The platform economy is a central topic today in all economic sectors - but above all for the Digital Factory of the Future. Having a platform on which you can run analytics and manage applications is essential in order to get value from the Internet of Things (IoT). Amazon Web Services to SAP and Siemens: more than two dozen large IoT platforms promise to become the operating system for Industry 4.0.
Before going into details, let’s look at different types of IoT platforms available. There are four types of platforms: end-to-end, cloud, connectivity and data. End-to-end platforms offer hardware, software, security, connectivity, and management tools to handle concurrent device connections. Cloud IoT platforms offer the backend services to monitor multitude of simultaneous device connections. Connectivity Management Platforms is a low-cost solution, which uses Wi-F and cellular technologies such as cellular networks. Finally, data platforms combine a number of devices to route device data and visualize analytics.
Such IoT platforms save industrial companies transaction costs and enable completely new services and business models. They bring different protocols and different data formats into one interface ensuring accurate data streaming and interaction with all devices. It essentially brings data to life with event-action-triggers allowing the execution of “smart” actions based on specific sensor data. The final peculiarity of platform economics lies in the network effect, which is both an advantage and a risk: the more participants can gather on an IoT platform, the greater the benefit for the individual.
However, this also entails enormous consolidation pressure, which currently makes it difficult for companies to make a decision. Although I don't believe that in the industry sector it will end up as a single winner-takes-it-all solution (unlike in many consumer goods markets), the understanding of platforms for industrial data is an important competence building block for any Operations Executive.
In any case, such platforms make established business models obsolete or force a repositioning due to changes in value-added and sales shares. This makes it all the more useful that companies can quickly and easily find out how "mature" they are for the Industrial Internet of Things.
When it comes to choosing a platform, there isn’t a platform created for everyone’s needs. When trying to decide on the course of action with Internet of Things platforms, you need to take a close look at your IoT strategy and identify the challenges it’s targeting and the goals it has set.
To help with this process, ask yourself the following questions:
- What is the role of the IoT application?
- What is the type of data we generate? Is it generated by a central repository or a distributed number of points? Is there any data we’re not generating that we should be?
- How do we analyse data? Do we analyse it in a way that brings value to us and our customers?
- How do we collect data? Are there third parties involved?
- How do we make use of the data? How much value it provides? Which sources produce the most valuable types of data?
Following on from that, when considering the platforms themselves, ask the following:
- Is the platform scalable?
- Does the platform easily integrate with your current business applications?
- Does the platform have a facility for developing and maintaining multiple applications?
- Does the platform have the ability to process data from multiple datasets?
- Does the platform own its data centre? If not, which third-party providers are they using?
- Is the platform capable of processing high-velocity streams of data?
Make sure to also look at IoT platform’s business model, whether it’s charging based on users, data usage or something else, as this can have a significant impact on your own business model.
For those looking to build a momentum, companies can consider adding other connected devices to their IoT service or expanding the solution to more business units. As the scale increases, the solution implemented begins to resemble a platform. The next logical step in the implementation process would be to make the platform accessible to suppliers and other third parties. Doing so increases the likelihood of building upon the platform functionalities through third party suggestions. As an example, Amazon Web Services’ clients have access to tools that allow them to easily develop applications making use of sensor data.
Such practices have led Amazon Web Services, and other platforms, to become data-center backend for most apps downloadable on our smartphones. The data and IoT such apps generate then allow those companies to innovate further. It’s a win-win.
The discussion of the related questions is an integral part of the Leading the Factory of the Future Masterclass, and often one of the aspects of the discussion with our participants that I enjoy most. For your orientation, I have compiled this overview of large IoT platforms. How do you decide which platform is best for your company?