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Where IoT Can Deliver The Most Value In 2018

This article is more than 6 years old.

These and many other fascinating insights are from Capgemini’s latest Internet of Things (IoT) study, Unlocking the business value of IoT in operations. The study can be downloaded here (28 pp., PDF, no opt-in). The catalyst that drove this study is the challenge enterprises are facing gaining greater value from IoT. Capgemini’s goals for the study center on learning where enterprises are moving to large-scale IoT adoption and the reasons why others get stuck at the pilot stage. The study provides an excellent overview of the most valuable use cases and provides guidance on how to get an operations-based IoT strategy started.

Capgemini interviewed senior executives from over 300 global organizations who are already implementing IoT initiatives. The research team also analyzed 300 cross-sector, real-life IoT uses cases used for internal operations spanning industrial manufacturing, retail, consumer products, energy & utilities, automotive and telecommunications, to identify which ones have the greatest impact. For additional details of the methodology, please see page 20 of the report accessible here.

Key takeaways from the study include the following:

  • Harley Davidson reduced its build-to-order cycle by a factor of 36 and grew overall profitability by 3% to 4% by shifting production to a fully IoT-enabled plant. The globally-based motorcycle manufacturer was also able to reduce operating costs $200M and increase production efficiency. Given how data and process-intensive manufacturing is, IoT’s potential to deliver value in the industry is high. Capgemini’s study looked at which industries are deploying IoT at scale, and found industrial manufacturing leading all others and 34% beyond the next closest industry, retail. On average, just 36% of organizations implement IoT at scale for optimizing internal operations. The auto industry is lagging, with just 6 out of 10 auto organizations able to make a strong business case for deploying IoT solutions to optimize operations.

  • Environmental monitoring, smart metering, renewable plants supervision and inventory intelligence are among the top areas IoT can deliver the most value for in 2018. Additional areas where IoT has the greatest potential to deliver value include improving operator productivity in production plants, improving the accuracy of warehouse management and inventory monitoring, reducing non-technical operations losses and enabling smart product tracking. The following grid compares the benefits from IoT implementation by payback period of investment. Capgemini predicts IoT will contribute to Manufacturing Intelligence and Product Quality Optimization gaining adoption over the long-term.

  • The majority of enterprises are missing out on the highest potential use cases IoT has to offer their industries, and growth opportunities are passing them by. Telecom leads all industries in implementing the highest potential use cases of IoT, with approximately four in ten actively pursuing IoT initiatives today. Enterprises competing in the five other industries included in the study aren’t close to realizing the potential growth, revenue and cost savings opportunities IoT has to offer. The green bars reflect the average full-scale IoT implementation percentage by industry. The red bars reflect the average multi-site IoT implementation percentage by industry.

  • The highest performing enterprises are converting 50% or more of their IoT use cases from pilot to scale and are 72% more efficient at generating new revenue compared to peers. Capgemini found an elite class of enterprises who excel at transitioning IoT uses cases from pilot to scale. Just 8% of the 300 enterprises are in this cohort which Capgemini calls the “Bellwethers.” They as a group excel at using IoT solutions to bring lasting improvement to internal process efficiency and productivity, improving revenues and reducing costs, ultimately delivering higher levels of customer satisfaction.  89% of bellwethers believe that not taking action on and excelling at IoT jeopardizes the future survival of their businesses, compared to 53% of their peers. Bellwethers excel at focusing on the use cases with the highest potential; 43% are implementing high potential uses cases today versus just 9% of their peers. 57% of bellwether-class enterprises don’t see data landscape or analytical capabilities as a major deterrent compared to 51% of their peers.

  • According to enterprise executives, the U.S. leads in deploying IoT in operations at full scale (44%) followed by the United Kingdom (41%) and Germany (35%). Capgemini’s research team attributes the U.S. lead due to significant venture capital investment with one estimate showing that over two-thirds of the IoT startups funded over the past five years are based in the U.S. This funding supports innovation by start-ups in the core IoT stack—sensors, platforms, and predictive analytics. U.S. companies are well placed to manage any cybersecurity concerns, with a concentration of startups focused on security solutions for IoT.

 

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