What is Industrial IoT?

The Industrial IoT, or IIoT, connects machines, computers, people and processes to enable intelligent industrial operations and transformative business outcomes. Initially, IIoT was commonly used in the context of manufacturing and smart factories (Industry 4.0). However, today the term IIoT has become much more pervasive and encompasses digitization in every industry sector, such as transportation, energy, manufacturing, oil and gas, healthcare and building automation.

IIoT also is interchangeably referred to as the Industrial Internet, a term originally coined by General Electric (GE). GE defines the Industrial Internet as “the convergence of the global industrial system with the power of advanced computing, analytics, low-cost sensing and new levels of connectivity permitted by the Internet.”

Just like the Internet, in many contexts, the IIoT is seen as a connectivity enabler. The IIoT combines the benefits of intelligent machines and devices, enterprise big data and advanced analytics to create systems that can monitor, collect, exchange, analyze and deliver valuable new insights. These insights can then help drive smarter, faster decisions for businesses.

How Industrial IoT differs from IoT

The Internet of Things (IIoT) is a pervasive concept for connected, intelligent products and services. IIoT includes and commonly gets associated with smart, personal wearables, along with ingestibles and home controls, such as smart thermostats, health and fitness monitors, smart watches and refrigerators. In that sense, the Industrial IoT is a subset of the IoT. The IIoT includes products and services specific to large-scale industrial applications, such as fleet management, smart power grids, asset tracking system across industrial sites and much more.

Thus, unlike consumer IoT products, the IIoT involves business critical systems and operations, where both the opportunities and risks are significantly higher. For example, the IIoT envisions operators to use machine data to optimize productivity or to detect a failure before it occurs. This can potentially save companies millions of dollars a year. In the event of system failures and unplanned downtime, the stakes are significant, as these events can result in life-threatening or high-risk situations. Whereas consumer appliances provide conveniences, but the risks associated with these products are much less.

How Industrial IoT Works

The Industrial IoT is all about the convergence of open standard-based information technologies (IT) with industrial operations (IO). The IIoT digitally transforms industrial operations by adding intelligence and IP-based connectivity to remote field devices, sensors, actuators and machines. The IIoT converges technical advancements in multiple areas, namely:

  • Innovations in network connectivity (low energy wireless, edge and cloud technologies)
  • Low-cost sensing, computing, and storage
  • Machine-to-machine (M2M) communications
  • AI/Machine learning for advanced data analytics and
  • Automation technologies which have existed in the industry for many years

Consider the example of an IIoT-enabled manufacturing unit where the factory assets are equipped with intelligent sensors. These sensors generate data related to asset location, performance, temperature and operational status. While some of this data is useful to generate immediate control signals, much of this machine big data can be used by business applications to generate insights on asset performance, usage, productivity and more. To gain these insights, the data is transported to computing platforms, either located on-premise or in the cloud using an IoT gateway. These IoT platforms process and analyze the machine data to generate business insights on asset allocation, predictive maintenance, and asset performance.

Thus, the essential functional building blocks of IIoT include:


Raw data from sensor and machines are ingested, typically using an IoT gateway. The IoT gateway is typically located at the edge of the industrial site and referred to as an edge device.


Data passes over secured communication channels, which may be Wi-Fi, cellular, mesh radio, satell3ite or fixed line.


The data from various devices are stored and processed most commonly in the cloud.


The data is processed and analyzed so that insights can be extracted and presented.


Based on these insights, alerts are sent to people, enterprise systems, or IoT devices for action.


IoT data is exchanged with other systems, monetizing it and enriching it with third-party data.

Exhibit 1

How big is Industrial IoT?

The industrial IoT is an expanding field of research, Trends, and Innovations in Industrial IoT Technology innovations, and investments. Many businesses have already adopted and benefitted from the convergence of information and operational disciplines by improving productivity, process automation and time-to-market. The falling prices of sensors combined with much-improved communication and computer technologies have reduced the overall cost associated with data collection analytics. These factors are driving investments and the growth of the IIoT market. A recent study found the global size of the IIoT market was valued at approximately USD $145.81 billion in 2017 and is expected to reach approximately USD $232.15 billion by 2023, growing at a CAGR of around 8.06% between 2018 and 2023.

Benefits of Industrial IoT

The Industrial IoT promises to transform How IoT Devices are Changing Business Operations Worldwide not just industrial companies, but our economies and societies at large. The opportunities that the IIoT unfolds are massive in scale and often designated as the fourth industrial revolution. The convergence of the information and operational technologies enables better ways to collect and analyze data, to make better business decisions and to create better outcomes.

Lower operational cost

The most compelling incentive that is driving industries to adopt IIoT solutions is the reduction in operational expenses. Using IIoT, enterprises can remotely monitor, and control operations based on real-time data. Remote monitoring, coupled with data analytics capabilities, enable early fault detection and, thus, reduce the associated time and costs of addressing the problem. When the industrial sites are geographically distributed, centralized remote operations management optimizes resource utilization and eliminates the need to dispatch personnel onsite. This saves both time and money. The associated operational cost reduction on an annual basis can make a significant improvement to the bottom line.

Improve asset management

IIoT enables suppliers, manufacturers and customers to remotely manage asset location, condition, and performance in real-time. Asset performance management is crucial to an asset’s lifetime and operational efficiency. The ability to track the location, status and condition of products throughout the supply chain improves predictability and reduces delays. If the goods are damaged or at risk of being damaged, the system can instantly alert the stakeholders who can then take remedial actions. The performance of operational equipment can be improved using IIoT sensors, which can monitor vibrations, temperature and other factors that might lead to operating conditions that are less than optimal.

Reduce production downtime

In production facilities, unscheduled downtime has been the main reason for lost productivity and revenue loss. According to a study by analyst firm Aberdeen Research, unplanned downtime can cost a company as much as $260,000 an hour. Critical asset failures largely contribute to these unplanned shutdowns. Finding effective ways to predict and prevent asset failures on the factory floor has always been a challenge. The IIoT connects information sources and draws insights from their actionable data. Based on real-time analytics of machine data, manufacturers can gain prescriptive and predictive insights for early fault detection and, subsequently, minimize unplanned downtime, enhance asset performance and improve profitability.

Improve customer satisfaction

Connected products allow product manufacturers and OEMs to capture and analyze operational data. Insights from real-world data help businesses to improve their products, services, operations and profits. In a marketplace driven by product customization, faster delivery and better experiences, it is no longer enough to only collect user data. Businesses must find efficient ways to consume the data to make agile decisions which closely align with the customer needs. The IIoT provides an opportunity to leverage big data analytics and data visualization to provide insights as user journeys interact with IoT enabled assets and environments.

Accelerate business growth

The IIoT enables more visibility and control in business operations. Businesses can improve operational efficiency, optimize processes and people utilization, speed decision-making and take advantage of opportunities as soon as they arise. Cloud-based IoT solutions are transforming standalone products into platforms. This enables enterprises to deliver tangible value and superior outcomes. Product development companies across industry verticals are on the precipice of a transformational shift in business models by leveraging this unique IIoT advantage.

Instead of selling standalone products with after-sales services, there is a shift to offering “value-in-use” or product-as-a-service. This is a significant shift to secure after-sales revenue. An IDC report predicts by the end of 2018, 40% of top 100 discrete manufacturers and 20% of the top 100 process manufacturers will provide product-as-a-service platforms.

Improve safety, reduce risk

IoT can help keep employees safe, especially those working alone in hazardous areas. For example, IoT-enabled cameras in truck cabs can watch for problems, such as a potential collision between vehicles and raise the alarm to mobilize emergency response and action. Wearable devices can sense environmental factors – such as temperature, levels of toxic gasses or prolonged periods of inactivity – and identify when a worker has had an accident or is in imminent danger. Intelligent machines and robots can replace the human workforce in hazardous conditions and thus reduce risk to human lives.

Protect remote assets

The IIoT offers new ways to protect valuable and sensitive inventory, equipment and plant machinery, particularly for remote sites or large areas. Connected alarms, door locks, motion sensors and tracking devices can help staff detect threats remotely. When a threat is identified, they can automatically activate cameras, isolation doors and other countermeasures, and notify emergency services. Should an item be stolen, M2M connectivity can help find and recover it.

Applications of Industrial IoT

The buzz about the industrial IoT is due to its wide applicability across every industrial sector and in a diverse variety of use cases. Unlike consumer IoT, IIoT use cases involve large-scale deployments and thus the realized benefits can be massive for companies.

Increase Asset Reliability

GE Digital has built the Predix Asset Management Platform in which the software connects streams of machine data to powerful analytics and people. Industrial companies can use these valuable insights to manage assets and operations more efficiently. For example, by using advanced analytics to predict events before they occur, the reliability and availability of assets are increased. It also helps to optimize maintenance costs, mitigate operational risks and reduce the total cost of ownership (TCO).

Improve safety and productivity

Commercial jetliner maker Airbus had launched its “factory of the future” digital manufacturing initiative to streamline operations and boost production. Airbus equipped its machines and tools in the factory floor with sensors that can provide real-time insights on asset performance and aid in predictive maintenance to avoid unwanted downtime. Airbus also outfitted its employees with wearables such as industrial smart glasses to cut down errors and to enhance workplace safety.

Cutting energy use

Charlotte, N.C. aimed to make the city the most sustainable urban core in the nation, targeting 20% energy reduction within five years by integrating data from 61 commercial buildings covering water, security, lights, and legacy systems and connecting to the Smart Grid. In the first two years, the city has already achieved reductions in total energy costs of 8.4%, equal to $10M in savings. Greenhouse gas emissions have decreased by 20% or 220,000 metric tons.

Security and Privacy Concerns of Industrial IoT

The IIoT calls for convergence of plant operations with IT technologies, introduction of cloud-based device and data management which collectively increases cyber-risks. While many businesses are still struggling to adequately secure traditional devices such as PCs and phone networks, adding connected sensors and beacons adds to the headache. The high volume of IoT data, and the possibility of this data to cross multiple organizational boundaries only further the security risks.

While embracing the IIoT, care must be exercised to ensure data collection strictly adheres to the privacy rights of employees, partners, suppliers and customers. Any regional and international regulations such as the GDPR should be enforced. Companies planning to monitor, and track employee movement and behavior must do so only after conferring with counsel about the current laws on data privacy, overtime requirements and so on. There are however enough control mechanisms and technologies available to secure the IIoT processes and to ensure safety and reliability. Before launching any new IIoT initiative, it is important to work with a provider that understands these risks and can help mitigate them.

Future of Industrial IoT

Manufacturers are increasingly leveraging IIoT solutions to enhance their analytics, consolidate their control rooms and to track and manage assets. The managed IIoT services industry also is set for steady growth due to its relevance in every layer of the IIoT ecosystem.

Improvements in low-power hardware devices, cloud integration, big data analytics, robotics, and smart sensors are driving IIoT market growth. A few factors, such as security and privacy concerns, lack of proper standardization and slow migration from legacy industrial gear are anticipated to deter global IIoT growth. However, with growing awareness of security and digital technologies among enterprises worldwide, IIoT is poised to be the future of the connected world.