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Manufacturers blaze slow, steady trail to M2M applications

Manufacturers are working through M2M hurdles surrounding complexity, cost and ROI.

Machine-to-machine (M2M) applications, also known as "the Internet of Things," are considered the next big opportunity for manufacturers to cultivate new revenue streams, streamline operations and forge tighter relationships with their customer base. Yet while enthusiasm for M2M is mounting at a fast and furious pace, actual deployments are moving at a much slower rate due to the complexity of the still relatively immature technology.

There's no doubt that momentum around M2M applications is building. According to Gartner, more than 50% of Internet connections are "things," and there are over 15 billion of those "things" connected over the Web today, with that figure set to double by 2020. M2M presents myriad opportunities for manufacturers both with internal and outward-facing applications. Experts say most manufacturers embark on the M2M journey with focused on internal operations, leveraging the technology to monitor large shop-floor assets for predictive maintenance or to optimize yields, as well as to track and trace product as it moves through supply chain processes.

At the next phase, manufacturers begin to incorporate M2M capabilities into their end products as a means of providing more efficient troubleshooting and diagnostic services to customers from afar. From there, they start to leverage the use-case data collected by the M2M capabilities to improve future product development and deliver additional services to customers as part of creating new revenue streams.

"Historically, when manufacturers built a device, they'd ship it off and then lose the connection to the customer, unless they called for service when there was a problem," noted Dan Murphy, vice president of marketing at Axeda, which makes a suite of applications and an integration platform built around M2M. "With a connected product, there's a lifetime relationship between the customer and the manufacturer."

With either deployment scenario, it's still fairly early on in the adoption cycle, and much of the reasoning comes down to return on investment (ROI), according to Brian Partridge, research vice president at Boston-based Yankee Group. Manufacturers are notoriously slow adopters of technology compared with other sectors like consumer goods or healthcare, he explained. Moreover, manufacturing processes and plants are so complex, there's a natural barrier to change. "We're still in the early innings of M2M adoption -- the costs haven't come down enough, the standards aren't there to make it appealing to the mass market of manufacturers, and there isn't enough education in the market on return on investment," he said.

Complexity, standards remain obstacles for M2M applications

For makers of large, capital-intensive equipment like industrial tractors or plant floor machinery, there's an obvious ROI in adding connectivity to understand the dynamics of how the machine runs in the field or to provide an additional layer of field maintenance support and customer service, Partridge said. "But at the other end of the spectrum, it doesn't make sense to put a live cellular connection into something that costs $100 if the [communications] module itself costs $100," he said.

Complexity around integration, connectivity options, standard protocols, data management and countless other requirements are also huge obstacles, particularly for smaller manufacturers outside of the Fortune 1000, Axeda's Murphy explained. "A lot of companies think they know their product better than anyone, so they rely on internal IT to build the connectivity, but this is very different than a typical IT project," he said. "It requires specialization around basic networking … and the heavy lifting is where a lot of companies get stuck."

While 10 years from now, every large production floor asset will come in some sort of pre-connected form, manufacturers are currently faced with retrofitting existing equipment with sensors and other capabilities to allow for M2M connectivity -- and that requires a very specific set of skills, noted Hung LeHong, research vice president at Stamford, Conn.-based Gartner. Knowing what data to collect and how to make use of the activity streams is another big issue for manufacturers, he said. While most manufacturers are familiar with how to leverage operational metrics from data historians associated with a single siloed machine, they don't necessarily know how to bring data together from multiple machines to optimize an entire assembly line.

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That brings us to the issue of lack of standards surrounding M2M, LeHong said. There are multiple wireless technologies to consider, and each machine on the shop floor supports different protocols, all of which need to be brought together to have complete visibility. "There needs to be a platform that lets you hook up a machine to the Internet regardless of what standards you are using … and those are starting to come out," he said.

While manufacturers are advised to tread slowly and hash out all these integration issues, LeHong cautions them not to be left on the sidelines. "The technology hasn't matured to a place where it's standardized, and that makes you hesitate, much like investing in VHS vs. beta, especially if you're buying very expensive equipment or outfitting a lot of items," he explained. "But that shouldn't stop you from implementing it."

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