This document discusses the industrial internet and Internet of Things (IoT), and the business opportunities they present. It provides definitions of these concepts and explains that industrial internet involves systematically applying sensor, communication, and data analysis technologies to improve productivity and create new business. It notes that major industry leaders like Cisco and GE see the industrial internet driving trillions in economic value through increased productivity, optimized asset utilization, and new business models. The document also outlines some of the challenges in realizing this potential, as well as examples of business models and technology solutions that can help companies benefit from the industrial internet.

1. Teollinen internet ja IoT –
mistä liiketoimintahyötyä?
24.9.2014
Digitalisointi - Avain kasvuun –seminaari
Heikki Ailisto, tutkimusprofessori
VTT Technical Research Centre of Finland

2. 2
Mitä Teollinen Internet ja
Internet of Things
tarkoittavat
- ja miksi murros tulisi nyt

3. 3318/09/2014
Industrial internet is a part of “through
digitalization” – everything goes digital
Industrial internet means
systematically applying sensor,
communication and data
analysis technologies for
improving productivity and
creating new business.
All objects have
unique digital
identity.
All objects have
unique digital
identity.
Smart things have
connectivity.
Smart things have
connectivity.
Internet of Things
is a digital
representation of
the real world.
Internet of Things
is a digital
representation of
the real world.

4. 418/09/2014 4
202020101990 -
Interoperability, connectivity, access
control, service discovery, privacy
(IoT platform)
Fixed/wireless
connectivity
(Internet)
App App App App
intelligent machines smart sensors
Unique ID for every object
IndustryC
IndustryA
IndustryB
Fixed/wireless
connectivity
(heterogenous)
Silo1HVAC
Silo2Lighting
Silo3Accesscontrol
SiloX
Silos within one domain
and company (systems do
not share data), case FM.
Business domains in silos.
Waste of resources because
of duplicating systems, ICT.Facilitymngmt
IoT solution:
First level benefits
Interoperability and
standardization,
lower cost of
implementation.
Industrial internet broader benefits: Sharing information
between systems, within companies, and even between
domains; Metcalfe’s law V ~ N2,
advanced data analytics and DSS bring not only savings but
new business.
Local smartness
Smart machines with
sensing and connectivity
Trend from M2M silos to IoT, or Industrial Internet
(but this is not the whole picture…)
Enabling new
business models,
e.g. from sale to pay-
by-use
Act:
Optimize
Control
Manage

5. 5
Matkalla kohti teollista
internetiä:
millainen muutos on
odotettavissa?

6. 6
Cisco: Internet of everything
…the age of IoE, creating an unprecedented
opportunity to connect the unconnected: people,
process, data, and things.
• The Internet of Everything (IoE) creates $14.4 trillion in Value at
Stake — the combination of increased revenues and lower costs
that is created or will migrate among companies and industries
from 2013 to 2022.
• The five main factors that fuel IoE Value at Stake are: 1) asset
utilization (reduced costs) of $2.5 trillion; 2) employee productivity
(greater labor efficiencies) of $2.5 trillion; 3) supply chain and
logistics (eliminating waste) of $2.7 trillion; 4) customer
experience (addition of more customers) of $3.7 trillion; and 5)
innovation (reducing time to market) of $3.0 trillion.
www.cisco.com/web/about/ac79/docs/innov/IoE_Economy.pdf
GE: Industrial Internet
The world is on the threshold of a new
era…the convergence of the global
industrial system with the power of
advanced computing, analytics, low-cost
sensing and new levels of connectivity
permitted by the Internet...
• Increased productivity …, if the Industrial
Internet could boost annual productivity growth
by 1-1.5 percentage points over the next twenty
years ... add a $10- 15 trillion to global GDP –
the size of today’s US GDP.
http://www.ge.com/docs/chapters/Industrial_Internet.pdf
What does it mean: Views of industry leaders

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Affordable technology is here
Why is it happening now?
Computing power grows
Smart machines
Intelligent analytics, decision support systems
Big data
“Store everything” paradigm (dirty cheap GB)
Connectivity like newer before
Internet IPv6, no limit to nodes
IoT paradigm – connected objects
Low power communication
Identify and track everything (QR, RFID, GPS)
Sensing everything in real time
Extremely low cost and small
Connected
Advanced sensing
Bio-mimicing
People are ready for it
Competences
Average person has good
competences with digital services
and products.
Acceptance
People in all age groups use web,
smart phones, car computers at
home and on free time.
Digital natives, Y-generation, not
only accept, they expect!

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Challenges
Identifying and exploiting business benefit.
Finding win-win solutions in value networks vs.
fighting who owns the data, who can use it.
Building and deploying applications fully
leveraging data from multiple sources
Cyber security and privacy threats
Closed / fragmented / lock-in solutions
(vs. open internet-type solutions)
Installing and managing 50 B smart devices
Powering 1 T sensors

9. 9
Teollinen internet ja
liiketoimintahyöty

10. 1018/09/2014 10
IoT field and players
Communication
hardware
Cisco, Ericsson,
Nokia, Huawei..
Communication
& connectivity service
Vodafone, KDDI,
TS, Elisa
IoT service
platform
Oracle, IBM, SAP, Axeda,
Tieto, CGI, Wapice, Oliotalo..
“The Actual
Business” Asset /
Brand
owner
System
integrators
Sensors
actuators, RFID
Actuator X Sensor X VTT Node RFID X
Security&privacy
Vertical
playersSchneiderGE
Asset
management
service
companies
OEM
system +
service
providers
Siemens
Intelligent assets (with sensors, actuators, ID, connectivity)
Many companies here want to become “vertical players”
Industrial
automation
Honeywell,
Siemens,
Rockwell
Metso
Automation, ..
Wild cards: Google
and Microsoft, Apple
Telcos, and others
too, want to expand
their role

11. 11
Here’s what Google gets for its money:
A Product Master Who Beat Apple to the
Next Big Thing
Before co-founding Nest, CEO Tony Fadell
was best known for designing the iPod, ...
When Google announced yesterday its $3.2
billion cash purchase of Nest, the jokes flew. “If
your house is burning down you’ll now get
gmail ads for fire extinguishers,” Valleywag’s
Sam Bidd
What Google Really Gets Out of
Buying Nest for $3.2 Billion
BY MARCUS WOHLSEN, Wired Magazine
01.14.2014
Nest Learning Thermostat
The bottom line: The
second generation of the
energy-saving Nest
Learning Thermostat puts
this device even further
ahead of the (nearly
nonexistent) competition.Is this a threat or opportunity to established
companies?

12. 121218/09/2014
Potential business models
• Optimize utilization,
save costsManage
• Pay-per-useMonetize
• Remote operationOperate
• Provide digital
services and contentExtend
According to Gartner, there are four major business models.

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Model Remote
support
Optimize
current
process
Transformat
ion to
service
Pay per use “Revenue
share”
Case Remote
maintenance
support in fleet
management
(Finnish
company X)
Tana Smart site:
shredder
productivity, cost
Tires as service
to truck
companies
(Michelin)
Advanced
leasing, e.g.
vehicles,
machinery
Split the savings
in energy
(Facility
automation
company)
Players Equipment
supplier/service
provider
(–Customer)
End user
Supplier
Service supplier
– Customer
Supplier – User
(customer)
Supplier
(maintenance,
analytics…)
Customer
Technologies Voice & video
connectivity,
augmented
reality, 24/7 call
center with
experts
Data collection
Measurement
communication
data-analysis,
optimization,
visualization
control
Measurement
communication
data-analysis
Reliable trusted
measurement,
communication
Reliable trusted
measurement,
analytics
How to benefit from Industrial Internet

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RDI activity
EU Horizon 2020: Cyber Physical Systems,
Internet of Things
ECSEL PPP: embedded systems, IoT,
smart systems, critical systems
Digile SHOK: IoT, D2I
FIMECC: S-STEP, S4Fleet
VTT Productivity with IoT
Tekes program on industrial internet
Finnish Industrial Internet Forum

15. 1718/09/2014 17
Module 4.1
Ismo Vessonen, Pirkka Tukeva
Global asset management
• CBM
• Remote operation,
monitoring
• Digital spare parts
Module 4.2.
Miimu Airaksinen
Intelligent infrastructures
• Smart lighting (Janne Aikio,
Marko Jurvansuu)
• Responsive buildings
Module 4.3
Anu Seisto
Digital society
• Interoperable services
• Digital infrastructure
Module 3. Information management and analysis, cyber security, Heli Helaakoski
Module 2. Connectivity, Pertti Raatikainen
Module 1. Networked sensors, Jukka Hast From real world phenomena to digital data
Program Lead, Heikki Ailisto
Business development, Petteri Alahuhta
Industrial internet is a VTT priority:
ProIoT program – 2013-16

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Opportunity Mapping is the Starting Point
Opportunity
Mapping
Project plan
Business Model Innovation
- Development Programme
Product or service Innovation
- Development Project
Specific technology need
- Development Project
Opportunity Mapping
service and tools
Funding opportunities
e.g. Tekes,
Technology and Business
Development resorces,
services, partners, tools
Funding opportunities
e.g. Tekes, EU, Ecsel

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Conclusion
Industrial internet is coming. It will disrupt most businesses and
public services during next 3 to 15 years. *)
Technologies are there, and they are affordable.
Risks and threats
Remaining too long in comfort, until someone takes your business
Major information security breaches (company level)
Opportunities
Improved competitiveness through offering productivity to customers
Open new business or take somebody else’s old one
What to do
Start preparing IoT/II strategy – think networks, can’t do it alone.
Analyze your services, products and processes. How does industrial
internet impact them? Is the game going to change? Should we change it?
Start early with experiments, learn from experience, also from setbacks.
*) Vastaukseni otsikon kysymykseen hype vai todellinen mahdollisuus: hypeäkin
on mukana, mutta kyllä tulossa on murros ja mahdollisuus.

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TECHNOLOGY FOR BUSINESS
Contact: Heikki Ailisto
heikki.ailisto AT vtt.fi
+358 40 555 0726

19. 22
VTT:n esimerkkejä teollisen
internetin teknologioista ja
hyödyistä

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Pilot installations in outdoor recreational area in Helsinki
Malminkartano.
Commercial luminaires as starting point to improve
technical performance as well as user acceptance.
Integrated sensors and wireless communication to deliver
different lighting modes.
Case: Smart Streetlight “AthLEDics”

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