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MBA Thesis-IoT-DeepakShivduttKANDPAL

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MBA Thesis-IoT-DeepakShivduttKANDPAL

  1. 1. We reserve all rights in this document and in the information contained therein. Reproduction, use or disclosure to third parties without express authority is strictly forbidden.  Audencia Nantes School of Management, France Based on External doc. no. Author Deepak Shivdutt KANDPAL Project IoT for Industrial Automation Approver Dr. Jonathan SEDDON Doc. kind Thesis Status Approved Title MBA Thesis Resp. dept. IS Management Classification Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 1 MBA Thesis en - No. of p. 76 FILE:MBA Thesis-IoT-DeepakShivduttKANDPAL.docx; SAVEDATE:09/02/2015 23:11 TITLE PAGE Smart & Sustainable World using Internet of Things (IoT) for Industrial Automation Dr. Jonathan SEDDON Submitted by Deepak Shivdutt KANDPAL (MBA in Responsible Management 2014-2015)
  2. 2. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 2 MBA Thesis en - No. of p. 76 ACKNOWLEDGEMENTS I wish to sincerely thank my supervisor Dr. Jonathan Seddon, for his guidance and support during the tenure of this course, besides giving me the liberty to pursue my ideas. I wish to express my sincere gratitude to Mr. Ratna Kanth Dittakavi, ABB & Mr. Swatej Marathe, ALSTOM, who have been a source of constant inspiration and immense encouragement throughout the MBA course. I also wish to thank to my colleagues Dr. Sridhar Iyer and Mr. Vignesh Valavane and my brother, Mr. Mahesh Kandpal, for their comments and suggestions during the concept development of this dissertation subject. Finally, I wish to express my words of appreciation for my wife Neena and my parents Shivdutt and Beena, who have been my pillars of strength and sources of unlimited support and encouragement. Last but not the least, I thank my lovely daughter’s Drishti & Nishka, who showed a lot of understanding, patience and supported their father in his long cherished desire and dream, to pursue and complete the Master of Business Administration course in Responsible Management.
  3. 3. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 3 MBA Thesis en - No. of p. 76 TABLE OF CONTENTS TITLE PAGE.......................................................................................................................................................1 ACKNOWLEDGEMENTS....................................................................................................................................2 1.0 ABSTRACT..............................................................................................................................................5 2.0 INTRODUCTION .....................................................................................................................................6 2.1 INTERNET OF THINGS (IOT)..............................................................................................................................7 2.2 INDUSTRIAL AUTOMATION.............................................................................................................................14 3.0 LITERATURE REVIEW............................................................................................................................17 3.1 HISTORY OF IOT, SERVICES AND ARCHITECTURES...............................................................................................19 3.2 INTERNET OF EVERYTHING AND IOE VALUE INDEX ............................................................................................21 3.3 EVOLUTION OF HUMANS, INTERNET AND IOT..................................................................................................25 3.4 OVERCOMING IOT CHALLENGES USING METCALFE’S LAW....................................................................................28 3.5 INDUSTRIAL AUTOMATION INDUSTRY DEPLOYING IOT ........................................................................................31 3.6 BENEFITS OF INDUSTRIAL IOT........................................................................................................................37 3.7 IOT OR I²OT AS AUTOMATION INVESTMENT OPPORTUNITY................................................................................38 3.8 SECURITY & CREATING VALUE IN THE IOT WORLD.............................................................................................40 4.0 PURPOSE OF THE RESEARCH................................................................................................................42 4.1 RESEARCH OBJECTIVES ..................................................................................................................................42 4.2 RESEARCH QUESTIONS ..................................................................................................................................43 5.0 RESEARCH METHODOLOGY AND DESIGN ............................................................................................44 6.0 BUSINESS PLAN FOR IOT......................................................................................................................45 6.1 INDIA STRATEGY AND MARKETING ...................................................................................................................48 6.1.1 India Market Review .......................................................................................................................48 6.1.2 Target Market Segment Strategy....................................................................................................50 6.1.3 Competition and Buying Patterns ...................................................................................................51 6.2 INDIA VALUE CHAIN AND SALES.......................................................................................................................52 6.2.1 Competitive Advantage...................................................................................................................52 6.2.2 Sales Forecast..................................................................................................................................52 6.2.3 Milestones.......................................................................................................................................53 6.3 INDIA FINANCE AND ACCOUNTING...................................................................................................................53 6.3.1 Start-up Funding..............................................................................................................................54 6.3.2 Projected Profit and Loss.................................................................................................................55 6.4 MANAGEMENT AND TEAM.............................................................................................................................56 6.5 ASSUMPTIONS AND RISKS ..............................................................................................................................57 7.0 SUMMARY OF RESULTS AND ANALYSIS ...............................................................................................58 8.0 CONCLUSION .......................................................................................................................................68 9.0 LIMITATIONS AND FURTHER RESEARCH ..............................................................................................70 10.0 APPENDIX ........................................................................................................................................71 LEGAL PAGE ...................................................................................................................................................74 11.0 BIBLIOGRAPHY.................................................................................................................................75
  4. 4. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 4 MBA Thesis en - No. of p. 76 TABLE OF FIGURES FIGURE 2-1: INTERNET OF EVERYTHING: IOT VISION 2020 (SOURCE: IDC) ............................................................................7 FIGURE 2-2: IOT VIEWED AS A NETWORK OF NETWORKS (SOURCE: CISCO IBSG) .....................................................................8 FIGURE 2-3: BILLIONS OF INTERNET-CONNECTED DEVICES (SOURCE: MIT TECHNOLOGY REVIEW)............................................10 FIGURE 2-4: THE DIGITAL UNIVERSE IN 2020 (SOURCE: IDC 2012)...................................................................................11 FIGURE 2-5: IOT VISION WITH HUGE ECONOMIC POTENTIAL (SOURCE: EIU).........................................................................12 FIGURE 2-6: M2M-MARKET SHARE WORLDWIDE 2013 (SOURCE: GSMA)........................................................................13 FIGURE 3-1: A SMART & SUSTAINABLE WORLD (SOURCE: LIBELIUM)..................................................................................18 FIGURE 3-2: FROM INTERNET TO IOT (SOURCE: SIEMENS) ................................................................................................20 FIGURE 3-3: IOT: INTELLIGENT SYSTEMS FRAMEWORK (SOURCE: INTEL)..............................................................................21 FIGURE 3-4: INTERNET OF EVERYTHING VALUE INDEX (SOURCE: CISCO)...............................................................................22 FIGURE 3-5: THE IOT WAS “BORN” BETWEEN 2008 & 2009 (SOURCE: CISCO IBSG)............................................................23 FIGURE 3-6: FIRMS IN COUNTRIES REALIZING IOE VALUE ..................................................................................................24 FIGURE 3-7: IT-DRIVEN INDUSTRIES REALIZING GREATEST IOE VALUE..................................................................................25 FIGURE 3-8: DIKW MODEL (SOURCE: CISCO) ................................................................................................................26 FIGURE 3-9: METCALFE’S LAW DEPICTING VALUE OF NETWORK=N²...................................................................................28 FIGURE 3-10: ZIGBEE PROTOCOL OSI MODEL................................................................................................................29 FIGURE 3-11: ZIGBEE NETWORK..................................................................................................................................30 FIGURE 3-12: IOT MATURITY MODEL (IOTMM) ............................................................................................................36 FIGURE 3-13: THE IT AND OT CONVERGENCE (SOURCE: SAP & OSISOFT) ..........................................................................41 FIGURE 6-1: PRODUCTS & SERVICES FOR IOT .................................................................................................................46 FIGURE 6-2: DST CLOUD OFFERING FOR IOT..................................................................................................................46 FIGURE 6-3: EMS SOLUTION FOR IOT BY DST................................................................................................................47 FIGURE 6-4: WMS SOLUTION FOR IOT BY DST ..............................................................................................................47 FIGURE 6-5: DCM SOLUTION FOR IOT BY DST ...............................................................................................................48 FIGURE 6-6: B2B SEGMENTATION DIMENSIONS..............................................................................................................50 FIGURE 6-7: MANAGEMENT TEAM & ORGANIZATIONAL STRUCTURE FOR IOT.......................................................................56 FIGURE 9-1: EMS SOLUTION WIRELESS ARCHITECTURE....................................................................................................73 FIGURE 9-2: WMS SOLUTION WIRELESS ARCHITECTURE ..................................................................................................73
  5. 5. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 5 MBA Thesis en - No. of p. 76 1.0 ABSTRACT This research is on how Internet of Things (IoT) & Industrial Internet of Things (I²oT) is bringing changes to the value chain and impacting Industrial Automation organizations to make a smart and sustainable world which is connected using technologies like IPv6, Cloud Computing, Fog Computing, Big Data and Big Data Analytics. The main focus is how these responsible organizations are making their business plan for IoT for saving time, money and supporting business intelligence efforts to have quality control, sustainable and green practices, supply chain traceability and overall supply chain efficiency. The aim of this study is to identify the different transitions required for triple bottom line i.e., People, Process and Technology using IoT in light of the Corporation 2020 mechanisms and Sustainable Development for building a smart and interconnected world. This empirical study is an exploratory research and has a qualitative approach with two sources of data: semi-structured interviews that deliver the primary data, mainly opinions from managers in different positions in the interviewed organizations. The interviewees are mostly Product/Project Managers, Directors and CEOs. In addition, a second source of data is from a survey answered by employees in the organizations, some of them in a position of Project/Department Manager. To gather employees opinion, it is very important to identify how the organization is engaging their employees in the IoT mission, vision and goals through the various programs/projects as one of the major stakeholders. The research findings: Almost, all the interviewed organizations are having or are willing to have an IoT mission, vision and goals. However, not all organizations can afford implementing the IoT Programs/Projects that require huge investments. Most of the organizations are ready to get integrated with other organizations for open interoperability standards, security and the development of common architectures so that these smart machines are better than humans at accurately, consistently capturing and communicating data which will enable organizations to pick up on inefficiencies faster.
  6. 6. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 6 MBA Thesis en - No. of p. 76 2.0 INTRODUCTION It is not surprising today that IoT has become the next major bubble in the Information and Communications Technology (ICT) industry as well as other industries like Industrial Automation. This has led to major corporations like Google, Microsoft, Amazon, Oracle, Cisco, Silicon Labs as well as Infosys, Accenture, Wipro, HCL, TCS to develop blue ocean strategy { (Kim & Mauborgne 2004), (Chan Kim & Mauborgne 2009) } for catering different types of customers. Not far behind are major industrial automation capital equipment suppliers (such as GE, Honeywell, ABB, Emerson Process Management, Siemens, Rockwell Automation, ALSTOM & Mitsubishi Electric) who will define a clear global strategy, marketing and deployment for IoT. In the current context for Industrial Automation industry, smart and sustainable solutions are required using IoT concepts and technology like Cloud Computing { (Rawal 2011), (Jain & Gupta 2012), (Mastelic et al. 2015) } and Big Data { (Banerjee et al. 2013), (Moorthy et al. 2015) } as there are various issues faced by Industrial Automation suppliers and customers. The issues faced are not only limited to improving performance and efficiency for customers but also reduce cost for suppliers by creating more affordable system architectures which are responsive, effective and sustainable. Before we try to understand how IoT will impact Industrial Automation industry to make smart and sustainable cities, we need to understand the definition, the policies and technology priorities. These were discussed in the seminar hosted by Qualcomm in London on 27th January, 2015 as described in the IERC website events which is the European Research Cluster on the IoT. There are many events like this which will bring focus on the policies in most of the countries in European Union, India & USA. The definition of, IoT (sometimes called Machine-to-Machine or M2M) is that it represents the connectivity of objects (Ashton 2013) that are tagged and identified, so that these objects—each with its own ‘fingerprint’—can communicate with one another. IoT was
  7. 7. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 7 MBA Thesis en - No. of p. 76 introduced by British technology pioneer Kevin Ashton in 1999 and popularized by testing at the Massachusetts Institute of Technology in the early 2000’s. Internet of Everything (IoE) industry based on IoT Vision 2020 by IDC as shown in Figure 2-1 below have researched and calculated 4 Billion connected people, $4 Trillion in revenue opportunity, more than 25 Million apps and 25 Billion embedded & intelligent systems with 50 Trillion GBs of data. Andrew Saunders (2014) has described IoE using web-enabled sensors embedded in physical objects for People-to-Machine (P2M) & People-to-People (P2P) technologies. Based on Global e-Sustainability Initiative (GeSI) SMARTer 2020 report as well as WWF Living Planet report, rising energy as well as water consumption for enterprises like hospitals, residential buildings, malls & businesses need to be reduced by 50% by end of 2020 using M2M technology. Figure 2-1: Internet of Everything: IoT Vision 2020 (Source: IDC) 2.1 INTERNET OF THINGS (IOT) As described by Ovidiu Vermesan & Peter Friess (2013), IoT is a concept and a paradigm that considers pervasive presence in the environment of a variety of things/objects through
  8. 8. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 8 MBA Thesis en - No. of p. 76 wireless and wired connections and unique addressing schemes. These things/objects are able to interact with each other and cooperate with other things/objects to create new applications/services and reach common goals. In this context, the research and development challenges to create a smart world are enormous. A world where the real (analog), digital and the virtual are converging to create smart environments that make energy, transport, cities and many other areas more intelligent. IoT refers to the interconnection of uniquely identifiable embedded computing-like devices within the existing Internet infrastructure. Typically, IoT is expected to offer advanced connectivity of devices, systems, and services that goes beyond M2M communications and covers a variety of protocols, domains, and applications as shown in Figure 2-2 below as researched by Cisco IBSG team. Figure 2-2: IoT viewed as a network of networks (Source: Cisco IBSG) One example is with, Environmental sensing projects, run by individuals and community groups, can measure factors in the local environment such as water quality monitoring, weather conditions, and pollution data. Another is Car parking, which is one of many industries that can benefit from huge cost savings by automating their services with the help
  9. 9. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 9 MBA Thesis en - No. of p. 76 of IoT. Car parks have cameras, motion sensors and gates. Often these cameras have a built in license plate recognition system. Finally, Connected buildings promise us a future where the environment not only responds to our needs but also saves energy by turning off lights and the heating down when the building is unoccupied. The important topics covered by Vermesan & Friess for IoT which are issues, changes, challenges and obstacles that need to be tackled by all stakeholders are listed below: a) Research & Innovation b) Market Deployment c) Identification d) Standardization e) Semantics f) Interoperability g) Governance h) Privacy i) Security These topics will be detailed in the Literature review as well as Research objectives and questions sections based on the various academic articles, interviews, publications, seminars and webinars. Siemens in its forecasts and facts (Karczewski 2014) has predicted that by year 2020, 26 billion objects/devices will be connected through internet which is in accordance with the business consultancy firm Gartner. By adding laptops, PCs, and smartphones, which will number around 7 billion by 2020, Gartner arrives at 33 billion objects/devices. This number is also foreseen by market research and consulting firm International Data Corporation who have estimated that 32 billion objects/devices will be connected to the Internet by 2020, and that these will produce 10% of all the data generated
  10. 10. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 10 MBA Thesis en - No. of p. 76 worldwide. A recent study by MIT Technology Review anticipates 28 billion Internet- connected things as shown in Figure 2-3 below. Figure 2-3: Billions of Internet-Connected Devices (Source: MIT Technology Review) Whether it's 26, 28, 32, or 33 billion – as the number of networked devices and sensors increases, they will create an ever-growing, unprecedented flow of data which will have to be collected, analyzed, and stored as shown in Figure 2-4 below.
  11. 11. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 11 MBA Thesis en - No. of p. 76 Figure 2-4: The Digital Universe in 2020 (Source: IDC 2012) This will require huge investments and defining standards, security and integration of organizations. Based on the study conducted by Booz & Company, an international strategy consultancy which came out with 2013 “Global Information Technology Report”, by studying the economic and social effects of digitization on a country’s gross domestic product (GDP) showed a 10% increase in a country’s digitization rate leads to a 0.75 % higher GDP per capita and a 1.02 % lower unemployment rate. "This wealth can either be concentrated in the hands of a few, or it can create opportunities for billions of people," says Erik Brynjolfsson, a professor of management and information systems at the Massachusetts Institute of Technology (MIT). So, the IoT is thus a vision of the future with vast economic
  12. 12. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 12 MBA Thesis en - No. of p. 76 potential as shown in Figure 2-5 below. According to Gartner, it will generate an added value of $1.9 trillion across a number of sectors by 2020 and IDC predicts earnings of $8.9 trillion. Figure 2-5: IoT Vision with huge economic potential (Source: EIU) Asian countries are playing a leading role for IoT M2M communication as can be seen in the Figure 2-6 below with more than 50 million connections, according to the GSM Association, the global trade group of GSM mobile network operators.
  13. 13. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 13 MBA Thesis en - No. of p. 76 Figure 2-6: M2M-Market Share Worldwide 2013 (Source: GSMA) China is leading the Asian countries together with India as it is planning to invest 5 billion RMB (about €606 million) in the IoT industry by 2015. China has set up the Chengdu Internet of Things Technology Institute in Sichuan Province, which is developing a "healthcare capsule" where the village residents will be able to step into a telephone-booth- sized capsule and obtain a diagnosis and a prescription from a doctor located in a distant hospital. Gartner expects manufacturing, healthcare, and insurance industries to profit the most from the IoT because they will have a precise overview of their inventory and the intake and depletion of raw materials and components at all times, and will be able to react quickly to changes in the market and in customer preferences. Consulting company Deloitte & Touche estimates that the smart home market which is connected to the Internet and centrally controlled and monitored will have a sales volume of €4.1 billion by 2017 in Europe alone.
  14. 14. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 14 MBA Thesis en - No. of p. 76 The following top 10 benefits of IoT as defined by Microsoft Corporation below will be used to build the business plan & strategy for new and existing organizations: 1. Start with your things. (Line-of-business assets and the data they produce, your Cloud Services, and your Business intelligence tools) 2. Get more out of your existing assets. (Employees and Customers) 3. Make small changes, see a big impact. 4. Improve efficiency. 5. Connect any asset. 6. Enable innovation. 7. Increase agility. 8. Build the ability to scale. 9. Transform your business. 10. Choose an enterprise-proven IoT partner. 2.2 INDUSTRIAL AUTOMATION Industrial Automation equipment suppliers have been thriving for more than 55 years now with customers from both Process Automation and Power Automation plants. Current Industrial Automation systems architecture for Programmable Logic Controller (PLC), Supervisory Controlled and Data Acquisition (SCADA), Manufacturing Execution System (MES) and Distributed Control System (DCS) require Ethernet communication at each level. A commonly used architecture model to define Manufacturing Operations Management is the five level Purdue Reference Model (PRM), which later formed the basis for the ISA-95 standard. The model is typically expressed as:  Level 5 - Business Systems
  15. 15. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 15 MBA Thesis en - No. of p. 76  Level 4 - Plant Level (ERP, MRP, and MES)  Level 3 - Operation Unit Level  Level 2 - Machine/Process Automation Level  Level 1 - Controller Level  Level 0 - Sensor/Actuator Level Existing automation systems generally reflect this architecture with software running on general purpose computers at levels 2, 3, 4, and 5. Levels 2, 3 and 4 typically have database and communications interfaces that buffer and synchronize information between each level in addition to associated HMI and user interfaces. Early minicomputers were used in the control of industrial processes since the beginning of the 1960s. The IBM 1800, for example, was an early computer that had input/output hardware to gather process signals in a plant for conversion from field contact levels (for digital points) and analog signals to the digital domain. The DCS was introduced in 1975. Both Honeywell and Japanese electrical engineering firm Yokogawa introduced their own independently produced DCSs at roughly the same time, with the TDC 2000 and CENTUM systems, respectively. US-based Bristol also introduced their UCS 3000 universal controller in 1975. In 1980, Bailey (now part of ABB) introduced the NETWORK 90 system. Also in 1980, Fischer & Porter Company (now also part of ABB) introduced DCI-4000 (DCI stands for Distributed Control Instrumentation). The DCS comprise of many real time ‘Intelligent’ devices, Systems (nodes) and Process Controllers that seamlessly interact with each other based on standardized communication protocols. These protocols are implemented over standard Ethernet based networks and Wireless networks. The DCS provides precise protection, monitoring, measurement and control of their process equipment and systems with a very high degree of system reliability and availability. The last decade has seen a huge convergence of Digital communication;
  16. 16. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 16 MBA Thesis en - No. of p. 76 Internet based technologies and Pervasive systems in the DCS domain. More recently, advanced Network Security concepts are also being employed in DCS, largely because of the very high stakes associated with using them in Process and Power Plants. Thus, Ethernet communication has become the high speed and pervasive technology used by industrial automation protocols and business systems. More controllers are supporting multiple Ethernet ports to interact directly with industrial and business networks that exist throughout industrial plants. The Industrial Internet of Things (IIoT or I²oT) is becoming a reality with sensors and actuators embedded in physical objects - from roadways to pacemakers - and are linked through wired and wireless networks, leveraging the Internet Protocol (IP). Industrial controllers are starting to follow this trend by providing data refinement, local historians, analytics, and advanced control at the source end devices. Modern controllers are communicating with all levels of systems using the “IP plumbing” that is pervasive in manufacturing plants, including capabilities to send email, ftp files, and serving up webpages. Open communications is being supported using XML, SOAP, SNMP, and OPC Unified Architecture (UA). Thus, IoT and Industrial Automation industries have gained prominence with advances in Cloud Computing & Big Data technologies in recent years where it will be investigated how IoT will contribute to a smart and sustainable world using industrial automation using these technologies largely in India, European Union & USA. The focus will be on how IoT will be implemented using industrial automation using these technologies in retrofit and new cities to make them smart as well as how the triple bottom line i.e. People, Planet and Profit will be used to make it sustainable. Although, the main focus will be on European Union, the study will examine the effects and comparisons of the various aspects (wherever applicable) of the above in Asia Pacific (Australia & Singapore), USA and BRICS countries i.e. Brazil, Russia, India, China and Republic of South Africa as well.
  17. 17. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 17 MBA Thesis en - No. of p. 76 3.0 LITERATURE REVIEW Based on the historical perspective as detailed briefly in the introduction of IoT/IIoT or I²oT and Industrial Automation, this section will review the ideas of various researchers and authors of academic articles, interviews, publications, seminars and webinars to understand the convergence of business processes, customer experience and human behaviour for Information Technology (IT) and Operation Technology (OT) so as to create value in the organization as well as for the stakeholders. This will also give the opportunity to probe further into the ideas as well as provide more insight to develop research objectives and questions. To have a smart and sustainable world as shown in Figure 3-1 below where everything is smart needs to have a mission and vision for the following applications:  Air Pollution  Forest Fire Detection  Intelligent Shopping  Quality of Shipment Conditions  Smart Lighting  Smart Parking  Smart Roads  Smartphones Detection  Structural Health  Traffic Congestion  Vehicle Auto-diagnosis  Waste Management  Water Leakages  Water Quality  Wine Quality Enhancing
  18. 18. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 18 MBA Thesis en - No. of p. 76 Figure 3-1: A Smart & Sustainable World (Source: Libelium)
  19. 19. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 19 MBA Thesis en - No. of p. 76 There are many articles on IoT like “Industrial automation industry exploring and implementing IoT” by Bill Lydon which describes how IBM started its Smart Planet initiative in 2008 and the same year, the non-profit IP for Smart Objects (IPSO) Alliance was started with more than 50 members from technology, communications, and energy companies to promote the IP for "smart object" communications. The dissertation will mainly draw from many of these articles, structure them and analyse the results in these articles. Further, how the renewable technologies which ensure the triple bottom line or 3P’s i.e., People, Planet and Profit along with Cloud Computing from major players like Google, Microsoft, Oracle & Amazon and Data Management with Big Data (Saunders 2014) will show the importance of Responsible Management practices like Corporate Social Responsibility (CSR) (Microsoft 2015) and Sustainable Development (Gutterman et al. 2014) for the future. We will also look how the various policies and rules will be changed by the European Union to accommodate IoT as well as the other countries as mentioned previously as described by Vermesan & Friess (2014). 3.1 HISTORY OF IOT, SERVICES AND ARCHITECTURES The Siemens Future Forum presented at Hannover Messe 2014 by Guido Stephan where he has described IoT and Services based on the various approaches towards evolution of internet, market pull or technology push, hierarchical communication or vertical communication, data centric development or information centric development and various research examples and projects like Internet of Things Architecture (IoT-A) and ICeWater. Guido has described how Internet has evolved from year 1969 to 2020 from ARPANET (Research Networks), Email, Websites, Social Media, E-Commerce to Smart City and Smart Grid i.e., Internet / Web of Things as shown in Figure 3-2 below. The market pull is leading to cross-domain integration with new business models, efficient information sourcing and process optimization for big data which is supported by technology push where very cheap
  20. 20. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 20 MBA Thesis en - No. of p. 76 sensors will allow ubiquitous web access to smallest field devices. This will lead to integrated flexible M2M communication and networked embedded DCS. Figure 3-2: From Internet to IoT (Source: Siemens) The future communication will be vertical rather than horizontal considering it will be seamless across domains with unified access and service oriented architecture (SOA) which will be IP/Web based like Highway Addressable Remote Transducer Protocol (HART) IP & Profinet DP/PA rather than diverse, specific communication protocols like HART, WirelessHART, Profibus DP/PA and Foundation Fieldbus to name a few. This vertical communication architecture applies also to Smart Grid solutions for Power Plants. Thus, Guido Stephan highlights that IoT will bring about changes in the business models as well as system architectures currently followed, will be developed in the future to be data centric, information centric or a hybrid of both depending on the technology and industry application as intelligent systems framework as shown in Figure 3-3 below.
  21. 21. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 21 MBA Thesis en - No. of p. 76 Figure 3-3: IoT: Intelligent Systems Framework (Source: Intel) In addition to what Guido and Siemens has provided as a view of the IoT future for system architectures for the industrial automation DCS, in my viewpoint, Cloud Computing and Big Data will break the hierarchical communication followed as of today to a single-layered communication which is IP/Web based so that each node as well as field device can communicate seamlessly and integrate into any 3rd Party Systems. This will lead to disruption or integration of many organizations specifically capital equipment suppliers of PLC and DCS. 3.2 INTERNET OF EVERYTHING AND IOE VALUE INDEX The articles by Dave Evans (2011) from Cisco Internet Business Solutions Group (IBSG) & Joseph Bradley et al (2013) on the how IoT is changing everything and the IoE Value Index which can be assessed using the tool at http://ioeassessment.cisco.com/explore/full as well as shown in Figure 3-4 below.
  22. 22. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 22 MBA Thesis en - No. of p. 76 Figure 3-4: Internet of Everything Value Index (Source: Cisco) Dave Evans conveys that Internet has already created a huge impact on education, communication, business, science, government, and humanity so it is one of the most important and powerful creations in all of human history. There are many IoT projects in progress that promise to close the gap between poor and rich, improve distribution of the world’s resources to those who need them most, and help us understand our planet so we can be more proactive and less reactive. There are several barriers that exist which threaten to slow IoT development, including the transition to IPv6, having a common set of standards, and developing energy sources for millions—even billions—of minute sensors. In January 2009, a team of researchers in China studied Internet routing data in six-month intervals, from December 2001 to December 2006. Similar to the properties of Moore’s Law, their findings showed that the Internet doubles in size every 5.32 years. Using this figure in
  23. 23. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 23 MBA Thesis en - No. of p. 76 combination with the number of devices connected to the Internet in 2003 (500 million, as determined by Forrester Research), and the world population according to the U.S. Census Bureau, Cisco IBSG estimated the number of connected devices per person. Cisco IBSG estimates IoT was “born” sometime between 2008 and 2009 as shown in Figure 3-5 below. Figure 3-5: The IoT was “born” between 2008 & 2009 (Source: Cisco IBSG) Thus, as per Cisco IBSG estimates there will be 50 billion connected devices by year 2020 considering the factor of 6.58 connected devices per person. This is just an approximation as of today which can change drastically to a higher value as more devices are connecting to internet everyday as cows, water pipes, people, and even shoes, trees, and animals become connected to IoT, the world has the potential to become a better place based on the initiatives and advances, such as Cisco’s Planetary Skin, HP’s central nervous system for the earth (CeNSE), and smart dust. As depicted in Figure 2-2, IoT can be viewed as network of individual networks like Home, Education, Transport, Energy, Business, Earth and many Others where each network is connected together with added security, analytics and management.
  24. 24. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 24 MBA Thesis en - No. of p. 76 The IoE value index report which is the calculation of the Net Present Value (NPV) of firms for 10 year period from 2013-2022 shows that firms in developed countries like Germany and France are currently realizing the most IoE value. Germany and France combined value at stake is around $146.9 Billion but the emerging countries like BRICS are not far behind with Brazil, China and India combined value at stake being $226.5 Billion as shown in Figure 3-6 below. US Firms only have the largest value at stake being $472.9 Billion. Figure 3-6: Firms in Countries realizing IoE Value Also, IT-driven industries like high tech / telecoms are realizing the greatest share of the IoE value followed by Financial services, Services and Healthcare / Life sciences as shown in Figure 3-7 below but Manufacturing and Energy which represent the Industrial Automation industry have combined value at stake being $279.4 Billion are not far behind. Services industry has the only largest value at stake being $276.9 Billion.
  25. 25. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 25 MBA Thesis en - No. of p. 76 Figure 3-7: IT-Driven Industries realizing greatest IoE Value 3.3 EVOLUTION OF HUMANS, INTERNET AND IOT As we have seen in Figure 3-2, Internet or Web has been through four stages of evolution or development where IoT is considered as the first real evolution of the Internet—a leap that will lead to revolutionary applications that have the potential to dramatically improve the way people live, learn, work, and entertain themselves. Already, IoT has made the Internet sensory (temperature, pressure, vibration, light, moisture, stress), allowing us to become more proactive and less reactive. Also, Internet is expanding into places that until now have been unreachable like patients are ingesting Internet devices into their own bodies to help doctors diagnose and determine the causes of certain diseases and extremely small sensors can be placed on plants, animals, and geologic features, and connected to the Internet. At the other end of the spectrum, the Internet is going into space through Cisco’s Internet Routing in Space (IRIS) program.
  26. 26. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 26 MBA Thesis en - No. of p. 76 We as humans evolve because we communicate as can be seen from the Data, Information, Knowledge, and Wisdom (DIKW) model shown in Figure 3-8 below where the benefit to humanity becomes more important as we go to the top of the pyramid. Figure 3-8: DIKW Model (Source: Cisco) Humans process data which is the raw material that is processed into information. Individual data by itself is not very useful, but volumes of it can identify trends and patterns. This and other sources of information come together to form knowledge. In the simplest sense, knowledge is information of which someone is aware. Wisdom is then born from knowledge plus experience. While knowledge changes over time, wisdom is timeless, and it all begins with the acquisition of data. Thus, for Humans there is a direct correlation between the input (data) and output (wisdom). The more data that is created, the more knowledge and wisdom people can obtain. IoT dramatically increases the amount of data available for us to process. This, coupled with the Internet’s ability to communicate this data, will enable people to advance even further. Thus, IoT has become critical for human progression as the planet’s population continues to increase, making people to become stewards of the earth and its resources. In addition, people desire to live healthy, fulfilling, and comfortable lives for themselves, their families, and those they care about. By combining the ability of the next evolution of the Internet (IoT) to sense, collect, transmit, analyze, and distribute data on a massive scale with the way people process information, humanity will have the knowledge
  27. 27. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 27 MBA Thesis en - No. of p. 76 and wisdom it needs not only to survive, but to thrive in the coming months, years, decades, and centuries. One of the areas where IoT can make a significant difference is in closing the poverty gap. Dr. C.K. Prahalad { (Prahalad & Hammond 2002), (Prahalad 2005) & (Prahalad 2012) } provides some mind-boggling statics comparing Dharavi (the poorest neighborhood in Mumbai) to Warden Road (the better side of the city just blocks away). The amount people from Dharavi paying for municipal-grade water is $1.12 per cubic meter as compared to $0.03 for residents of Warden Road so the injustice is clear: the poor people of Mumbai pay 37 times more for water (a basic human necessity). The main source of the disparity is the higher cost of delivering utility services to poorer neighborhoods because of infrastructure inefficiencies, problems such as leaks, and theft. According to an article in The Wall Street Journal, “Seven years ago, more than 50 percent of the power distributed by North Delhi Power Ltd. wasn't paid for by customers. A key challenge for power companies is reducing theft by India's poor.” IoT, because of its ubiquitous sensors and connected systems, will provide authorities with more information and control in order to identify and fix these problems. This will allow utilities to operate more profitably, giving them extra incentive to improve infrastructures in poorer neighborhoods. More efficiency will also allow for lower prices, which, in turn, will encourage those taking services for free to become paying customers at the Bottom of Pyramid (BoP). As depicted in the Digital Agenda EU (Commission 2013), IoT can provide better quality of life for the surging number of elderly people as the world’s population is aging. There are approximately 1 Billion people age 65 and older who will be classified as having reached “non-working age” by the middle of the century. For example, imagine a small, wearable device that can detect a person’s vital signs and send an alert to a healthcare professional when a certain threshold has been reached, or sense when a person has fallen down and can’t get up.
  28. 28. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 28 MBA Thesis en - No. of p. 76 There are several barriers and challenges for IoT that have the potential to slow its development of which the four major ones are deployment of IPv6, power or energy for the sensors, agreement on standards and cyber security. IEEE is just one of the organizations working to solve these challenges by ensuring that IPv6 packets can be routed across different network types. While barriers and challenges exist, they are not insurmountable and given the benefits of IoT, these issues will get worked out soon. This effort will require businesses, governments, standards organizations, and academia to work together toward a common goal. Thus, in conclusion, IoT truly represents the evolution of internet so to gain acceptance among the general populace, service providers and others it must deliver applications that bring tangible value to peoples’ lives using the DIKW Model. 3.4 OVERCOMING IOT CHALLENGES USING METCALFE’S LAW Silicon Laboratories Inc. is bringing IoT to life by overcoming the challenges for connecting Intelligent Nodes using Metcalfe’s Law as shown in Figure 3-9 below. Figure 3-9: Metcalfe’s Law depicting Value of Network=N² According to Metcalfe’s Law, the value of a network is equal to the square of the number of devices connected to it. At the edge of the IoT are the appliances and equipment interconnected across an infrastructure or backbone using combinations of ZigBee, sub-
  29. 29. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 29 MBA Thesis en - No. of p. 76 GHz, Wi-Fi or power line communications (PLC) connectivity to provide a robust bidirectional communications link with relatively long range, low latency for fast responsiveness, low power and a sufficient data rate to aggregate information from many connected devices. This infrastructure also serves as the gateway to the Internet and enables remote monitoring and control of devices by other networks, utility companies and end users. The majority of connected devices in the IoT are nodes located at the so-called “last inch” of the network. These nodes contain microcontrollers (MCUs), wireless devices, sensors and actuators that provide the brains, eyes and fingers of the IoT. The ZigBee is an open global wireless protocol standard that addresses the needs of low- cost, low-power networks that connect IoT devices such as home automation; (automating functions like opening doors, garage openers, water sprinklers, etc.); environment control like temperature; controlling traffic; and other IoT devices and not just home automation. The range is around 10 to 100 meters and a ZigBee network can support 1000's of end devices. Technically speaking the ZigBee standard operates on IEEE 802.15.4 (physical and MAC layers) physical radio specification and operates in unlicensed bands 2.4GHZ, 900MHZ and 868MHZ as shown in Figure 3-10 below. Figure 3-10: ZigBee Protocol OSI Model The ZigBee components are Coordinator, Router and End device which are connected in a mesh or a star network as shown in Figure 3-11 below. The coordinator which is installed first as well as the routers which join the ZigBee network next are always up and the end
  30. 30. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 30 MBA Thesis en - No. of p. 76 devices (bulbs, thermostats, etc.) that join later are usually battery operated can stay up or down. Figure 3-11: ZigBee Network The ZigBee protocol has been created and ratified by member companies belonging to the ZigBee alliance (http://www.zigbee.org/zigbeealliance/our-members/) consisting of more than 300 leading semiconductor manufacturers; technology companies; service providers; and OEMs. ZigBee being an open standard, the adoption will be slow and vendors add their own special tweaks. XBee is a special kind of ZigBee manufactured by Digi International (Refer www.digi.com). The benefits to the users is through:  Higher Efficiency  Proactive Usage  Proactive Maintenance  Single Control Interface  Ease-of-Use Thus, IoT enables electronic component suppliers, software vendors, OEMs and service providers to focus on their core competencies and leverage the strengths of partnership to create compelling applications for consumers using ZigBee, 6LoWPAN and Sub-GHz protocols. Thus, employing a mesh topology is ideal for many IoT applications as Bluetooth
  31. 31. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 31 MBA Thesis en - No. of p. 76 is limited to just seven devices on a network and Wi-Fi to 32. It is better to use Silicon Labs EmberZNet PRO protocol stack provides a ZigBee-compliant software solution for IoT applications as it can be extended to interconnect 100’s or potentially 1000’s of devices on a single network. Real innovation will occur in software technology where ZigBee standard profiles, such as ZigBee Smart Energy, ZigBee Home Automation, ZigBee Building Automation and ZigBee Light Link, provide interoperable platforms that simplify the development of IoT applications for smart homes and commercial buildings, intelligent lighting control systems, smart meters and in-home energy monitoring systems. This is possible with Interoperability through Standard Protocols, Achieving Ultra-Low Power Efficiency, Accelerated Software & Application Design and finally, Faster Time-to-Market for IoT Applications. The IoT will continue to open new markets and drive new applications and opportunities for OEMs and application developers across all industries. IoT has become a tangible reality with commercially successful deployments in several markets, including connected home and green energy applications. What many OEMs and their suppliers want to know is when the IoT is going to grow out of its infancy and achieve the critical mass necessary to become a 10 M+ unit market. With the availability of the fundamental technologies, products, software and tools necessary to create efficient, ultra-low power devices for the last inch, it is clear the answer is now. 3.5 INDUSTRIAL AUTOMATION INDUSTRY DEPLOYING IOT In the article by Bill Lydon, he has described how Industrial Automation industry is exploring and implementing the IoT Vision which is a massively instrumented world of intelligent sensors (analog and digital) and actuators (analog and digital) communicating using IP to improve performance and efficiency. Industrial automation has a history of adopting commercial technology as it becomes mainstream, and applying IoT technologies to improve performance and enable better integration with business systems is a logical step.
  32. 32. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 32 MBA Thesis en - No. of p. 76 IoT applied to Industrial Automation will use this technology to streamline, collapse, and create system architectures that are more affordable, responsive, and effective. The goal is to have frictionless communications and interaction from manufacturing field input/output (I/O), including sensors, actuators, analyzers, drives, vision, video, and robotics, for increased manufacturing performance and flexibility. This revolution will drive intelligence to the edge of the system with the ultimate goal of all industrial devices supporting IP, including field I/O. Wireless IP devices, including smartphones, tablets, and sensors, are already being used in manufacturing. The wireless sensor I/O open standards like WirelessHART, ISA100, and WIA-PA are all IP devices supporting the latest IPv6 standards, which leverage larger address spaces and improved cybersecurity standards. The following research questions were asked by Bill Lydon to the executive leaders working for the Industrial Automation suppliers namely: 1) What is your functional definition of the IoT? 2) How will Industrial Automation systems change to achieve the goals of the IoT? 3) What products (hardware/software) do you deliver today that are components for users to deploy the IoT? 4) What products (hardware/software) will you be delivering in the next 1 year that are components for users to deploy the IoT? These questions become quite significant considering the issues like Cyber Security which require ISASecure EDSA (Embedded Device Security Assurance) certification and “safety integrity level” certification (ISO/IEC 61508) as well as the Competitive Risks like adopting these technologies before they are proven and not adopting them when they are stable and before competitors use the technologies to outperform them in the marketplace. Professor Detlef Zühlke, Ph.D., Scientific Director at Innovative Factory Systems at the German Research Center for Artificial Intelligence discussed the Smart Factory initiative at the Hannover Messe 2014 where he described the need for standards, including physical,
  33. 33. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 33 MBA Thesis en - No. of p. 76 mechanical, pneumatic, and communication, to accomplish more efficiency and functionality to achieve Industry 4.0. The standards that support these concepts, including OPC UA, WSDL, EDDL, and IEC 61499 need flexible horizontal and vertical communications between controllers, field devices, and enterprise systems. OPC UA provides secure communications using established computer industry standards, including IP and Web services, to allow the multitudes of devices to gather and convert remote data into useful information to make intelligent decisions. The IoT with OPC UA provides a unique opportunity to leverage volumes of sensor data in applications to improve operations and efficiency in a wide range of applications. PLCopen provides the technology to make the information in the controller accessible in a harmonized way. This means that communication on the factory floor is becoming possible “out-of-the-box”. PLCopen even provides machine-to-machine communication, as well as machine-to-cloud communication, connecting the controller to the world and the world to the controller. Thus, PLCopen and OPC Foundation have together developed PLCopen IEC 61131-3 function blocks that incorporate OPC UA as Integrated Web Services as shown below. The answers to these research questions by the executive leaders can be summarized as follows:
  34. 34. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 34 MBA Thesis en - No. of p. 76 1) The core characteristics of IoT are:  Devices need to be intelligent.  There needs to be an infrastructure that supports the devices.  Analytics and optimization are the third component.  The distribution of information is another key element.  There needs to be an organization to consume the information produced. The above can be summarized as intelligent devices with seamless interoperability capable of acting in a collaborative fashion to achieve business benefit in a cost- effective way. Thus, IoT is really pulling together the major buzzwords and trends used today:  devices produce data  which needs to be stored (big data)  on some type of infrastructure (cloud computing)  with analytics using the data (analytics/data mining)  and distributing the information (mobility) Industrial Automation impact will be that it will propagate the concept of stand-alone subsystems as part of a larger mesh. 2) The Industrial Internet or the IoT is the infrastructure connecting previously unconnected industrial machines, devices, and sensors, such as packaging machinery, semiconductor photolithography tools, robots, motors, photoelectric sensors, and numerous other industrial objects. It drives customer value through connectivity across machines, data, insights, people, and business operations using ERP systems. The IoT enablers create value through the combination of one or more of the following:
  35. 35. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 35 MBA Thesis en - No. of p. 76  Improved Asset Performance  New Service Models  Higher Customer Intimacy The pervasive nature of the IoT allows more devices to be "configured for purpose" on the fly and then communicate, not only centrally, but to each other to improve efficiency, reduce cost, and improve safety. IoT will essentially complete the full supply chain. When fully leveraged, IoT could mean better inventory management, pulled production instead of pushed production, accurate activity-based costing, and automatically adjusted logistics that adapt to changes in the manufacturing layer (and vice versa). The Industrial Automation impact is seeing the move from separate or distinct MES/SCADA systems to direct integration with ERP systems and automation networks will use data to self-configure, self-regulate, and suggest efficiency improvements. ERP systems today have flexible/configurable web-enabled screens that process the information, including ERP for production information, enterprise asset management for maintenance, data vault for business intelligence, and analytics. Once the data is collected from the machine sensors, it is important to use pre-configuration tools, such as OPC, to classify the information. Having that data and the resulting live visibility directly in the ERP can improve everything from real- time scheduling and error handling to alerting and reporting. With today's real-time orders, including just-in-time, Kanban, and Lean, ERP must stay in perfect communication with the shop floor. Many of the decisions an operator currently makes will soon be made by the machine themselves, freeing the operator to focus on improving the efficiency of the system, addressing things like energy usage, security, safety, and process tuning. Additionally, industrial operators will morph into a cross between industrial engineers, computing experts, and data scientists. Thus, IoT with IP-enabled manufacturing automation architecture with built-in Web server capability will distribute more functions into new breeds of powerful industrial controllers and
  36. 36. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 36 MBA Thesis en - No. of p. 76 sensors/actuators with embedded processors, eliminating the need for middle-level software that is cumbersome, expensive, and difficult to maintain. This will be achieved in three phases namely horizontal or M2M communication, vertical communication and last phase of analysis of data for production efficiencies. IoT will help us to keep focus in the challenging world of the convergence of Information Technology and Industrial Automation for global competition, fast-changing consumer tastes and increased profitability. Similar to the Software Engineering Institute (SEI) Capability Maturity Model (CMM), IoT will follow the IoT Maturity Model (IoTMM) as shown in Figure 3-12 below for the Programs/Projects from Primitive phase to Optimized phase for both software development and people development processes to reach converged technology and unified intelligent solutions. Figure 3-12: IoT Maturity Model (IoTMM)
  37. 37. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 37 MBA Thesis en - No. of p. 76 3.6 BENEFITS OF INDUSTRIAL IOT The article by Herman Storey (2013) on IIoT or I²oT which dwells into the following questions for industrial applications space rather than consumer applications and products for which IoT is already much in news. These important questions are: 1) Should Industrial users embrace IP networking? 2) Is it necessary or even beneficial? 3) Why, Why Not, What & How? Smart devices should be able to communicate with each other or with human interfaces anywhere on the planet—thus driving improvements in productivity. I²oT must give priority to security, robustness, and timeliness requirements of automation networks while providing for remote access as a secondary requirement. In the Automation World, I²oT represents the opportunity for partial convergence of industrial automation communication on a grand scale by allowing improvements in functionality, security, flexibility, ease of use, and cost savings. In the long run, it will be beneficial for vendors as well as users but in the short run, it is disruptive technology requiring changes to organizational structure, resources and leadership which needs to be adaptive as it will cross organizational lines and blur distinctions between foundations. I²oT does not have a home yet with the Industrial Automation World. The model for I²oT are Essential Elements, Applications and IPv6. Multiple interfaces are necessary to support all of them considering the future of industrial communications technology. Switching and routing, common sense of time (event tagging & security), architecture (ISA 100.15 gives models & terminology), common network management (ISA 100.20), common security management and specifications & profiles to support compliance certification. Technology migration should be plug and play not plug and pray so the technology solutions we create must be easy, flexible and powerful as mentioned by Rick Bullota. “If market forces do eventually drive this convergence, it is safe to assume that it will
  38. 38. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 38 MBA Thesis en - No. of p. 76 happen very slowly and chaotically under market conditions.” Lead organization is required as many organizations are involved and no organization is well positioned to take lead. As Daniel Drolet, Executive Vice President of PCN Technology Inc. has considered I²oT as two ends of spectrum with one end as Industrial Automation & Control with other end as consumer or human interface. This he has highlighted by stating “Don’t miss the <big space> in the middle” as well as “Society cannot simply shut down to replace legacy infrastructure with new IP based communication infrastructure.” To have a successful IoT or I²oT, the focus should be on the interconnectivity of the two ends of the spectrum by enabling intelligent infrastructure for the continuum in the middle for managed migrations to Industrial Internet within industrial systems, energy, oil & gas, transportation, and other industries. Thus, building a positive outcome will need a lead organization or a consortium of organizations for a successful effort. 3.7 IOT OR I²OT AS AUTOMATION INVESTMENT OPPORTUNITY There is big money backing I²oT, Big Data and Industrie 4.0 (Industry 4.0) as these are considered automation investment opportunities (Kowal 2014) to ensure that the systems are updated with intelligent manufacturing efforts. Stingy Capital budgets have prevented widespread adoption of important functions of I²oT such as predictive maintenance, networked safety, energy monitoring and advanced diagnostics. So, the IoT or Industry 4.0 strategy is to pick a secure data acquisition cloud service to manage global operations from a centralized engineering department for performing predictive maintenance, energy management, and overall equipment effectiveness (OEE) across all lines and all plants everywhere by using standards like ISA/IEC-62443 (formerly ISA-99) for automation system security and ISA TR.88.00.02 (PackML) which can help even beyond packaging like for all manufacturing state models, modes, and tag names. Thus, the key concepts for I²oT are:  Internet Protocol technologies are quickly moving to Industrial applications.
  39. 39. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 39 MBA Thesis en - No. of p. 76  The IoT offers many potential benefits for industrial users but only in the right contexts.  A careful and purposeful approach can make adoption more practical and avoid many pitfalls. Executives see transformational impact of IoT as devices become smarter and more integrated to expand manufacturing efficiency. IT and OT convergence will drive IoT adoption which is a reality today as billions of devices are already connected through IoT with the challenge being lower overall costs and data security. In the 2014 IoT World Forum in Chicago on October 14-16, Rockwell Automation Chairman and CEO Keith Nosbusch said “Only a few of the most progressive manufacturers have truly been able to bridge the IT/OT gap.” Schneider Electric Chief Technology Officer Pascal Brosset cited the example of MMG Mining, which increased mining capacity by 20% and added $1 billion to the company’s bottom line just through instrumenting every asset in the mine. Brosset said “One thing our customers expect is to make it cheaper. To me, that’s one thing we don’t talk enough about. When you take the price down, then growth is exponential. By getting the data, you constantly monitor performance of every asset.” The potential benefits of deploying the I²oT for manufacturers as described by Tom Mariano (2015) are:  Introducing equipment data tracking, remote equipment service, and predictive failure analysis can improve product reliability and minimize downtime.  Acting on this information in real-time can boost customer’s return on investment (ROI) through productivity and quality gains.  Automating the operation of equipment can result in lower customer labor costs and increased manufacturing throughput.  Leveraging the knowledge gained from 24/7 connectivity can ultimately increase long-term market share through product performance improvements.
  40. 40. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 40 MBA Thesis en - No. of p. 76 This is a proactive approach for enabling intelligent manufacturing solutions by using web- enabled sensors embedded in physical objects to gather, track, and analyze data in the cloud, then acting on that information. 3.8 SECURITY & CREATING VALUE IN THE IOT WORLD Security in the IoT World is extremely important as quoted by Travis Hessman (2013) ‘When everything is online, security is everyone’s job’. In the connected world of manufacturing and industrial automation, there have been many structured and targeted attacks lately like stuxnet in June 2010 and car hacking of self-driven cars. These attacks have related technical issues, financial issues and social issues which are risks in the IoT World. Mild attacks on an unprotected connected control system costs $40 to $80 billion each year which escalates to a higher value when their operations are targeted. By 2020, these attacks will lead to chaos and even loss of lives as billions of devices will be connected to Internet so all organizations rather than only security organizations should work together as integrated teams. Cyber underground has pumped $3 billion into the attack capability while security firms are only pumping millions into new antivirus and firewall programs which shows the huge gap and the necessity for ensuring security is part of everyone’s business including engineers, designers, planners and operations. This calls for a new cybersecurity plan which is shared between huge online MES, industrial automation and security organizations for rethinking safety in the IoT World. Thus, security is a very important requirement for a smart and sustainable world using IoT for Industrial Automation. During a recent webinar by SAP and OSIsoft on July 24, 2015 announcing their shared interests for creating value for customers by a complete IoT software offering for both business and industrial processes using SAP HANA Cloud Platform and Big Data Platform with Hadoop (HDFS) plus SPARK Cluster Manager. This value is created by the IT and OT convergence as shown in Figure 3-13 below where the strategy, architecture, security,
  41. 41. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 41 MBA Thesis en - No. of p. 76 governance and hardware need to be reimagined from business processes, customer experience and human behavior viewpoints. Figure 3-13: The IT and OT Convergence (Source: SAP & OSIsoft) I²oT technologies are creating value by improving:  Asset Health & Uptime  Operating & Production Performance  Safety & Risk Management  Logistics Optimization  Worker Experience  Business Process Improvement Thus, the IoT mission and vision to ensure sustainable development and support triple bottom line needs to combine the different transitions of business and technology with the corporate transition as defined by Allen White, Vice President, Tellus Institute together with Pavan Sukhdev, Yale University called the Corporation 2020. The four clear mechanisms by which this corporate redesign can be achieved are:
  42. 42. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 42 MBA Thesis en - No. of p. 76  Disclosing corporate externalities like Carbon Emissions;  Putting taxes on resources extraction like natural water and mining;  Enacting limits to financial leverage &  Making advertising accountable. Thus, the new industrial automation corporation getting transformed by IoT to have a smart and sustainable world should have the following goals:  Harness private interests to serve the public interest.  Accrue fair returns for shareholders, but not at the expense of the legitimate interests of other stakeholders.  Operate sustainably, meeting the needs of the present generation without compromising the ability of future generations to meet their needs.  Distribute their wealth equitably among those who contribute to its creation.  Governed in a manner that is participatory, transparent, ethical, and accountable.  Human capital is the key so never infringe on the right of natural persons to govern themselves, nor infringe on other universal human rights. 4.0 PURPOSE OF THE RESEARCH The main purpose of this research is to use IoT for Industrial Automation equipment suppliers to enable things to be connected anytime, anyplace, with anything and anyone ideally using any path/network and any service. 4.1 RESEARCH OBJECTIVES The research objectives of this dissertation/thesis are threefold:
  43. 43. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 43 MBA Thesis en - No. of p. 76  The first objective of this research is to provide information to organizations and entrepreneurs interested in implementing a new business plan by using IoT for Industrial Automation in India, Australia and France. This research will allow them to avoid potential problems faced by various stakeholders.  The second objective is define the business plan by using IoT vision and IoT applications that can be improved with sensing and control using industrial automation, including health care, traffic control, vehicle safety, energy use, agriculture, and manufacturing. This vision includes coupling massive sensing and control with big data and analytics to accomplish advanced levels of optimization and efficiency in European Union, Asia Pacific (Australia & Singapore), USA and BRICS countries i.e. Brazil, Russia, India, China and Republic of South Africa.  The third objective is to give valuable advice to managers in India, Australia and France who want to improve the industrial automation business plan and strategy in their organizations using IoT technologies like Cloud/Fog Computing, Big Data/Analytics. 4.2 RESEARCH QUESTIONS The core research question is:  How is smart and sustainable world possible with Internet of Things (IoT) vision and applications? Other queries that need to be addressed in line with the core question:  How to explore and implement IoT for Industrial Automation industry using Amazon, Google, Microsoft & Oracle products?  What are the policies and technology changes required so that the triple bottom line (TBL) is maintained and sustainability achieved?  What are the policies and technology changes required so that the triple bottom line (TBL) is maintained and sustainability achieved?
  44. 44. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 44 MBA Thesis en - No. of p. 76 5.0 RESEARCH METHODOLOGY AND DESIGN In order to conduct the study and bring the elements of answers to the problem, a qualitative approach was adopted. The choice is justified by the nature of our work which consists in analysing the mission and vision of IoT and evaluation of the effects of this on Industrial Automation strategy, investments, processes, policies, architectures, standards and organization stakeholders and to try to develop a business plan to help organizations to have a clear view of this field yet not really understood by all. We have two sources of data, primary one from interviews of top managers and a questionnaire with 10 questions undertook by many company managers or employees. Indeed, the primary data gathered from semi-structured interviews using a sample composed of global MNC organizations. The managers interviewed about their organization IoT strategy or initiatives are either company’s CEO, director/head of Engineering or R&D departments or in charge of CSR. The interviews were recorded with the participants’ authorization, and they also agreed to be cited in the research report. The funnelling technique was used to guide the interview. These interviews were conducted out of the manager office, usually in a cafeteria to have them speak openly and freely. These interviews are extremely important to figure out the policy and the decision making process in this field, according to Saunders, Lewis and Thornhill (2009, p. 320) ‘the order of questions may also be varied depending on the flow of the conversation and may vary from interview to interview’. In the meanwhile, interaction is very important in fact managers may not be aware of the latest IoT new approaches. Besides, interviews reveal more the human touch as far as the research is more focused on the IoT policy related to stakeholders rather than focusing only on wireless technologies, cyber security, carbon footprint or virtualization. The interview questions were divided into five categories:
  45. 45. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 45 MBA Thesis en - No. of p. 76  Category A: IoT Mission, Vision & Goals  Category B: IoT Sustainable Development Solutions  Category C: IoT Product & Service Life Cycle Management  Category D: IoT Organization Governance, Processes & Policies  Category E: IoT Human Capital & Investments In addition, a secondary source of data using a small-scale survey. This survey’s data source is there to complete the analysis due the technical aspect of the research topic. The survey was completed on surveymonkey.com of about 10 questions some of them very technical. Therefore it was difficult to ask them those technical questions during interviews. In general this task takes time to complete and the participants have limited time to dedicate to the interviews and depending on the position of the interviewee in their department they may not have straightaway the answers. Finally, in the discussion of the findings we use the qualitative data to help us understand the patterns in the quantitative analysis. 6.0 BUSINESS PLAN FOR IOT Deem Sensing Technologies (DST) Private Limited, India (Nambiar 2015) formed a new department in 2013 for Automation Systems, MES and System Integration Solutions to be recognized as an emerging market leader for new IoT Products and Services in Industrial Automation industry together with DNK Technologies & Solutions Pty Ltd, Australia (Kandpal 2015) & outsource company iPAC Automation, India (Sanap 2015) through value proposition of providing good quality, on-time delivery and cost reduction to our Customers by offering Cloud Solutions for EMS (Energy Management System), WMS (Water Management System) and DCM (Data Centre Monitoring) as shown in Figure 6-1 below.
  46. 46. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 46 MBA Thesis en - No. of p. 76 Figure 6-1: Products & Services for IoT This Business Venture will be providing Private/Hybrid Cloud for these three main solutions namely EMS, WMS and DCM as shown in Figure 6-2 below. Figure 6-2: DST Cloud Offering for IoT These three solutions are detailed as shown in Figure 6-3, Figure 6-4 and Figure 6-5 below.
  47. 47. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 47 MBA Thesis en - No. of p. 76 Figure 6-3: EMS Solution for IoT by DST Figure 6-4: WMS Solution for IoT by DST
  48. 48. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 48 MBA Thesis en - No. of p. 76 Figure 6-5: DCM Solution for IoT by DST 6.1 INDIA STRATEGY AND MARKETING 6.1.1 INDIA MARKET REVIEW IoT already being recognized as the next emerging field in IT for India. Indian Government is working on taking the right steps to encourage this industry. The key areas for India to use the IoT are the following: a) Transport: Huge unsaturated market mainly in private transport-buses, cars, taxi’s both for comfort and for safety i.e. GPS tracking systems, anti-theft solutions etc. So far this market is highly unsaturated and if these devices are introduced at an affordable prize it has huge volume which can be tapped. b) Buildings & Homes: Flats, plots (upper middle class i.e. houses between 40-60 Lakhs) are potential market which can be affordable for this segments and will add value to their living conditions. This market segment is the upwardly mobile segment and hence offers an immediate potential as customers.
  49. 49. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 49 MBA Thesis en - No. of p. 76 c) SMEs: Auto manufacturing, pharmaceuticals etc.: revolute supply chain management by networking machinery, sensors and control systems together which aims to reach the JIT inventories (Honda, Big C), automated manufacturing, forward and backward integration, optimize resources in order to increase the capacity and strengthen firm’s competitive advantage d) Healthcare: Hospitals, clinics, doctors working in rural and urban areas. This is a hugely promising segment with a lot of rural areas which need to be covered. Here IoT can bring value in helping healthcare to reach the rural area effectively and at affordable cost. The government may also help in this segment through policies and procedures in the future. One such example is the Industry-academia collaboration in Bangalore-Robert Bosch Centre for Cyber Physical Systems at IISc (health indicators of individuals, which are stored and controlled on their own devices also and not just central data servers)-some applications  Bluetooth sensors to track hand hygiene habits of medical staff in St John’s Hospital in Bangalore,  Sensor networks to help irrigation efficiency for Indian farmers  Motion tracking in post-operative therapy for Narayana Hrudayalaya patients e) Government Projects: Infrastructure: monitor and control the operations of infrastructure such as: bridges, high way, railways track then increase the system’s supply efficiency and reduce risk. IoT devices can be used in scheduling repair and maintenance activities by coordinating tasks between infrastructure providers and users. This is a huge market with the government having declared that building infrastructure is one of the key priorities. Thus the government is in the process of simplifying the procedures to facilitate industry participation in the nationwide infrastructure projects. Further to this the government has announced the project for building 100 smart cities in India and hence this will generate a huge market for IoT in the near future.
  50. 50. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 50 MBA Thesis en - No. of p. 76 6.1.2 TARGET MARKET SEGMENT STRATEGY The business venture aim is to approach 3 main markets: healthcare, energy management and public service. As mentioned by David Wilan in B2B Market Segmentation (Figure 6-6), Circle Research White Paper, the target market can be segmented based on: company features; buying or usage behaviors; needs, preferences and desired relationship and the attitudes. Figure 6-6: B2B Segmentation Dimensions 1. Company Features: we focus on the segment of these companies with the characteristics as following: SME with revenue from 1 million to 3 million USD and total employees around 200 people in sectors: healthcare, energy management and public service, located in Bangalore 2. Buying or Usage Behaviors: firms need a package management system includes technologic devices and implementing support for internal development. The company choose the suppliers based on the reputation of the suppliers and quality of products and service; attitude to decision: high-involvement products thus need long time consideration and complex decision making
  51. 51. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 51 MBA Thesis en - No. of p. 76 3. Needs, Preferences and Desired Relationship: products which are price sensitivity will be provided in full package with devices and technology support; promoted by direct sale and through business relationship 4. Attitudes:  Business criticality of the product or service: high important  Desired relationship: partnership  Level of expertise and knowledge: high  Level of inertia and loyalty: high 6.1.3 COMPETITION AND BUYING PATTERNS Analysis of the competitors shows that most of them are competing in highly specialized areas and are small software based. Hence we will have an edge as we are integrated (manufacturing, hardware, service, maintenance) and in more diversified products Other factors which will boost this Industry:  Hardware Electronic Manufacturing to get big boost from India (Make in India campaign) since presently a high % is being imported-some projections:  India’s National Policy on Electronics (NPE) aims at investing about US$ 100 billion in the electronics industry by 2020 (chip design and embedded software will be one major area)  Indian Government initiatives in forming guidelines for this Industry considering its potential  Indian Government initiative of 100 smart cities will also propel this industry  Bangalore is the hub of IT and start ups  Electronic manufacturing also strong in Bangalore.  Can be a base for South India Main Competitors: Sensegiz, GetActive, ConnectM, Altizon Systems, Connovate Technologies, Cariq, Entrib Shopworx, Teewe and Lifeplot (Mapping)
  52. 52. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 52 MBA Thesis en - No. of p. 76 6.2 INDIA VALUE CHAIN AND SALES 6.2.1 COMPETITIVE ADVANTAGE The MD/CEO has its own manufacturing unit in this industry for 9 years in Bangalore and is well connected in this industry (vendors, big organizations etc.). Also, MD is well connected and well versed with the bureaucracy in this industry and other players (builders, government officials, industry leaders) in state of Karnataka and Kerala. The Director has 25 years of experience and is well connected in this industry; well versed in writing tenders for this industry both for government and private industry; Also an expert in IoT Place: Bangalore is suited to cover both Karnataka, TN and Kerala Good relations with all the vendors who manufacture exclusively for this industry and are difficult to have access to. Partnership with some of the important vendors. Very few players have entered and market is huge and unsaturated (right time to enter) Some of the investment needed for any such start-ups is avoided by using office spaces already available with the founders (one in Bangalore and one in Mumbai) and strategic collaborations with some of the manufacturers Finally, IoT contains multiple products and several combination of business from manufacturing to installing to service/maintenance and hence need a multi departmental infrastructure which is inherently hard to have within one roof for a startup. This is overcome because of the many collaborations and access to skill sets which the founders/top management has. This gives it a competitive edge over other startups. 6.2.2 SALES FORECAST Sales projection for the first 4 years of the business will be showed in the table below. The low sale in Year 1 due to the small amount of customers because the company has just launched, however, sale expectation will be double in the following year due to the increase of sale men and marketing activities. Year 3 and Year 4 are expected to be double and triple for the reason
  53. 53. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 53 MBA Thesis en - No. of p. 76 that the growth of sale team and new products launched as well as company’s good reputation. 6.2.2.1 TABLE: SALES FORECAST Sales : k$ Year 1 Year 2 Year 3 Year 4 EMS 200 400 640 800 WMS 60 180 360 360 DCM 84 240 384 480 Total Sales 344 820 1,384 1,640 Direct Cost of Sales Year 1 Year 2 Year 3 Year 4 EMS 100 200 320 400 WMS 20 60 120 120 DCM 42 120 192 240 Subtotal Direct Cost of Sales 162 380 632 760 6.2.3 MILESTONES The milestones for IoT Business Plan is as shown in the table below. 6.2.3.1 TABLE: MILESTONES Milestone Start Date End Date Budget Manager Department NDA Collaboration 1/6/15 30/6/15 $0 Deepak Services Outsourcing 1/7/15 20/7/15 $0 Deepak Services Totals $0 6.3 INDIA FINANCE AND ACCOUNTING This is a very crucial part of the Business Plan for IoT as the start-up funding is key for success.
  54. 54. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 54 MBA Thesis en - No. of p. 76 6.3.1 START-UP FUNDING At the beginning, the company fact with some issue like less customers, small market share. The expenses will be higher than the revenue because the sales cannot make up the loss. By spending more money into marketing and sales force, the company increases the sales number, expands the market share in the next year, so the expenses increase more in first year but the loss are less and we make a little profit. Continuing with this strategy, we will expand the market and increase the revenue in next two years. In first year, we will receive $ 4,000,000 to invest in Private/Hybrid Cloud system. This action will ensure DST takes advantage in the market that will grow up to $ 14.4 trillion by end of 2022. Besides this gradual investment every year for the next 3 years in order to install the new product development. 6.3.1.1 TABLE: CAPEX Cash Flow Year 1 Year 2 Year 3 Year 4 Beginning Cash $50,000 $3,963,450 $10,080,250 $10,279,650 Gross Margin $182,000 $440,000 $752,000 $880,000 Expenses $(261,550) $(320,200) $(543,600) $(589,000) Investment $4,000,000 $2,000,000 $2,000,000 $2,000,000 Capital Expense $(7,000) $(3,000) $(9,000) $(1,000) Change in Cash $3,963,450 $6,080,250 $8,279,650 $10,569,650 Ending Balance $3,963,450 $6,080,250 $8,279,650 $10,569,650 Capital expenses Employee Workstations (PP) $7,000 $3,000 $9,000 $1,000 Prototype Expenses $0 $0 $0 $0 Cumulative CAPEX $7,000 $10,000 $19,000 $20,000
  55. 55. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 55 MBA Thesis en - No. of p. 76 Depreciation Depreciation Charge $2,333 $3,333 $6,333 $4,333 6.3.2 PROJECTED PROFIT AND LOSS Although, the total cost of sales increase year by year but the Gross Margin keep high because all of expense we spend for sale team in order to find new customers, expand the market and sell more projects. The sale number increase faster than the cost of sale, so we have the efficient sale team and we are going the correct strategy. Now we move to the expenses, all expenses increase year by year but the percentage is not appropriate. As a service company, we spent dominant to G&A and engineering expense instead of marketing and sale. In short term, we can handle this situation but in long term, when the company bigger the management team become bigger and slower, so it is not good for a company to keep its position in the market. Our company decided to follow this strategy in the short term and we will change strategy in order to suitable the market and keep our position and growth. 6.3.2.1 TABLE: PROFIT AND LOSS Year 1 Year 2 Year 3 Year 4 Sales $344,000 $820,000 $1,384,000 $1,640,000 Direct Cost of Sales $162,000 $380,000 $632,000 $760,000 Other Costs of Sales $0 $0 $0 $0 Total Cost of Sales $162,000 $380,000 $632,000 $760,000 Gross Margin $182,000 $440,000 $752,000 $880,000 Gross Margin % 52.91% 53.66% 54.34% 53.66% Expenses Engineering $82,300 $109,200 $181,600 $201,800
  56. 56. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 56 MBA Thesis en - No. of p. 76 Marketing $60,750 $44,000 $76,800 $68,400 Sales $28,700 $65,000 $131,600 $154,800 G&A $89,800 $102,000 $153,600 $164,000 Other $0 $0 $0 $0 Total Operating Expenses $261,550 $320,200 $543,600 $589,000 EBITDA $(79,550) $119,800 $208,400 $291,000 Depreciation $2,333 $3,333 $6,333 $4,333 Net Profit (EBIT) $(81,883) $116,467 $202,067 $286,667 Net Profit/Sales (23.80)% 14.20% 14.60% 17.48% 6.4 MANAGEMENT AND TEAM The Management team and Organizational structure is as shown in Figure 6-7 with the staffing plan as well as salary projections as given below. Figure 6-7: Management Team & Organizational Structure for IoT Managing Director & CEO - Jeeja NT & C.K. Manoharan Head - Sales and Business Development Resident Director - Services Head - Applications Engineering 2 Advisory Council Members for IoT
  57. 57. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 57 MBA Thesis en - No. of p. 76 Staffing Plan Projected (Year on Year): Salary Plan Projected (Year on Year): 6.5 ASSUMPTIONS AND RISKS The following general assumptions and risks have been considered for preparing this business plan for IoT: a. Market of IoT (Machina Research data cited at the TiE panel) in India by 2020 expected to be: $10-12 Billion (Rough Order of Estimate). b. Internet of Everything (IoE) industry in predicted to be a USD 14.4 Trillion market by end of 2022 using Sensors for H2M & H2H technologies. c. India’s National Policy on Electronics (NPE) aims at investing about US$ 100 billion in the electronics industry by 2020, so for IoT hardware more Electronics Manufacturing Clusters (EMC) will be key as well as speedy implementations and clearances by Indian Government.
  58. 58. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 58 MBA Thesis en - No. of p. 76 d. Indian environment with extreme temperatures, high levels of humidity and dust, erratic power supply and spotty telecom coverage which is a critical risk that need to be mitigated with CAPA. e. Wireless surveillance devices can easily be sabotaged and tampered with by disgruntled employees so this high security risk need to be reduced with CAPA. The detailed risk assessment will be done based on the Risk Management Impact & Likelihood. 7.0 SUMMARY OF RESULTS AND ANALYSIS The semi-structured interviews were done for organizations with following profiles: Sector Organization Name Description Interviewee Number of Employees Industrial Automation ABB R&D Product Manager 140400 Transport ALSTOM Engineering Domain Manager 65000 Information Technology & Services Pitney Bowes Information Technology Executive Assistant 10827 Data analysis of the results was done based on findings of interviews and the survey in comparison with the literature review and research objectives/questions for these five categories as shown below: Category A: IoT Mission, Vision & Goals Question 1: Who is in charge of the IoT business plan & strategy for defining mission, vision and goals & what programs are running in your organization? Based on the survey responses and the interviews, more than 60% people said that CEO or MD or the Innovation team together with Technology & IT team define the business plan & strategy as well as various programs running in the organization.
  59. 59. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 59 MBA Thesis en - No. of p. 76 Question 2: What are the key standards, technologies and architecture models to reach your IoT and Sustainable Development goals? Based on the survey responses and the interviews, more than 90% people said that Cloud Computing with Data Centers and Big Data with Hadoop databases are the key technologies with MongoDB open database and IPv6 with ZigBee protocols and architectures following these main focus technologies. These technologies are helping organizations in achieving their IoT as well as Business and Sustainable Development goals based on CSR policies.
  60. 60. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 60 MBA Thesis en - No. of p. 76 Category B: IoT Sustainable Development Solutions Question 3: What is your most pressing reason for your business to adopt IoT and Sustainable Development solutions? Based on the survey responses and the interviews, more than 70% people said that the most pressing reasons were technology changes, cost reduction for energy, growth in IT infrastructure and data growth for the business or organization to adopt IoT and Sustainable Development solutions. This was debated by one interviewee who mentioned Shareholder Pressure to be the topmost.
  61. 61. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 61 MBA Thesis en - No. of p. 76 Question 4: What solutions do you deliver today or plan to deliver that are sustainable to deploy the IoT? Based on the survey responses and the interviews, more than 50% people said Energy Saving solutions are sustainable to deploy the IoT. But, this was debated by some interviewees who were of the opinion or bias that energy savings were already delivered by them so they need to be more efficient and cost reducing.
  62. 62. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 62 MBA Thesis en - No. of p. 76 Category C: IoT Product & Service Life Cycle Management Question 5: What Products similar to Energy Management Systems, Water Management Systems and Data Center Monitoring using Cloud or Fog Computing & Big Data do you deliver today or plan to deliver for IoT? Based on the survey responses and the interviews, more than 60% people said SAP solution together with the MES or DCS using Cloud or Fog Computing & Big Data will be delivered for IoT.
  63. 63. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 63 MBA Thesis en - No. of p. 76 Question 6: What Service Life Cycle Management support do you deliver today or plan to deliver for IoT? Based on the survey responses and the interviews, more than 90% people said that they would like to retain the current SLC Management but would enhance it with remote monitoring and engineering.
  64. 64. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 64 MBA Thesis en - No. of p. 76 Category D: IoT Organization Governance, Processes & Policies Question 7: What changes in the organization are you experiencing or foresee for governance, processes and policies to support IoT? Based on the survey responses and the interviews, more than 75% people said that they will see new vertical/structure in the organization to support IoT with policies on data collection using BYOD (Bring Your Own Device).
  65. 65. Doc Kind Thesis Project ID IoT for Industrial Automation Audencia Nantes School of Management, France Doc. no. Lang. Rev. Ind. Page 65 MBA Thesis en - No. of p. 76 Question 8: As an organization are you willing to go out-of-box to form partnerships with small open organizations rather than only using IoT Products from Google, Amazon, Microsoft and Oracle? Based on the survey responses and the interviews, more than 95% people said “Yes” which shows their intent to integrate and team up with different organizations.

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