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Starting simple: Why the IoT doesn’t have to cost the Earth

On a balmy summer day in February, the Industrial Internet 4.0 Summit took place at Aerial Function Room at Sydney’s UTS. It was the third such summit after the first one was launched in 2017.

Three years ago, a lot of the delegates were still dipping their toes into what some thought were murky waters. How could it help my business? What kind of outlay was needed? Did my business even need to adopt an Internet of Things (IoT) or Industry 4.0 strategy? Today, the answers are, ‘several ways’, ‘depends’ and ‘definitely’.

The 2019 summit had an impressive number of speakers, all dedicated to spreading the IoT word. Most do have a horse in the race, but they all spoke a lot of common sense. At the main panel session on the first day, there were a few clear and concise messages:

  • If you are in the manufacturing sector, you need to get onboard with artificial intelligence (AI), the IoT and all the peripheral possibilities that go with it.
  • If you don’t get on board, your competition will have an advantage.
  • It won’t cost you an arm and a leg to get started.

The five panellists included university academics and CEOs of consultancies and small manufacturing enterprises. On a wider scale, some of the speakers represented multi-nationals that are IoT and AI acolytes.

Professor Michael Blumenstein, who is the associate dean (research strategy and management) at UTS Sydney said that the relationship between business and academia is changing due to the digitisation of industry.

“Not everyone has the internal capability in the Industry 4.0 context – with data science and AI – to come up with solutions they need off-the-shelf,” said Blumenstein. “The universities now become the research arm [of some businesses] – particularly in the SMEs where the capacity is not significant enough to have internal capabilities. Universities are now more geared towards trying to give solutions that give real benefits to the industry. Some of those areas – from robotics, AI and data science – are not easy skills to come by. This is definitely something that is being done better now and I think industry is taking more advantage of it.”

An issue that was mentioned early in the discussion was that the IT department should not be in charge of the IoT transition. Dr Herbert Hermens, the CEO of Tezamen, explained why.

“This technology we are talking about cannot be driven by IT,” he said. “It has to be an industry-wide project. It has to be driven by the companies. Start with having a vision. You need to be able to understand what is possible. It almost means you have to be able to dream about it. You have to look at your business in the broader scope, from design through to application. That means that people need to work together.

“What we are finding in the difference between Industry 3.0 and Industry 4.0 is that Industry 3.0 just created a lot of data. Really, we were the interface to the change to that data and to interpreting the data and making sure the data was utilised as best we could. We worked well with the data that was being created, but we had to. The major difference with industry 4.0 is that we get situational awareness in machinery. Machinery is really AI. It is about being able to make some of the basic decisions – some would say a lot of the basic decisions – for us. It is both scary and really exciting.”

Reed Leighton is the CEO of Leighton O’Brien, a company that specialises in working in the petroleum industry. He said that the IoT is not just about sensors, but the data they produce. He said the petroleum industry has been using sensors since the 1980s, but they were not part of the IoT because there was no AI involved. He also said that the uptake of digitisation has been phenomenal – not only in terms of the adoption itself, but the storage power needed to accommodate the growth.

“About seven per cent of our industry has adopted IoT with AI,” he said. “There means there are 50,000 stations around the world out of 700,000 that have really embraced [the technology]. Although seven per cent seems small, it is accelerating fast. In 2016, we were looking after about 7,000 sites. This year, that number is going to be 25,000 sites. The growth is extraordinary. In 2016, we had 700GB in the cloud. Now we have 48TB. By December 2019 it will be 200 TB.”


David Hart, CEO of Dematec, is a champion of SMEs, and believes that a lot of them are holding back on adopting IoT initiatives. He said this can be a mistake, not only because it might give somebody else a competitive advantage, but the costs are not as high as some might think.

“A good example is how we got helped a small company where we put some sensors on their three laser cutting machines that were manually operated,” said Hart. “[It was a] very noisy environment and they didn’t really know what sort of utility they were getting form their machines. They knew they were losing time, but not how much. What we did was put some sensors on those machines so they could start capturing some basic metrics on how much utility they were actually getting.”

Then Dematec persuaded them to put a stack lamp on top of each machine with a loud audible siren, which meant as soon as the machine stopped producing products – whether that be a minute or 30 seconds – the siren would go off and the lights flashed. An operator could take immediate action. The company had an immediate productivity boost form something as simple as that, said Hart.

“Then they went that one step further to capture the data and analyse it and get a performance baseline in place. The next step was to get the operators to designate down time so they can do maintenance and create a bit of granularity and continue to improve for purposes It can be as simple as that,” said Hart.

Chris Janssen, CEO of electronics manufacturer GC Electronics, pointed out that it was important to make sure you needed IoT and AI, and not just take them onboard because they’re there.

“We are an SME and the reality is what drives us is not Industry 4.0 but rather the dynamics of what we need to do in business in terms of competitiveness,” he said. “Companies have to look at productivity; how efficient they can make things; look at quality and yield; and make sure that what they are doing, they are doing well. How fast can you do things to how fast can you respond to different things. And when you start looking at those things then naturally you put in feedback loops and what you might need to do to fix it.

Janssen said his company did those things because of competitive pressures and afterwards they got told it was called Industry 4.0. To him, the important thing was to drive his business and understand how GPC could compete and use the tools to help them do that.

“Don’t drive to be a 4.0 player and then work how it’s going to fit out into your business,” he said.

And the future? All the panellists had their own ideas on how industry will progress over the next decade or so. While most were excited about the future, there was also caution.

“I’m very excited about the way business will develop over the next few years,” said Hermens. “Money in the future will not exist in a physical form, it will more a concept in the thinking and the processes – that’s where the money will go. Overall, we need to realise is that other countries are leading in this area and we are lagging in Australia. It scares me a little bit. We need to start thinking in a bigger mentality. From designs through to application what the IoT promises to integrate [is where we need to look to].

“The key difference between Industry 3.0 and 4.0 is that you are enabling AI to interplay. And what AI will do is reduce the cost of manufacturing. It will reduce the amount of bodies needed to manufacture. We need to think about that in Australia if we want to start to catch up with the rest of the world.”

“[The IoT and AI] are ways of developing plant and looking at how you can work in the workforce and actually create more meaningful jobs,” said Janssen. “And as a result of that, you get more competitiveness and hopefully create a lot more revenue.”

Blumenstein believes that although there will be job losses, there will be new job opportunities and there will be growth. But he is concerned about data, and what will become of it and how people will use it. And, who will own it.

“In IoT systems there is such a huge amount of data being generated that we are all aware of the importance of this data and how it is the oil of business,” he said. “Harnessing that data and making the best use of it in the IoT age is extremely important. Of course, just as there are vast amounts of data, there comes other issues that have to be addressed. Where do we process it? Where do we store it? How do we keep it secure? How do you make use of it to enhance the business? Unfortunately, that is not an easy step to consider. Especially cyber security. However, it if it is done properly it can be of huge benefit to every business. I’ll also say that we get Industry 4.0 right before we look too far into the future.”

As for Janssen, he thinks that where the IoT comes into its own is linkages and how they can save money.

“Linkages are important,” he said. “Within the factory – how we get flow, how we connect things and make things work from one end to the other. We don’t have pictures, or drawings of things any more. The real difference is, if you can actually create linkages, you can eliminate waste. Every time there is an interface that someone has to receive, someone has to pack, shift, inspect and document and on the other side you have to do the reverse. If you can create linkages across things, then you can save huge amounts of both time, effort and waste. I think the IoT gives you the tools to be able to create linkages.”

Leighton was more blunt in his assessment. He intimated that if you don’t get on board soon, you might be too late as your competitors start making it big in their respective industries.


“If you don’t adopt IoT and AI, where are you going to be in five years’ time if your competitors do?” he said. “Are you going to be okay? I bet you are going to have higher costs, lower margins, losing customers – someone is going to eat your lunch. Get on the IoT train or get left behind. It is that important. It is not easy. Having it is not as expensive as it used to be. Sensor costs are coming down. It’s easy to do AI. Start with early steps. You are going to be at a competitive disadvantage if you do not get on this. I guarantee you.”

The last word was left to Hart, who believes that there are still teething problems to be had with the IoT, but they are solvable and that, like Leighton, the future is here now, and business better start implementing the technology.

“In terms of looking into the future, obviously there is a long way to go with Industry 4.0 and there are some issues including servicing Industry 4.0,” he said. “The future will be resolving those through artificial intelligence, better interoperability, breaking down those supply chain barriers so it just becomes a seamless experience, system to system.”



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