Internet connectivity is rapidly infiltrating devices everywhere to provide feedback to engineers, managers, designers and customers. Machines, products and industrial processes, especially in manufacturing, are growing ever more effective, efficient and profitable.
This “Internet of Things,” as it is called, is helping revive U.S. productivity and competitiveness, attracting onshore jobs that departed a generation ago in pursuit of lower foreign labor costs.
Growing machine-to-machine communication is creating faster processes and better service, decreasing downtime and improving quality. Digital information streams, meanwhile, are flowing from an exponentially growing number of sensor-packed machines in the plant and products in the field. The info is pooled into massive databases that yield predictive analytics; managers and engineers can filter data to extract best practice benchmarks for individual devices and organizations – and spot weaknesses to improve.
Internet of things, abbreviated as IoT, is a term coined in 1999 that has achieved currency in the past year as its transformational impact grows. And those busy building this interlaced and reactive world say it is only just beginning.
“The Internet of Things will be as big as the Internet,” according to Alex Frommeyer, CEO and partner in Louisville-based Uproar Labs, which specializes in the development and launch of IoT products. “It will produce a very different consumer experience in the next few years.”
The term is a catchy buzzword but that buzz is happening, Frommeyer said, because “the underlying realities and technology and what it opens up for business and consumers is substantial.”
Others aren’t yet ready to say the impact will exceed that of the Internet itself – Frommeyer confesses to being “the most aggressive talker about the Internet of Things in the state” – but they concur it is a big deal. It definitely is for businesses that provide information technology and hardware.
“I’ve never seen it any more active,” said Steve Sigg, CEO of Lexington-based SIS Inc., a technology and managed IT solutions provider. “An incredible transformation going on in the industry. It is exciting and taxing to keep up with, though.”
Everybody in the IT world is dealing with it, said Sigg, whose 24-year-old company expects business to grow 30 percent this year. SIS is seeing major change taking place “at the manufacturing level, at the distribution level, at the marketing level.”
“Visibility” worth spending trillions for
Research and training provider IDC Techologies estimates the IoT technology ecosystem itself is already a $5 trillion market globally, ZDNet reports, and will grow to $8.9 trillion by 2020.
There is strong growth at Balluff Inc., a Florence, Ky., provider of industrial sensors and machine-to-machine communication systems, said Tom Rosenberg, director of marketing. Balluff’s hottest commodity is radio frequency identification chips, a decades-old technology that has evolved into a primary M2M component for industry. Six to eight years ago, RFID chips began incorporating basic servers that generate a web page for information display and programmable controls.
RFID sales are up more than 60 percent, Rosenberg said. Balluff networking systems sales are up at least 48 percent, and industrial sensors are up 8 to 10 percent.
That surge is occurring now even though basic IoT practices – without the catchy name – have been around in industry for at least a couple of decades. Balluff opened operations 30 years ago in Florence to be near the heart of the U.S. machine tool production region, and its German parent, Balluff GmbH, is 90 years old.
While basic sensors have been around nearly a century, Balluff’s network systems line is only eight years old, Rosenberg said. Today’s IoT systems are giving manufacturing and industrial plant managers and operators on-the-fly “visibility” into how their machines, devices and tools are running. In the past they had to take a machine, and likely others nearby, offline to inspect it; or they would guess.
Better information, Rosenberg said, means better decision making about everything.
With IoT visibility, cutting tool and stamping die life is maximized, an improper process stops immediately, quality increases, costs decline and production increases. Maintenance can take place exactly when needed.
“We’ve been trying to do these things for decades,” he said. “It’s not new, but we didn’t call it Internet of Things.”
Data gathering was manual.
“There should be nothing they cannot see”
“In the past, someone would give management a paper report of machine tool use” to assess what had already taken place, Rosenberg said. IoT systems now give managers live information on raw materials coming in, machine use, up time, down time both planned and unplanned, and nearly any other production process factor.
“In my view, there should be nothing that they cannot see,” he said. “It’s going to be transformational for sure.”
Sensors are inexpensive and can be used liberally. In industry and elsewhere, IoT’s potential benefits are often limited by the creative human resources businesses are able to allot toward thinking up improvements.
For now, Rosenberg considers the IoT adoption process among the manufacturing and industry customer base Balluff serves to be taking place slowly. Payback can occur in as little as one or two years, he said, especially for those operating highly automated systems on thin margins. Balluff has an ROI calculator on its website.
Building IoT systems into new facilities is easier, but some Balluff clients do not hesitate to retrofit when they want to address a specific problem at a plant.
Manufacturing is ahead of most sectors in adopting IoT, said Jeremy Brann, alliance technology executive for HP Software, who consults with major customers – and HP sales staff – about their IT system needs in today’s changing environment. In his view, a manufacturer with as few as 10 machines probably needs the new connectivity to stay competitive.
With new IT technologies, Brann’s observation is that there typically is a three- to four-year cycle of progression: from talking about it, to early adopters piloting it, to broader business adoption, to the point where chief information officers at companies that have not adopted it need to be explaining why not.
Linked to cloud computing and big data
For example, cloud computing was the then-buzz-heavy subject of a December 2011 Lane Report cover story whose headline asked: “Is it for real?” Today the cloud computing practice of leasing database capacity and computing power as needed from outside providers is mainstream. Big Data and IoT are following closely, Brann said, and the three are intertwined.
“IoT is a very hot area for us (at HP) right now,” Brann said, “because it exists at the nexus of two broader trends: cloud computing and big data.”
The technologies enable private business and public sector entities, he said, to dream up ways to use continuous information streams from sensor-laden devices to improve processes, products and services – or create new ones.
The talking and early adopter stages of IoT are active, and the potential benefits of applying its new strategies is sinking in.
“These kinds of things can pick up speed quickly,” said Kris Kimel, president and co-founder of Kentucky Science and Technology Corp., which works to encourage and support business innovation.
Kentucky business owners and leaders need to understand what is happening – or quickly be learning – and considering how IoT might apply to operations in their sector, Kimel said. This is always the case with new technology.
“If you don’t understand it, you can get left behind,” he said, citing the classic example of Kodak, which invented digital photography but now is out of business because it kept its focus on film. On the flip side, photo social media innovator Instagram still had only about 12 employees when Facebook purchased the then-18-month-old start-up for $1 billion in early 2012.
Kimel and others at KSTC hear discussion of IoT “a lot in the conversation stream. It is clearly in the bulls eye of a lot of (Kentucky) companies,” he said. “It’s a disruptive technology.”
“Am I behind my competitor?”
Competitiveness is a common theme of discussions when Brann consults with HP customers today.
“Clients say, ‘We’re behind,’ or ‘Am I behind my competitor?’ ” he said. They ask if their operation should have a “private cloud” to protect its information and want to know whether there is a data best practice for their industry.
“The (top) challenge is to figure out how to extract the insights from the data,” Brann advises. “Without Internet of Things you don’t have the Big Data, and you don’t need the cloud.”
Inexpensive sensors can be built into a device literally by the dozens to gather any information deemed useful to a manufacturer or customer. Large numbers of sensors in large numbers of devices generate large amounts of data to store and process, but these IoT practices are helping product producers increase revenue from their after-sales service, he said.
“After sales can be a quarter to a third of revenue,” Brann said. “Improve that and [you] greatly improve earnings.”
IoT information can even be a new product.
Aircraft maker Boeing “uses tons and tons of sensors” in its engines and aircraft systems, Brann said, that transmit data back to Boeing after they are sold to customers. Compared to benchmarks, the data provide visibility on aircraft systems throughout their operational life and report when they need maintenance or attention. In addition to being useful feedback for Boeing engineers and designers, he said, the company sells customers subscriptions for that information for their product service management.
Potential IoT applications span all aspects of business and consumer usage, according to Sigg. Because SIS has its own data center and is a cloud provider, it works with a diverse range of customers, he said, and change is being driven by the client.
Products that tell you what they think?
One SIS customer that builds diesel engines wants to be able to gather telemetry from operating engines that not only will feed back to its engineers for improving their designs but enable it, on a live basis, to notify drivers they may have a pending issue and need to make a service stop – while also telling the driver that he is 45 minutes from a service center, which is now expecting the vehicle’s arrival.
“It’s exciting,” Sigg said, “but if you’re going to be relevant, you’ve got to be willing to address the change coming. If you’re not relevant to your clients, your future is not very bright.”
Because SIS has a decades-long relationship with IBM, other IoT clients are creating “thinking” applications that access Watson, the cognitive technology IBM developed to interact with people using natural language and become smarter as it fails and succeeds. Watson famously competed against champions of the “Jeopardy” television show and outperformed them.
Early this month, Sigg said, SIS took a team from the University of Kentucky College of Pharmacy to Austin, Texas, for a briefing on how the university might use Watson in some of its research.
SIS sees the technology adoption process for business speeding up as a result of IoT’s impact. He shares Brann’s view that IoT technology has a relationship with cloud computing and “big data” analytics, but for nearly all implementations with which SIS is involved, Sigg adds two more elements: mobile devices and social interaction; the latter can be by social media or direct physical activity.
People use their mobile devices to access with M2M data or IoT-enhanced services as they shop, travel, cook or engage in other activity, Sigg explained. Some IoT systems initiate contact via those mobile devices to create or drive interaction – for example, a retailer or service provider can offer a product of special interest to a potential customer planning a trip to the beach based on cognitive analytics their databases produce.
The Uproar Lab consultants are “doing a lot with retail,” and Frommeyer says the shopping experience is in the process of changing.
Brick and mortar shops are using sensors to improve their sales process and learn more about customers. They can track shoppers “to understand the relative success or value of where you place products in a store,” he said. “You can more granularly understand where people are spending their time and how.”
Better processes bringing back jobs
Frommeyer and several fellow University of Louisville J.B. Speed School of Engineering graduates launched their IoT consultancy not long after developing the BEAM Brush, a connected toothbrush and app that helps users improve their dental habits and health. Word of mouth after its launched in early 2013 quickly led others with ideas for connected products to approach them for help.
Beam Technologies, the company they helped found, moved in mid-2014 to central Ohio near the base of operations of a major new investor, but Frommeyer and the core research-and-development engineering team decided to stay in Louisville as Uproar Labs. They foresee plenty of work for at least the 20 or 30 years as IoT unfolds.
One urgent Kentucky customer segment, he said, is midsize manufacturers. Those with an older product and minimal research and development resources turn to Uproar Labs to create connected versions of their product or process.
“Our manufacturers are very much involved in looking at (IoT processes) and how they can fit into their operations,” said Greg Higdon, president and CEO of the Kentucky Association of Manufacturers. “There are opportunities out there. The ones that are going to remain competitive will have to get really, really involved.”
The connectivity today of manufacturers’ shop floor tools is significant, said Dave Tatman, executive director of the recently created Kentucky Automotive Industry Association and former manager of the General Motors Bowling Green Plant that makes the Chevrolet Corvette.
The real-time visibility that modern RFID chips and machine-to-machine communication provides is important to fulfilling the expectations of “today’s extraordinary focus on safety and quality,” he said. Better cutting tool and stamping die management means better final products.
“It’s not new, but it’s probably been in the last 10 years, maybe five years, that we’ve gotten good at it,” Tatman said. “It gets better and better. We are thinking of more and more things to do with it.”
Mark Green is editorial director of The Lane Report. He can be reached at [email protected]