How to translate IIoT investments to ROI
A digital transformation takes time, sometimes a considerable amount. This means it can be difficult to quantify ROI, at least in the short term. Return on investment for IIoT (Industrial Internet of Things) relies entirely on the data collected with the technology, and how it’s applied. The information itself may be incredibly valuable, but that won't matter if it's used ineffectively, further reducing the leverage.
Real-time insights provide more of a direct influence on operations, offering minimal boons to a variety of business facets. That said, measuring real ROI is about the big picture and how all those smaller wins come together to provide a wholly effective strategy.
It’s difficult to ascertain the ROI of IIoT and gauge whether or not you’re on the right track in the first place.
Spending on IoT remains high for many industries, but the ROI is still up in the air. About 72% of construction business operators include new tech adoption as part of their strategic plan or vision for the future. Despite that, only 5% see themselves on the cutting edge of adoption. Here are some tips that can help you better plan industrial IoT adoption, while also getting the most out of the new technologies:
Choose an objective
Industrial IoT is an incredibly broad field that encompasses nearly every device, machine and process that exists today, and beyond. Just because the technology can be outfitted to work with every system in a facility doesn’t mean that’s what should happen.
Before moving forward with any form of implementation, every organization should choose an objective for its IIoT campaign. What is the technology going to achieve? Should it be used to improve manufacturing efficiency? Will it help sync up workers across the plant floor? Is it better suited for fleet management and asset tracking?
While it would be great to have multiple potential solutions in place, it would be nearly impossible to verify the ROI after doing so. By selecting a single objective and following through, data teams can adopt a more systematic approach that provides more accurate insights. In the end, it allows decision-makers to see firsthand whether IoT is a proper investment and worth pursuing on a larger scale.
If nothing else, deploying IIoT with the intent to eliminate bottlenecks in existing processes is a great place to start.
Go process by process
With all the hype surrounding digitization and modern technologies, it's easy to get swept up in the tide. Overhauling every aspect of a business to honor advanced digital solutions may seem like a great idea, initially. The reality is that taking it all on at once is likely going to fail. For instance, switching to a paperless operation while simultaneously installing new IoT sensors on the factory floor will cause more confusion than positive support.
As Harvard Business Reviews’ Digital Transformation of Business report states, merely spending more on cutting-edge technologies does not guarantee a positive outcome.
The real winners will be the 'companies that both identify which core business capabilities they need to differentiate and make a commitment to transform these core business capabilities with the right digital technology'.
Instead, take a look at the processes and systems currently in place and identify what will see the most significant boon from digitization. Choose one or two, and then get to work. Once the ball is rolling, it’s going to take time and resources to implement the proper solutions. New technologies will need to be installed, which means old equipment and tools might need to be phased out or upgraded. Employees will need training, and they may also need their own set of improved tools. Leadership will need to come up with new strategies for working with upgraded systems>, communicating with their workers and taking action.
It’s a long, demanding process. Not something that happens overnight. That’s precisely why it’s best to take it one step at a time and focus on a single process or solution. Once a particular department or task is honed, then it’s time to move on to other digitization projects within the company.
Choose a reliable vendor
With new technologies it’s best to work with a vendor or specialist that already has considerable experience. Yes, it’s possible to develop an in-house IoT solution that’s also managed by a proprietary IT crew. It’s also a lot more costly and more likely that problems will arise as a result.
Third-party vendors have more resources at their disposal merely because it’s what they do, exclusively. They tend to have more robust IT and security solutions, along with the appropriate human resources to keep everything safe. They can handle installation, upgrades and repairs, which takes the responsibility away from the leading organization. They also provide comprehensive support for when problems or questions do arise.
Implement predictive operations with IIoT
Predictive maintenance is something relatively new in the industrial field, made possible thanks to IIoT and the real-time insights it can deliver. Data can reveal hidden details about working machinery, output, potential errors and more. Collectively, it provides a detailed report about performance, allowing decision-makers to pinpoint what areas of the operation are lacking. They can take action, sooner rather than later, to correct any issues and replace ailing equipment.
It’s a process that should be deployed across the entire operation instead of solely for maintenance. It can be used for a lot more than just predicting when equipment is going to fail, too. Employing machine learning and analytics applications can reveal when and how supplies are going to thin out, demand trends, and much more. Another term for this is business intelligence. Predictive operations throug big data analysis are one facet of business intelligence, albeit an incredibly lucrative one.
Invest in IoT for predictive operations and ROI will innately improve.
Improving ROI even before it can be measured
These tips offer just a few ways that organizations can improve the ROI of IIoT implementation, even through preplanning. It may be difficult to quantify the real value of the technology upfront. Nonetheless, honoring these processes can help realize the bigger picture, which is something business leaders always demand.
Author: Megan Nichols