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Industrial Internet Adoption: Senior Leadership Sought

For a successful condition monitoring program, you have to have an overall Industrial Internet of Things (IIoT) plan. Sure, you can put monitoring devices on your equipment and extract significant value, but without an overarching plan, over time you will spend unnecessary capital funds, run into scalability issues, and underestimate the impact IIoT will have on your organization.

A recent study finds that three out of four companies do not have a clear IIoT strategy. Additionally, an article’s headline states, “While Most Execs Find IIoT Strategy Critical, Only 25% Have One in Place.” Finally, a spring conference speaker referenced “over 50 percent of industrial companies have no plans to create an IIoT strategy.”

At this stage in the IIoT lifecycle, it boggles the imagination to understand how C-suite/executive level leadership in any public or private company could not have plans developed or at least underway to address the impact of the industrial Internet. Have they not seen the impact of the smartphone in the business place? Are they not observing Amazon’s transformation of the service sector? Can they not extrapolate to their own industry and business the impact of the IIoT technologies experienced in electric cars, wind power, jet engines and water utilities? Don’t most board of directors have to review risk to their organizations? Don’t they understand how much IIoT can improve service and how much they can save?”

Of course, many reasons exist for an organization to not develop an IIoT strategy yet. Several executives blame their last major shared services initiative as having worn the organization down and they “need a breather.” Sure, major platform replacements can be challenging, but this perspective is dangerous and suggests limited organizational bandwidth and a lack of confidence in the chief information officer (CIO).

More legitimate rationale ranges from limited cash flow to personnel deficiencies to mergers and acquisitions activity to competing strategic initiatives. Certainly, strategic plan development by its very nature is time-consuming, challenging and requires layers of consensus and approval before being enacted. Once set, organizations typically follow the implementation of these multiyear programs with discipline to achieve the desired outcomes. But, what do you do when disruptive change enters the business environment? Time has shown most organizations are slow to recognize these business changes, even slower to adapt and many simply falter.

Does the industrial Internet qualify as a disruptive? With investment outlooks in the trillions, the multitude of start-ups in the IIoT supply chain, rapid technological tool development, and a boatload of conferences on the subject, it seems reasonable to assume that IIoT is a disruptive initiative. Any doubts can be erased if you look deeper into those more competitive, emerging, or safety industries, like auto, air transportation, and wind generation. These telltale signs of substantive change are exactly the reason why organizations should be assessing IIoT’s impact.

So, what should C-suite/executive level leadership be doing to assess the impact? Certainly, starting with an organizational risk assessment makes sense as a first step, but to do that, senior leadership has to prepare for that journey by:

Educating Themselves

  • Conference attendance (not supplier conferences, which are really product demonstrations);
  • Benchmark – go to the best IIoT in other industries, see and hear case studies firsthand (at least a half dozen visits to include the chief executive officer, vice presidents and key strategic leaders);
  • Participate in IIoT supply chain discussions – have suppliers present case studies of success, not just product demonstrations;
  • Assess what your competitors are doing through industry organizations or digital media (LinkedIn is a great source).

Evaluating the Organization’s Current Capabilities

  • Look sharply at your business anew through industrial engineering eyes with a combination of internal and external resources. How productive is labor? How many handlings per product? How many maintenance, repair and operations (MRO) resources and what are they “really” doing? What is the utilization, availability and cost of all your assets?
  • Go down to your factory floor and listen to your employees. Where are the opportunities? Where are the problems that aren’t being resolved? Take action immediately where it makes sense.
  • Review your supply chain activities. Focus on material usage and supplier efficiencies. Listen to the supply chain and how it’s dealing with IIoT.
  • Quantify your workforce management situation. Look at attrition projects, skill set gaps, the impact of labor agreements on productivity, people development programs, etc.

Performing a Risk Assessment

Define the IIoT opportunity with the new knowledge base

  • Review scenarios of the impact of IIoT technologies on all aspects of the business, including production, MRO, customer service, facility management, workforce management and future growth goals.
  • Assess the impact IIoT will have on the organization’s key performance indicators (KPIs).
  • Quantify the competitive and risk aspects of doing nothing versus investing in IIoT technologies.

Yes, this takes time and resources, but the investment is worth the effort. The industrial engineering self-awareness assessment alone should provide adequate return on investment for the time invested, as well as build a fact-based foundation for future IIoT investment. At the end of this journey, every C-suite/executive leadership team will sharply realize the need to rethink their organizational strategy and incorporate IIoT investment into their planning, which will schedule out over multiyear investments in platforms, including asset management systems, sensors and condition monitoring software, and machine learning/artificial intelligence (AI), so they integrate to optimize your investment, organizational goals and profit and loss statement (P&L).

Just as the Internet of Things (IoT) is having a profound transformational impact on consumers, IIoT will have the same, if not greater, impact in the industrial environment. Those who plan and welcome change will thrive, those who don’t, won’t.

John Murphy

John R. Murphy founded Gallatin Management Services in 2016 and recently joined as Senior IoT Leader. For 34 years prior to starting Gallatin, Mr. Murphy was Chief Mechanical Officer – Engineering and Strategy at CSX, a leading freight transportation company.

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