How We Can Industrialize the Internet of Things

For today’s column, I bring you a guest post from Kevin Klustner. Kevin is the CEO of Powerit Solutions, an international energy management technology company.

How We Can Industrialize the Internet of Things

By Kevin Klustner

A number of thoughtful people – including Cisco CEO John Chambers – believe that the Smart Grid will ultimately be bigger than the Internet, by a magnitude of 100 or 1,000.

That’s a fairly audacious prophecy.

And, if you asked a wide range of industrial companies with energy-intensive facilities right now, they might not necessarily agree with this prediction.

But their skepticism is understandable – and it’s also based on current reality.

Indeed, many energy-intensive businesses today aren’t able to interact fully with Smart Grid signaling and pricing for the highest cost efficiency because of a lack of real-time knowledge and a lack of technology integration with their automation systems.

Put another way, we can’t help manufacturing facilities optimize their energy use in terms of savings and sustainability unless we successfully and seamlessly link industrial automation systems with the Smart Grid.

So, to take full advantage of the Smart Grid, we have to drive intelligence into the production and consumption of energy at the factory level. That means developing smarter plants, smarter equipment and smarter assembly lines with cloud-based technologies and then building the industrial equivalent of the Internet of Things (IoT).

Right now, the Internet of Things is primarily consumer-focused, with millions of devices – smart phones, smart TVs, tablets, laptops, and kitchen and home appliances, for example – connected. But a number of analysts and executives believe that an industrialized IoT could represent a multi-trillion-dollar market within a number of years.

When it comes to energy usage, how do we industrialize the IoT?

First and foremost, we have to install demand management software in factories so we can slow the growth of peak energy demand and take advantage of demand-side flexibility to reduce the need for new supply without compromising product quality or output. Peak-demand charges often represent up to 30 percent of an energy-intensive’s industrial facility’s energy bill, and automated demand management can reduce these charges by up to 30 percent.

The key here is to focus on how much energy is consumed, as well as when it’s consumed. And, by giving factories the ability to respond to fluctuations in energy supply and auto-balance their usage, we will help industrial companies capitalize on the strengths of the Smart Grid.

Second, we need to take a continuous flow of data from our smart plants, smart equipment and smart assembly lines and put it in the hands of executives at energy-intensive companies, so they can make informed and real-time financial decisions about energy use for their businesses.

This can’t take place in an effective or intelligent way, however, unless we have a common or standardized information model. And we also need an application that can transparently meld and integrate cost and supply / demand data.

Third, we need an energy-pricing stream for industrial companies that will allow energy-intensive plants and facilities to reliably plan their usage in advance, based on accurate and predictive cost modeling.

Fourth, we need an application that will help the industrial sector’s factories integrate storage and other sources of energy – such as solar and wind – into the data management mix. Right now, it’s all about electricity consumption. We must broaden our horizons to reflect changing 21st century energy portfolios.

Fifth, true industrial automation means that we need an application that can integrate all of a facility’s operations with energy data. This will enable plant managers to better understand and assess the total cost of production, as well as operator and equipment efficiency and practices.

The industrial Internet of Things is already taking shape in factories on several continents. These plants are home to legions of sensors and actuators that are embedded in equipment and assembly lines and linked through wired and wireless networks – often using the same Internet Protocol that connects the Internet. The result is an ongoing churn of real-time data that provides a treasure trove of business intelligence, which leads to greater efficiency, productivity, resource allocation and profitability.

And, just as significantly, this sensor-driven transformation is helping industrial companies alter and refine complex business processes, often without human intervention.

A recent report from McKinsey, for example, discussed how the chemical industry is benefiting from the emerging industrial Internet of Things. As McKinsey explains it, sensors in plants feed data to computers, which then send signals to actuators to adjust processes – whether it’s by modifying ingredient mixtures, temperatures or pressures. In the end, there are major reductions in waste, energy costs and human engagement – all critical bottom-line benefits.

Looking forward, we still have work to do on the technology front to make the industrial Internet of Things a smoothly running global network that is affordable and accessible for virtually every factory and facility seeking to continuously improve performance and financials.

But that’s the challenge and opportunity before us – and it represents one of the most powerful and profound conversions since the first Industrial Revolution began almost 250 years ago.


Powerit Solutions is an international energy management technology company based in Seattle that strives to make the smart grid real, profitable and effortless for utilities and energy-intensive businesses worldwide.

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