You heard it first here: “In 2014, the Internet of Everything (IoE) will accelerate the growth of manufacturing industries to outpace overall U.S. GDP growth by >3x.”
As my colleague Jim Grubb points out, the IoE itself is no longer a prediction in-and-of-itself. The joining of people, process, data and things to transform information into actions and create new capabilities, richer experiences and unprecedented opportunities is already a global reality. Just how IoE impacts our economies and industries —including what many believe to be an American Manufacturing Renaissance— is what remains for our collective imaginations, innovations and entrepreneurial ingenuity.
To gain some insights and guidance on manufacturing movements, I turn to industry analyst expertise. Bob Parker, IDC Group Vice President, last week hosted the IDC Manufacturing Insights 2014 Predictions: Worldwide Manufacturing, one in a series of annual web conferences where IDC analysts share their industry outlook for the upcoming year in the form of a Top 10 Predictions. Below, I provide a recap of what Bob and his team had to say about global IT investment trends and business initiatives relating to key process areas within manufacturing, along with my contentions around the impact of IoE on the manufacturing economy and why I believe we will see a growth inflection in the industry next year.
Prediction #1:
Manufacturers Begin to Build 3D Value Chains. Independent of functional lines of business, the social, mobile, analytics and cloud technologies will coalesce to deliver a platform of productivity and growth initiatives. These will build the capabilities of the “3D Value Chain”: Demand Oriented, Data Driven, Digitally Executed.
- My Take #1: IoE is the foundation for what IDC refers as the “3rd Platform”—social mobile, analytics and cloud—creating the underpinnings for manufacturing business model transformation returning the ‘3D Value Chain’ and accelerating GROWTH, that is, how manufacturers:
- improve asset utilization,
- create employee productivity,
- drive supply chain and logistics resiliency,
- engage customer experiences, and
- speed time to market with innovation.
Prediction #2:
Operational (OT), Information (IT), and Consumer (CT) Technologies Converge to Reshape Approaches to Technology Management.
- My Take #2: The convergence of all three within the enterprise is a manifestation of IoE. IT supports business systems, communications and administration. OT enables value creation within the connected factory, supply chain, product management, after-market services and customer experience domains. CT provisions personal devices, for easier commerce and social interactions. With convergence and the consequent simplifying of organizational structures and management approaches we’ll see an acceleration of the capture of IoE economic value add, which is almost $4 Trillion total in manufacturing over the next 10 years.
Prediction #3:
Operational Resiliency Will Be the Focus of Supply Chain Strategies in 2014 and Beyond.
- My Take #3: As an increasingly demanding world pressures supply chains to deliver with quality, accuracy and certainty, IoE enables resiliency AND accelerated throughput, with Big Data granularity, accuracy and ubiquitous, real-time operational visibility.
Predictions #4:
Supply Chain Technology Investments will Involve Modernizing Existing Systems, while also Trying New Approaches.
https://www.youtube.com/watch?v=Wvl6HalipMs
Predictions #5:
The Modernization of the Underlying B2B Commerce Backbone becomes an Investment Priority for IT.
- My Take #4-5: IoE is at the root of technology modernization and innovation investments to drive supply chain agility, hastening the responsiveness of manufacturers to new and shifting demands. Cloud and managed services enabled by IoE fast-track supplier/partner on-boarding and create a much more agile environment for manufacturers to pursue and acquire new customers and create new markets.
Prediction #6:
Product Lifecycle Management (PLM) Strategies Become Increasingly Global, Multidisciplinary, Innovation-Based and Customer-Focused.
Predictions #7:
PLM Initiatives will Focus on Value Realization.
- My Take #6-7: IoE-driven mass customization for manufacturers is the ultimate global, multidisciplinary, innovative, customer-focused strategy for growth and new customer acquisition.
Prediction #8:
“Servitization Optimization” will be Core to Future Profitable Revenue Growth and Leading Manufacturers will Make the Necessary Investments to Enable these Strategies. According to IDC, “Servitization’ refers to the strategies for original equipment manufacturers (OEMs) to increase after-sales services and provide new sources for predictable, profitable, subscription-like revenue streams.
- My Take #8: Product-as-a-Service / Machine-as-a-Service / Platform-as-a-Service (PaaS) strategies, whether B2C or B2B, are utterly reliant on IoE—instrumenting and connecting people, process, data and things—to enable manufacturers’ lifecycle services offerings and extend their revenue potential and goals. IoE-based Automotive OEM ‘Connected Car’ strategies are a prime example of a B2C Servitization Optimization, in this case fueled by consumer sentiment for vehicle automation.
Predictions #9:
On the Way Towards the Factory of the Future, 2014 will Set the Stage for a New Manufacturing Renaissance.
Predictions #10:
Plant Floor IT Investments Will Continue to Become a Higher Share of the Overall Technology Investment Portfolio.
- My Take: Accelerating plant floor investments, that bridge IT and OT for productivity and throughput improvements and that better secure industrial networks, exponentially advance the manufacturing economy, as we connect more of the unconnected with IoE/IoT. Check out the Industrial IP Advantage resource, for a wealth of collateral to help hasten your IoE convergence journey towards the Factory of the Future.
All that said, IDC is forecasting +5.3% technology investments growth within U.S. manufacturing industries, which may very well exceed by 3x GDP growth year-over-year for 2014, if the economy stays on course, so not an unprecedented prediction, after all. Upon examining the IDC research and Top 10 predictions, I’m convinced that for manufacturers, investments in IoE—the convergence of OT/IT/CT connecting people, process, data and things—is the best bet we can make for our future competitiveness. IoE is a key catalyst for the growth of manufacturing, the 2014 U.S. economy, and beyond. Let me know what you think. PLEASE COMMENT!
You make some interesting points Chet. It will be interesting to see if the so-called American manufacturing renaissance (and the current anemic economic recovery) really gains traction with investments in IoE and commitment to strengthening competitiveness with technology.
Thanks, Celine. You’re right, it will be (very personally) interesting, for those of us with late-teen children! The real and practical litmus on the ‘American Manufacturing Renaissance’ will be U.S. jobs, which have been moving–albeit slowly–in the positive direction in 2013.
This is a game changer for technological education (and STEM)!
It is a good time to have these conversations among educators, about how we should update the curriculum and the technology we need in schools. We need to prepare the skilled workforce to accelerate innovation and productivity at home.
Thank you for your insightful post, Chet.