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Manufacturing industry 'not ready for IoT', says SAP

Margi Murphy | Oct. 2, 2014
IoT may be far off for manufacturers - but when it achieves total connectivity it will have the best return says SAP.

Manufacturing is slower to join the Internet of Things (IoT), but eventual investment in connecting devices will bring it more growth and a larger return than in other industries, a SAP manufacturing lead predicted.

"The consumer side [of IoT] definitely has bigger growth potential...But I think the longer running growth and certainly much larger return is going to come from the continued investment and continued growth on the manufacturing and industrial side," said Sam Castro, director of responsive manufacturing at SAP.

"There will be the initial 'pop' on consumer side, but a steady ramp of growth on industrial side, as these technologies get cleaner and easier."

He added during an SAP podcast last week: "That initial 'pop' from consumer side will drive investment into smart manufacturing."

But the industry is still not ready to be connected, analyst Joe Barkai has argued.

During the podcast, Barkai said: "With the average age of industrial equipment in the US has risen in 10 years to the oldest point since 1938. So we have very old equipment and many of these devices are not able to connect to the internet.

"Furthermore if you look at the spending it is very slow-paced, at three percent per year growing investment."

Despite the hype around the IoT, North American and European manufacturers are a long way off connecting equipment in a way that will benefit business, Barkai added.

"Areas where manufacturing is growing, primarily in China and India, we will see more investment and more of a digitalisation of product lines."

He advised firms to slowly begin investing equipment on a case-by-case basis, retrofitting where possible and waiting until older machines can be replaced in entirety.

IoT -- what does it mean for manufacturers?
Firms are confused over machine-to-machine (M2M) connectivity and the IoT, Barkai said. The IoT, he said, is where automated devices will be connected across a firm on a global scale, as opposed to one piece of equipment connected to a back office system.

He said: "What kind of intelligence can I get from multiple lines, maybe across the world in different facilities. A global view of manufacturing facility -- that is where I draw the line between M2M and IoT."


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