for driving cost of entry down, but the downside is what I’d call the Babel Effect. Let’s say a manufacturer is trying to transform its facility into a connected factory. The complexity of such a project inevitably requires solutions from several vendors to achieve the desired outcome. Each solution needs to communicate seamlessly with the others, and yet often they fail to do so because they’re each communicating via different protocols that the others cannot interpret. In other words, everyone’s trying to help you build your tower, but everyone is also speaking a different language. Architectures like OPC UA and IIC set common standards that enable interoperability between devices, but adoption of these architectures is still a work in progress, especially for connecting legacy equipment.

Edge analytics

Another nascent trend appearing at HMI this year is the part of IoT known as “the edge.” Not to be confused with the famous U2 lead guitarist, here IoT’s edge refers to the devices, usually sensors, that monitor changes in their environment and then send this data (traditionally) back to an on-premises or cloud server for analysis. However, one limitation of this approach is latency—it can take hundreds of milliseconds for the sensor data to be sent, analyzed and then acted upon. For time-sensitive scenarios, such as remotely controlled robotics, this latency is unacceptable. The solution? To build the processing power into the sensors themselves, enabling edge analytics, reducing latency to near zero. However, edge analytics also introduces new complexity into a given IoT solution, which our client Microsoft’s Clemens Vasters explained in his talk about the importance of establishing mutually agreed upon practices that allow devices within an IoT solution to share information with one another. Architectures such as OPC UA take steps to solve these new challenges, but more work remains to be done.

Small and midsize businesses

IoT has actually been known under other names (such as M2M) to the manufacturing industry for a few decades, but until 2017 cost and complexity have limited IoT’s availability to large enterprises. Now solution providers are addressing SMB needs with scalable SaaS solutions, such as Microsoft IoT Central, that are easy and quick to configure at a lower cost. Expect to see a surge in SMBs deploying IoT solutions over the next two to three years.

All of these trends contribute to the acceleration of one uber-trend that began about two years ago—servitization.

Not my favorite verbism, but all it means is that manufacturers need to stop thinking about only selling products, and start thinking about how to sell services. With IoT, your customer relationship no longer ends with a product sale; that becomes the midpoint. With IoT, you have the opportunity to provide value-added services such as remote monitoring and predictive maintenance, which in turn enable your customers to maximize the value they get from your products. By enabling servitization, IoT changes how you do business, and this will lead to a flurry of exciting innovations that people are only just beginning to think of.

One great example of servitization in action is the partnership Sandvik Coromant formed with DMG Mori, a leading global manufacturer of CNC-controlled lathes and milling machines. Sandvik’s drill bits contain IoT sensors that capture precise details on the condition of the drill bit. DMG Mori’s machines receive this data and provide real-time analytics via a dashboard that give mill operators instant updates and recommendations for how to tweak settings that will maximize the life of the drill bit. So even after the product (drill bit and cutting machine) is sold, Sandvik and DMG continue to gain revenue by providing value-added services that benefit their customers.

It’s hard to capture all the potential I’ve seen for IoT at HMI this year in a couple of posts, and if anything I probably leave with more questions I had when I started. But I see that as a sign of just how fast IoT is evolving, and how fast it is transforming manufacturing (as well as many other industries). As these trends continue to mature, imagine the possibilities as other Industry 4.0 technologies, like robotics and AI, are integrated as well. It’s a very exciting moment to be in.

For more on IoT at HMI, check out my first post  as well as the WE Twitter and Instagram feeds for more insights and images from the past week.