Image courtesy of Thinkstock

Scaling IoT Hurdles

Jan. 25, 2016
Supply chain companies recognize the value of the Internet of Things, but many struggle to find the best ways to invest in and implement new technologies.

Many supply chain companies are in the process of implementing Internet of Things applications—or working out how best to define the term— and what financial investments to make toward that end.

Josh Ramirez, product manager for One Source Distributors, a distributor of electrical products, automation controls, and industrial supplies in Oceanside, California, points to the IoT momentum in all aspects of business.

Josh Ramirez, One Source Distributors

“It has definitely grown, because the technology is increasingly changing the way we view things,” says Ramirez, pointing to society’s need to be “connected” in general and the need for businesses to stay on top of the technology curve, in particular. “And technology continues to improve the speed at which these changes occur.”

Ramirez brings up past examples of technological advances to demonstrate his point.

“There are some statistics that I studied where it took approximately 38 years from when radio was introduced to capture 50 million users,” Ramirez says. “Then, when TV was introduced, it took 13 years [to reach 50 million users]. And when the Internet was introduced, it took four years to get to 50 million users. Facebook took less than three years. With the Internet and Google and all these applications that complement this whole transformation – it is incredible.”

Whether it means connecting equipment on the plant floor to the Internet or implementing IoT-enabled processes elsewhere in the company, industry professionals agree that the technology is here to stay. Recently, an IC Market Drivers report projected that worldwide systems revenues for applications connecting to the Internet of Things will nearly double between 2015 and 2019, and could be more than $124 billion by 2020.

Published by IC Insights, a semiconductor market research company, the report went on to say that “During that same time frame, new connections to the Internet of Things (IoT) will grow from about 1.7 billion in 2015 to nearly 3.1 billion in 2019 …”

Matthew Littlefield, LNS Research

The rapid connectivity of the IoT—along with the unique and virtually instant collecting of data and related analytics—makes getting involved with it essential for all businesses rather than a luxury only the big companies can afford.  In that vein, one of the ongoing concerns and questions regarding the IoT is about the cost and eventual ROI, explains Matt Littlefield, president and principal analyst at market research firm LNS Research.

“ROI and funding, in our surveys, is the number one challenge companies have when investing in the IoT right now,” says Littlefield. “It is not technology shortcomings. It is not security. But building the business case is the number one challenge.”

This is especially true in the short term, adds Ramirez, because many business leaders—especially on the industrial side of the equation—are still uncertain about how much to invest in the IoT.

“If they do not understand what benefits we can gain as an organization or as an industry, then you’re not going to embrace it,” he says.

Littlefield says he can sympathize, and suggests executives keep almost a two-track mind when looking long-term. He urges them to establish reachable short-term IoT goals as well.

“There has to be a tie in to [a company’s] long-term digital transformation goals. But at the same time, you need short-term benefits to drive investment,” Littlefield says. “Some of the short-term benefits that we are seeing include asset liability, so there is less downtime. [But] a lot of those are core areas that have always been concerns to manufacturing … they are the business benefits that can justify these costs in the short term.”

Littlefield says he doesn’t any particular industry driving IoT adoption..

“One of the things that we have noticed is that there doesn’t seem to be any one industry or few industries that are leading, or are particularly far behind,” he says. “What we are seeing is [that] those companies that have been traditionally early adopters of technology are today the early adopters of, and running pilot projects for, the Internet of Things GE and Siemens are both companies that are focused on this. They are both users and sellers of this technology.” 

Littlefield also points to Fanuc, one of the largest robotics manufacturers in the world.

“They serve a number of industries. Probably their largest served industry is the automotive industry,” Littlefield says. “They have what they call a zero downtime offer, ZDT they call it So they can access not only their own robot speed, but also the process data around the robot to do more detailed analysis and also do preventative maintenance before there is actually downtime.”

Having a few industries and companies standing out as early adopters is typical with new advances, he said.

“I think every industry has early adopters pursuing [the Internet of Things]… For example I wouldn’t say that the oil and gas is one industry that has done great with the Internet of Things while pharmaceutical doesn’t have any opportunities,” Littlefield explained. “I think there are opportunities in every industry.”

Still, Ramirez describes industrial and electrical companies, in particular, as slower adopters of new technology, a factor that may be keeping some firms from being more active in IoT development.  

“We tend to say that we are an archaic type industry,” he explains. “We are not sexy at all, so why would we ever utilize or jump into this realm of New Age technology that is being used primarily by our younger generation? So that has been a barrier.”

Many argue the irony of that point, given the innovations that have emerged from the electrical industry, in particular, including  LED lighting and the interactive technology that has followed. In the end, it may come down to a generation gap.

 Littlefield adds that as some senior level managers and executives move on, the younger layer of management will be more anxious to advance into the IoT.

“…There is a changing of the guard going on right now among mid-level and senior level managers [many of whom are nearing retirement age]. And there are a lot of [younger managers] coming in who want to shake things up,” Littlefield explains. “They want to do things differently. That is going to have a pretty big impact on how quickly companies adopt new types of technology, especially around the IoT.”

Voice your opinion!

To join the conversation, and become an exclusive member of Supply Chain Connect, create an account today!