IoT in the industrial sector

IoT in the industrial sector

The Internet of things in the industrial sector, generally termed the Industrial Internet of Things (IIOT), concerns the application of digital-physical systems to monitor industrial manufacturing processes and to make autonomous decisions based on the data and driven by predictive analytics and artificial intelligence.

The IIoT is undoubtedly disrupting many traditional manufacturing operations, particularly in the conversion of linear manufacturing supply chains into interconnected systems that deliver improved efficiencies, enhanced safety for human workers, and with much lower costs. This sea change is often referred to as the fourth industrial revolution, or “Industry 4”.

IIoT is big business. It is estimated that by 2025 the impact of the IIOT will be between $1.2 trillion and $3.7 trillion.

Evolution or revolution?

Although we have described the IIOT as the fourth industrial revolution, in many ways, it is more evolution than revolution. We have been using sensors to track the progress of goods through the factory floor and to monitor machinery for very many years. There is nothing new about the concept. Programmable logic controllers (PLCs) have been used in manufacturing since the late 1960s and by the early 1980s, we were already creating networks of smart devices. RFID technologies began making a significant impact at the turn of the century. Notable developments in the early 2000s were cloud computing, big data analytics, and the implementation of the OPC Unified Architecture protocol for secure communication between devices, data sources and applications.

The unfettered progress of Moore’s Law resulted in improved performance and lower prices for devices such as smart sensors and computer technologies. Advances in predictive technologies and artificial intelligence promised more intelligent systems that could replace or complement the human operative offering all the benefits of improved productivity, enhanced security, reduced downtime, and many other benefits. Concepts such as smart manufacturing and the smart factory became realistic goals, not only for big manufacturers but also for smaller enterprises.

Which manufacturers have successfully implemented the IIoT?

As with all significant advances, some organisations have been quick to implement these technologies, while others often impeded by a lack of resources and expertise have lagged. The reality is that currently, IIOT remains out of reach for most companies. Some of the necessary technologies remain unaffordable; there is a lack of talent to implement complex IIOT processes; and there is still a technology lag – not everything that is necessary, such as 5G networks, is currently available. Thus, while some of the largest organisations have made significant progress, many potential users of the IIoT are still at the early stages of investment.

Here we will attempt to assess the current state of play in terms of leading proponents and how far networked and automated production advanced?

In a 2019 survey of decision-makers in 204 manufacturing companies in Europe, each with over 500 employees, conducted by PAC Ltd on behalf of Fujitsu, the key findings were:

  • 63% plan to increase their investment in Smart Factory over the next three years.
  • 66% rank Smart factory as one of the top three priorities.
  • 44% are already achieving ROI on their Smart Factory projects, many in under a year, and of the 56% that are yet to deliver ROI, they are still in the early days of implementation.
  • 8% are in the advanced stages of Smart Factory with organisation-wide rollouts.
  • 37% are still at the planning and evaluation stages of Smart factory initiatives; 19% have their first live Smart factory initiatives that are impacting on their business.
  • 46% handle data in-house; 14% in the cloud; and 14% on the factory floor (known as the edge). The ambition of 35% is to move data analytics to the edge.
  • The main goals of Smart factory implementation are to improve product quality, digital transformation, and product customisation. Overall, the external driving goals are improved customer satisfaction, supply chain management, and after-sales products monitoring.
  • The major impediments to Smart factory are cost (58%), building a business case, lack of skilled staff, and technical challenges.
  • Looking to the future, 59% saw blockchain technologies as important, 50% deep learning and Artificial Intelligence, and 19% quantum computing.

While we are clearly in the early days of IIoT, there is a considerable momentum which will surely increase over the coming years. While there remain impediments to implementation, there would appear to be real enthusiasm throughout the manufacturing sector.

Investments in IIOT

While the PAC survey illuminated the opinions of key decision-makers, the data provided little information on actual investment levels.

According to a 2019 report by the IDC, by the end of 2019, global spending on the IoT which includes the  IIoT was estimated at $745 billion, 15.4% more than  2018.

The companies that invested most in IoT during 2019 were:

  • Discrete manufacturing – mainly manufacturing operations and production asset management: ($119 billion)
  • Process manufacturing ($78 billion)
  • Transportation – mostly freight monitoring and fleet management:  ($71 billion)
  • Utilities – mainly smart grids for electricity, gas, and water: ($61 billion)

The highest levels of industrial investment during 2019 were :

  • Manufacturing operations ($100 billion)
  • Production asset management ($44.2 billion)
  • Smart home ($44.1 billion)
  • Freight monitoring ($41.7 billion).

While these figures combine the IoT and the IIoT, excluding the smart home, the total level of IIoT investment was $185.9 billion, and this is currently growing at around 16%.


While today networking and automation of the production world is still in its early days, nearly half of large manufacturers surveyed in Europe are already seeing returns on the IIoT investments, and higher numbers are expecting to make further investments in the coming years. Globally investment levels are high, amounting to $185.9 billion in 2019 and snowballing.

A simple answer to the question posed in the title of this article is probably more than you might suppose and watch this space. The Smart Factory is here, and undoubtedly it is getting smarter.

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