FANUC automation products are used in factories around the world, primarily in the auto industry. In the past, when a problem arose with one of the company’s robots, a plant manager would contact FANUC, which would dispatch someone to fix it. Each minute of downtime can cost thousands of dollars, and the robots often took days to repair.
In October 2015, FANUC embedded Cisco Systems security and connectivity sensors into its robots so they can detect developing issues and address them remotely rather than wait for problems to occur. “That reduced downtime from days to hours and even a few minutes,” explains Pavan Singh, head of Internet of Things vertical solutions at Cisco.
Within six months, FANUC had saved about $38 million due to the project. Those returns are likely to multiply, Singh adds, because now that FANUC’s engineers can examine how the machine components operate in factories, they can improve the designs of future robots.
“Getting more connected, getting business analytics, getting knowledge out of businesses’ connectivity is going to be very transformational,” predicts Vikas Butaney, general manager of IoT at Cisco.
Factory equipment has long been embedded with sensors. In the past, however, those sensors simply performed a function within the equipment; they weren’t connected to anything. As the Internet of Things (IoT) revolution accelerates, more of these sensors are connecting to the Internet. Whether they’re in robots, watches or heating and cooling systems, these sensors can gather information and communicate back to enterprise systems to drive behaviors.
"Connecting the things is not where the interesting business value will be created,” says Butaney. “When we talk to our customers, what they really want to do is transform and digitize their businesses."
By IP-enabling machines, devices and sensors in everyday products, organizations can detect when equipment needs maintenance before it fails. Retailers can analyze traffic patterns in stores and target ads to customers based on their interests and purchase history. Hospitals can monitor patients at home, improving care, extending their reach into remote areas and cutting costs.
“Think about that learning from the data playing out in thousands or millions of use cases,” says John Byrne, senior principal analyst at IHS Technology. “That’s ultimately where this goes.”
Getting Insights from Connected Devices
To derive value from IoT deployments, organizations need to take three steps, according to Singh. First, they need to connect their “things.” Next, they must convert the data from those things into insight. Finally, they need to share that data with suppliers and vendors.
The ultimate goal is to give everyone involved access to data. For instance, a public transportation maintenance crew might be notified of a mechanical issue before a bus leaves the station, while a passenger waiting for that bus might be notified that it will be delayed.
Cisco got its start in IoT six years ago in the energy industry. After a series of power failures and brownouts, utilities were looking for a way to securely deploy and deliver energy to customers, and Cisco worked with several partners in the industry to design a smart metering system.
During fall 2015, Cisco launched a new IoT capability around substation security. The solution combines physical security, including cameras and video surveillance capabilities, with cybersecurity measures for a holistic approach, explains Butaney.
For instance, suppose a utility contractor becomes disgruntled. He has the credentials and authority to access a remote substation, but in this instance, he plans to raise the temperature on a cooling system to the point where it could damage the facility. He swipes his badge, and the system recognizes him and grants him access, but preset flags trigger alarms in the supervisory control and data acquisition (SCADA) system when he tries to change the temperature past a certain range.
In addition to monitoring, IoT solutions open the door to new customer engagement opportunities. In the past, a company would manufacture a product, sell it and never hear about it again. “Their relationship with the customer was at the point of sale,” says Butaney. “Our customers are looking for what we call a connected business model, where each of their products is connecting back to them.”
This means manufacturers can perform remote updates, deliver new services to their products and have an ongoing relationship with their customers. “It’s about the ability to deliver a richer customer experience — to be able to gather data, do analytics and make that product continually improve,” he explains.
As businesses learn how customers use their products, they can create new value, whether that shows up in a zero-downtime offer, a better customer experience or predictive maintenance, says Butaney.
In addition to offering new capabilities, IoT technology is changing the very nature of business within many industries. Since sensors provide greater visibility into systems and trigger alerts as issues begin to develop, manufacturers are better able to predict the long-term performance of their products. That means that instead of selling products, they can sell service level agreements, guaranteeing uptime of their products for a set period of time.
That’s a big advantage for companies with limited capital budgets, because it moves what used to be a capital expense into an operational expense. “That makes it easier for companies to invest as you go as opposed to investing in something big and waiting for it to amortize over X amount of years,” adds Byrne.
It also reduces maintenance costs significantly, because businesses can be more efficient with their maintenance. Instead of doing preventative maintenance every three months, they can wait until a sensor indicates a developing issue.
“I definitely see this as the next phase of the Internet. And it is taking off,” says Byrne. “It takes a couple of trailblazers in each industry to start doing something that other companies can look at and use as a template.”
IoT Is Taking Off in Retail, Other Industries
Such trailblazers are not hard to find. IoT pilots are taking place in a variety of industries, says Byrne.
Many of the far-out technologies in the movie Minority Report, such as customizable billboards, aren’t so far off today, points out Mike Fratto, principal analyst at Current Analysis. All sorts of IoT applications are being used to improve the customer experience and target ads and commercial opportunities to customers.
Beacons, which are Bluetooth modules, can recognize customers when they walk into a store, tapping into data about interests, shopping history and purchasing behaviors to customize coupons and advertisements sent to smartphone apps or wearable devices.
Beacons can also help businesses analyze foot traffic patterns in stores, so they can determine peak hours and where customers congregate, as well as what they do and do not pass, says Fratto. Retailers can use that data to manage shift schedules, organize displays and target ads toward individuals. They can even use that data to charge more for displays in high-traffic areas. “If they didn’t know that, they couldn’t charge those differentiated prices,” he says.
Another major application for IoT is in the field of building management. By IP-enabling sensors in lights, heating and cooling systems, doors, security cameras and other environmental mechanisms, organization can control them centrally and operate more efficient buildings.
They can also integrate IT systems and devices with other things to more intelligently manage the environment, explains Fratto. For instance, after the last employee leaves for the night, the system can automatically turn off the lights and air conditioning. Then in the morning, when the first employee to arrive swipes an badge at the door, the lights and air conditioner on the floor where he or she works can automatically turn on.
Building management sensors can also improve security, because IoT systems analyze the data they gather to see if anything’s out of the norm, explains Chris Witeck, principal tech strategist at Citrix. For instance, if an employee leaves the office at 5 p.m. every day, but one night he’s there at 11, that would serve as a flag. "So collecting all of the data and managing that data and looking for patterns is going to be part of the security posture," says Witeck.
IoT solutions require a new approach to security. "Traditionally, people thought of their network as a fixed perimeter,” Witeck says. “It was like a wall built around my organization.” Now, with vast numbers of sensors, devices and users on networks, “the security posture shifts from building a wall around your organization to carrying the flow of information exchange.”
In healthcare, IoT is helping transform how patients interact with caregivers. “It also improves patient care,” says Byrne. Wearable devices can monitor heart rate, sleeping patterns and other vital signs and provide feedback to patients. They can also trigger notifications to caregivers if readings are outside a specific range.
“Not only are you providing more constant care, but you’re doing it at home, and that's obviously cheaper than having to monitor somebody in the facility or having somebody go in for a checkup every week," he adds.
Digital health in rural areas, where doctors are scarce, can automate activities that medical staff would have to perform in the past, freeing up doctors and nurses to treat more patients more efficiently. "Healthcare is one area where we see a lot of promise,” say Byrne.
Some auto insurers are using connected cars to gather data about driving behaviors so they can adjust insurance rates accordingly. They can also be used on the enterprise side to help businesses with fleets of vehicles track their drivers.
IoT systems can even transform agriculture by gathering and analyzing data to achieve better crop yields, especially in areas with drought conditions. It may even help solve some of the world’s problems with food scarcity.
“That’s where the value of Internet of Things is going to come from,” says Byrne. “Not from connecting things, but from developing value out of that.”
The key is to think big. Often IoT initiatives are aimed at solving a specific problem, says Singh. But, he warns, "If a solution is limited to that one problem, it doesn't unlock a companywide transformation.”
Consider mass transit, for instance. Many transit organizations have deployed solutions for vehicle maintenance, fare management, counting passengers and advertising, but true value comes from merging all the systems into one so if there’s a problem, users can get a holistic view of the environment.
“Sometimes we see people thinking just for one use case and not thinking about how to deploy such that you invest in a system," says Singh.
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