1212372020 ‘The power of value 4.0 for industrial intemet of things | MIT Technology Review T MIT Technology Review Subscribe MIT Technology Review Q The power of value 4.0 for industrial internet of things There is ahuge task ahead of companies that want to transform their production and business operations and generate value with digital technologies. by Florian Beil December 22,2020 Sponsored Content Provided by Reply % REPLY Many companies expected 2020 to be a challenging year. They anticipated technological shifts that would affect their business—like the transition from combustion to electric vehicles for stability due to raging trade wars or Brexit. But the x automotive manufacturers—or ongoing i impact of the covid pandemic on top of these challeng unprecedented. Never before have today’s generation of business lead conditions in such a short period of time. Covid force re-examine their perspectives on how digital solution: competitiveness. It has been much more evident that industrial internet of things (IIoT) offer huge potential many novel, value-adding use cases built across one common technology stack. These use cases could optimize production, supply chain operations, and resilience, as well as offering novel services—for example, connected products in many industries. Consequently, industrial hitpshwwctechnologyreview com!2020112/22/1015424/Ine-power-f-value-4-0-or-industral-ntemet-ofthings! ona1212372020 ‘The power of value 4.0 for industrial intemet of things | MIT Technology Review o MIT Technology Review Figure 1: Impact of covid-19 on IIOT budgets and projects i Positive impact I Nochange [Bl Negative impact Ii Strongly negative impact I Don't know ‘Compiled by MIT Tachnology Review Insights based on data fromIDC, 2020 Additionally, technology investments that companies had made prior to covid with the aim of making cost savings (for example, Volkswagen's industrialcloudhub and BMW’s open- manufacturing-platform) were suddenly mission-critical for delivering concrete, measurable business value at scale in a short amount of time. ‘The cost pressures that arrived with the pandemic, along with an increased need to deliver returns on investment, have led to an acceleration of digitalization as a key enabler for the futurg, But there is still a huge task ahead of these companies to really transform their production and business operations to generate additional value with IoT and other industry 4.0 technologies. The use case and PoV purgatory Given this background, there has been a lot of activity within industrial companies to close the digital divide and reap the benefits of industry 4.0. While many are driving strategic digitalization projects and “proof of value” (PoV) efforts according to a recent study of a 150 customer projects by Reply, 95% of companies today are struggling to use IIoT solutions at scale and or use it to generate a competitive advantage (see Figure 2). hitpssiwwtechnologyreview com/2020/12122/1015424/tne-pawer-of-value-4-0-orndustralintemet-ofthings! ana1212372020 ‘The power of value 4.0 for industrial intemet of things | MIT Technology Review T MIT Technology Review SOIUTIONS (% Of respondents) I Rollout and scale solution 1} Implement Pov for use case I Are connected but stillsearch fora use case Key challenges — Classical project management approaches do not scale — Noclear focus and measurement on target value add generated —> No means to easily manage complexity of use cases, solutions and solutions variants —> Too much focus on technology rather then enablement >< of operators for value creation Compiled by MIT Technology Review Insights based on data from Reply, 2020 Given the fact that about 95% of industrial companies surveyed by Vodafone expect increased efficiency from digitalization, and the implementation of novel technologies is the future of production, this is a striking observation. It indicates that there are substantial underlying challenges to be overcome before companies can adopt IIo and generate value at scale. hitpssiwwtechnologyreview com/2020/12122/1015424/tne-pawer-of-value-4-0-orndustralintemet-ofthings! ana1212372020 ‘The power of value 4.0 for industrial intemet of things | MIT Technology Review T MIT Technology Review Digitalization and lloT need to be one, scalable, continuous effort One of the most consistent observations is that the vast majority of industry 4.0 and digitalization projects are driven based on a “project management office” (PMO)-like approach. This means that there are dedicated resources assigned to drive workshops, technology integration, and installations to drive industry 4.0. This rather top-down approach runs the risk of IloT initiatives being seen as “another project” by the rest of the organization, or even worse, as the next cost- cutting exercise, instead of a continuously ongoing change in innovation and value creation supported by the whole organization. Value 4.0 over industry 4.0: Integrated value design needs to come first ‘Technological discussions are essential to provide a solution to a defined improvement area or challenge, but they are meaningful only after there has been a clearly defined use case with concrete and measurable value identified and captured within financial reporting systems. This means that cach effort should start with an integrated value design, rather than technology. It needs to be integrated in the sense that the designed target value can be directly linked to an outcome —for example, process improvements enabled by the digital solution that generated a measurable value impact. Value and solution design need to be one integrated effort. In consequence, this also implies that use cases need to be defined bottom-up, by the operators and resources that operate production and thus realize value add, rather than top-down. Using technology to manage complexity and rollout at scale Within industrial settings, implementing industry 4.0 technologies takes more time and effort, compared to applications in the consumer space, for a variety of reasons. Any industrial customer today depends on existing brownfield installations to run and operate their business—these are mostly highly complex and tailored to the targeted product. Managing this complexity manuall would be a Sisyphean struggle. When industrial companies are integrating digital manufactu vA and supply chain solutions with their customers, they need to continually adapt the solution stack to customer requirements. In addition, rolling out solutions in global production networks needs to be managed with digital, scalable workflows. Therefore, a scalable, structured solution and sential. Trying to manage all this this without proper configuration management approach tool and digital process support will not achieve scale. It’s about enabling people in the right manner Finally, one of the most important observations is on how novel technology enables people in the right manner: digital solutions are only as good as the improvements they deliver in operations and processes. These operators do not care about the specifics of the technology stack—they care hitpssiwwtechnologyreview com/2020/12122/1015424/tne-pawer-of-value-4-0-orndustralintemet-ofthings! ana1212372020 ‘The power of value 4.0 for industrial intemet of things | MIT Technology Review T MIT Technology Review In summary, these challenges result in a lack of focus on value generation from digital solutions, and result in limited scalability of solution design, adaptability, and customization, as well as ongoing difficulties in the rollout and installation stages, where value creation needs to happen. ‘Taking this into account, it is no wonder why industrial companies are struggling to reap the benefits anticipated from digitalizing their production environments. What problem are you solving for? Value 4.0-value accelerators are on the rise We believe that IoT value challenges can and should be addressed by suites of digital tools that for rolling out novel solutions. These tool create scalable, continuous innovation and proce: chains might be called value accelerators for digitalization and Io, as they focus on identifying and scaling value from a use case innovation, solution management, and rollout rather than the details of the technological stack itself (see Figure 3). Figure 3: Concept of a value accelerator —> Manage lloT innovation cycle as one seamless digital process = 4 > Cloud-based digital tool chain scales tonetwork of experts and customers easily — Templates for use cases and solutions accelerate HoT innovation cycle es a a Mocules Solution USE CASE NSRSEERLON yy oS Designer speeds up lloT development — Industrial hardened installation workflows scale the rollout to complex production environments ‘Compiled MIT TechrooayRevow hsintsbasedondta rom Rep, 2020 Why do we believe that such a digitally guided process is viable? Because with a proper design, value accelerators fundamentally address the key challenges to industry 4.0 and Ilo adoption. ‘They provide a platform for digitally managed innovation across all relevant stakeholders. The hitpssiwwtechnologyreview com/2020/12122/1015424/tne-pawer-of-value-4-0-orndustralintemet-ofthings! ona1212372020 ‘The power of value 4.0 for industrial intemet of things | MIT Technology Review T MIT Technology Review Accelerated adoption with wizards and templates Innovation and adoption depend a lot on acceptance by stakeholders. A digital value accelerator can tremendously reduce barriers with well-defined wizards that guide users through innovation processes. Predefined templates and solutions can greatly accelerate the definition of use cases and solutions. Modular solution design and digital installation workflows Modular use cases and solution designers can help manage complexity and variance by providing users with a continuously extended library of solution elements and integrations that can be combined to deliver the target value as well as the technical solution stack. In addition, each use case and solution stack can have a digital workflow to guide operators through the installation process, allowing them to cooperate globally with solution designers and experts as needed. Continuous learning system and artificial intelligence Digital value accelerators provide a process and data structure that cover industry 4.0 and IloT innovation and rollout, creating datasets that can be analyzed to continuously improve and accelerate digitalization in industrial environments. Al-powered recommendation engines can propose solutions to operators or give solution designers hints on how to improve their concrete technological stack Intelligent automation increases adoption Structured use case, solution, and process information enables further automation of today’s tedious tasks. For example, providing cloud-based services can be automated so that operators can work independently, rather than following lengthy installation procedures in a joint effort with IT. All of these processes and benefits can be delivered by a digital system tailored to allow industrial organizations to accelerate value from digitalization. The system, which operates at a meta level above the concrete solution technology or cloud stack to be deployed, covers the whole innova cycle from use case and target value-add design, to solution design and configuration, and installation and enablement in the field. This is supported by respective digital wizards, solution element libraries, and digital workflows, allowing for a continuous solution adoption through structured feedback loops and holistic implementation and configuration management (see Figure 4). hitpssiwwtechnologyreview com/2020/12122/1015424/tne-pawer-of-value-4-0-orndustralintemet-ofthings! ena1212372020 ‘The power of value 4.0 for industrial intemet of things | MIT Technology Review T MIT Technology Review Innovate use re ee cat Roll out globally cases with use solutions with ah ra Ceck with implemen- case wizard solution wizard with target value M7 tation workflows elements Value accelerator © Use Case Wizard for fast use case 1 Value First design methodology description © Value Engineering with value elements, © Use Case Templates ready to use drivers and process changes required © Library of use case elements © Library of value elements ready to use © Modular Solution Designer for fast OT © Executable implementation workflows for solution configuration rollout in field © Solution templates ready to use © Guided implementation with task and team . management © Integration into customers’ R&D processes 5 Ready-to-use templates for design Industry 4.0 is an incremental transformation, not a ‘Big Bang’ What does all this mean for Ilo’ and industry 4.02 A value accelerator approach helps companies consistently and continuously identify value-adding use cases and solutions. Calculations show that it has generated value at five times the rate of classic project management office approaches. Customer feedback suggests that the value accelerator has the potential to take IIoT to the next level; HoT partners say this technology will deliver greater valuc to their customers. Value accelerators will change the way Ilo and industry 4.0 are implemented in industrial settings and will become essential for efficient and profitable digitalization. “Big Bang” digitalization projects will evolve into digitally enabled continuous innovation, transforming companies use case-by-use case. These accelerators will enable networks of solution specialists who can collaborate with operators in scalable and mutual reinforcing ways to drive value creation. This incremental approach lacks the immediate visibility of traditional large projects, but with more substantial and sustainable results. This is what counts in industrial digitalization. Learn more about tackling complex industrial projects from Reply’s Axulus. hitpssiwwtechnologyreview com/2020/12122/1015424/tne-pawer-of-value-4-0-orndustralintemet-ofthings! mma1212372020 ‘The power of value 4.0 fr industrial internet of things | MIT Technology Review T MIT Technology Review =Q Share gs tink QD Tagged Coronavirus, Sponsored Author Florian Beil The foodissue Dec 22 Your first lab-grown burger is coming soon—and it'll be “blended” Growing meat in alab is still way too expensive. But mixing it with plants could help finally get it onto our plates. htpsswwctechnologyreviewcom/2020/12221015424/Ine-pawer-f-value-4-0-orsndustralintemet-af-things!1212372020 ‘The power of value 4.0 for industrial intemet of things | MIT Technology Review T MIT Technology Review Pandemic Technology Project @hours “Vaccine passports could further erode trust” Reopening services only to those whove been vaccinated against covid-19 could worsen inequities and mistrust of health officials, says aleading expert Xx Opinion 13 hours Don't underestimate the cheapfake Deepfakes didn't disrupt the US election as many predicted. But cheapfakes had a banner year. hitpssiwwctechnologyreview com/2020/1222/1015424/Ine-pawer-of-value-4-0-orsndustralintemet-ofthings!1212372020 ‘The power of value 4.0 for industrial intemet of things | MIT Technology Review T MIT Technology Review =Q Pandemic Technology Project 2 days Will you have to carry a vaccine passport on your phone? There's a rush to build systems that could show your vaccination status. Butit's unclear how they would work—or even how useful they would be Tech policy 2 days This is the Stanford vaccine algorithm that left out hitpssiwwtechnologyreview com/2020/12122/1015424/tne-pawer-of-value-4-0-orndustralintemet-ofthings! son1212372020 ‘The power of value 4.0 for industrial intemet of things | MIT Technology Review T MIT Technology Review =Q what went wrong. The foodissue Dec 21 Technology can help us feed the world, if we look beyond profit Powerful technologies like genetic modification aren't the enemy of a healthy, sustainable food system. 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Tech policy Dec 17 40 more states have targeted Google with its third antitrust lawsuit in two months x The search giant now faces a trio of legal cases accusing it of anti-competitive actions. hitpssiwwtechnologyreview com/2020/12122/1015424/tne-pawer-of-value-4-0-orndustralintemet-ofthings! vane1212372020 ‘The power of value 4.0 for industrial intemet of things | MIT Technology Review T MIT Technology Review This is the Stanford vaccine algorithm that left out frontline doctors Technology can help us feed the world, if we look beyond profit We want to hear from you: The global Al agenda 2021 Injust 10 minutes, you can help MIT Technology Review understand how enterprises are using big data and Al to recover from covid-19. x Load more hitpssiwwtechnologyreview com/2020/12122/1015424/tne-pawer-of-value-4-0-orndustralintemet-ofthings! sa1212372020 ‘The power of value 4.0 for industrial intemet of things | MIT Technology Review hitpsshwwctechnologyreview com/202001212 1015424/he-power-of value-4-0forndustiabintomet-f things! van