CIOs need to embrace the industrial Internet of Things. The most conservative transformation strategy possible - waiting it out - is not a viable option. Below, concrete examples of how IoT- and cloud-based businesses will blow away the competition.

“For even so it is in all material factories. The spoken words that are inaudible among the flying spindles; those same words are plainly heard without the walls, bursting from the opened casements.” - Herman Melville, Moby-Dick

A proud tradition

Your manufacturing business hails from a long, proud tradition. Founded by your great-grandfather in a dusty cellar, it has now grown to span seven continents, with offices in every major city. As your regional plants have prospered, they’ve each developed their own way of doing things. Most of your equipment was purchased pre-Internet. Until recently, that has been working out just fine. But there’s no doubt about it. It’s finally time to embrace the industrial Internet of Things (IoT) to stay competitive.

Why? Because:

  • In industry, money is tight and it’s important to be able to optimize processes easily. Optimization processes should include simulations, which require all the data that the Industrial IoT brings.
  • Products are complex, they get made quickly, and consumers need to replace them on an increasingly faster timeline.
  • Digital transformation (using data to make money) is on the rise.
  • In industry, reliability and security are major concerns.

Advantages of the industrial Internet of Things

The Industrial IoT will use sensors, machine-to-machine (M2M) communication, and mobile devices to make your global business feel like a local business. You’ll be able to closely monitor your supply chain, and pinpoint the location of any item within it. You’ll know when a certain item is running low, and from where to best replenish it. You’ll be able to track your whole fleet of vehicles: location, driver, contents, temperature of the storage compartment, fuel, accidents, and delays. Sensors will keep you updated on your raw materials and works-in-progress (WIP) inventory. You’ll be able to view your power consumption in aggregate. Not to mention the location of your employees.

But it's not all milk and honey. For many businesses, moving to the IoT is less about the excitement of new capabilities, and more about the dread of having to replace their old equipment, buy new software, reconfigure their production process, and put all their confidential information at risk.

The new obsolescence

The IoT is changing the definition of the word “obsolete.” It used to be that a machine was obsolete if it could no longer fulfill its function, or if there was another machine that could perform its function much better. For systems that are not involved in production, but merely make up infrastructure, that’s actually a low bar to clear.

For example, in the year 2000, a company might own one particular computer whose purpose was just to track inventory, or generate invoices, or query an ancient database of archived records. What difference did it make which OS that computer was using, or whether it had the latest security updates, or even whether the password (“admin123”) was taped to the monitor?

Machines like that were, as Ericsson Head of Product Area, Cloud Systems, Jason Hoffman, has said, “more efficient paper.” Insofar as they were hooked up to a network (which might have been a completely internal network), there was no expectation that outward-facing security was necessary. In other words, those systems were designed (and kept) for performance, not for security.

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Over the past fifteen years, my work has brought me into contact with a number of ancient, but functioning, pieces of software, some of them running on DOS. In one case, there were newer versions available, but the company didn’t want to have to retrain its employees. In another case, the company that made the software had gone out of business. But in both cases, the client company’s decision to keep using the old software was (though annoying to employees) essentially sound. The plan was to replace the old software as soon as it, or the computers on which it was installed, stopped working.

If it ain't broke

The conservative culture of “don’t fix it if it ain’t broke” has a legitimate reason to resist upgrading systems for IoT compatibility: What if the upgrades aren’t good enough? What if all the new hardware and software turns out to be a waste of money, and must be replaced? It’s not a farfetched idea. Take the much-discussed case of Nest, the home-automation company acquired by Alphabet. Nest integrated hardware and software from a company called Revolv, which then went out of business. When that happened, all Nest devices relying on Revolv ceased functioning. What if Nest had been used to control the temperature of a meat locker, or an indoor stadium?

How, then, can a CIO decide on the right partners to help them into the IoT? Should they choose only the biggest, most established companies, hoping that they’ll still be around in a few years? As we saw with Alphabet (Google’s “parent” company), that strategy doesn’t work, because the big company will inevitable partner with smaller, less reliable companies.

The entire business world faces the same problem. In order to stay relevant, we must all embrace the IoT, and soon. And yet, in taking that step, a lot could go wrong, and best practices are still being hammered out.

What if we had an IoT, and nobody came?

Let’s discuss the most conservative strategy possible: waiting it out.

Suppose that, instead of a manufacturing business, your family runs a grocery store. The store contains one computer, a desktop PC, in the office. It's used for email, maintaining the website, and ordering stock. The only machine to which it's connected is the router provided by your ISP. The checkouts use registers purchased around 2000, with scanners for UPCs and credit cards, but those registers are not connected to each other, or to anything else. The main room, the refrigerator case, and the walk-in freezer are all controlled by electric thermostats, but those thermostats are on separate systems, and can only be checked and adjusted manually.

You don't have a big profit margin. It's not a high-tech business. People will always need to buy food. So why worry about the IoT? The question sounds reasonable now, but in a few years, it will sound as unreasonable as asking whether the store really needs an email address or a web presence.

Here are just a few of the ways that IoT-equipped grocery stores will blow away their competition:

  • displays that give shoppers information about the food they're buying
  • insight into when the shelves need to be restocked
  • analytics on your customers' buying behavior, to help you give them what they want
  • efficiently monitoring temperature, food type, and the danger of spoilage and expiration
  • customers using their smartphones to pay, access coupons, and receive in-store push advertising

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Digital Industrialization Cloud Infrastructure

Michael Bennett Cohn

Michael Bennett Cohn was head of digital product and revenue operations at Condé Nast, where he created the company's first dynamic system for digital audience cross-pollination. At a traditional boutique ad agency, he founded and ran the digital media buying team, during which time he planned and executed the digital ad campaign that launched the first Amazon Kindle. At Federated Media, where he was the first head of east coast operations, he developed and managed conversational marketing campaigns for top clients including Dell, American Express, and Kraft. He also has a master's degree in cinema-television from the University of Southern California. He lives in Brooklyn.

Michael Bennett Cohn