- If companies want to effectively digitize their operations, they need to collect data on their industrial internet of things (IoT)-tagged equipment, a recently released study by IFS revealed. The study included responses of more than 200 decision-makers at small, medium and large companies.
- There is a "strong correlation" between companies that said ERPs "prepared them well for digital transformation and those who said their software prepared them well to consume IoT data." Just 16% of the survey respondents said they consume IoT data through their ERP software.
- The study also found that 30% of respondents use data collected via IoT to make strategic decisions for institutional advancement, which suggests that those who take advantage of IoT are more likely to have a competitive edge within their industry.
Even if companies start integrating IoT into their operations and processes, the study showed that companies don't think their ERP software does a good job handling the IoT data — and that could derive from a technology gap or a knowledge gap.
At the same time, companies know that digitization is necessary in order to compete, so the struggle becomes finding and knowing how to use the proper tools.
"The ability to use networks of smart devices to extend enterprise software offers industrial companies the best chance to disrupt their markets, offer new products and services and drive radical top-line growth," said Chuck Rathmann, senior marketing communications analyst for IFS. "Companies can add sensors to every single piece of equipment, but enterprise software is still the key to getting this transformational benefit from IoT."
A key finding from the study showed that, in order for companies to effectively utilize IoT, they need comprehensive ERP systems.
"Enterprise software must therefore facilitate two-way communication from connected devices — programmable logic controllers, temperature or vibration sensors or entire work cells united through SCADA systems — and the system of record used to manage the enterprise," the study reads. "This direct communication between enterprise systems like ERP, EAM and field service management software and sensored devices on the plant floor — or distributed assets in the field — will be essential for these organizations to achieve the more advanced use cases for IoT."
This suggests that if ERP systems aren't currently well-equipped to handle IoT data, the problem compounds: not enough companies are taking advantage of IoT tools, but when ERP software isn't properly customized and up to date, it won't matter, because the software won't be able to to process the IoT data.
The study reveals some opportunities for innovation in the field — ERP software could be better and companies should be tagging their equipment with sensors to add them to IoT. Then the big takeaway becomes, digital transformation necessitates IoT usage. If companies want to digitize their supply chains effectively, they need to be using this tech, and using it correctly and efficiently.