Why digitise industrial assets?

Having been to several IIoT events around the world, it is very seldom that I meet CFO’s in these events. This is puzzling given the fact that the ultimate goal of digitalising industrial assets is to increase the ROI and ultimately the bottom line of the company. Understanding the full potential of the IIoT, is something that everyone in the organization should be curious about.

Today, I would claim, condition monitoring is the single biggest reason to digitalise industrial assets. In condition monitoring you can show very clear and immediate benefits. Predictive maintenance saves costs and increases reliability, automated 24/7 monitoring saves labour costs and it extends the life of the asset, among many other things. The investment can be justified with relative ease with calculations and the results can be documented and proven.

What if, instead of just monitoring, you would take an active role and turn monitoring into management?

But this is just the start. It is very easy to fall into the short-term benefit trap, partial optimization, and invest in a condition monitoring solution and call it the industrial internet solution. If investments are made in silos, partially optimized, the grand scheme, the ultimate benefit from digitalisation, is lost. Condition monitoring, or even better condition management, is a great place to invest. But what if the organisation and all the potential information users would be considered simultaneously, or at least left the door open to service other potential information users than only those of the silo? Today’s technology makes it possible at the same or lower cost as a dedicated one-purpose solution, and at the above mentioned 5k piloting cost, it is extremely low barrier of entry.

The ROI calculation, at the high level, includes revenues and costs. If we brake the revenue-component down a little, we find contributing components like life of the asset, i.e. length of the revenue stream, quality, new sales – contributing to both revenue and cost, customer satisfaction – hopefully contributing to sales as well. On the cost side: maintenance, spare part optimization, labour costs, safety, downtime, utilization, energy consumption and, depending on the asset, many other components contribute to the ROI. By digitalizing an asset, using edge computing technology and intelligence at the asset level combined with 2-way communication and a platform to service the entire organization, these contributing components can be harnessed to ROCK the ROI.

Source: Distence Oy

What if you made the asset aware of itself and its surroundings? Able to autonomously make decisions using information from other assets, operations and outside data sources. What if, instead of just monitoring, you would take an active role and turn monitoring into management? Where is your asset? Who is using it and how? What condition is the asset in? Is it using the latest information to optimize itself?

The people needing this information and who benefit from it the most, are distributed all over the organization, from HR to sales and from operations to finance. Partial optimization, a dedicated system, would leave them out of the loop and the ROI far short from maximum. This is something to consider at the management level, where all functions are represented.

Piloting a solution in search of a full roll-out version, runs around 5000 euros

Today the technology is ready to deliver a significantly higher ROI from operations and assets. Piloting a solution in search of a full roll-out version, runs around 5000 euros, so kicking off an IoT initiative can’t be about the money. Using SaaS and PaaS models, the cost is negligible. The question is, is your organization ready and is it aware of the power of the information available. Have you maxed the ROI from your industrial assets?                 

Timo Tammisto

The author is the Chairman of the Board at Distence Oy, a company focusing on making industrial assets in demanding environments intelligent, retrofit or OEM. Learn more https://www.distence.com/.