Smart Connected Assets Role in Digital Transformation

THE ROLE OF
SMART CONNECTED ASSETS

IN DIGITAL TRANSFORMATION:
How People, Processes, and Technology
Are Disrupting Business Models
CONNECT:
lnsresearch.com
THE ROLE OF SMART CONNECTED ASSETS

IN DIGITAL TRANSFORMATION:
How People, Processes, and Technology are Disrupting Business Models
TABLE OF CONTENTS
Section 1: Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2: Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3: The Business Drivers Facilitating Digital Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4: The Opportunity to Change
People and Business Models with Smart Connected Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5: Let it Flow: Managing Data Is at the Heart
of a Smart Connected Assets Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 6: Preparing the Business Case for Smart Connected Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7: Business Value & Recommended Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
lnsresearch.com
SECTION 1
Executive Summary
Executive Summary
PAGE
THE ROLE OF SMART CONNECTED

ASSETS IN DIGITAL TRANSFORMATION
Asset Performance Management (APM) has been an area of early suc-
Digital Transformation means shifting to new production, busi-
cess for Smart Connected Assets. Many of the ROI case studies for
ness, and customer engagement models and enabling unprecedent-
deploying Smart Connected Assets have centered on their value in
ed business possibilities like packaged services of industrial equip-
improving the reliability of production equipment. It is obvious that
ment, selling capacity instead of capital, and improved performance.
less downtime leads to higher productivity, but it can also contribute
For industries that rely on physical assets to produce the goods and
to improved quality. The question that many businesses have is, How
services they deliver, Smart Connected Assets are at the heart of
will Smart Connected Assets, coupled with APM, enable me to trans-
their Digital Transformation efforts.
form my business in this age of digitalization?
DIGITAL TRANSFORMATION
FRAMEWORK
DIGITAL
TRANSFORMATION
FRAMEWORK
TABLE OF
CONTENTS
SECTION
1 2 3
4 5 6
7
STRATEGIC OBJECTIVES
Reimagining Business
Process and Service Delivery
OPERATIONAL EXCELLENCE
Realigning People,
Process, and Technology
OPERATIONAL ARCHITECTURE
CONNECTIVITY
People Process Technology

Operational Excellence Platform
ENERGY
Fall short on any pillar and your

OpEx platform becomes tippy
Fall short on two or more pillars and your
OpEx platform becomes totally unstable
BUSINESS CASE DEVELOPMENT
Managing IT-OT
Convergence and NextGen
IIoT Technology
SMART CONNECTED ENTERPRISE
OPERATIONAL
EXCELLENCE SUPPORT
OPERATIONS
QUALITY
EHS
CLOUD
L5
IoT Enabled Governance and Planning Systems
L4
IoT Enabled Business Systems
L3
Smart Connected Operations - IIoT Enabled

Production, Quality, Inventory, Maintenance
L2
L1
APM
APPLICATION
DEVELOPMENT
IIoT Enabled
Next-Gen
Systems
COSTS
TOTAL
HARDWARE
SOFTWARE LICENSING
BIG DATA ANALYTICS
L0
Smart Connected Assets -
IIoT Enabled Sensors, Instrumentation, Controls,

Assets, and Materials
SOLUTION SELECTION
Defining Immediate
and Long Term ROI
THIRD PARTY SOFTWARE
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
Eliminating Bias and

Finding Long Term Partners
APPLICATION SOFTWARE
DOCUMENTATION & TRAINING
MAINTENANCE
INSTALLATION
INTEGRATION
LEGACY DATA LOADING
Project
Charter
Team
PLANNING
BUSINESS CASE
PROJECT MANAGEMENT
SUPPORT
TOTAL:
DISCOVERY
Research
Evaluation
RFP
Pilot
SELECTION
The Digital Transformation Framework

PAGE

One of the strategic objectives we see asset intensive organizations
These assets are more than just digital sensors connected to a
beginning to pursue is Smart Connected Assets, which LNS defines
control system. Smart Connected Assets allow an enterprise to move
as those assets that are used by a business to produce and deliver its
beyond real-time control to predictive control and ultimately, auton-
goods and services that can sense and respond to internal and exter-
omous operation.
nal environments as an intelligent agent. This means they are aware of

and can react to:
Past performance
REAL TIME
Predicted future failure

Raw materials
Environmental impact
SECTION
Other factors, such as customer requirements

or supplier performance
1 2 3
4 5 6
7
Converged Sensors, Instrumentation,

Controls, and Assets
Design and configuration
TABLE OF
CONTENTS
SMART
CONNECTED
SMART CONNECTED
ASSETS ASSETS
Converged Sensors,
Instrumentation,
Controls,
Converged
Sensors,
Instrumentation,
and Assetsand Assets
Controls,
REAL TIME
PREDICTIVE
AUTONOMOUS
PREDICTIVE
AUTONOMOUS
The Digital Transformation Framework (Cont.)

PAGE

TABLE OF
CONTENTS
SECTION
1 2 3
4 5 6
7
A huge enabler for the role of Smart Connected Assets in Digital
asset performance in global organizations, and how these perfor-
Transformation is the Industrial Internet of Things (IIoT) Platform.
mance initiatives are key components of enabling Digital Transfor-
Within it are Cloud services, Big Data and Analytics, Connectivi-
mation. LNS Research has analyzed data collected from more than
ty, and Application Development, and they are the technological
350 global executives on this topic to provide actionable recom-
building blocks for Digital Transformation.
mendations to executives looking to start their Smart Connected
This eBook will educate executives who are responsible for driving
Assets journey.
INDUSTRIAL
INTERNET OF THINGS PLATFORM
INDUSTRIAL INTERNET OF THINGS PLATFORM
CONNECTIVITY
CLOUD
Network Infrastructure Wired, Wi, and Cellular
Private/Public/Hybrid
Standards - Serial/
Proprietary > Ethernet/Open
PaaS - Run Time, Queue, Traditional DB/DW | Data

Historian | In-Memory Database | Hadoop/Data Lake
Machine 2 Machine/Data
Acquisition - Embedded,
Gateways, APIs, Web Services,
OPCUA, Modbus TCP/IP,
MQTT, etc.
SaaS - Traditional Enterprise Applications, Next-Gen

IoT Enabled Applications
Device Management
IaaS - Compute, Storage, Network
Security - Authentication, Access Control, Conguration

Management, Antivirus/Spyware, Cryptography, Logging,
Data Tagging, Compliance
Complex Event Processing

Alarms, Condition Based
Monitoring
Data Transport and Speed
Security - Authentication,
Access Control, Intrusion
Detection/Prevention, Firewalls,
Application Whitelisting,
Antivirus/Spyware, Cryptography, Logging, Data Tagging,
Compliance, etc.
APPLICATION
DEVELOPMENT
Integrated Development
Environment: JAVA, HTML5
IIoT Data Model and
Execution Engine
Workow and Business
Logic Modeler
Collaboration, Social
Mobile
BIG DATA ANALYTICS

Statistical Programming: R, SAS, SPSS
Search, Text Mining, Data Exploration
Analytics: Image/Video, Time Series, Geospatial,
Predictive Modeling, Machine Learning, etc.
Statistical Process Control Optimization and Simulation
Metrics and KPIs
Visualization
Search
Access Control, Conguration
Management, Cryptography,
Logging, Compliance
SECTION 2
Demographics
Research Demographics
PAGE

TABLE OF
CONTENTS
For this eBook on the role of Smart Connected Assets in Digital Trans-
The mix of geography and company size has remained stable
formation, we are in a unique position to pull from the value of two
with no significant change. As expected the majority of survey re-
surveys, IIoT and APM. Each of these surveys has over 300 respon-
spondents reside in the North American region, with very strong re-
dents. Using both surveys allows us to get a full view of the market and
sponse rates from Europe and Asia.
trends that are converging as Digital Transformation initiatives take
1.2%
shape in Discrete, Process, and Batch Industries.
INDUSTRY
12.5%
(Respondents were not limited to one industry self-identification)
GEOGRAPHY
COLOR BY HQ LOCATION
52%
Process
25.5%
51%
Discrete
60.8%
Europe
Asia / Pacific
SECTION
1 2 3
4 5 6
7
North America
21%
Batch
0%
10%
Rest of the World
20%
30%
40%
50%
60%
10.0%
REVENUE
COLOR BY COMPANY REVENUE
41.4%
48.6%
Small: $0 - $250MM
Medium: $250MM - $1BB
Large: $1BB+
Research Demographics (Cont.)

PAGE

When looking at respondents area of responsibility, we were happy

to see a strong mix of C-level and Director level responses from the
groups that are leveraging Smart Connected Assets in their Digital
Transformation journey. With Digital Transformation, all levels of the
organization need to be involved to ensure success and the survey
results validate this.
What is your area of responsibility?

Information
Technology
35%
TABLE OF
35%
CONTENTS
SECTION
1 2 3
4 5 6
7
Operations
21%
24%
12%
Engineering
4%
Maintenance
6%
50%
40%
26%
31%
8%
JOB TITLE
CxO
Director
4%
3%
Safety
Manager
1%
2%
Risk
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
SECTION 3
The Business Drivers Facilitating

Digital Transformation
What Is Driving Digital Transformation in Asset Performance Management?

PAGE

11
The constant drive toward better operational performance is, without
ing operational efficiency. An assets ability to understand past per-
a doubt, the major business driver of Digital Transformation in APM.
formance in order to predict future failure will transform "business as
This has been the #1 strategic objective of organizations, regardless of
usual" and will cause a shift in focus to opportunities such as buying
industry, for the last two years of our APM survey. Smart Connected
capacity or guaranteed uptime by suppliers.
Assets will play a huge role going forward in supporting and improv-
What is the #1 strategic objective for improving asset performance in your organization?
CONTENTS
TABLE OF
Increasing production
capacity and capabilities
SECTION
All others not listed
1 2 3
4 5 6
7
51%
Better operational performance
11%
8%
7%
Raising financial performance

Managing operational risk
5%
Improving safety
5%
4%
Improving product quality

Enhancing overall
sustainability performance
3%
Increasing manufacturing agility
3%
2%
Reducing energy usage

Improving regulatory compliance
and reporting
1%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
Business Drivers Behind Digital Transformation

PAGE

12
TABLE OF
Organizations are in an education phase when it comes to Smart
outlook is lower as most investment has taken shape and it seems
Connected Assets. When we examine APM survey data year over
the easiest area to prove value (the low hanging fruit).
year, we can understand where in the business organizations are
The outlook is bright for Smart Connected Assets; production vis-
investing with regard to Digital Transformation. This also provides
ibility, business model transformation, and future opportunities look
insight to the investments, market outlook, and direction for Smart
to be within asset reliability and business transformation and asset/
Connected Assets.
material tracking are the focus areas going forward. These are all ar-
For some time now, remote monitoring has been the primary investment driver. Energy efficiency has been high on the list, but its
Top IIoT Use Cases, One Year Outlook
CONTENTS
SECTION
1 2 3
4 5 6
7
Remote Monitoring
Energy Efficiency
Quality Improvement
Asset Reliability
Production Visibility
Business Model Transformation
Asset and Material Tracking
eas that can generate value if considering Smart Connected Assets.
Top Challenges Deploying Smart Connected Assets

PAGE

13
If any of the areas of future outlook are of interest, it is important to
A good strategy is to start small with a pilot project. This provides
understand the roadblocks organizations face in the Digital Trans-
the opportunity to learn about the capabilities in the market and
formation with regard to Smart Connected Assets. There is a direct
help build to a future, larger business case. This will be the ammu-
correlation between education on new technologies, such as IIoT,
nition necessary to address concerns of executive leadership and to
an integral component of both Smart Connected Assets and Digital
get the buy-in required to fund larger projects.
Transformation, and the ability to build a business case and get the
funding required to execute on a project.
TABLE OF
CONTENTS
SECTION
1 2 3
4 5 6
7
What are the top challenges in deploying IIoT technology?
Funding:
32%
Build a Business Case:
31%
Understanding IIoT:
27%
Security:
26%
Standards:
23%
Technology Partners:
18%
Technologies: Moving Full Steam Ahead

PAGE

14
What a difference a year makes! As the market continues to become
Increasing by 8 percentage points are those organizations that
educated on IIoT, Smart Connected Assets, and the potential of sup-
will be investing in Digital Technologies like IIoT. We attribute this
porting Digital Transformation technologies, we see a slight increase
jump to more and more industry stories that can be internalized to
for those who continue to invest. The big jump from last year to this
help support the business case and therefore the funding to start
year is the number of respondents who will invest moving forward.
pilot projects of their own.
The category of those that do not expect to invest is in a free fall,

dropping 12 percentage points!
Please indicate the nature of investment in Digital Transformation Technologies, like IIoT, expected going forward
2015
2016
TABLE OF
CONTENTS
SECTION
1 2 3
4 5 6
7
We do not expect to invest in IoT

technologies in the foreseeable future
We expect to start investing in IoT
technologies in the next 12 months
but are still establishing a budget
We have established budget

for IoT technology investment in
the next 12 months
11%
7%
3%
We have made significant investment

already and expect it to decrease
in the future
2%
0%
10%
25%

18%

already and expect it to stay the
same for the foreseeable future
31%

technologies in the foreseeable future
22%

We have made significant
investment already and expect it
to increase in the future
We expect to start investing in IoT

but are still establishing a budget
37%
20%
30%
40%
20%
We have made significant

investment already and expect it
to increase in the future
9%
We have established budget

for IoT technology investment in
the next 12 months
8%

already and expect it to stay the
same for the foreseeable future
4%

already and expect it to decrease
in the future
3%
0%
10%
20%
30%
40%
SECTION 4
The Opportunity to Change People

and Business Models with Smart
Connected Assets
Smart Connected Assets: Digitalization and Disruption

PAGE

16
TABLE OF
CONTENTS
SECTION
1 2 3
4 5 6
7
Smart Connected Assets can and will drastically alter business models. Digital Transformation is enabled by using Smart Connected Assets as a strategic objective and will impact Asset Performance Management best practices. Organizations need to understand where
to make investments in technologies and software to support these
efforts. People, processes, and technology are disrupting business
models.
Smart Connected Assets Roadmap: Do Not Exclude The Workforce

PAGE

17
As Smart Connected Assets become more prevalent in asset intensive organizations, so too will the connectivity options of the workforce. We have seen much use of mobility and related applications
already. The next phase will be tools, and personal equipment, like
hard hats, shirts, gloves, and boots. These will be able to monitor
the condition of the workforce and the environment around it. This,
What specialist intelligent wearables do you use

or experiment with in your plants?
coupled with the smart asset itself, will promote a safe working environment leading to improved safety.
iGlove or other
Smart Glove
BY YEAR
2016
2015
Smart Watches
TABLE OF
CONTENTS
SECTION
1 2 3
4 5 6
7
Google (or other) Glass
Wearable Barcode
Scanners
Location Device
0%
5%
10%
15%
20%
25%
Intelligent wearables are being increasingly experimented

with as we compare 2015 to 2016. Specifically, wearables
that help with location as well as smart gloves and smart
watches are expected to increase this year.
Enabling Smart Connected Operations

and try to quickly relate to it as the model on how to digitally transform asset intensive businesses. In reality this is not the case and
it creates confusion. Organizations want to explore the promise of
Operations will then provide the capability to manufacture efficiently and handle different levels of orders, customizable for each customer request. Because of the smart connected nature of the op-
CONTENTS
eration different business models will become more profitable and
SECTION
therefore more viable to pursue.
1 2 3
4 5 6
7
IG U
Control
Mobile Device
HARDWARE SETUP
& INSTALLATION
operations into Smart Connected Operations. Smart Connected
SECURIT Y
VIT
on the application. Instead, Smart Connected Assets will transform
ON
TI
Digital Transformation in asset intensive businesses will not focus
TI
ONF
simple, intuitive way for individuals to work at home shops.
RA
IIoT, but if they apply the Uber model, it would simply equate to a
EC
TABLE OF
A
DAT

18
Often we hear the technology industry speak of the Uber paradigm
S E T U P A ND C
PAGE
FUNCTIONS
CO
NN
Gateway to
Plant or IoT Network
Analytics Become Prescriptive

PAGE

19
TABLE OF
CONTENTS
SECTION
1 2 3
4 5 6
7
As technology has progressed we have seen an evolution from break/
There are two levels when talking about becoming prescriptive.
fix reactive maintenance through to condition based maintenance
The first is the ability to understand and prescribe which mainte-
(CBM) and ultimately, the holy grail today, which is predictive ana-
nance activity or activities to take in order to postpone or prevent
lytics. In the past the prohibitive factor in moving from reactive to
failure. The second is to prescribe operational changes to alter the
predictive was the high cost of sensors and network connectivity.
profile of the equipment in order to postpone or prevent the failure.
Now the convergence of Cloud and Big Data is enabling cheaper in-
The first is important to become maintenance smart, while the sec-
frastructure costs, increased flexibility, and greater processing power.
ond enables Operational Excellence.
BIG DATA
ANALYTICS
FRAMEWORK
BIG DATA
ANALYTICS FRAMEWORK
DESCRIPTIVE
DIAGNOSTIC
PREDICTIVE
PRESCRIPTIVE
What
happened
Why it
happened
What will
happen
What action
to take
An Opportunity to Rethink Business Models

PAGE

20
TABLE OF
CONTENTS
SECTION
1 2 3
4 5 6
7
Early indications are that organizations that adapt Smart Connected

Assets gain a competitive advantage and can be more profitable in
doing so. As asset intensive industries move from traditional analytics toward predictive and prescriptive analytics, the insights are seen
as an opportunity to provide better services. These analytics will incorporate new sources of data, like video, geospatial, and new algorithms via machine learning to further push organizations to evolve
into new business models and competitive offerings.
One opportunity is employing a Smart Services model with the
manufacturer of the equipment in which is being invested. This removes the learning curve and makes the manufacturer responsible
for monitoring, analyzing, and taking action on the asset if it is predicted to fail.
The second opportunity is vendors selling capacity instead of the
asset itself. Organizations are buying the capability of the machine,
with guarantees of uptime. This allows companies to become more
competitive in their customer base offerings. Products may be delivered at a lower price or a higher level of service because of agreements with suppliers and confidence in a consistent and reliable
manufacturing process.
SECTION 5
Let it Flow: Managing Data Is

at the Heart of a Smart Connected
Assets Strategy
The State of Asset Performance Management Data Services and Smart Connected Assets
PAGE

22
TABLE OF
CONTENTS
At the moment, leveraging data to enable new business models is at
If that data is shared, it more than likely will benefit them in the fu-
its infancy, but we are hearing more customer stories on the oppor-
ture with improved product designs and proactive fixes to support
tunity it presents. A near-majority of industrial companies, 47%, have
warranty issues.
not deployed Smart Connected Assets and therefore are not getting
the APM related data they so richly provide.
The more proactive organizations do at some level share their

APM data, either with proactive or diagnostic level support. Starting
Another split is the remaining 43% that do have assets that are
here allows asset intensive organizations to understand how suppli-
generating APM data; a majority, 22%, will not allow suppliers to ac-
ers use the data, and can be the first step in requesting Smart Ser-
cess it. This is a missed opportunity in the relationship with suppliers.
vices or usage based asset models.
Which statement best describes your attitudes toward APM services provided by the vendors
of the smart connected devices in your facility?
SECTION
1 2 3
4 5 6
7
We do not have any smart

technology enabled systems that
generate APM-related data
47%
We have systems that generate

APM-related data but do not allow our
suppliers to access that information
22%

APM-related data and allow suppliers
to access that data to proactively
assist us with APM initiatives
11%

APM-related data but only allow
suppliers access to that data to help
us with diagnostics
10%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Smart Connected Legacy Assets: Investing in the Past Leads to a Profitable Future
PAGE

23
There are decades of legacy equipment that can become Smart Con-
Organizations are taking a careful approach by installing sensors
nected Assets. Some legacy assets have been generating data for
to a small percentage of assets this year. This chart also indicates
some time, and some may need a few extra sensors to complement
smaller pilots (sensing small percentage of assets, 50 or less) are suc-
existing data sources. Alternatively, software can be added to unlock
cessful since there are plans to invest in sensing more than 50% assets
or expose this data for use. Others may require a host of sensors to
next year. We expect this trend to continue, as organizations are find-
understand the condition and performance. The good news is sens-
ing quick wins in the pilot phase and want to quickly increase invest-
ing technologies are getting cheaper by the day, enabling organiza-
ment in order to scale the value of Smart Connected Assets.
tions to explore the opportunity for Smart Connected Legacy Assets.
TABLE OF
CONTENTS
SECTION
1 2 3
4 5 6
7
Percentage of legacy equipment that will be Smart Connected

12
10
8
6
4
2
2015
2016
0-25
26-50
50+
Already Smart and Connected: Investments to Accelerate with Early Successes

PAGE

24
TABLE OF
Eventually a legacy assets life comes to an end and it is necessary to

invest in new plant equipment. Increasingly organizations are buying
assets that are already Smart and Connected. As with legacy assets,
industrial companies are taking a similar pilot approach when incorporating these new assets into their infrastructure. The aim small, miss
small approach allows organizations to accelerate the learning curve
and rework the plans around people, processes, and technology.
From the chart below, it is clear organizations this year are incorporating Smart Connected Assets on a smaller scale and it also indicates they like the value they are providing, as next year reveals more
organizations will invest in new assets at a larger scale by purchasing
larger amountsover 50%.
CONTENTS
SECTION
1 2 3
4 5 6
7
Percentage of newly purchased assets that will be Smart Connected

12
10
8
6
4
2
2015
2016
0-25
26-50
50+
Early Adopters Demonstrate Increased Reliability

PAGE

25
TABLE OF
CONTENTS
For the small percentage of forward-thinking companies that have
impact all three of those factors, meaning organizations with higher
taken advantage of the full Smart Connected Assets opportunity
reliability will show higher OEE.
that exists today, they are reaping benefits on multiple fronts and
Looking below at organizations that have real-time visibility into
this can be seen by looking at the impact of reliability on operation-
APM data vs. those that do not, we see that those that have the ca-
al performance. One of the closest relationships to measure this is
pability exhibit a substantially higher OEE performance than those
through the metric Overall Equipment Effectiveness (OEE). As the
that do not, with a median OEE of 75 vs. 67.
product of availability, productivity, and quality, asset reliability can
Achieving real-time visibility into APM metrics

100
SECTION
1 2 3
4 5 6
7
80
60
40
20
ALL
CURRENTLY IMPLEMENTED
Count
790
186
Median
67
75
Outliers
SECTION 6
Preparing the Business Case

for Smart Connected Assets
Introduction to the Five-Step Business Case Process

PAGE

27
For companies considering the promise of Smart Connected Assets as a component of their organizational Digital Transformation
strategy, it important to take a thoughtful approach to increase the
chances of success. Based on our history of understanding organizations that have started down this path, we recommend a five-step
process to ensure alignment of people, processes, and technology
with Digital Transformation initiatives.
STEP 1
Prepare Technically for What Is to Come
TABLE OF
CONTENTS
SECTION
1 2 3
4 5 6
7
STEP 2
Understand the Data and the Processes Around It
STEP 3
Align for Success: Operational Excellence,

Smart Connected Assets, and Digital Transformation
STEP 4
Use Operational Architecture to Execute

Digital Transformation
STEP 5
Build the Business Case
STEP 1
Prepare Technically for What Is to Come
PAGE

28
TABLE OF
CONTENTS
SECTION
1 2 3
4 5 6
7
There are a number of essential components that make up the abili-
LNS sees a rapid deployment of sensors (and other things) that
ty to manage data generated by Smart Connected Assets, and a well
have built-in intelligence and communication capabilities. Connec-
thought out IIoT platform will enable the Digital Transformation
tivity directly from any system to a Smart Connected Asset will great-
today and into the future. The key elements of the IIoT platform
ly enhance data availability and will allow that data to be delivered to
comprise Connectivity, Cloud, Big Data Analytics, and Application
whomever or whatever needs it, effectively breaking down silos that
Development (see chart below).
have existed for decades.
INDUSTRIAL
INTERNET OF THINGS PLATFORM
INDUSTRIAL INTERNET OF THINGS PLATFORM
CONNECTIVITY
CLOUD
Network Infrastructure Wired, Wi, and Cellular
Standards - Serial/
Proprietary > Ethernet/Open
PaaS - Run Time, Queue, Traditional DB/DW | Data

Historian | In-Memory Database | Hadoop/Data Lake
Machine 2 Machine/Data
Acquisition - Embedded,
Gateways, APIs, Web Services,
OPCUA, Modbus TCP/IP,
MQTT, etc.
SaaS - Traditional Enterprise Applications, Next-Gen

Device Management
IaaS - Compute, Storage, Network
Security - Authentication, Access Control, Conguration

Complex Event Processing

Alarms, Condition Based
Monitoring
Data Transport and Speed
Access Control, Intrusion
Detection/Prevention, Firewalls,
Application Whitelisting,
Antivirus/Spyware, Cryptography, Logging, Data Tagging,
Compliance, etc.
APPLICATION
DEVELOPMENT
Integrated Development
IIoT Data Model and
Execution Engine
Workow and Business
Logic Modeler
Mobile
BIG DATA ANALYTICS

Metrics and KPIs
Visualization
Search
Management, Cryptography,
Logging, Compliance
TRIAL INTERNET OF
THINGS
PLATFORM
STEP
2
Understand the Data and the Processes Around It
PAGE

29
NNECTIVITY
k Infrastructure Wi, and Cellular
ds - Serial/
ary > Ethernet/Open
In order to build a successful Smart Connected Asset strategy and
APPLICATION
Once companies have some results from their attempts, decisions
DEVELOPMENT
therefore
make it possible to implement Digital Transformation, it
about the larger Digital Transformation program can be made by roll-
CLOUD
Development
ing out to
a larger set of assets. After the decision to scale, it is time
needs to
be tried
first. LNS
suggests
that the first place to play is in Integrated
IaaS
- Compute,
Storage,
Network
to select a partner to deploy the IIoT Platform and implement Smart
Big Data
Analytics
(but not
tooTraditional
big), monitoring
a select group of
PaaS
- Run Time,
Queue,
DB/DW | Data
Historian
| In-Memory
| Hadoop/Data
Lake data, trying IIoT
Connected
critical assets.
This
requires Database
connecting
and collecting
Data ModelAssets.
and
Execution
Engine
Below is the current state of understanding the connections the
SaaS
Traditional
Enterprise
Applications,
Next-Gen small-scale
analytics
tools-from
a variety
of vendors,
and deploying
e 2 Machine/Data
tion - Embedded,
Batch, Discrete
and Process industries have. Batch leads the effort,
ys, APIs, Web Services, Cloud infrastructure. There are many vendors offering analytics ca- Workow
and Business
Security - should
Authentication,
Access
Control, Conguration
Modbus TCP/IP,
andModeler
understands the assets and connections available; it anticipates
Logic
pabilitychoices
be made
carefully.
etc.
expanding their understanding and documentation by next year. The
Management
Process Industry is heavily invested in understanding these connecTABLE OF
x Event
Processing
Mobile
CONTENTS
tions within the next year.
Condition
SECTION Based
ing1 2 3
4 5 6and Speed
ansport
7
y - Authentication,
Control, Intrusion
on/Prevention, Firewalls,
ion Whitelisting,
s/Spyware, Cryptogragging, Data Tagging,
nce, etc.
BIG DATA ANALYTICS

Metrics and KPIs
Search
Do you have a definitive list of connections to the plant
and what data
can flow through them?
Management,
Cryptography,
Logging, Compliance
58%
Yes
43%
36%
Visualization
17%
Includes the use of a broad set of statistical and

optimization tools to cleanse, monitor, and analyze
both structured and unstructured data for enabling
unprecedented insights.
35%
36%
No
Batch
25%
22%
28%
Planned in
1 year
0%
10%
20%
30%
BY INDUSTRY
Discrete
Process
40%
50%
60%
STEP 3
Align for Success: Operational Excellence, Smart Connected Assets, and Digital Transformation
PAGE

30
TABLE OF
CONTENTS
SECTION
1 2 3
4 5 6
7
As our research shows Operational Excellence as a key objective,

it also reveals the top barriers to achieving the objective have to
do with a lack of metrics or visibility into the metrics that are being measured, inaccessible data, and organizational silos/structure.
Just pursuing Digital Transformation is not a guarantee of overcoming these barriers.
Looking at some of the enabling technologies that have driven
Digital Transformation to the forefront todayCloud, Big Data Ana-
OPERATIONAL
EXCELLENCE SUPPORT
to that data one of the barriershoarding datacan be addressed.
lytics, and Mobilityit can be seen that some of these barriers can be
overcome. By moving data to the Cloud and enabling mobile access

This is not to say that technology is a silver bullet, however.
People - Process - Technology
OPERATIONAL EXCELLENCE PLATFORM

Fall short on any pillar and your OpEx platform becomes fragile
Fall short on two or more pillars and your OpEx platform
People Process Technology
becomes totally unstable
Operational Excellence Platform
ENERGY
Fall short on any pillar and your

OpEx platform becomes tippy
Fall short on two or more pillars and your
OpEx platform becomes totally unstable
OPERATIONS
QUALITY
EHS
APM
STEP 4
Use Operational Architecture to Execute Digital Transformation
PAGE

31
TABLE OF
The challenge for many organizations is making the leap from an
ational Technology (OT) convergence.
IT-centric view that is typically associated with classic Enterprise Ar-
We believe strongly that OA is critical to executing a successful
chitecture (EA) activities, to the day-to-day operations of the busi-
Digital Transformation within a manufacturing or asset intensive
ness. LNS Research supports the use of tools and techniques of EA,
enterprise. Like any initiative an enterprise takes there are strategic
and believes that when applying it to daily operations, businesses
elements and tactical elements. The OA exercise helps to clarify
need to think in new terms; that is the concept of Operational Ar-
and separate strategy from tactics, and helps an organization un-
chitecture (OA). Operational Architecture takes the discipline of
derstand where they are today and define where they need to be
the IT domain and its EA activities, but translates them to reflect
to accomplish their business objects. It provides the map of how to
the operational side of the business. It is only natural that we think
get from the as-is to the desired state.
of Operational Architecture as the culmination of the IT and Oper-
CONTENTS
OPERATIONAL
ARCHITECTURE
SECTION
1 2 3
4 5 6
7
OT
IT
Machinery
Storage systems
Equipment and assets
Computing technology
Monitoring systems
Business applications
Control systems
Data analysis
L5
IoT Enabled Governance and Planning Systems
L4
IoT Enabled Business Systems
L3
Smart Connected Operations - IIoT Enabled

Production, Quality, Inventory, Maintenance
L2
L1
L0
Smart Connected Assets -
IIoT Enabled Sensors, Instrumentation, Controls,

Assets, and Materials
IIoT Enabled
Next-Gen
Systems
STEP 5
Build the Business Case
PAGE

32
The business case charts an organizations journey from todays as-is
By breaking the Digital Transformation effort into Operational Ex-
state to the ultimate end goal. An organization should identify its cur-
cellence focused business process improvement initiatives (BPIs), for
rent as-is state on the business case journey chart by identifying the
example, Smart Connected Assets, organizations can typically build
current APM maturity and moving up the business case journey line.
sound business cases with measurable results. If a company has a solid
The dividing line is where the Smart Connected Assets initiative
vision of what the business should look like in 5, 10, or even 20 years
shifts from a cost center to a value center. Top executives view cost
out by linking back to Operational Excellence, and adheres to the re-
centers as required, but deserving of minimum investment as they
sults of an Operational Architecture effort, it will be positioned to ac-
do not deliver value. Conversely, value centers receive sustained in-
tually accomplish its Digital Transformation goals.
vestment as they drive positive business outcomes.
TABLE OF
CONTENTS
$$$$$
1 2 3
4 5 6
7
5
OPERATIONAL EXCELLENCE MATURITY
SECTION
BUSINESS CASE JOURNEY
4
$$$$$
METRICS
Big Data*
VALUE
C OS T C
*Big Data Analytics, Diagnostic, Predictive, Prescriptive
C EN
ENT
T ER
Value**
**e.g. Revenue and Earnings
ER
Financial
$$$$$
Operational
$$$$$
Siloed
DEPARTMENT
CROSS-FUNCTION
EXECUTIVE
$$$$$
BUSINESS CASE AND OBJECTIVE SCOPE
SECTION 7
Business Value
& Recommended Actions
Purchasing Capacity Over Capital

PAGE

34
As mentioned earlier in this eBook, the opportunity for Smart Connected Assets not only creates better visibility into operations and
maintenance but offers up a transformative opportunity with maintenance business models.
Buy machine capacity, not the machine. We are already seeing
this trend in our survey data. From last year to this year, the number
of organizations purchasing machine capacity on smart connected
devices instead of buying the machinery doubled, from 3% to 6%.
Although this is small, this approach is in its infancy and we should
continue to see precipitous growth for years to come as pilots pan
out and roll outs increase in size and scope.
TABLE OF
CONTENTS
SECTION
1 2 3
4 5 6
7
From last year to this year the response has doubled

for companies purchasing machine capacity instead
of buying the machine itself.
We are already purchasing machine capacity on
smart connected devices instead of buying the
machinery from the suppliers
2015
2016
3%
6%
Maintenance as a Service
PAGE

35
TABLE OF
In this instance companies are not buying capacity, but purchasing

guaranteed uptime to ensure the capacity is there when they need it.
Service Level Agreements would be developed that allow the supplier to monitor the equipment and predict failure and provide proactive service to avoid it.
One of the main issues stalling this opportunity is data ownership. The reason? A majority of the data is owned by suppliers and
is not shared with the customers that own the machines. There are a
number of reasons for this, but owner/operators may not be ready to
share this data back to a supplier as it may serve as a competitive advantage. What if a company figured out how to run a machine more
efficiently, for example? They might not want this to be fed back to
CONTENTS
the supplier, as this performance information could be used as a cus-
SECTION
tomer service opportunity with other clients.
1 2 3
4 5 6
7
Who owns the data from the machines you deliver to customers?
(Respondents were able to choose more than once answer to reflect different asset capabilities)
We own the data and do not

share raw data with customers
67%
The customer owns the data,

we are data custodians
33%
We own the data but provide

raw data access to customers
33%
0%
10%
20%
30%
40%
50%
60%
70%
Business Value
PAGE

36
TABLE OF
CONTENTS
We are in the early phases of Smart Connected Assets and its role in
pillars like Enterprise Quality Management Systems (EQMS), Energy
Digital Transformation. The good news is many of the early pilot proj-
Management, and Enterprise Resource Planning (ERP). Therefore,
ects have been around Asset Performance Management. To that end,
the more mature companies are with best practices in people, pro-
we do have data that begins to paint the picture of potential benefits
cesses, and technology, the more likely they will see direct benefits
moving in the Smart Connected Assets direction.
when investing in Smart Connected Assets. Why? They have already
Companies that do see value and are rapidly pursuing opportunities in Digital Transformation and Smart Connected Assets have
taken the five-step journey and understand their Operational Architecture and its impact on Operational Excellence.
integrated their APM solutions into other Operational Excellence
Organizations that view application integrations (ERP, IEM, EQMS) as key to APM
are more likely to understand and pursue IoT
SECTION
1 2 3
4 5 6
7
31%
We are rapidly pursuing IoT

opportunities, either for operations, for customers, or both
6%
BY INTEGRATION WITH OTHER APPLICATIONS Like ERP, IEM, EQMS, etc.
7%
Currently implemented
Not planned
17%
We have interest but are still
investigating the impact
Planned within 1 year
21%
34%
24%
Don't understand/know
about IoT
38%
7%
0%
5%
10%
15%
20%
25%
30%
35%
40%
On Time Delivery Performance Improves with Smart Connected Assets and Data Sharing
PAGE

37
TABLE OF
CONTENTS
SECTION
1 2 3
4 5 6
7
Sharing is caring is the old adage, and is true when it comes to
suppliers, to the tune of 6% to 8% higher.
improving on-time delivery performance and investing in Smart
Being Smart and Connected is making an impact. Any time a com-
Connected Assets. The chart below indicates organizations that
pany can improve on-time delivery performance, it will increase
do not have Smart Connected Assets and those that do not share
customer satisfaction. This will increase the chances of maintaining
APM data back to suppliers have lower on-time delivery perfor-
current business and allow competitiveness when growing new busi-
mance than organizations that do share that data back to their
ness opportunities.
Current On Time Delivery Performance

100
90
80
70
60
50
40
30
20
10
We do not have any smart

technology enabled systems that generate data
We have systems that generate APM related data and

allow suppliers to access that
data proactively
we have systems that generate APM related data but do

not allow suppliers to access
that information
Count
530
90
411
Median
88
95
90
Outliers
34
62
Conclusion and Recommendations

PAGE

38
TABLE OF
CONTENTS
SECTION
1 2 3
4 5 6
7
For industries that rely on physical assets to produce the goods

and services they deliver, Smart Connected Assets should be one
of the first strategic objectives within their Digital Transformation
journey. Digital Transformation means shifting to new production,
business, and customer engagement models and enabling unprecedented business possibilities like packaged services of industrial
equipment, selling capacity instead of capital, and improved performance. This will be done by enabling legacy equipment, incorporating new assets, and leveraging the promise of the Industrial Internet
of Things. Although we are at the early stages of understanding the
full business impact, early results point to competitive advantages in
goods produced and new business models that will transform industries in the years to come.
Conclusion and Recommendations (Cont.)

PAGE

39
TABLE OF
CONTENTS
SECTION
1 2 3
4 5 6
7
To move forward, here are some suggested actions to take with your
Smart Connects Assets journey:
The IIoT is a transformative technology trend that will change the
definition of IT-OT convergence, system architecture, organizational structure, and business models: Smart Connected Assets,
whether legacy or new, will play a crucial role in generating the
Author:
Jason Kasper
Research Analyst
jason.kasper@lnsresearch.com
value of Operational Architecture.

Look to vendors that can deliver the needed capabilities of an
IIoT Platform, Smart Connected Assets, Operations, or Enter-
Connect:
prise: They should have an open view of technology platforms;

proprietary capabilities do not belong and will be difficult to
lnsresearch.com
work with long-term.

Vendor collaboration is critical for delivering on the vision of
Smart Connects Assets and Operations: There will not be a one
size fits all approach so look to vendors with strong partnerships
Presented by:
that can provide a broad reach across the platform.

Take the first step in the business case journey by readying technically for what is to come. The best approach for this is a pilot.
Understanding at a small scale how things work prepares the plan
and helps develop the value to move to a larger scale.
Do not forget people, processes, and the connection with operational performance benefits and ROI: As the information begins
flowing, new ideas and resources will be required. Processes will
change; getting ahead of this will extend competitive advantages
and can be a value multiplier.
LNS Research, 2016. All Rights Reserved.

Smart Connected Assets Role in Digital Transformation

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Smart Connected Assets Role in Digital Transformation

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THE ROLE OF

SMART CONNECTED ASSETS

THE ROLE OF SMART CONNECTED ASSETS

THE ROLE OF SMART CONNECTED

Asset Performance Management (APM) has been an area of early suc-

Digital Transformation means shifting to new production, busi-

ness, and customer engagement models and enabling unprecedent-

deploying Smart Connected Assets have centered on their value in

ed business possibilities like packaged services of industrial equip-

improving the reliability of production equipment. It is obvious that

ment, selling capacity instead of capital, and improved performance.

less downtime leads to higher productivity, but it can also contribute

services they deliver, Smart Connected Assets are at the heart of

will Smart Connected Assets, coupled with APM, enable me to trans-

their Digital Transformation efforts.

form my business in this age of digitalization?

People Process Technology

Fall short on any pillar and your

BUSINESS CASE DEVELOPMENT

IoT Enabled Governance and Planning Systems

IoT Enabled Business Systems

Smart Connected Operations - IIoT Enabled

BIG DATA ANALYTICS

Smart Connected Assets -

IIoT Enabled Sensors, Instrumentation, Controls,

THIRD PARTY SOFTWARE

Eliminating Bias and

The Digital Transformation Framework

THE ROLE OF SMART CONNECTED

One of the strategic objectives we see asset intensive organizations

These assets are more than just digital sensors connected to a

beginning to pursue is Smart Connected Assets, which LNS defines

control system. Smart Connected Assets allow an enterprise to move

beyond real-time control to predictive control and ultimately, auton-

nal environments as an intelligent agent. This means they are aware of

Predicted future failure

Other factors, such as customer requirements

Converged Sensors, Instrumentation,

Design and configuration

SMART CONNECTED ASSETS

The Digital Transformation Framework (Cont.)

THE ROLE OF SMART CONNECTED

A huge enabler for the role of Smart Connected Assets in Digital

asset performance in global organizations, and how these perfor-

Transformation is the Industrial Internet of Things (IIoT) Platform.

mance initiatives are key components of enabling Digital Transfor-

Within it are Cloud services, Big Data and Analytics, Connectivi-

ty, and Application Development, and they are the technological

350 global executives on this topic to provide actionable recom-

building blocks for Digital Transformation.

mendations to executives looking to start their Smart Connected

Network Infrastructure Wired, Wi, and Cellular

PaaS - Run Time, Queue, Traditional DB/DW | Data

SaaS - Traditional Enterprise Applications, Next-Gen

IaaS - Compute, Storage, Network

Security - Authentication, Access Control, Conguration

Complex Event Processing

BIG DATA ANALYTICS

THE ROLE OF SMART CONNECTED

The mix of geography and company size has remained stable

formation, we are in a unique position to pull from the value of two

with no significant change. As expected the majority of survey re-

sponse rates from Europe and Asia.

trends that are converging as Digital Transformation initiatives take