Schneider’s Authoritative Report: The Future of IoT Begins with Sensors

Schneider

In a recent “Schneider Electric Global IoT Survey” involving over 2,500 business decision-makers worldwide, more than 70% of respondents believe that IoT will:

· Create new business opportunities for companies

· Improve efficiency within their enterprises and others

· Generate long-term business benefits

· Become a key interface between companies and customers

Moreover, nearly half of the respondents are concerned that failing to adopt IoT technology in their business operations will negatively impact their operations and lead to a loss of competitive advantage. This is quite noteworthy.

To help identify their development path and explore related opportunities in IoT, Schneider Electric will outline in this report:

· An outlook on IoT prospects

· A guide to getting started with IoT

· The four pillars for realizing business opportunities

· The important role of partnerships and platforms

IoT Prospects: Schneider Electric’s Five Predictions

1. The Next Round of Digital Transformation: IoT will initiate the next wave of digital transformation in enterprises, merging Operational Technology (OT) and Information Technology (IT), and facilitating the mobility and digitization of the workforce: As more and more enterprises expand and deepen their digital transformation across their operations, the role of IoT, especially Industrial IoT, will become increasingly important. More affordable “connected” sensors, embedded intelligence and control, faster and more ubiquitous communication networks, cloud acceleration and edge computing, along with advanced data analytics capabilities will drive this wave of digital transformation. Survey results show that two-thirds of enterprises plan to implement IoT technology through mobile applications in 2016.

2. Market Insight Data: IoT will convert previously untapped data into market insights, helping enterprises elevate customer experience to a new level: When considering the value proposition of IoT, most enterprises believe its primary advantages lie in enhancing efficiency and reducing costs. However, achieving data access—including previously untapped data—and transforming it into actionable market insights (which is the hallmark of IoT) will help enterprises achieve a higher degree of customer service transformation, providing new opportunities to enhance brand/service loyalty and satisfaction. 63% of surveyed enterprises plan to use IoT in 2016 to better analyze customer behavior, thereby improving service levels.

3. Confidence from Local to Cloud: IoT will promote an open, interoperable hybrid computing approach, facilitating collaboration between industries and governments on global architectural standards, thereby helping to address cybersecurity issues: While cloud-based IoT solutions will become increasingly popular, no single computing architecture can monopolize its information transmission. Instead, as part of private or public cloud products, IoT will thrive across systems, whether at the edge or indoors. 41% of respondents believe that IoT-related cybersecurity threats will become a key challenge for their businesses, reflecting current user security concerns. Making IoT available in heterogeneous computing environments will help end-users utilize IoT solutions in ways that best suit their security needs and critical mission requirements, while enabling those still using traditional technology infrastructures to move forward on a manageable path, allowing them to transition smoothly over time.

4. Overcoming Infrastructure Barriers to Achieve Innovation: IoT will stimulate innovation, disrupt business models, and promote economic growth for enterprises, governments, and emerging economies: Just as the Industrial Revolution, the birth of the internet, and the mobile revolution have driven societal progress, innovation, and prosperity, IoT will do the same. Enterprises and cities will provide new types of services supporting IoT, and new business models will emerge, especially in emerging economies that will have great opportunities to rapidly leverage IoT without being constrained by inadequate traditional infrastructure, fundamentally achieving leapfrog development. In fact, McKinsey predicts that 40% of the global IoT solutions market will come from developing countries.

5. A Better Planet: IoT solutions will be used to address major social and environmental challenges: IoT will help countries and their economies tackle the greatest challenges facing the planet, including global warming, water scarcity, and environmental pollution. In fact, respondents believe that improving resource utilization is the greatest benefit IoT brings to society as a whole. In conjunction with the private sector.

Local and national governments are also supporting IoT in hopes of utilizing relevant technologies to accelerate and optimize existing measures to curb greenhouse gas emissions, fulfilling the commitments of nations in the COP21 (Paris Climate Agreement), in which 195 countries have pledged to limit global temperature rise to within 2 degrees Celsius by 2100.

Four Pathways to Realizing IoT Value

Understanding the prospects of IoT is indeed important, but at the same time, the “Schneider Electric Global IoT Survey” found that enterprises struggle with how to embark on the IoT journey and how to prove its value. On the other hand, enterprises cannot afford to directly discard or replace their existing IT/OT facilities. But the reality is that the impact of IoT—especially in the industrial sector—will be a “gradual revolution.” That is, a progressive change that supplements traditional investments while driving significant transformations in business processes and performance.

From Schneider Electric’s experience, it is best for enterprises to start small, focus on key areas, and achieve quick returns on investment through pilot projects to demonstrate the benefits of IoT before scaling up implementation. Applying IoT in this manner will yield the best results. Maximizing energy efficiency and optimizing asset performance and reliability can serve as test grounds for enterprises applying IoT.

If IP networks connect various assets and monitor their operations through sensors, the costs can often be staggering. However, new technologies that have emerged in recent years have changed this cost equation. With the advent of system-on-chip technology, assets can be easily connected to the network; sensor costs have decreased, allowing enterprises to accurately monitor all assets rather than just a small portion as before.

The comprehensive coverage of assets by IoT means that every component (such as a drive) and every system (such as a machine) in the production process or supply chain can convey information: whether they are operating within standard ranges, when proactive maintenance is needed, and how much they are being utilized, etc. This information sharing is a significant development in the integration of OT and IT, enabling enterprises to maximize productivity, efficiency, and profitability.

The principles applicable to industrial and manufacturing environments also apply to cities and buildings. Today, installing sensors in conference rooms can measure room usage and send information to building management systems, which will automatically turn off lights and heating/cooling systems to save energy. Its role can be further expanded. By connecting sensors with online weather information, environmental control can be implemented for the next day’s work. If its application is made more global, IoT can help energy managers manage building portfolios by accessing real-time and historical data to achieve the highest return on energy efficiency investments.

The Four Pillars of Realizing Business Opportunities

In 2016, IoT is creating tremendous value in the following four areas, with the potential for even greater value through continuous innovation:

· Maximizing energy efficiency and sustainability through intelligent systems and data-driven real-time decision-making

· Optimizing asset availability and performance through predictive analytics and proactive maintenance

· Responding to time cost through reducing energy waste and downtime, achieving smarter, more efficient, and profitable operations

· Achieving mobile exploration and potential risk prediction through simulation, situational awareness, and digitization

Next, we will analyze these four key areas, including the tangible benefits customers have gained from successfully applying IoT.

1. Maximizing Energy Efficiency and Sustainability

Whether they are professionals in energy and sustainability or leaders in IT and operations management, regardless of the scale they manage—be it a single building, a complex structure, a factory floor, a global supply chain, or even an entire city—they are now facing the severe challenge of maximizing efficiency. To succeed in addressing this, it is essential to connect multi-format data from various application scenarios and resources, including energy usage, utility costs, water consumption, and building occupancy.

These tasks were typically accomplished using spreadsheet software in the past. Today, there is the capability to collect precise data from systems worldwide (even as small as a computer on a production line) and convert it into operational intelligence through IoT and data analytics, thereby obtaining sustainable application solutions to address strategic business issues and enhance profitability and company performance.

Such IoT-based measures are well reflected in the operations of the Sustainable Apparel Coalition (SAC), which represents companies holding over one-third of the global apparel and footwear market share. SAC needs to shift its heavy reliance on complex spreadsheet software, specifically the proprietary self-assessment tool Higg Index, to a more user-friendly online platform to measure and assess social and environmental sustainability.

With the help of IoT, the new Higg Index platform enables SAC members to easily track and measure key sustainability indicators throughout the supply chain, including energy consumption, greenhouse gas emissions, water usage, chemical policies, waste management, and labor practices at factories worldwide. Today, SAC is transforming this platform into the LinkedIn for the apparel supply chain, where brands, manufacturers, and distributors can connect, share data, and publish their sustainability performance.

2. Optimizing Asset Availability and Performance

IoT can also create value in asset availability and performance. Through predictive analytics, critical equipment can achieve continuous operation, avoiding the high costs associated with downtime; it can also enhance operational efficiency by operating within performance ranges with less power, thereby extending product lifespan.

A major American utility company adopted IoT software, employing condition monitoring and predictive analytics to enhance asset performance, achieving significant success. This company installed sensors on critical equipment across its processes, successfully transforming data (such as temperature variation patterns) into operational information, preventing critical business process downtime, and saving millions of dollars.

By inputting data obtained from sensors into predictive analytics applications, it was found that the exhaust temperature of a gas turbine was 50°F higher than historical records. Technicians used this information to visually inspect the malfunctioning burner but did not find the root cause of the issue. Trusting the software results, technicians implemented a maintenance plan for this machine.

During the planned downtime, technicians conducted an in-depth investigation to identify and resolve the damaged locations. Ultimately, it was found that the combustion chamber, transition pipe, fixed blades, and rotating blades all required maintenance. The predictive model enabled by IoT saved the company over $450,000 in previously estimated costs. The IoT functionality also helped them discover more temperature and vibration issues, saving a total of over $5 million through proactive maintenance.

3. Smart, Efficient, and Profitable Operations

IoT gives every asset on the production line, manufacturing process, building, or electrical grid the opportunity to “speak,” thereby breaking down the long-standing barriers between OT and IT worlds, opening up business operations far superior to existing methods. OT can “interject” at any time regarding environmental conditions and performance, providing accurate operational data, allowing any machine, person, or information system at any level to participate in improving overall processes.

New Belgium Brewing Company applied this thinking and reaped substantial rewards. Due to increased market demand, the company needed to boost capacity, but increasing production lines would require more investment, so they urgently sought a way to increase output from existing facilities. New Belgium Brewing Company equipped itself with manufacturing software utilizing IoT technology, capable of providing real-time analysis of asset and capacity utilization and overall equipment efficiency. By monitoring and measuring equipment performance and energy consumption, relevant information can be sent in real-time to operators and decision-makers, allowing for quick responses, implementing equipment maintenance, improving equipment status, maintaining productivity, and reducing unplanned downtime.

Ultimately, New Belgium Brewing Company reduced unplanned downtime by 50%, while doubling capacity without adding new production lines to meet the growing market demand.

4. Mobile Exploration and Potential Risk Prediction

As illustrated in the above examples, IoT is helping enterprises discover new value and extract more benefits from existing systems; bringing “things” to the forefront of enterprise strategies without needing to “discard and replace.” Here is another area where value can be derived from IoT solutions: mobile exploration and potential risk prediction.

One of the most challenging tasks in factories is troubleshooting and repairing machinery failures. Factory equipment often consists of a mix of new and old models, ranging from brand new to over 20 years old. Additionally, not every product has a human-machine interface, and many products lack on-site documentation, creating significant challenges in fault identification and diagnosis.

By embedding sensors throughout the factory on machines and loading data such as inventory, geographical location, and shape recognition into Augmented Reality mobile applications, operators can leave the control room and gain detailed insights without running back and forth. With just a handheld tablet, real-time data can be obtained in the factory environment, in front of machines, or even outside buildings, informing operators of issues to watch for and potential faults needing repair.

Another example of “situational visualization information” is the public engineers in Carson City, Nevada, who are currently engaged in maintenance and repair work for urban water supply, sewage treatment, traffic operations, landfills, vehicle transport, and renewable energy generation systems. They are equipped with tablets and smartphones loaded with specialized software that provides them with real-time centralized information on equipment status and work scheduling. Managers and workers believe that thanks to initial investments in digitalization and IoT, their mobility, situational awareness, responsiveness, and work efficiency have improved.

The Important Role of Partnerships and Platforms

The development, implementation, monitoring, service, and continuous innovation of IoT solutions cannot be done in isolation, nor can it be achieved solely by one’s own efforts. IoT technology involves a multitude of technologies, including hardware, software, machines, and networks, as well as assistance from organizations at various levels. IoT technology is rapidly evolving. To effectively build, deploy, manage, and introduce new IoT solutions, forming partnerships among industry leaders, technology innovators, academic institutions, and government and standards organizations is crucial.

Strategic partnerships are rapidly developing, covering many areas related to IoT, enabling collaborative efforts among technology innovation experts in interconnectivity, cloud computing, big data, cybersecurity, industrial automation, engineering, and integration, facilitating technical communication among each other, and even providing professional consulting to top industry leaders and academic institutions. These partners are working together to address the issues faced by key customer groups, accelerating the development of new IoT solutions and delivering these solutions in a more impactful way to create value.

Finally, IoT platforms, especially cloud platforms, are the key foundation for developing and delivering IoT solutions. They create a new industry environment, making it easier and more cost-effective to develop new applications and services, explore and support a broader development community, adopt industry standards and thinking, and continuously innovate.

Innovation Is Ubiquitous

Three major trends have triggered a significant increase in energy demand, leading to the IoT revolution:

· Urbanization: By 2050, the global urban population will increase by 2.5 billion.

· Digitalization: 50 billion devices and “things” will be connected to the internet within five years.

· Industrialization: Industrial energy consumption will increase by at least 50% over the next 35 years.

Traditional energy fuels are unsustainable and harmful to the planet. Meanwhile, there are still 1.3 billion people worldwide without access to electricity.

All of this exacerbates the energy dilemma. However, there are two transformational developments that can address the challenge of energy efficiency: one is the integration of Operational Technology (OT) and Information Technology (IT), and IoT can accelerate this process; the other is smart grid technology. The emergence of smart grid technology can promote the development of a more “3D+E”, digitalized, low-carbon, decentralized, and electrified new energy world.

Relying on the innovative power and infinite possibilities embedded in IoT, Schneider Electric provides interconnected products, edge control, applications, analytics, and services, achieving multi-level innovation from the device layer to the operational layer to the management layer, thereby helping customers in homes, buildings, data centers, industries, and the power sector optimize energy efficiency and process control.

Interconnected products: Achieving smart technology integration across all devices for digital transmission of data.

Edge control: Enabling real-time automation and control decisions at the local operational level for hardware and software.

Applications, analytics, and services: Enterprise-level software, applications, and analytics transform aggregated data obtained from the lower two levels into data-driven operational information.

Innovation is timeless at any level; it redefines energy management and automation for customer outcomes, while also addressing the energy dilemma for the sustainable development of the planet.

Conclusion—Today’s Value

The application of IoT in enterprises is still in its early stages, but it has already begun to create value and generate concrete impacts, especially in the four areas discussed above.

Here are the summaries of these early success cases:

1. Companies have not allocated large budgets for IoT. Instead, they are trying to pilot IoT solutions in an effective manner, hoping to gain more benefits from their existing OT and IT investments and processes.

2. Enterprises that have adopted IoT solutions have found that asset and energy management are two excellent test beds for IoT, which can quickly generate value at relatively low costs.

3. IoT is bridging the gap between OT and IT. This means that enterprises can access a wealth of new datasets. These datasets will gradually enable enterprises to gain better market insights and achieve better performance. This integration will also facilitate collaboration with enterprises in the OT and IT fields.

Utilizing IoT solutions to generate value in functional areas must also consider the overall benefits. For example, for an industrial manufacturer, if a 10% reduction in energy consumption comes at the cost of production time, safety, and risk reduction, then it cannot be considered a benefit.

Forward Thinking—Tomorrow’s Value

Clearly, over time, IoT will inevitably be used to connect the entire enterprise to make informed decisions that consider the overall context. Enterprises should fully leverage IoT to place assets, business, processes, people, energy, mobility, and situational awareness within the relevant context of a system or the entire system. Enterprises should also recognize the interconnections among each part, which will help ensure that the whole is greater than the sum of its parts, thereby achieving exponential operational benefits.

Enterprises now face several decisions whose outcomes will affect whether they can benefit from IoT in the future, including the development of new applications and the services these applications generate. To achieve these positive outcomes, enterprises need to carefully coordinate the integration of technology, partnerships, personnel, winning strategies, and innovation.

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