Only 30%! That is how many companies are capturing value at scale from their Industry 4.0 investments, according to a McKinsey study and as described in a new joint report from Cisco and the analyst firm Industrial Transformation Network (IX Network), 4 Critical Components to Harnessing the Power of IoT in Manufacturing.

Manufacturers around the world are investing in industrial IoT solutions hoping to cut costs, reduce downtime, improve quality, and increase efficiency and output. But only 30% succeed in meeting their goals!

What could the other 70% do differently? As the report authors point out, harnessing the power of IoT in manufacturing takes more than technology. They lay out four critical components for IoT success, illustrating their points with real-world examples from manufacturing leaders like Nissan Motors. Here’s a quick summary of the report.

1 – Clearly defined business case

In the earliest planning stages, get clarity around the business case. Who will benefit? How will work processes change? How will you measure success? As my colleague Paul Didier has said, “Whether an IoT project gets stuck in ‘pilot purgatory’ depends on whether you have clear objectives.” Good business cases for small-loT manufacturers include integrated data models, optimizing overall equipment effectiveness (OEE), and mobile apps for workers that give them a pulse on production. Example: at Nissan Motors’ Tochigi Plant, workers monitor production on their smart watches. For mass customization, there’s a solid business case for automating quality inspections.

2 – Small, focused pilot

After you’ve defined your business case, conduct a short pilot with a few machines and sensors, and a small group of users. If you’re not seeing results after 90 days, pull the plug on the pilot and try another. The report authors note that failing fast reassures business leaders that experimentation isn’t overly costly, helping to get them in your corner.

3 – Collaboration between IT, OT, and factory workers

IT and OT teams have complementary skill sets, and you can’t succeed without both. OT teams understand automation control systems and their dependencies. IT teams know how to connect those systems for high performance and security. Both teams also need to understand the other’s priorities and concerns. For example, OT teams consider availability a top priority, only behind safety. That’s because outages can interrupt production and revenue. In contrast, IT teams prioritize data security. Only by collaborating can the two teams define policies that balance availability with security risks. Include solution users (plant managers, QA managers, factory workers) in the earliest planning stages of your IoT project to make sure they see the value of the solution and will actually use it.

4 – Robust, automated, and secure network infrastructure

The factory network needs to be highly available and have sufficient bandwidth to move data from machines and sensors to the people and systems that act on that data. Keep in mind that switches and access points intended for temperature-controlled offices can fail under harsh factory environments. Look for industrial switches and access points designed to withstand extreme temperatures, humidity, and vibration. You’ll need network management tools that alert you to problems and give clear directions for resolution.


For more details on each of the four components of successful industrial IoT programs, I invite you to download a copy of the full report, 4 Critical Components to Harnessing the Power of IoT in Manufacturing. It is a must read before embarking on your own Industry 4.0 journey. Do not be in that 30%!

For more insights, check out What’s next for IoT in manufacturing? Interview with Paul Didier.

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