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A lack of integration stands between manufacturing companies and digital transformation benefits of IoT.

The more a manufacturing operation is equipped to meet and understand the Internet of Things (IoT), the more competitive it will be going forward. A new study, however, shows that most manufacturers are not equipped in this way at this time. IFS, a global enterprise applications company, conducted a survey among 200 IoT decision makers at industrial companies in North America, and only 16 percent of respondents consume IoT data in enterprise resource planning (ERP) software. That means 84 percent of industrial companies face a disconnect between data from connected devices and strategic decision making and operations, limiting the digital transformation potential of IoT.

“Study data suggest that the most common use case for IoT in these industrial settings is condition-based maintenance. The benefits go beyond operational improvements and maintenance cost avoidance,” says Ralph Rio, vice president of enterprise software at ARC Advisory Group. “It increases uptime that provides additional capacity for increased revenue. It also avoids unplanned downtime that interrupts production schedules causing missed shipment dates and customer satisfaction issues. When married to demand and scheduling systems in ERP, IoT becomes a revenue-enhancement tool improving the top line.”

The study posed questions about companies’ degree of IoT sophistication. It also explores how well manufacturers’ ERP, enterprise asset management (EAM) or field service management (FSM) software prepares them for digital transformation and to consume IoT data within enterprise software.

Respondents were divided into groups including IoT leaders and IoT laggards, depending on how well their enterprise software prepared them to consume IoT data. The study also separated digital transformation leaders and digital transformation laggards, depending on how well their enterprise software prepared them for digital transformation.

  • The two leaders groups overlapped, with 88 percent of digital transformation leaders also qualifying as IoT leaders, suggesting IoT is a technology that underpins the loose concept of digital transformation.
  • Digital transformation leaders made more complete use of IoT data than digital transformation laggards; Leaders are almost three times as likely to use IoT data for corporate business intelligence or to monitor performance against service level agreements. 
  • Digital transformation leaders were more likely than digital transformation laggards to be able to access IoT data in applications used beyond the plant floor. They were more than four times as likely to have access to IoT data in EAM software, twice as likely than digital transformation laggards to be able to access IoT data in high-value asset performance management software, and almost twice as likely to be able to be able to use IoT data in ERP.
  • The data suggests a real need for more IoT-enabled enterprise applications designed to put data from networks of connected devices into the context of the business.

“These study data shows this technology is required to connect IoT with strategic data from around their organization,” Steve Andrew, IFS vice president of marketing for North America. “This in turn lets businesses use IoT not just for cost avoidance strategies like condition-based maintenance, but to add new or enhanced product or service lines, increase enterprise agility and realize the growth and revenue benefits of digital transformation.”

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