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Smart manufacturing: when factories go digital

Insights on smart manufacturing from the IDC Directions 2017 conference

Digital –  it's a word that has birthed many buzzwords, phrases, and discussions. For some, it brings to mind a specific type of technology that helps to enable automation, or that streamlines processes. Others hear "digital" and think about the customer experience of real-time data, access, and new business models.

Recently, hundreds of leaders in the tech industry converged at the Santa Clara Convention Center in California to discuss digital topics at the IDC Directions conference. There, discussion centered on the rise of the digital transformation economy.

A full palette of technology companies was represented – software, hardware, startups, Internet of Things (IoT), services groups, and IT. They contributed to an agenda that focused on digital trends in retail, finance, healthcare, utilities, government, transportation, smart manufacturing, and other verticals.

The future is IoT

IDC set the stage with some overarching insights on the future direction of digital transformation:

  • IoT spending will hit $1.3 trillion by the year 2020, with smart manufacturing being the largest segment at 22%1
  • By 2019, 43% of IoT data will be processed at the edge of the cloud2
  • Connected things will hit 30 billion endpoints by 2020, and by 2025 that number could reach 80 billion3
  • More than half of IT spending will be driven by line of business (LOB)4

Amid these changes, businesses are also notably shifting their digital strategies. Kirk Campbell, IDC's president and CEO, said that one-third of GDP is already digitized and that digital will be the core of what companies deliver to their customers by 2020. He also noted how the cloud is evolving to a version 2.0, where the edge and distributed processing are becoming significant factors in the overall digital infrastructure. Campbell also emphasized that IoT will continue to be verticalized.

A major disruption point for companies driving transformation is how they use digital platforms. The way companies collaborate and develop platforms will become more central to what they deliver to their customers. The ability to develop and provide solutions that scale with partners and third parties will be a key to success in this new economy and integral in improving overall customer experience. "Every company is a software company," said Scott Lundstrom, vice president of IDC’s software, health, and government practice, in discussing how these new platforms are changing industries.

Smart manufacturing: when factories go digital

The conference's themes closely align with shifts currently happening in the manufacturing sector. As factories become more connected through industrial networking, predictive maintenance and data processing at the edge are becoming more essential to overall equipment effectiveness (OEE), which measures how effectively operations are being utilized. Fog computing at the edge provides an important value in securely processing data at its origination point and then distributing and communicating real-time information that is critical for plant operations. Using a combination of industrial Ethernet switching at the edge for machinery, as well as fog computing platforms, has helped companies like Mazak and Fanuc achieve better connectivity and real-time data and analytics. Fog computing can also drive new business models and improve industrial security by preventing unauthorized access.

As IDC speakers noted, the predicted proliferation of billions of IoT devices over the next decade and the continued vertical development of these devices is driving the need for the right tools to manage the emerging Industrial Internet of Things (IIOT). Visibility, control, and troubleshooting are needed within a single platform for operations and IT teams that will support and scale the many endpoints. Modernization is also changing how OT and IT groups work together and invest in technology to support digital transformation.

Amid the conference’s discussions around these drastic shifts, two underlying ideas rose to the surface: There must be a deep understanding of business processes, as well as an embrace of providing customers not just with platforms, but with the ability to be open and connect all the pieces needed for innovation. As Campbell stated in his opening keynote, "We are at the threshold of reaching scale where businesses are using this technology to change their business."

"We are at the threshold of reaching scale where businesses are using this technology to change their business."

Kirk Campbell, IDC president and CEO

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