IIoT: The central nervous system of digitalization

IIoT (Industrial Internet of Things) is establishing itself as a central element of the digital transformation. It promises more revenue, higher productivity, fewer costs and the prospect of new business models.

It began in 1990 with a toaster. Two computer scientists operated it via the internet during a conference. It wasn’t called the “Internet of Things” at the time. That term would emerge nine years later. Kevin Ashton of the Massachusetts Institute of Technology (MIT) coined the term to describe passive RFID tags that could be read out without contact. A year after that, the electronics group LG caused a stir with its much-cited internet-capable refrigerator that could inform its owner of supply shortages.

After that, devices connected via the internet really took off. By 2008, there were already more of them knocking around on the web than there were humans on Earth. And this year, Gartner expects to see more than 20 billion IoT devices worldwide. Statista is even expecting more than 30 billion, which would then swell to 75 billion by 2025. Smart TVs, wearables and surveillance cameras will make up the lion’s share.

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Of course, these aren’t at the top of companies’ wish lists. The IoT especially for industrial application (IIoT) pursues entirely different goals with significantly higher demands. According to the IDG study “Internet of Things 2020,” this should ultimately lead to cheaper production (34 percent) and a more efficient manufacturing process (30 percent). With this comes wishes for shorter setup times, lower energy costs and longer, breakdown-free running times thanks to predictive maintenance.

A recent study by Computerwoche and CIO shows that a good half of companies (51 percent) have already implemented IIoT projects here in Germany. Last year, only 39 percent had. And now there are no longer any companies without IoT activities. As before, the most important criteria for measuring success are higher productivity (55 percent), followed by cost reductions (46 percent) and increases in revenue (41 percent).

According to the study as far as IIoT applications are concerned, quality control (40 percent) has replaced the longstanding frontrunner, networked production (37 percent). After that comes smart connected products and sales control with 35 percent each. The rest are shared between logistics, building management and predictive maintenance.

According to a ReportLinker study from August this year, the global IIoT market amounted to $313.27 billion in 2019. It is expected to grow at a CAGR of 12.3 percent to $607.73 billion by 2025. Unlike previous analyses, this takes into account the effects of the coronavirus pandemic.

The growth of IIoT draws from various sources while reinforcing existing trends itself.

1. Edge computing
   The masses of data supplied by IIoT devices and sensors overstrain traditional cloud computing. This is prompting the relocation of computing power and data analyses to the network perimeters. This minimizes latencies, improves performance and saves money. At the end of 2018, 12 percent of all questioned companies across all sectors used edge computing, while in Germany that number was significantly higher at 24 percent (IDC study, September 2019).
2. Digital twins
   According to Gartner, 75 percent of the companies that draw on IIoT are already using digital twins or are in the process of establishing them. These virtual representations of everything from physical devices to entire production environments enable real-time simulations of services, products and processes.
3. Artificial intelligence (AI), machine learning (ML)
   It’s the seamless connection of AI, ML and IIoT that turns a company into a data-driven, process-oriented organization. This is because the massive volume of data from sensors, output devices and manufacturing elements is only useful and controllable if AI and ML use it to automatically and intelligently mine real added value. Three quarters of the German companies surveyed already use machine learning applications or are currently implementing them (IDG Research, February 2020).
4. Security
   Security is the be all and end all if IIoT devices are to find their way into industrial production, as rapid networking increases the number of potential target areas for cyber criminals. 37 percent of the surveyed companies name data security concerns as their number one argument against comprehensive IoT usage (IDG/TÜV/SÜD), January 2020).
5. 5G
   IIoT is gaining significant ground thanks to 5G technologies, as they enable companies to process large quantities of data much faster and in real time, for example with integrated cloud manufacturing solutions. But the new mobile communication standard also provides edge computing with an additional boost. 73 percent of the surveyed companies hope to be using 5G for IIoT by 2021 (IDC, September 2019).

Knowledge base

COMPUTERWOCHE/CIO: IoT Study 2020

Magenta AT Whitepaper: How companies get fit for IoT and Industry 4.0

IDG/TÜV SÜD: Internet of Things 2019/2020