8 Reasons Why Your IIoT Project Is Stuck in Pilot Purgatory

June 21, 2019
84% of companies working in IoT are stuck in pilot mode, 28% of them for over two years.

Most of the latest consulting and industry reports on IoT technology and pure digital innovations (from Capgemini, Cisco, McKinsey, and the like) recognize that deploying and scaling IoT and digital opportunities in B2B and industrial markets is happening more slowly than expected. It is not leading to the explosive growth that it has for B2C organizations.

A 2018 McKinsey survey found that 84% of companies working in IoT are stuck in pilot mode, 28% of them for over two years. McKinsey refer to this phenomenon as languishing in “pilot purgatory.” The CEO of a manufacturing company who participated in a recent Industry 4.0 Monetization event in Milan reacted to this comment thus: “It is not purgatory, it is hell!”

All manufacturing organizations want to grow as fast as Uber, Google, and Amazon. The reality in the industrial world is different. The slow scaling process is frustrating organizations and forcing research institutions in 2018 to cut the IoT potential forecast by half, according to IoT World Today.

This situation raises the following questions: What is so different in the industrial and manufacturing sector that makes it difficult for digital IoT solutions to be scaled quickly? What leads most IoT projects that manufacturers are trying to scale to be stuck in pilot mode?

Here are a few leading reasons:

1. Lack of willingness to conduct internal IoT pilots on their own asset basis to validate their assumptions and business cases prior to approaching prospective customers.

2. Failure to realize that industrial process might be structurally flawed or dysfunctional and a hope that good technology can fix outdated or inadequate manufacturing processes.

3. Variability in B2B manufacturing processes and maturity levels, including diversity in machine languages, manufacturing standards, age and origins of equipment, infrastructure design, automation level, etc.

4. Complexity of assets, which can vary from simple machines (machine tooling) to complex manufacturing lines the size of a football field (paper mills or float glass line).

5. Differences between B2B verticals and variability between end-use applications within verticals.

6. Complexity of organizational structures in global manufacturing environments, where some manufacturing leaders and plant managers have more spending authority than others.

7. Complexity in navigating complex buying centers and decision-making maps in matrix organizations, leading to longer project scaling (delays, missed targets, and failure to generate the desired ROI).

8. Fragmentation of sources of data that might be required for IoT solutions to scale.

If you are a manufacturer of parts and services to a paper-mill account, getting approval to deploy an IoT pilot project might take three to 12 months. Imagine the time it might take to scale this solution across multiple plants around the world! It is not surprising to anticipate the need to work on multiple pilot projects before a customer agrees to full-scale deployment to maximize the promises of IoT.

The pilot purgatory is real and may impact all manufacturers, large and small, who want to play in digital. It is also not a fatality. It offers a unique opportunity for differentiation and design, a very powerful monetization strategy that includes a strategic and intentional pilot portfolio strategy. We’ll cover that strategy in a second installment, Getting Your IIoT Project out of Pilot Purgatory.

Stephan Liozu is Chief Value Officer of Thales Group and an adjunct professor and research fellow at Case Western Reserve University’s Weatherhead School of Management. He co-authored “Monetizing Data: A Practical Roadmap for Framing, Pricing, and Selling your B2B Digital Offers.”

About the Author

Stephan Liozu | Founder, Value Innoruption Advisors

Stephan Liozu ­­­is Founder of Value Innoruption Advisors, a consulting boutique specializing in industrial pricing, XaaS pricing, and value-based pricing. He is also the co-Founder of Pricing for the Planet (HOME | PricingForThePlanet & Sustainable Pricing) which specialized in pricing for sustainability. Stephan has 30 years of experience in the industrial sector with companies like Owens Corning, Saint-Gobain, Freudenberg, and Thales.

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