Planning For The Industrial Internet of Things

ARC STRATEGIES
By Greg Gorbach, Chantal

Polsonetti, and Andy Chatha
Planning for the Industrial Internet of Things

Executive Overview .................................................................... 3
The Value Proposition for a Connected Industrial World .................... 4
From Products to Products-as-Services .......................................... 7
Industrial IoT Architecture ........................................................... 8
The Connected Asset Value Chain ................................................12
Smart Product Design Considerations ...........................................16
Standardization Plays a Key Role .................................................16
Security Concerns Remain a Primary Impediment .......................... 19
Recommendations .....................................................................21
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY
ARC Strategies January 2014
Industrial Internet of Things (IoT) Enables New Business Models
IoT Component
Description
Functionality
Examples
Intelligent sensors,
machines, devices,
assets
Embedded intelligence,
storage, and processing
power
Data producers and

consumers;
Local intelligence and
data storage
Controllers, machines,
pumps, transmitters,
valves, etc.
Communications
Networks of all types
Connectivity;
Data delivery;
Security
Wired, Wireless,
Cellular, Satellite,
other Networks
Big Data
Data repositories
Data aggregation
Hadoop, Azure
Analytics
Data processing
engines
Data analysis;
Insight
Analytical engines for

reliability, EAM and
FSM applications
Visualization
Text/graphical input
and output;
Intuitive touch, text,
voice;
Universal, Mobile
Data presentation;
Search queries
HMIs, OIs
Smartphones
Tablets
Industrial Internet of Things Building Blocks
2 Copyright ARC Advisory Group ARCweb.com
Executive Overview
The industrial Internet of Things (IoT) is at hand. The needed technologies
are available and require no substantial technological breakthroughs. Well
thought out reference architectures have been created, and compelling use
cases are being developed. Techniques for adding IoTs digital umbilical
cord capability to existing industrial systems - allowing companies to securely supply asset performance information to the asset manufacturers
and others - are coming to market. Whats lacking is broad recognition of
what has become possible, and the vision to utilize these new technologies
to transform industry.
Enabling business improvements
through secure remote access to
Granted, there is plenty of hype surrounding the

Internet of Things. Its not hard to find forecasts of
connected machines, assets, and other
trillions of dollars in economic growth driven by
devices is a primary value proposition
the use of ubiquitous intelligent sensors and devic-
driving manufacturer interest in the
es, Big Data and analytics tools, and universal
Industrial Internet of Things (IoT).
visualization capabilities.
But this isnt just another futuristic fad. Leading companies are making major investments in the Internet of Things concept for their industrial
solutions using catchy terms such as Smarter Planet (IBM), Internet of
Everything (Cisco), and Industrial Internet (GE). In Europe, Industry
4.0 is taking hold. Many other software, hardware, and automation companies are also developing (or already offer) industrial IoT solutions. IoTenabled improvements in industrial production as well as asset, maintenance, and service management processes promise to reduce unplanned
machine downtime and dramatically reduce energy costs, among numerous other anticipated benefits.
Industrial companies are in a unique position. Unlike in other IoT segments, such as consumer applications or the Smart Home, industrial
manufacturers are likely to both consume connected products for use in
their own operations and produce connected products for use by their end
customers. Automotive manufacturers, for example, are racing to add incremental
value-add
through
in-car
connectivity
and
associated
applications, but will also need to plan for the use of a new breed of connected machinery in their production facilities. The unique demands of this
dual use makes it vitally important that the entire organization (up to and
Copyright ARC Advisory Group ARCweb.com 3
including the C suite), understands the value proposition inherent in intelligent management of connected products.
ARC Advisory Group defines the industrial Internet of Things (IoT) as connecting intelligent physical entities, such as sensors, devices, machines,
assets, and products, to each other, to internet services, and to applications.
The industrial IoT architecture builds upon current and emerging technologies such as mobile and intelligent devices, wired and wireless networks,
cloud computing, Big Data, analytics, and visualization tools. With most of
the technological components already available, concerns over cyber security, technology standardization, and intellectual property ownership remain
the most prominent potential obstacles.
The Value Proposition for a Connected

Industrial World
Industrial companies have pursued horizontal and vertical connectivity
within their operations for some time now in their ongoing efforts to improve performance and achieve operational excellence.
Most existing
sensor and actuator points in an industrial automation system are in place

to support process/production control, safety, and regulatory compliance.
Increasingly, sensor data is also being used to support operations management and maintenance activities. These points are typically connected to a
particular real-time system or application that may share certain data with
other plant or enterprise systems or applications. Industrial companies use
information from these connected entities to lower costs, optimize processes, and execute efficiently.
So what does the industrial Internet of Things bring to the table? The industrial IoT emphasizes remote access to connected machines and other
devices to enable transformative business improvements. The ability to
serve data from ubiquitous connected devices on the plant floor and process sophisticated output from enterprise systems for operational
improvement become core enablers for driving the expected savings.
Intelligent connected products and machines help improve performance
and reduce downtime through remote diagnostics, troubleshooting, and
condition monitoring capabilities. These support predictive maintenance
approaches that minimize unplanned downtime, improve maintenance
productivity and effectiveness, and enable assets to operate in an optimal

manner. This, combined with the ability of authorized parties (both internal and external to the organization), to remotely access data from
appropriate internet-connected devices, machines, and other plant equipment can deliver incremental business benefits.
Benefits
Means
Timeline
Source
1 to 1.5%
productivity
improvements
Condition monitoring,
improved performance,
innovation enabled by remote
access
Annual
GE
$10 to $15 trillion

growth in global
GDP
Condition monitoring,
improved performance,
innovation enabled by remote
access
20 years
GE
$20 billion
Improved IoT-enabled service

and maintenance
Annual
current cost
GE
$14.4 trillion
Technology innovation;
Incremental competitive
advantage through
connectivity and remote
access
10 years
Cisco
$326 million
(One mature oil &
gas field)
Field data capture,

informed & predictive
operations
10 Years
IBM
Selected Estimates of Quantifiable Benefits Associated with the

Industrial Internet of Things
Initial Target: Reduce Unplanned Downtime

Machine downtime, particularly unplanned downtime, is highly detrimental to production performance. Over 70 percent of respondents in an
ARC survey on enterprise asset management (EAM), for example, cited
The potential for further reductions in
unplanned machine downtime through
remote monitoring and access is a
primary driver behind use of the
Industrial Internet of Things (IoT) and
connected devices in manufacturing.
improved machine uptime as a primary business

driver behind purchasing EAM software.
The potential to incrementally improve this metric
through remote asset monitoring by internal or
external service and operations personnel provides
real business value that can help industrial organi-
zations justify adoption of the IoT and connected devices. Connected devices can help reduce downtime through remote monitoring of sensor data
like vibration and temperature for predictive maintenance purposes. For
example, remote service personnel could identify specific problems and
potentially perform configuration fixes or update software or firmware

without having to travel to the facility; saving time and travel expense, plus
the need to involve typically time-strapped on-site technicians.
The Manufacturer as Connected Product Producer

Many industrial manufacturers have devoted significant resources over the
years to internal operational improvements via performance monitoring,
pursuit of best practices, overall equipment effectiveness (OEE), and similar
pursuits. For todays high-performing manufacturing firms, the ability to
improve the profitability and revenue potential of their service operations
once the product is shipped to the customer frequently represents a new
revenue opportunity.
GE, for example, has been very public about reporting the benefits of connected products, including the companys ability to remotely resolve 53
percent of service issues in its power and water business. Manufacturers in
general can use the IoT to proactively monitor products in the field and use
that information to reduce mean time to repair (MTTR) and the number
and frequency of technician dispatches.
The industrial Internet of Things promises improved performance of manufacturers service operations through remote connectivity, as well as
incremental connectivity-based revenue streams that represent entirely new
opportunities. Clearly, the value proposition for the IoT extends beyond
simple connectivity into the ability to build new products and services using that connectivity as a base.
Service capabilities increasingly provide a means for manufacturers to achieve
competitive differentiation. Adoption of IoT-based device connectivity enables predictive maintenance capabilities, continuous uptime, rapid service
response, and the opportunity to offer incremental, revenue-producing
products and services.
Providers of IoT-connected devices will also be able to gain competitive advantage by delivering incremental value, differentiating products from
competitors, and fostering new revenue streams. Manufacturers that offer
connected products will be able to remotely access the installed base and
provide a direct path to maintaining customer satisfaction, reducing service
costs, improving profitability of service and warranty management, and
delivering products as a service.
Category
End User
Product Supplier
Productivity
Reduced downtime, better

asset utilization and ROA
Ability to solve customer

issues remotely
Lower lifecycle costs
Reduced need for onsite

service
Easier to serve internal data

customers
Improved productivity of
service organization
Remote diagnostics,
predictive maintenance,
remote fixes and updates
Improved profitability through

reduced service and warranty
management costs
Supplier collaboration on
business problems
From fix & repair to helping

customers with business
problems
Faster, more focused service,

repair, and optimization
Improved customer
satisfaction
Pay for product value,

not just product
Product as a Service
Incremental functionality and

process insight
New revenue streams
Service
Innovation
Select List of Benefits Realized by End User and Device Supplier through
Use of Connected Products
From Products to Products-as-Services

Use of IoT-type connections can enable industrial organizations to not only
reduce costs through monitoring of remote devices, but also to generate
entirely new revenue streams. One of the most compelling iterations of this
concept is the migration from selling products; to selling the value of the
product, or product-as-a-service. Examples include an aircraft engine builder
billing airlines on the amount of thrust provided, instead of just an aircraft
engine and a maintenance contract. Or an HVAC
The industrial Internet of Things will
allow even industrial products to be sold
on a subscription-based service basis.
supplier that bills its customer based on the

amount of comfort its system provides, rather than
just a climate control system.
These applications require more than just smart devices and digital umbilical cord connectivity.
With product-as-a-service, the manufacturer or
OEM retains ownership of the asset itself, providing all required maintenance, service, and repair. This represents a whole new business model.
Manufacturers and OEMs that are not yet at the point of providing a product as a service can still benefit from using the IoT and connected products
to reduce warranty and service costs and improve the service levels and
profitability of these activities. Remote device connectivity coupled with
device-level service apps can help manufacturers more rapidly diagnose
and troubleshoot issues in the field, address them in a more timely fashion,
and market new subscription-based products and services.
Industrial IoT Architecture

Today, the Internet of Things is in a chaotic emerging state, with no agreed
upon standard systems, standard networks, or standard interfaces. Multiple communications technologies are used and a variety of embedded
intelligence technologies and sensor and actuator solutions are available.
Numerous IoT research and development activities are currently under
way. These target opportunities across a variety of separate domains such
as health care, smart manufacturing, smart cities, logistics, smart houses,
smart energy, retail, and smart transport. Each segment has unique requirements, but some commonalities do exist.
Four Main Parts of Industrial IoT

Any industrial IoT system contains four main parts: intelligent assets; a
data communications infrastructure; analytics and applications to interpret
and act on the data, and people.
Intelligent assets include machines or other assets enabled with sensors,
processors, memory, and communications capability. In certain cases, these
assets may have an associated virtual entity or support software-defined
configuration and performance. Intelligent assets will generate more data
and share information across the value chain. Some intelligent assets will
eventually be self-aware or operate autonomously. In addition to the Internet, data communications between these assets and other entities will often
leverage network technologies such as LTE, ZigBee, Wi-Fi, IEEE 802.15-4,
and cloud-based computing infrastructure with storage to accommodate
Big Data requirements.
Powerful analytics and related software will enhance asset optimization as
well as system optimization. Predictive analytics will be deployed to re-
duce unplanned downtime.
Newly available information generated by
these tools will lead to new, transformative business models supported by

new applications. Instead of offering physical products for sale, companies
will increasingly offer products as a service as noted earlier.
People will participate by having access to much more data, better analytics
tools, and better information, and will increasingly make decisions based
on the analysis generated by these resources. Quantified decision-making
will become much more common and intelligent information will appear
when and where people need it. But people will also continue to become
better connected to others and to machines and systems through social and
mobile tools and applications.
IoT Functional Components

Diving down a level, lets explore the functional components required to
realize the industrial IoT. Thought-leading work by the IoT-A (Internet of
Things Architecture) project in Europe to establish and evolve an architectural reference model for the IoT, is very helpful.
IoT-A devised an architectural reference model
and defined an initial set of key building blocks.
Together they are envisioned as crucial foundations for fostering a future, interoperable
Internet of Things.
The IoT Reference Model provides the highest
level of abstraction for defining the IoT Architectural Reference Model. It includes:
Facts about the IoT-A Project
An IoT Domain Model
An IoT Information Model that explains how

IoT knowledge is going to be modeled
An IoT Functional Model that encompasses an IoT Communication

Model; and a Trust, Security, and Privacy Model
The IoT Reference Architecture provides a reference for building compliant

IoT architectures. As such, it provides views and perspectives on different
architectural aspects of concern to IoT stakeholders. Within the IoT Reference Architecture, a Functional View has been developed. It includes seven
main areas of functionality:
IoT Functional Model from IoT-A
Communication: an abstraction, modeling the variety of interaction

schemes derived from the many technologies belonging to IoT systems
and providing a common interface to the IoT Service. This component
provides a reference stack for communicating with the intelligent devices.
IoT Service: includes functionalities for discovery, look-up, and name

resolution of IoT Services. This component provides for exposing device and sensor data as a service.
Virtual Entity: functions for interacting with the IoT system on the basis of virtual entities. This component provides for asset-based
information exchange. For example, you can inquire about the outside
temperature at your car, instead of looking up the value of sensor T123.
IoT Process Management: process modeling, process execution. This

component provides an environment for modeling IoT-aware processes
and the tools necessary to model business processes.
It also executes
these processes by utilizing IoT services orchestrated in the Service Organization layer.
Service Organization: service composition, orchestration, and choreography.
This function resolves the appropriate services that can
handle the IoT User's request, and provides an asynchronous way to

request service orchestration.
Security: functions for ensuring the security and privacy of IoT-Acompliant systems. This component provides for authorization, authentication, identity management, key exchange and management for
secure communications, and the like.
Management:
This component provides functionalities for dealing
with configuration, fault identification and isolation, performance,

membership management, reporting, and state monitoring, prediction,
and enforcement.
Are Industrial Companies Ready for Software-Defined Machines and

Virtual Assets?
Connected Device Management Platforms

The IoT can be viewed as a multi-layer infrastructure that allows information from remote products, sensors, devices, machines, assets, and other
entities to be used anywhere by any authorized party. Connected device
management (CDM) platforms provide not only the glue that links devices
to higher layers of the architecture, but also value-added functionality and
the opportunity for competitive differentiation at the device level.
CDM platforms are critical solution components, with functionality that
goes beyond simple device connectivity and SIM card management to include device configuration, device management, and creating and
executing value-added, and often revenue-producing, device-level applications.

CDM platforms extend device connectivity solutions from simple openloop monitoring, alarming, and SIM card management to closed-loop solutions that allow field service and other local issues to be resolved remotely.
The incremental value-add brought by CDM platforms allows suppliers to
charge a higher price and subsequently realize higher margin per device,
user, amount of data traffic, or other subscription parameter.
Connected Device Management Platforms Function as IoT Middleware
The Connected Asset Value Chain

Certain types of industrial equipment, machinery, or other assets used in
operations are already connected and remotely monitored or operated
examples of the industrial IoT. Heavy mobile machines used in agriculture
or mining is a leading example. Many large mining and earthmoving machines, as well as autonomous or semi-autonomous harvesters and other
machines, are already actors in the IoT. A second type is large rotating machines used to generate electric power, lift, or thrust. This type includes jet
engines, hydraulic pumps, and power generation turbines.
General Elec-
tric and other suppliers are targeting this class of assets. A third type is
machines and equipment used to produce commercial products. This cate-
gory includes a great variety of equipment such as pumps in refineries or

other continuous processing plants; robots in automotive plants; retorts in
thermal processing of low-acid foods in cans, pouches, jars or bowls; and
mixers, tanks, compressors, and countless other industrial machines. Opportunity exists to improve operations by adding intelligence, sensors, and
communications to these machines, and connecting them to new applications and analytics as part of the Internet of Things.
What can industrial companies do to help their operations equipment vendors do a better job for them?
One possibility is to share in-service
performance data in real time. Makers of heavy mobile machines for mining and agriculture already incorporate sensors, intelligence, and
communications technology in their machines to monitor performance in
the field. Makers of pumps, compressors, robots, turbines, and other industrial equipment used in factories and industrial plants also want in-service
information from the products they manufacture for use as industrial assets.
Establishing a Digital Umbilical Cord for ABCs Pump in XYZs Plant
A real-time feed of select machine sensor data would enable the vendor to
monitor and analyze machine performance, suggest alternative operating
parameters, improve its product designs, predict failures in advance, reduce warranty support costs, provide better maintenance and support
services, and more. By monitoring a large set of its deployed products, an
asset vendor may discover new patterns and failure modes that individual
users would not be able to identify.
Multi-Cloud Connected Asset Value Network Node Model
How can industrial companies share in-service performance data safely and
securely with trusted vendors? In certain applications, it is possible to add
low-cost sensors that collect performance data and communicate this
through plant Wi-Fi networks. In the not-too-distant future, equipment
will come outfitted with the necessary sensors, intelligence, and communications capability built in. Until then, a sensible approach to deploying this
connected asset value chain is to leverage the existing data infrastructure
and add a secure cloud-based system to share selected performance data
with vendors and service providers.
How Will the Industrial IoT Change Plant Software and Automation?
Leverage Existing Systems and Cloud-based Solutions

To better serve their customers, asset vendors want access to in-service operating data from their products. Today, operating assets often have at
least some associated sensors and operating information (cycle count, etc.)
But typically, this information is read only by a PLC, DCS, or plant floor
application such as EMI, asset-based historian, HMI, or MES. These applications may also provide a basic hierarchical plant model that names,
classifies, and locates the asset (i.e., Pump P-004). If other applications or
systems need the information, it is shared via the applications API and
possibly some intermediate software.
By adding cloud-based solutions, this existing information infrastructure
could become the basis for securely sharing certain information with the
asset vendors. Companies can take advantage of public cloud services such
as Microsoft Windows Azure. These can serve as a secure private computing platform for SaaS applications that could help ensure that only certain
information is shared with specific trusted vendors who can subscribe, subject to constraints and conditions and possibly payment of service fees.
This approach eliminates having to wait for possible standard ways of doing things to emerge, which in any case, wouldnt likely easily
accommodate legacy assets.
Add Cloud-Based Solutions to Existing Systems to Share Asset

Information
The cloud-based solution enables immediate participation in a companys

connected asset value chain.
It enables asset vendors to monitor their
products real-time performance in-service, and to act upon the information gathered from these assets to better serve their customers.
Smart Product Design Considerations

We are rapidly approaching the point where manufacturers of industrial
products/assets (pumps, compressors, robots, machine tools, turbines, and
a host of other industrial equipment) should be working to understand how
to design for industrial IoT.
This will involve adding embedded
processing,
storage,
and communications technology,
plus
the
right
complement of sensors, to the

product.
The
intelligent
onboard system will need to

support the digital umbilical
cord function, as well as other
Designing IoT-enabled Products Requires Concurrent Design
and Simulation of Software, Electrical, and Hardware Systems
appropriate functionality for a

given product.
Design tools are available that enable concurrent design and simulation of
software, mechanical systems, and electrical systems. The difficulty lies in
determining requirements such as what connection technologies the product should support; what sensors/data
the
product
should
expose; what intelligence the product
requires;
and
what
performance, data selection, buffering,
communication
frequency,
security, etc. should be supported.

A product-centric model of the
A Product-centric Model of Connected Systems Can
Help Identify Requirements
connected asset ecosystem can help

accomplishing this.
Standardization Plays a Key Role

Standardization of core components of the IoT architecture is a primary enabler to realizing its potential benefits.
Widely adopted standards,
particularly in key areas such as data exchange, architecture, security, and

many others, will make industrial IoT solutions easier and simpler to im-
plement and manage. Standards are important for future-proofing installations and protecting users from becoming locked into a specific vendor or
technology. In the fast-moving IoT universe, however, it will be difficult
for standardization efforts to keep up with the rapid pace of new technology developments.
Standardization of the Industrial IoT
architecture is one of the most
important, and most challenging,
issues affecting adoption.
Industrial device-level connectivity remains one of

the most fragmented interface areas, with many proprietary and/or defacto standard protocols in use.
Industrial manufacturers are well aware that proprietary supplier protocols continue to enable suppliers to
retain customers and deflect third-party involvement in their installations.

In the industrial IoT world, this trend is not just limited to manufacturing
applications, as even the Smart Grid and smart electrical meters are being
implemented as closed systems.
Proprietary implementations are also widely employed in the middleware
platform connectivity layer of the IoT in spite of the increasing availability
of standards.
For example, some platform suppliers currently support
standard Java and REST APIs, while others employ proprietary protocols
and homegrown APIs.
Standards and Organizations

Numerous efforts to standardize IoT components and develop standardized IoT architectures and implementation approaches are under way
around the world. Developments with the most near-term potential impact
for manufacturers are likely to come from the IT world. This is particularly
due to the emphasis placed on IP-based devices, interfacing to higher level
architectural components, and the overall faster pace and more widespread
adoption of technology in this space. This scenario is not new to manufacturers, since most have adopted Ethernet and wireless networks,
commercial operating systems, and other carryovers from the COTS technology world.
Beyond the IoT-related standardization activities, numerous organizations
have formed or focused resources on IoT architecture and implementation.
The European Union, for example, has formed the European Research Cluster on the Internet of Things, or the IERC, to help coordinate activities in
this area. Projects under the IERC umbrella range from OpenIoT, which is
pursuing open source IoT in the Cloud, to the IoT-A or Internet of Things
Architecture previously referred to in this report. NIST in the US also

formed a consortium dedicated to IoT issues, but has yet to issue any deliverables.
Standard
Organization
Summary
LTE
ETSI
Telecomm standard for modern

connected cars and cellular devices
MQTT
IBM, OASIS (proposed)
Publish/subscribe message transport for

remote devices
Numerous
IEEE
Network physical and data link layers:

Ethernet, WiFi, 6LowPan, Bluetooth, etc.
IPv6
IETF
Internet network/transport layers
ISA 100
ISA
Wireless industrial network architectures
TR50
TIA
M2M Smart Device Communications

Framework
Selected Examples of IoT-Related Standardization Efforts
IPv6
Every device on the Internet must utilize TCP/IP (more accurately, the Internet Protocol Suite) to communicate with other internet-connected
devices. TCP/IP provides the identification, location, and routing that are
core components of the IoT architecture. TCP/IP is also important because
it can support virtually any media type, which is important for industrial
implementations. Most applications already support TCP/IP.
IPv6, the latest revision of the Internet Protocol, was developed by the IETF
to replace IPv4, which still carries over 90 percent of Internet traffic. IPv6
simplifies network management and addresses the larger problem with
IPv4, which ran out of available new addresses. IPv6 further promises the
ability to support differing network types and offers improved security
provisions. Cisco, Rockwell Automation, and Panduit have founded an
industrial-specific consortium, Industrial IP Advantage, dedicated to the
use of IP in industrial applications.
The 6LoWPAN extension of IPv6 allows it to be used on low-power wireless devices and limited bandwidth networks, specifically IEEE 802.15.4.
This significantly expands the number of low-end devices that can be addressed in the Industrial Internet of Things. Use of 6LoWPAN is also being
pursued in non-industrial implementations of the IoT, such as its promotion by the IPSO Alliance in the energy, consumer, and healthcare sectors.
Security Concerns Remain a Primary

Impediment
Concerns about the security integrity of the industrial IoT, connected devices, and unauthorized access to proprietary information are the most oftcited obstacles to widespread adoption. Widely publicized commercial and
industrial data breaches, ranging from Target Stores to Stuxnet, raise manufacturers awareness as to their potential exposure to theft, process
disruptions, personnel injuries, and liability. Security issues pose the further threat of undermining the primary industrial IoT value proposition of
reduced unplanned downtime, particularly when process disruption is the
hackers objective.
Manufacturer concerns about IoT security frequently stem from the universal connectivity inherent in the IoT, reliance on internet technology
(including cloud platforms and commercial networks), concerns about publicized breaches of internet-based solutions, and data export restrictions.
The need for robust cyber security to protect sensiIdentification and management of
potential security vulnerabilities must be
paramount in order to protect sensitive
data and intellectual property.
Manufacturers will need to implement a
layered approach to IoT security that
extends throughout the enterprise;
encompasses customers, partners, and
tive data and proprietary information is therefore

paramount, and is logically cited in the IoT visions
of GE and other proponents.
Current approaches to industrial cybersecurity
emphasize stringent account management and a
layered approach by architecture tier. Embedded
other users of connected devices; and
device suppliers looking to serve IoT applications
strictly manages use of file transfer
are focused on addressing the issue of device secu-
mechanisms, such as USB drives.
rity through a variety of means, including account

management and use of commercially available
anti-virus packages from suppliers such as McAfee and Semantic. Conventional network protection products such as basic or advanced firewalls are
widely used to guard network connectivity.
Suppliers of connected device management middleware platforms currently employ standard schemes such as https over SSL and 256-bit encryption.
Frequent use of mechanisms such as USB drives to introduce malicious
software means that industrial cyber security strategies must address this
form of ingress.
Industrial cyber security issues are being pursued individually and collectively by organizations such as the IEC, NIST, NERC, and industry
organizations such as ISA. NIST recently issued a preliminary cybersecurity framework proposal for review that is focused on securing critical US
infrastructure. This framework was developed in response to the US Presidents Executive Order: Improving Critical Infrastructure Cybersecurity.
Industrial control system suppliers are also seriously pursuing a variety of
cyber security strategies. The Industrial IP Advantage group mentioned
earlier includes the issue of IoT security in its advocacy of industrial IP.
This group also advocates a layered security model composed of device
hardening, application security, computer hardening, network security,
physical security, and policies.
When using cloud-based solutions, data export restrictions can be addressed by:
Contractually agreeing with other parties involved in data exchange as

to policies for managing in-country data restrictions, and
Selecting a cloud provider that can ensure that the cloud components
are deployed only in a particular region to ensure that all traffic and data exchange is routed through this region.
ARC provides extensive coverage of the industrial cyber security threat,

including current and potential strategies for technology suppliers and users alike. Readers interested in pursuing more in-depth information on
cybersecurity strategies are encouraged to contact ARC.
Recommendations
Based on ARC research and analysis, we recommend these actions for
companies regarding industrial IoT adoption:
Prepare to leverage the industrial Internet of Things and connected devices throughout your production and service operations. The
pervasiveness of this technology will require policy making at a high
level to ensure continuity and maximum benefits.
Asset vendors want real-time, in-service information about their products. Help asset vendors serve you better by securely sharing select
information across the connected asset value chain. This can often be
accomplished by using existing plant automation and software systems
as a starting point.
The emphasis on connected devices means that the IoT can be rolled
out incrementally. This allows you to refine your necessary policies and
procedures using the low-hanging fruit of justified point solutions
(perhaps by machine type, application, or single product or production
line), before rolling it out to your entire facility or product line.
Much of the technology inherent in the industrial Internet of Things

and connected devices is or will soon be available. Standardization of
device connectivity and security of remotely accessible devices are two
of the major issues impeding adoption, and ARC will continue to report
on developments in these areas.
Legacy systems can and should be included in your IoT vision. Many
of these systems already feature either Ethernet or wireless connections
designed to enable horizontal and/or vertical connectivity. The combination of installed intelligent devices and IP network connectivity is a
significant step toward realization of potential IoT benefits.
Acronym Reference: For a complete list of industry acronyms, please refer

to www.arcweb.com/research/pages/industry-terms-and-abbreviations.aspx.
API
Application Program Interface
LTE
App
Application (software)
M2M Machine-to-Machine
CDM Connected Device Management

Platform
MES
Management
Transport
MTTR Mean Time to Repair
NERC North American Electric
CRM Customer Relationship

Management
DCS
EC
European Community
EMI
Enterprise Manufacturing
ERP
Reliability Corporation
NIST National Institute of Standards
and Technology (US)
Distributed Control System
EAM Enterprise Asset Management
Manufacturing Execution System
MQTT Message Queue Telemetry
COTS Commercial Off-the-Shelf

CPM Collaborative Production
Long Term Evolution
OASIS Organization for the

Advancement of Structured
Information Standards
Intelligence
OEE
Enterprise Resource Planning
OEM Original Equipment Manufacturer
ETSI European Telecommunications
OI
Overall Equipment Effectiveness

Operator Interface
Standards Institute
PLC
Programmable Logic Controller
Euro (currency)
PLM
Product Lifecycle Management
FP7
Seventh Framework Programme
REST Representational State Transfer
FSM
Field Service Management
ROA Return on Assets
HMI
Human Machine Interface
SaaS Software as a Service
IEC
International Electrotechnical
SCM
Supply Chain Management
Commission
SIM
Subscriber Identity Module
SQL
Structured Query Language
SSL
Secure Sockets Layer
TIA
Telecommunications Industry
EUR
IEEE Institute of Electrical &

Electronics Engineers
IERC European Research Cluster on
Association
the Internet of Things

IETF Internet Engineering Task Force
IoT
TR50 M2M Smart Device

Communications Standard
Internet of Things
IoT-A Internet of Things Architecture
USB
Universal Serial Bus
IPv6 Internet Protocol version 6
VDE
Association for Electrical,
ISA
International Society of
IT
Information Technology
Electronic and Information

Technologies
Automation
VDI
Association of German Engineers
Analysts: Greg Gorbach, Chantal Polsonetti, Andy Chatha

Editor: Paul Miller
Distribution: MAS and EAS Clients
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Planning For The Industrial Internet of Things

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ARC STRATEGIES

By Greg Gorbach, Chantal

Planning for the Industrial Internet of Things

VISION, EXPERIENCE, ANSWERS FOR INDUSTRY

ARC Strategies January 2014

Industrial Internet of Things (IoT) Enables New Business Models

Data producers and

Networks of all types

Analytical engines for

Industrial Internet of Things Building Blocks

2 Copyright ARC Advisory Group ARCweb.com

ARC Strategies January 2014

Granted, there is plenty of hype surrounding the

connected machines, assets, and other

trillions of dollars in economic growth driven by

devices is a primary value proposition

the use of ubiquitous intelligent sensors and devic-

driving manufacturer interest in the

es, Big Data and analytics tools, and universal

Industrial Internet of Things (IoT).

Copyright ARC Advisory Group ARCweb.com 3

ARC Strategies January 2014

The Value Proposition for a Connected

sensor and actuator points in an industrial automation system are in place

4 Copyright ARC Advisory Group ARCweb.com

ARC Strategies January 2014

productivity and effectiveness, and enable assets to operate in an optimal

$10 to $15 trillion

Improved IoT-enabled service

Field data capture,

Selected Estimates of Quantifiable Benefits Associated with the

Initial Target: Reduce Unplanned Downtime

improved machine uptime as a primary business

Copyright ARC Advisory Group ARCweb.com 5

ARC Strategies January 2014

potentially perform configuration fixes or update software or firmware

The Manufacturer as Connected Product Producer

6 Copyright ARC Advisory Group ARCweb.com

ARC Strategies January 2014

Reduced downtime, better

Ability to solve customer

Lower lifecycle costs

Reduced need for onsite

Easier to serve internal data

Improved profitability through

From fix & repair to helping

Faster, more focused service,

Pay for product value,

Incremental functionality and

New revenue streams

From Products to Products-as-Services

supplier that bills its customer based on the

With product-as-a-service, the manufacturer or

Copyright ARC Advisory Group ARCweb.com 7

ARC Strategies January 2014

Industrial IoT Architecture

Four Main Parts of Industrial IoT

8 Copyright ARC Advisory Group ARCweb.com

ARC Strategies January 2014

duce unplanned downtime.

Newly available information generated by

these tools will lead to new, transformative business models supported by

IoT Functional Components