Today, industrial companies are deriving real-world value from Industrial Internet of Things (IIoT) platforms, yet some still opt for resource-intensive, self-made do-it-yourself Internet of Things (IoT) initiatives. While well-intentioned, these initiatives can have long-standing detrimental impacts on cost, time, people, and scaling.
Digital transformation is becoming a table stakes step process change to effectively compete in today’s marketplace. However, this transformative change has led some non-digitally native companies to over-extending themselves and opting to travel the digital journey entirely internally.
Research has shown this path is not as effective and that partnering with digital companies is how industrial companies can quickly derive business value and still leverage internal strengths for hitting strategic goals. Consider this:
The goal is not to become a digital company. Instead, for industrial companies to capitalize on digital technologies to defend and advance their advantage.National Association of Manufacturers
IoT initiatives are not exempt from this underestimation by industrial companies opting for the do-it-yourself (DIY) approach. Three out of four self-initiated IoT projects are reported failures, many of which cause rippling effects throughout an organization. The underlying challenges inhibiting these DIY IoT projects from success is the money, time and people required to develop IoT internally, as well as to scale the solution across the company and value chain. These challenges present significant organizational hurdles. Below, we explain why.
DIY Is a Budget Buster
Investors need to see their money go into projects that result in quick, short-term wins, measurable ROI, and scalable use cases that will sustain long-term growth and benefit the bottom line. In many instances, homegrown IoT deployments have spiraled into massive cost centers with no clear reward or future benefits in sight. There are three distinct downsides to DIY IoT from a budget perspective:
Total Cost of Ownership
While the initial up-front price to purchasing an IIoT platform or solution may seem steep to some companies, the alternative to developing it in-house and accommodating for the functionality required is far costlier. A DIY project’s total cost of ownership can be almost 4x greater in a factory setting when compared to adopting a third-party IIoT platform.
Costs for sustaining the DIY initiative can spiral with required continuous investments in the IoT system’s security, resiliency, scalability, and development of new features. Locking into this ongoing expenditure can quickly run into the millions, resulting in bloated annual expenses and recurring negative annual outcomes. An IIoT platform provider with knowledge of agile software development processes is better-suited to quickly roll-out innovative applications on its roadmap than an industrial company.
“Time is money” for any organization. It’s continuously top-of-mind for executives, whether it’s deploying resources to develop a new system internally or creating a product to improve customer experiences. Specifically, developing a software solution entirely internally is a time-intensive and therefore costly endeavor. This time-consuming process lengthens exponentially for non-digitally native companies who may be experts in engineering the next great heavy-industrial machine, and lesser so in agile software development and programming.
Developing an IIoT solution internally can take approximately 2.5 years when adding up the time it takes to build and orchestrate a team, to develop the application, and to move it into production. Partnering with a software provider who offers a leading IoT platform is estimated to take half that time to boost proof of concepts (PoCs) into production and even quicker than that in some instances — 89 percent of PTC’s IIoT survey respondents expect to transition use cases to production within a year of purchase.
With competitive pressures mounting, the time-crunch to adopt IoT grows two-fold where industrial adopters of third-party IoT solutions are outpacing the market. Industrial companies without IoT in production are quickly becoming the minority; IDC predicts by the end of 2019, 75 percent of manufacturers will have integrated IoT into their operations.
With DIY IoT initiatives, there are many unknowns, which can lead to delays in implementation and return on investment. With the current speed of change and innovation in the marketplace, that means ultimately falling behind the competition.
Culture Convergence Is a Must
Corporate cultures are changing out of necessity in industrial companies, as operational technology (OT) and informational technology (IT) groups must converge to make digital transformation initiatives, including IoT, a reality.
Industrial companies are already pressed with major skills gap challenges for hiring and developing front-line workers, creating an anticipated 2.4 million manufacturing worker shortage. There’s also a forthcoming one million worker shortage in software developers and engineers facing the United States. Silicon Valley and innovation hotspots have traditionally been the desired area of employment for IT-oriented talent, creating an additional recruiting challenge for industrial firms.
In order to develop and manage a scalable IoT solution internally, an industrial company will need traditionally walled-off IT and OT in-house staff to converge, as well as the ability to lure in digitally-native talent in increasingly competitive labor markets. Acquiring, orchestrating, and optimizing the required skills to enable all this is a massive organizational overhaul and a timely and costly endeavor.
Scaling Out of Pilot Purgatory
The inability to escape pilot purgatory has plagued many industrial companies’ digital transformation progress. Only 30 percent of pilots in Industry 4.0 programs scale out of PoCs, leaving 70 percent of time and resources spent at the pilot stage to waste. IoT is no exception: 74 percent of IoT initiatives are not considered a complete success. The top-cited IoT inhibitors are lack of resources/knowledge to scale and the high cost of scaling.
Pairing DIY approaches that already exhaust resources and costs with these scaling encounters only dampens the likelihood that the IoT use case will reach production. Partnering with an IIoT platform and cloud provider with a proven history of scaling IIoT deployments and similar use cases is the most promising path to circumvent scaling challenges.
When it comes to DIY IoT, research shows there has been more failure than success. That should not be interpreted to mean that digital transformation initiatives that leverage IoT technology are not worth investing in, but a robust partner ecosystem is critical to capturing this value.
Adopting an IIoT platform is a cost-effective and timely way for industrial companies to develop IoT use cases that expand out of incubation zones and into the real world. A proven platform provides the development of on-ramps and role-based applications for both OT and IT personnel to generate and recognize value. When compared to DIY’, IoT platforms significantly expedite time-to-value for industrial companies while providing the foundation for scaling IoT across operations. In today’s rapidly changing global ecosystem, industrial companies need these digital allies to overcome these pressing challenges and prioritize resources towards their own competencies.