It’s Time You Own the IoT Application Layer 

According to McKinsey, IoT could enable around $5.5 trillion to $12.6 trillion in potential economic value globally, including the value captured by consumers and customers of IoT products and services. The manufacturing industry will specifically create up to $2.5 trillion in added economic value. It is not even questionable how much industrial OEMs are spending and willing to incorporate technology to transform their businesses.

Socrates once said: “The secret of change is to focus all your energy not on fighting the old, but on building the new." 

As technological innovations take up more and more space, the manufacturing industry, like every other industry, is focusing on the new and relying on IoT to optimize and automate processes, make the most of edge processing, and gain actionable insights from across the network. Almost every manufacturer, especially dealing with capital-intensive assets, needs to turn their equipment into ‘smart equipment’. 

But the proximity of their dream remains uncalculated. Just making the equipment smart is not enough, because their competitors are already thinking about it, or worse, have done that. Just monitoring the high value equipment will not solve the larger problems in the picture. If they want to stand at the winning edge, they need to gather real-time insights into their customers’ assets which will further their journey to the competitive arsenal. Without data it is all irrelevant, an unconquerable war. This is where they need IIoT solutions to modify how they operate, market, and serve what their customers need. 

The possibilities created by IoT applications form the basis of this change and this is exactly where OEMs need to invest, dragging themselves from just monitoring the assets to creating new value pools. To become the leaders, they need to move from the no edge connectivity to service offering. 

Let's try to see what you just read with the help of a diagram.

At the initial stage, OEMs have no clue about their customer assets and lack any possible form of IoT connectivity. With no visibility into the assets and assets remaining isolated, aiming for asset performance, pointing inefficiencies and maintenance needs looks like a far-fetched dream. 

Moving ahead to what we call the beginning of the “table stakes”, OEMs begin monitoring the high-value assets by adding sensors to capture the basic data points. This is the initiation stage for expanding IIoT capabilities—enabling condition-based monitoring and proactive maintenance. 

With fully connected assets through IIoT enabled data feeds and continuous data flow, OEMs can gain deeper insights into their asset operations. This stage forms the groundwork for integrating edge computing.

These early stages act as the foundational ground of IIoT investment for OEMs but do not yield significant profits. 

The Profit Driving Curve

To maximize the full potential of their assets and create customer-centric solutions, OEMs need to own the smart application layer. 

Smart applications drive actionable insights and enable remote monitoring and diagnostics that help them optimize asset performance as well as minimize asset downtime through predictive maintenance. This just not increases asset reliability but also improves customer experience. Coupling smart edge data into applications that make sense of it through data ingestion, normalization, analytics, predictions, diagnostics, user productivity tools, advanced services, and other operational advantages is where the actual value lies.

What this means is, when OEMs only invest in Smart Edge, they are only realizing a fraction of their payback on the investment. They need to evaluate whether they should invest in owning or partnering for the IoT application layer in order to retain control over the complete value chain. Because if they neglect this, they would unknowingly be relying on third parties to control the application layer, undermining their competitive advantage. 

What could go wrong here? The provider of the IoT application layer has the opportunity to exert far more account control over the devices connected to the application layer and their customer’s processes and systems. 

The illustration below really brings this home:

Scenario 1 explicitly defines the problems of OEMs that have a great market share but no IoT application. While they have smart products and a refined go-to-market through distributors or system integrators, they are still not able to know what is happening at their customer’s end. 

Scenario 2 is the same as Scenario 1, but the customer brings in a third party for the IoT application which could possibly be a competitor. Here, the work done by the OEM to make the Smart Edge is leveraged by the Application Provider, who now realizes recurring revenues for their licensed product. In this case, the third party will have more control over the customer’s data. 

But the real winners are those in Scenario 3! 

When the OEM becomes the application provider and has taken their IoT capabilities to a newer level, they can add more and more services on top of what they sell. Now, not only do they receive the IoT application recurring revenues, but they build up far more account control than they ever had before. This helps them to move “up the curve” to the bigger value inflection points. 

So why are more OEMs not immediately chasing this strategic path to new revenue, growth, and competitive advantage? 

Of course, many are. But, until recently the Industrial IoT application creation ecosystem was not developed to the point that the investments needed to make this move seemed affordable or reasonable.

This is where an Application Enablement Platform comes in. With AEP, OEMs can now have the powerful path to deliver customized applications tailored as per their customer’s needs. This not only gives them a strategic advantage but also accelerates time to market, cutting risks and reducing costs. 

Why Chase the AEP Comfort

Speaking of history, it was difficult to develop and deploy IoT applications. The included cost, complexity and time deterred many OEMs from following this path. But with time, the IoT Application Enablement Platform (AEP) space evolved as one of the most definitive contributions to the IoT world. Businesses realized they need AEP because

1. It saves significant amount of time in developing and operating IoT applications 
2. The AEP architecture provides reliable and scalable end-to-end solution 

With this in hand, OEMs can: 

1. Deploy customized application quickly 
2. Minimize development challenges by leveraging the pre-built middleware capabilities
3. Address customer needs with bespoke applications
   

The IIoT sphere is offering unprecedented opportunities for industries OEMs to transform their businesses and to entirely capitalize on this potential, they must go beyond the average i.e. smart edge. It’s time to lead by taking ownership of the IoT application layer. It’s time to unlock new revenue streams, strengthen customer relationships and secure your position as the leader. With an AEP like Flex83, you can make this strategic path more achievable than ever.