Most industrial companies are finding that there’s a big divide between creating digital connections and leveraging those connected devices to make strategic and operational decisions. In fact, this reality is limiting the potential of the digital evolution and Internet of Things (IoT), a new study research study from IFS found. The firm surveyed 200 IoT industrial companies in North America, and discovered that just 16% of respondents consume IoT data in enterprise resource planning (ERP) software.
In the study, companies were asked about IoT sophistication and how well their enterprise resource planning (ERP), enterprise asset management (EAM), or field service management (FSM) software prepares them for digital transformation and to consume IoT data within enterprise software.
Investments in 24 months. Image courtesy: IFS.
To get a good grasp on the study’s findings, respondents were divided into groups based on their knowledge, including IoT leaders and IoT laggards, or digital transformation leaders and digital transformation laggards. The two leader groups overlapped, with 88% of digital transformation leaders also qualifying as IoT leaders. This suggests that IoT underpins the concept of digital transformation.
Looking at digital transformation leaders alone, they made more complete use of IoT data than digital transformation laggards. The study found that leaders are nearly three times more likely to use IoT data for corporate business intelligence or to monitor performance against service legal agreements. Further, digital transformation leaders were more likely than digital transformation laggards to access IoT data in applications used beyond the plant floor. In addition, compared to laggards, they were:
- more than four times as likely to have access to IoT data in enterprise asset management software,
- twice as likely to be able to access IoT data in high-value asset performance management software,
- and almost twice as likely to be able to be able to use IoT data in ERP.
Overall, the data suggests that more IoT-enabled enterprise applications must be designed to put data from networks of connected devices into the context of the business.
But what’s causing such a gap between IoT and ERP? Why aren’t organizations putting this higher on their priority lists? ERP systems are structured, transactional, and not good at real-time event processing, Rick Veague, CTO, North America, IFS answered. Furthermore, the insights revealed by IoT data streams can vary widely, meaning different potential entry points for IoT information into ERP.
Rick Veague, CTO, North America, IFS
“For IoT and ERP to work together and realize the full potential of both, the ERP system needs to be flexible, built on a modern architecture, and be able to be configured to respond to IoT inputs easily,” Veague told EBN. “This can be a challenge for older ERP systems, but more importantly, it can require change in how people think about, and use, their ERP system. For some, integrating IoT and ERP implies a large and costly systems integration project.”
Veague said IFS dove into analyzing this information to find out how the rate of IoT adoption was changing, and whether IoT was driving business results.
Many of the respondents in the study reporting using IoT in ways that are reactive. Responses suggest that, for example, many organizations using data from machinery or equipment they sell for diagnostics or to facilitate aftermarket service and repair with their customers. They don’t appear to be commonly leveraging the technology in proactive ways such as triggering service calls automatically based on equipment health data, or automatically measuring response times by capturing geolocation data from technicians’ mobile devices, the survey found. That may be the future of aftermarket service, but it’s not here yet, except for the most advanced organizations.