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The Internet of Things: Networking is just the beginning

Oct 18, 2016

The new PAC study reveals that IoT has arrived as a topic in the manufacturing and logistics industries. But when it comes to the degree of networking achieved, many companies are absolute beginners.
Internet of Things: plenty of potential in the manufacturing and logistics industries
IoT (Internet of Things) and the networking of plants and machinery are opening up new possibilities for companies. They can optimize their business processes and enhance value creation – for instance, through new services and business models. A new study carried out by PAC, a market research and advisory firm, on behalf of Deutsche Telekom and its corporate customer subsidiary T-Systems, surveyed 150 IT and business decision-makers from the manufacturing and transportation industries – and provided some interesting insights. Manufacturing and transportation enterprises have recognized the potential of IoT solutions and are working hard to implement projects in this area. But the networking of machines, production facilities and mobile goods has only just begun. Only four percent of those surveyed stated that they had already achieved a fully networked environment.
“IT decision-makers are thinking a lot about IoT and predictive maintenance because the opportunities they offer are obvious,” says Anette Bronder, Head of T-Systems’ Digital Division. “But they also have a lot of security concerns – and we need to dispel those if we want to prepare the ground for the necessary infrastructure and to establish the IoT in Germany across the board.”

The degree of networking needs to increase substantially

The key factors motivating companies to invest in IoT are the pressure to enhance efficiency (77 percent), the need to become more competitive (73 percent) and the desire for greater agility and flexibility (71 percent). As the study indicates, logistics enterprises have already achieved a much higher degree of networking than manufacturers. One reason for their lead is that they have a particular interest in making their logistics processes more transparent and efficient with the help of IoT technology. Another is that pressure to innovate from online retailers is compelling them to develop new delivery concepts.
On the whole, however, though many companies have already networked their production and logistics landscape, “their current installations are inadequate to achieve end-to-end IoT functionality,” as Joachim Hackmann, Principal Consultant at PAC, notes. According to the decision-makers surveyed, the degree of networking needs to increase substantially: 82 percent of respondents stated that, within the next four years, they wanted to have in place an IT landscape that was more than 50 percent networked. Above all else, they expect such a landscape to enable them to constantly optimize their production and logistics (88 percent); 87 percent aim to achieve more transparency on the current status of their facilities and machines, while 83 percent would like their IoT projects to help them avoid unplanned idle time.

Security from external partners

That is why many companies have set up dedicated IoT teams, yet respondents say that such teams are not involved closely enough in strategic decision-making. Almost three-quarters of respondents said, for example, that top management at their companies was responsible for making decisions on IoT projects.
In the future, companies want to invest in sensors and, especially, in security-related aspects, because they are concerned that the networking of production facilities will make them more vulnerable to hacker attacks. Apparently, the companies surveyed are already aware that they cannot manage the digital transformation on their own: 65 percent of them plan to call on external service providers to help them with their IoT projects.