Varun Nagaraj,President and CEO
Some weeks ago, I attended a technical conference where the speakers all highlighted the Industrial Internet of Things (IIoT), the use of big data, and the potential to change business models and add new revenue streams. They talked about how products would evolve from being not-so-smart and not-so-connected to being very smart and very connected.
It was all the typical stuff you hear at conferences. But what was out of the ordinary was the reaction of the 200 or so attendees representing 150+ companies. The thought many of them seemed to be sharing was, What does this have to do with me?
At the breakout sessions and over drinks and dinner, I asked vendors why they werent excited about the prospect of smart connected products.Here are a few things I learned:
IoT Interest Comes Down to Where in the Value Chain a Company Sits
A leader of a flow-meter company explained to me that his meters already collect data and provide it through simple analog methods to a higher-level Programmable Logic Controller (PLC) in a commercial or industrial facility. Unfortunately, PLCs are a different product segment and are made by a different set of companies.
So what does the IoT mean for a flow meter company? Could his company compete better if he provided richer data to the PLC? But what specifically would the PLC vendors value? Could he circumvent the PLC in some way? It would be great if he could reach remotely to his installed flow meters behind the PLC to see how his meters were performing, so he could make operational suggestions to his customers or design suggestions to his own engineers. But the flow meters are hidden behind the PLC and inaccessible.
Overall, it was unclear if and how the IIoT would change his world. He noted that the PLC vendors are different in that they could access their systems remotely and get more involved in data management, and that some of the smart, connected product concepts could be more applicable to them.
So, an important lesson here was that a companys position in the current – and future – value chain greatly influences its ability to enable or exploit the IIoT trend.
IoT Software is Not Part of the Sales Channels Comfort Zone
A second conversation, with the CEO of a Human Machine Interface company, shed light on a different challenge. We identified use cases where more data, access to that data, and ability to analyze that data could all conceivably add greater value to his product line. In all cases, we agreed that these capabilities would be enabled by software.
The challenge, though, was his channel. While his distribution network knew how to sell hardware, he didnt believe this channel could articulate and sell the value-add of software and services — which is what a lot of the IIoT is about. Therefore he was in no hurry to spend R&D dollars to make his products smarter and more connected in the IIoT context.
Lets Talk About It
Besides these two business-model barriers, there are surely others that hinder the adoption of the IIoT.
We need to learn from each other so that the IoT concepts that the keynote speakers and IoT vendors spoke about are mapped into actionable plans by each industry. The topic would make a great workshop at a future industry conference.
Meanwhile, maybe youd be interested in forming a working group to discuss this topic online? Get in touch.
Varun Nagaraj is CEO and president of Sierra Monitor in Milpitas, Calif. Contact him atVNagaraj@sierramonitor.com.