Value from IoT in Manufacturing Still Evolving, but Spending and Investment Continues On

The Internet of Things (IoT) hype remains very high, with much of the conversation around smart homes and use of smart phones by consumers and all the potential there, while the real action is taking space in the manufacturing realm.

While there are hundreds of firms vying for a slice of this action worldwide, a couple of industrial titans - GE and Siemens - are vying to be king of the mountain in the creation of an IoT platform, though complexities abound

Supply Chain Digest Says... All this is a huge technical and integration challenge, and why the need for a central platform to manage across these diverse data sources is seen as valuable. What do you say? Click here to send us your comments Click here to see reader feedback

But the battle between GE, Siemens and others is really about more than just IoT, it is about providing a platform for digitizing
manufacturing, of which IoT plays an important but certainly not exclusive role.

Much of this in turn stems from Industry 4.0 thinking. That is a concept developed in Germany under the leadership of the German government that provides a vision for the digitiation and integration of manufacturing operations, and the development of the so-called "smart factory."

But in addition, there is a vision for what is called the Industrial Internet, which some say is competes for thought leadership with Industry 4.0, while others say the two visions are complementary.

GE offers its digital platform Predix, which it says is an "operating system for the Industrial Internet," which will help companies by "connecting industrial equipment, analyzing data, and delivering real-time insights…unleashing new levels of performance of both GE and non-GE assets."

Siemens, meanwhile, offers Mindsphere, which is more specifically IoT focused. The company says Mindsphere is a "centerpiece of a powerful IoT operating system with data analytics and connectivity capabilities, tools for developers, applications and services."

It positions Mindsphere as a "Platform as a Service" (PaaS), offering customers a development environment in which they can integrate their own applications and services.

Boiling it down to its essence, IoT and the Industrial Internet are "about connecting and using the data from end to end," GE Chief Digital Officer William Ruh told the Wall Street Journal last week.

Using a new generation of sensors and identification mechanisms such as RFID, the vision is that companies will be able to conduct digital conversations with their manufacturing equipment, whether that is food processing equipment, a production line or an industrial robot. The systems let manufacturers collect data and send back instructions to the equipment or predict maintenance needs early.

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But of course, the equipment providers themselves are rapidly developing their own IoT solutions. Factory ownership comes and goes with mergers, acquisitions and divestitures. Companies will often want to have visibility to manufacturing operations at suppliers.

Hence, it is a huge technical and integration challenge, and why the need for a central platform to manage across these diverse data sources is seen as valuable.

But, the Wall Street Journal article says, given all this complexity the race is on for GE, Siemens and a few others to extend their reach and ease integration challenges by forming partnerships with other providers - and lots of them - in everything from Cloud storage to robots.

The platform race will require many "co-petitors," Siemens Chief Technology Officer Roland Busch told the WSJ.

Microsoft, for example, has deals with Siemens and GE to link with its Azure cloud platform. Other software vendors handle analytics for the mountains of industrial data.

"What's the point of knowing a pump is going to break if you don't know where the pump is?" said Nils Herzberg, head of global IOT strategy at German business-software provider SAP, whose software is compatible with multiple platform systems.

GE says it already had more than 300 partnerships for its Predix system.

That while the business case for all this investment in IoT and Industrial Internet is not particularly clear.

"People are still trying to learn how it benefits their business," said Jenalea Howell of research firm IHS Technology. "Folks are coming around to the idea, but it's still fairly recent."

Along the same lines, "You can't do it alone," says Rainer Kallenbach, the head of Bosch Software Solutions. Bosch and GE recently agreed to make their cloud platforms and related software interoperable. "All these various platforms are currently more or less islands" and must merge to "create continents," he said.

Still, the dollars are flowing. The researchers are IDC say spending on the IoT (hardware, software, services) worldwide jumped from $150 billion in 2015 to $177 billion last year.

Richard Soley, the head of the Industrial Internet Consortium, said GE and Siemens are ahead of others in designing platforms and so "will own a lot of the market."

However, he said no overall winner is likely because industries and their requirements vary widely.

SAP may play a critical roles, for example, due its ability to link something like cost management to factory machines.

What's your take on these industrial internet/IoT platform battles? Are GE and Siemens well in the lead? Let us know your thoughts at the Feedback section below.

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