INDUSTRIAL INTERNET Value Behind the Hype. Juha Pankakoski, Konecranes Plc Chief Digital Officer and CIO
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1 INDUSTRIAL INTERNET Value Behind the Hype Juha Pankakoski, Konecranes Plc Chief Digital Officer and CIO
2 Ii - OPPORTUNITY Ii - CHALLENGE II - KONECRANES II - LEARNINGS Ii - DATA TO KNOWLEDGE II - ECOSYSTEMS Ii - FUTURE 2
3 INDUSTRIAL INTERNET - OPPORTUNITY 3
4 4
5 EXPLODING NUMBER OF NEW BUSINESS OPPORTUNITIES (The Connectivist, 2013) 5
6 CONVERGENCE OF DIGITAL AND PHYSICAL Industrial Internet is the next wave of Internet evolution that will transform B-to-B products and business models similarly than the previous internet evolution stage has transformed B-to-C products and business models Smartness and interconnectedness make products fundamentally different compare for instance a smart phone to a traditional telephone Change is made possible by the rapidly falling unit prices of sensors, computing, televommuncations, and data storage Many observers believe that this phenomenon will drive the largest growth opportunity in the history of business 6
7 INDUSTRIAL INTERNET OPPORTUNITY IS 46% SHARE OF GLOBAL ECONOMY TODAY (GE, 2012) 7
8 II IS EXPECTED TO RADICALLY REDISTRIBUTE VALUE WITHIN SEVERAL INDUSTRIES (Cisco IBSG, 2013) 8
9 VALUE DELIVERED BY INDUSTRIAL INTERNET IN IS MEASURED IN TRILLIONS 10
10 THE OPPORTUNITY FOR INDUSTRIAL SCALE IMPLEMENTATION IS THERE (GE, 2012) 12
11 AND JUST 1% PRODUCTIVITY IMPROVEMENT ON KEY INDUSTRY AREAS DELIVERS BILLIONS 13
12 VALUE OF IOT IS EQUIVALENT OF 11% OF THE WORLD ECONOMY IN 2025 McKinsey, June
13 INDUSTRIAL INTERNET - CHALLENGE "It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, Charles Dickens, The Tale of Two Cities 16
14 WILL IMMEDIATE FUTURE BE DISAPPOINTING? Konecranes Plc. All rights reserved.
15 TOP EUROPEAN LEADERS TESTIFY: IOT IS EXTREMELY IMPORTANT 18
16 WE ARE ALREADY INVESTING 19
17 BUT WE HAVE NO CLUE WHY. 20
18 POTENTIAL RISKS ARE ALSO DAUNTING SAFETY system operates without causing unacceptable risk of physical injury or damage to the health of people, either directly, or indirectly SECURITY system operates without allowing unintended or unauthorized access, change or destruction of the system or the data and information it encompasses RESILIENCE system is able to avoid, absorb, and/or manage dynamic adversarial conditions and to reconstitute operational capabilities after casualties 21
19 INDUSTRIAL INTERNET - KONECRANES 22
20 COMPANY IN NUMBERS 12,000 EMPLOYEES 600 LOCATIONS WORLDWIDE ACTIVE IN ALMOST 50 COUNTRIES EQUIPMENT IS 58% OF TOTAL SALES SERVICE IS 42% OF TOTAL SALES 1.75 MILLION ANNUAL SERVICE CALLS OVER 9,000 REMOTE CONNECTIONS MAINTENANCE CONTRACTS COVERING MORE THAN 450,000 EQUIPMENT OF DIFFERENT MAKES 2,011 MILLION IN SALES IN
21 INDUSTRIAL INTERNET We make machines intelligent and aware of their condition, and network them to create real-time visibility for enhanced safety and productivity. This unique service that we offer our customers differentiates us from our competitors and warrants a price premium. Safety 421 Productivity 15,0% 24
22 KONECRANES DRIVERS Our Mission We re not just lifting things, but entire businesses. Our Vision We know in real time how millions of lifting devices and machine tools perform. We use this knowledge around the clock to make your operations safer and more productive. 25
23 26
24 SMART CRANES WITH SMART SERVICE SERVICE Preventive approach Service programs based on customer needs Services for lifting equipment of every make 4,000 well-trained technicians in 600 locations servicing a contract base of 450,000 items of equipment. TECHNOLOGY Increased R&D investment Focus on digital controls, software, automation, and serviceenabling technologies High attention to quality, usability, ergonomics, and environment Smart solutions to improve customers safety and productivity. MAXIMIZING THE PRODUCTIVITY OF UPTIME MINIMIZING THE COST OF DOWNTIME 27
25 DIGITAL PRODUCT DNA 28
26 REAL-TIME SERVICE CONNECTED CRANES & MACHINE TOOLS TECHNICIANS MOBILE TOOLS SALES & SERVICE SUPPORT INDUSTRIAL INTERNET DIAGNOSTICS & ANALYTICS CUSTOMER PORTAL & APPS 29
27 INDUSTRIAL INTERNET LEARNINGS 32
28 BLACK BOX IS THE NORM 33
29 CUSTOMER EXPECTATIONS WILL NOT DRIVE THE DEVELOPMENT Customer expectations? Nonsense. No customer ever asked for the electric light, the pneumatic tire, the VCR, or the CD. All customer expectations are only what you and your competitor have led him to expect. He knows nothing else. W. Edwards Deming 35
30 MONETIZATION HURDLES EQUIPPING MACHINES WITH SENSORS PROVIDES RELATIVELY LITTLE NEW USEFUL INFORMATION OF THE MACHINE ITSELF. KNOWING HOW MACHINE IS BEING USED IS OF LITTLE USE IN TRANSACTIONAL BUSINESS MODEL. INDUSTRIAL INTERNET IS REMOTE MONITORING, WHICH HAS ALREADY BEEN AROUND FOR DECADES. INDUSTRIAL INTERNET IS A TECHNOLOGY CHALLENGE. 40
31 MONETIZATION OPPORTUNITIES (BASIC) INDUSTRIAL INTERNET IS DATA ON USE AND ITS IMPACT NOT ON EQUIPMENT OR CUSTOMER. 24/7 DATA AND RELATIONSHIP BUSINESS MODEL FIT WELL TOGETHER TRANSACTIONAL NOT SO WELL. INTELLIGENT, SENSING, AND COMMUNICABLE MACHINES ARE MORE THAN BRAIN-DEAD ZOMBIES. INDUSTRIAL INTERNET ENABLES CREATION OF NEW INFORMATION- BASED BUSINESSES. 41
32 INDUSTRIAL INTERNET CREATES VALUE IN MULTIPLE PLACES AND LAYERS CRANE OPERATOR SERVICE TECHNICIAN MANUFACTURING MANAGER SERVICE SUPERVISOR PLANT MANAGER CRANE OWNER 42
33 AND IT WILL RESPECTIVELY IMPACT ALMOST EVERY JOB IN THE COMPANY SHOP FLOOR PERSONNEL PRODUCT DEVELOPER SERVICE TECHNICIAN SALESMAN CUSTOMER SERVICE REPRESENTATIVE MANAGER 43
34 INDUSTRIAL INTERNET DATA TO KNOWLEDGE 47
35 PROVIDING MEANINGFUL DATA, NOT JUST DATA Your crane did 28 starts and stops today, moved 427 meters, and lifted 87,3 tons. You consumed wearable parts in your crane for 201 minutes. Your hoisting brake has less than 10% of its expected life remaining. Based on present usage, you have less than 2 weeks before the brake needs to be changed. Konecranes service technician will change your brake next week Friday, when you have a scheduled production break. By training your operators on 2nd shift not to use emergency brake for operations, you could extend your crane life by 30% Konecranes Plc. All rights reserved.
36 COMBINING BIG DATA WITH RELIABILITY ANALYSIS AND SIMULATIONS ENHANCES PREDICTIVITY FURTHER. 49
37 ALGORITHM SOFTWARE UPDATES IMPROVE ALREADY INSTALLED PRODUCTS 52
38 INDUSTRIAL INTERNET - ECOSYSTEMS 53
39 WHAT IS A HACKATHON? Hackathon (hack-marathon) is an intense, time constrained, open programming event First Industrial Internet Hackathon event ever was organized by Konecranes Arranged in Hyvinkää, groups, 40 participants (mostly start-ups) Access to one Smarton and two Smart CXT s 48 hours time 54
40 INDUSTRIAL INTERNET - FUTURE 60
41 WE RE ONLY TAKING THE FIRST STEPS We need to empower computers with their own means of gathering information, so they can see, hear and smell the world for themselves, in all its random glory. RFID and sensor technology enable computers to observe, identify and understand the world without the limitations of human-entered data. Kevin Ashton, Internet of Things 61
42 AND WE HAVE NOT YET EVEN TOUCHED THE REAL IOT 62
43 NOT JUST LIFTING THINGS, BUT ENTIRE BUSINESSES 63
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