The view of the industrial Internet of Things (IoT) as billions of sensors connected into intelligent systems distracts from its true role: digital transformation. The gargantuan task and investment of making all these connections, reliably and securely, is pointless unless there is a solid business reason — and there are two very good ones.
2 reasons manufacturers invest in IoT
The first reason big companies invest in IoT is they are worried about being digitally disrupted by a Tesla, Uber, or the next Airbnb in their industries — disrupt or be disrupted.
The second reason: a company’s slowing growth and the need for increased productivity. BCG’s Olivier Scalabre explained that driver during a 2016 Ted talk.
Manufacturing revolutions — the steam engine, mass production and the first automation wave beginning in the 1970s — created huge economic growth in 50- to 60-year cycles, and this last cycle is losing steam. Only a new manufacturing revolution will create a new high-growth cycle.
Over the past 40 years, SAP has been the beneficiary of the last wave of manufacturing automation productivity, putting the company’s 87,000 employees and 350,000 customers right smack in the middle of the evolution to industrial IoT.