Imagine if airlines could predict part failures before they occur, to replace aircraft components at the right time. What if manufacturers of life-changing prosthetics or pacemakers could reduce costs by 10X thanks to improved efficiency and systems? All of this (and much more) is possible with the Industrial Internet of Things (IIoT).

The Industrial Internet of Things (IIoT) is the coming together of sensors, computers, and networks in industrial environments to collect and generate data that is used to monitor, control, and improve processes.

Also known as Industry 4.0 or the Industrial Internet, IIoT is revolutionizing the way that companies manufacture and distribute their products. The last few years have been marked by significant developments in the way IIoT systems are deployed to drive industrial efficiency and performance.

In this article, we will explore how IIoT is enabling digital transformation and faster decision-making in today’s industrial enterprises.

What is the Industrial Internet of Things (IIoT)?

The Industrial Internet of Things is a subset of the Internet of Things (IoT), where companies are reimagining how they connect, monitor, analyze and take action using industrial data to reduce costs and drive growth.

The term ‘Industrial Internet’ was coined by General Electric, one of the five founding members of the Industry IoT Consortium.

The idea behind IIoT is to take advantage of the data that “dumb machines” have been producing in industrial facilities all these years. Smart machines on assembly lines are not just better at capturing and analyzing data, they are also better at relaying crucial information that can be used to make faster and more accurate business decisions.

Today, predictive maintenance is a key component of almost all automotive assembly lines. Indeed, intelligent IIoT systems are able to predict equipment health and maintenance needs before they become emergencies and lead to downtime.

According to IndustryARC, the global market size for IIoT is estimated to be $187 billion in 2022. Also, the same report forecasts that the market will experience a compound annual growth rate (CAGR) of 22.9% through 2026.

Global Market Size for Industrial Internet of Things (IIoT)
Global Market Size for Industrial Internet of Things IIoT
Source: Industrial Internet of Things (IIoT) Market Overview, IndustryARC.

Industrial automation accounted for 27% of this spending, with manufacturers looking to improve assembly line efficiencies. Technology consulting firm, IDC, estimates spending in discrete automation will reach $89 billion in the Asia-Pacific region alone, by 2025.

Investments in IIoT will not be slowing down anytime in the foreseeable future either, as McKinsey Insights estimates the total potential economic value created in factory settings to be around $0.5 trillion to $1.3 trillion, by 2030.

The technologies or focus areas that are at the forefront of IIoT implementations include artificial intelligence (AI), cyber security, cloud computing, edge data centers, and data mining.

READ MORE: Internet of Things (IoT) Edge – Computing for Devices

Considerations for the Industrial Internet of Things (IIoT)

As the number of interconnected devices in factory settings increase, security threats have emerged as the biggest impediment to the adoption and growth of the IIoT market. In 2019 alone, cyberattacks on IoT devices increased by 300%.

READ MORE: Internet of Things (IoT) Security – Next-Generation Protection

However, most businesses calculate that the benefits of IIoT far outweigh the risks or drawbacks. To put this in perspective, the average cost of avoidable industrial downtime is estimated to be in excess of $50 billion per year – a sizable loss that any business would be eager to avoid.

At the same time, IIoT has proven it can address security threats, by leveraging technologies such as big data, cloud computing (from cloud service providers like Amazon Web Services), and AI, for sophisticated predictive and preventive maintenance far beyond the grasp of traditional, human-dependent maintenance practices.

That said, the notion that IIoT will eliminate the need for humans on assembly lines seems to be grounded more in science fiction than fact. Digital factories are likely to free up factory floor workers from monotonous, repetitive tasks in order to focus on high-value, rewarding ones instead. In addition, the growth of IIoT has also been accompanied by a surge in new opportunities and career paths for data scientists and security engineers.

What is the Difference Between IoT and IIoT?

IoT and IIoT are built on the same digitization philosophy and technology, but differ on usage and applications. IoT has consumer-applications like wearables or appliances, while IIoT connects mission-critical devices in industries like healthcare, electric power, and oil & gas.

READ MORE: Internet of Things (IoT) Devices – What’s Smart in 2023?

An IoT device could be as simple as a connected mouse trap system at home that texts you whenever it is activated. As such, IoT use cases are functional in nature, and are primarily designed for convenience. If your IoT refrigerator malfunctions, the worst outcome is that you might be out of milk when you need it.

READ MORE: Internet of Things (IoT) Examples by Industry in 2023

On the other hand, IIoT is deployed in contexts where the cost of system failures and downtime are exponentially higher, potentially resulting in life-threatening situations or millions of dollars in lost revenue. For example, if an IIoT system fails at a nuclear power station or a water treatment plant, the consequences could be catastrophic.

Ultimately, the key factors separating IIoT from IoT are higher stakes and greater risks.

How Does the Industrial Internet of Things (IIoT) Work?

A typical IIoT system comprises a network of interconnected devices which exchange large volumes of data and convert it into actionable information.

The sheer volume of data produced and the demands placed on networks are so great that the Industry IoT Consortium envisioned a brand new architecture for implementing IIoT systems.

READ MORE: Internet of Things (IoT) Architecture – Layers Explained

Industrial Internet of Things (IIoT) infrastructure typically consists of:

  • Edge devices like sensors and actuators that capture data from industrial environments
  • Network infrastructure to transmit data generated by IIoT devices
  • Cloud infrastructure where data is stored, analyzed, and turned into action points
  • User interface devices for technicians and operators to receive the necessary inputs
Industrial Internet of Things IIoT Infrastructure
Source: Planet Technology USA.

Why Do We Need the Industrial Internet of Things (IIoT)?

IIoT devices continuously collect data on how machinery and equipment are consuming resources and delivering output. By analyzing this constant stream of data, businesses are able to improve their operational efficiency and find competitive advantages.

In forecasting IIoT’s greatest potential for value creation in manufacturing facilities, McKinsey predicts that IIoT is most likely to result in improved efficiency of day-to-day management of assets and people.

Below are five specific examples of why we need the Industrial Internet of Things (IIoT), including increased automation, predictive maintenance, supply chain visibility, enhanced quality control, and improved customer satisfaction.

1) Increased Automation

In any industrial enterprise, there are always a set of tasks that are repetitive, mundane, and demand a high-degree of focus from the employee.

Human errors are common in such scenarios and these errors often have a cascading effect on the entire workflow of a company. IIoT will put an end to such inefficiencies by automating monotonous, rule-based tasks.

Implementing automation with the help of technologies such as adaptive learning and pattern recognition will eliminate mistakes and free-up human resources to prioritize tasks that require higher levels of thinking.

2) Predictive Maintenance

With IIoT devices working alongside industrial equipment in a factory setting, operation managers are more acutely aware of equipment malfunctions and necessary repairs.

Real-time data can be used to analyze when a machine needs maintenance work and this can be performed before failures occur.

According to a McKinsey report, IIoT-based predictive maintenance helps in reducing maintenance costs of factory equipment by up to 40%.

3) Supply Chain Visibility

Another often-cited benefit of implementing IIoT in manufacturing setups is the continuous tracking of location and status of products across a company’s supply chain. This tracking enables all stakeholders to have an overview of a company’s production line at all times.

For example, a sales representative in the field can use their mobile device to check production schedules and provide customers with a specific delivery date on the spot, instead of only being able to do so after returning to headquarters.

4) Enhanced Quality Control

Instead of relying on assembly line workers to identify and reject products with defects, a smart factory gives companies the ability to identify even the smallest of imperfections in finished products. This is achieved through a combination of machine-equipped sensors and digital workflow instructions.

Another benefit is the ability to create a digital twin of the industrial system. A twin allows for data-driven experimentation to be performed virtually, without the need for halting production or sacrificing safety.

5) Improved Customer Satisfaction

IIoT allows companies to track the performance of their products once they are shipped out to consumers for use in the real world. Specifically, Industrial IoT enables various feedback mechanisms for manufacturers and product designers to fine tune their product to better serve customer needs.

Which Industries are Using the Industrial Internet of Things (IIoT)?

Technology-driven verticals such as manufacturing (especially the automotive and aviation industries), and large-scale or capital-intensive sectors such as retail and agriculture, are at the forefront of IIoT adoption.

1) Automotive

More than any other sector, the automotive industry has been most progressive in its adoption of IIoT to streamline manufacturing processes. Through the use of industrial robots and IIoT, companies are able to spot potential problems before they disrupt production.

In a survey conducted by IBM that polled over 700 OEMs and suppliers from 18 countries, automated workflow and real-time equipment monitoring topped the list of applications of Industrial IoT.

2) Agriculture

According to PitchBook, more than $10.5 billion was invested in agtech (agriculture technology) startups in 2021 alone, recording a 58% increase from the previous year.

Gone are the days when farmers had to resort to guesswork for boosting productivity. IIoT devices and sensors are now extensively used on farms to collect data about soil nutrients, moisture, and more, enabling farmers to harvest an optimal crop. Drones are being used as well, to monitor plant health and drop seeds.

3) Oil and Gas

Facing unprecedented disruption and historic volatility in crude oil prices, the industry has identified digital technology as the key to driving efficiency and productivity into operations.

In a June 2020 survey of oil and gas executives by EY, 80% were investing in at least a moderate amount of digital technology. Furthermore, 93% of the respondents confirmed that they were using IIoT devices for remote monitoring.

Some oil companies are maintaining a fleet of autonomous aircrafts to detect potential problems in pipelines using visual and thermal imaging. By combining this information with data from sensors in their rigs, these companies are identifying and fixing problems before they become threats.

4) Healthcare

According to Statista, the global healthcare market is predicted to top $135 billion worldwide by 2025.

Today, IIoT is empowering doctors and healthcare providers by making medical imaging data accessible to them from anywhere, by storing it in the cloud. Moreover, Industrial IoT is aiding the medical community by analyzing data and providing diagnoses using machine learning and artificial intelligence.

5) Retail

The retail industry is not too far behind when it comes to IIoT system adoption. Retailers are using connected devices to offer a personalized shopping experience for customers.

By tracking demand, user behavior and inventory, Industrial IoT is enabling retailers to deliver location-based content (i.e., advertisements) in a targeted way.

What are Examples of Industrial Internet of Things (IIoT) Applications?

Every vehicle that rolls out of a Tesla factory is first tested using a digital twin. Data from thousands of Tesla vehicles on the road are used to run each car’s simulation in the factory. Artificial intelligence interprets data from the digital twin to determine if the car is working as intended. Tesla’s software integrations are so comprehensive, that sometimes even mechanical problems with the car can be fixed with just a software update.

After unveiling its factory of the future, commercial airline maker Airbus is leveraging digital intelligence to streamline operations and boost production. From integrated Industrial IoT sensors in machines and tools on the factory floor, to employees outfitted with wearable tech (like industrial smart glasses), Airbus is aiming to drastically reduce errors, whereby a single mistake in the process could cost the company millions of dollars to fix.

Robotics manufacturer, FANUC, is using sensors in its robots along with cloud-based data analytics to predict the imminent failure of components. These data analytics allow facility managers to avoid potential downtime by scheduling maintenance at the most optimal time.

READ MORE: Internet of Things (IoT) Analytics – Understanding Data

Pentair, a global provider of water filtration systems to breweries and industrial & commercial customers, leverages IIoT. Using AWS IoT, Pentair has been able to improve beer filtration performance by 10%, reduce costs, and increase the predictability of its filtration process.

READ MORE: Amazon Web Services (AWS) IoT – Connecting Devices

Caterpillar’s marine division provides power systems for tug boats and vessels that are usually run by fleet operators. Through the use of shipboard Industrial IoT sensors, Caterpillar was able to determine the most efficient operating approach for its generators, resulting in savings of $30 per hour, which amounted to savings of more than $650,000 in a year.

Adam Simmons covers Towers for Dgtl Infra, including American Tower (NYSE: AMT), Crown Castle (NYSE: CCI), SBA Communications (NASDAQ: SBAC), Cellnex Telecom (BME: CLNX), Vantage Towers (ETR: VTWR), IHS Holding (NYSE: IHS), and many more. Within Towers, Adam focuses on the sub-sectors of ground-based cell towers, rooftop sites, broadcast / radio towers, and 5G. Adam has over 7 years of experience in research and writing for Towers.


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