Functional analysis of IoT implementation in XYZ company for reducing quality cost

1. FUNCTIONAL ANALYSIS OF
IoT IMPLEMENTATION IN
MANUFACTURING PLANT FOR
XYZ COMPANY
INTERMEDIATE INTEGRATING
PROJECT
ACADEMIC ADVISOR:
Prof. Dr.Inz Bartosz Wachnik,
AUTHOR,
Harsha Pundalikrao Durugoji -
288648

2. 1
CONTENTS
1. INTRODUCTION .................................................................................................................2
1.1 Abstract............................................................................................................................2
1.2 Evolution of IoT...............................................................................................................2
2. LITERATURE REVIEW......................................................................................................4
3. PROJECT APPROACH. ......................................................................................................9
3.1 PROFILE OF COMPANY ..............................................................................................9
3.2 Scope of project .............................................................................................................10
3.3 Project Methodology......................................................................................................11
3.4 Gantt chart......................................................................................................................12
4. FUNCTIONAL ANALYSIS ...............................................................................................14
4.1 Functional requirements.................................................................................................14
4.2 Features of cloud backup system ...................................................................................15
4.3 Functional requirements.................................................................................................19
4.4 Requirements for the current iot implementation in a an xyz company........................21
4.5 Industrial Big Data.........................................................................................................24
4.6 SAP HANA (High Performance Analytic appliance) ...................................................24
4.7 Advantage of the SAP HANA as cloud support............................................................25
4.8 SAP HANA engine........................................................................................................26
5. FINANCIAL ANALYSIS ...................................................................................................27
5.1 Balance sheet of the project implementation.................................................................27
5.2 Discounted present value...............................................................................................29
5.3 Benefits ..........................................................................................................................30
5.4 Net present value............................................................................................................30
5.5 ROI.................................................................................................................................32
6. CONCLUSION....................................................................................................................32
7. APPENDIX………………………………………………………………………………..35

3. 2
1. INTRODUCTION
1.1 Abstract
After analysing the current industrial losses due to the cost of quality which is of most important
and with enhanced cost. So in this thesis I am going to do some functional analysis to minimize
this cost by using the latest technology like IoT which is a current trend in many industrial
application as all the devices are now connected to the internet.
The various cost of quality includes internal, external, appraisal and prevention cost. If we
reduce this cost the final price for the customer is going to reduce and for the industry profit
will be increased along with the growth in the customer satisfaction.
In the present thesis I am going to show how the use of the latest technology will provide a
good results in reducing the cost and increased performance.
1.2 Evolution of IoT
Internet of things came a long ago coined since 1999 over 17 years. With many analysts and
journalists predicting an exponential increase in connected devices.
While most people focus these days on where IoT is going, it’s just as important to talk about
the past in order to understand the future. Just a few decades ago, most Americans were
“connected” to the world outside their homes in very limited ways, primarily with landline
telephones, radios and televisions. Aside from the telephone, home radios and televisions were
a one-way experience.
While most of the people in America were connected to the world outside their home in a very
limited ways primarily with phones, landlines, home radios and television and in other way to
watch or listen. All of these began slowly with the advent of home computers and later the IBM
PC. Suddenly entire family could interact with a machine in a more meaningful ways and most
importantly outside the world.
The notion of connectivity was still in infancy, as slow dial-up speeds and infrastructure
hampered online activity aided by Moore’s law (the simplified version of this law states that
processor speeds, or overall processing power for computers will double every two years)

4. 3
But during this time, concerns over online security and privacy began to work their way into
the public consciousness. By the late 1990s, landlines had given way to mobile phones, DSL
had replaced dial-up, and clunky desktops were fast being supplanted by sleek laptops and,
later, by tablets. Online commerce boomed (along with fraud) as most people became
connected to the internet one way or another.
And so, in many ways, we are still grappling with the rapid changes and technological
advancements that began in the middle of the 20th century. Although a watch could certainly
be physically stolen, no one really had to worry about the watch disclosing personal
information that could enable identity theft or fraud. Similarly, aside from its mechanical
components, the modern vehicle can be thought of as a network of networks which can be
attacked, hacked and even driven off the road.

5. 4
2. LITERATURE REVIEW
The Internet of things (stylised Internet of Things or IoT) is the internetworking of physical
devices, vehicles (also referred to as "connected devices" and "smart devices"), buildings, and
other items—embedded with electronics, software, sensors, actuators, and network
connectivity that enable these objects to collect and exchange data.
Deepa Mishra Angappa Gunasekaran Stephen J. Childe Thanos Papadopoulos Rameshwar
Dubey Samuel Wamba presented a paper in which explained the concept of origin of the
concept IoT where that physical world was connected to the internet via sensors and actuators
which can provide real-time information and benefit in several ways1
.
The Cluster of European Research Projects gave its vision statement by combining different
ideas and technical components of pervasive computing, ubiquitous computing and ambient
intelligence. They defined IoT as “a dynamic global network infrastructure with self-
capabilities based on standard and interoperable communication protocols where physical and
virtual ‘things’ have identities, physical attributes, virtual personalities and use intelligent
interfaces, and are seamlessly integrated into the information network”
Eleonora Borgia in his paper tells that IoT is a new paradigm that combines aspects and
technologies coming from different approaches. Ubiquitous computing, pervasive computing,
Internet Protocol, sensing technologies, communication technologies, and embedded devices
are merged together in order to form a system where the real and digital worlds meet and are
continuously in symbiotic interaction. The expected huge number of interconnected devices
and the significant amount of available data open new opportunities to create services that will
bring tangible benefits to the society, environment, economy and individual citizens2
.
1. Deepa Mishra Angappa Gunasekaran Stephen J. Childe Thanos Papadopoulos Rameshwar Dubey Samuel
Wamba " Vision, applications and future challenges of Internet of Things A bibliometric study of the recent
literature”, Industrial Management & Data Systems, pp. 1331 – 1355 Vol. 116 Iss 7
2. Eleonora Borgia “The Internet of Things vision: Key features, applications and open issues” Cluster of
European Research Projects 1 December 2014 Volume 54 1 December 2014, Pages 1–31

6. 5
José Ignacio Rodríguez Molano , Víctor Hugo Medina, Javier Felipe Moncada Sánchez
proposed that Internet description of things and its applications to the industry, the principles
on which it is based, the elements and technologies available to achieve communication
between people and objects and applications that have been developed in different areas and
demonstrating the importance of the implementation of this current. Also there describes a
monitoring prototype developed under the frame of the Internet of Things and implemented
through the microcomputer Raspberry Pi, a cloud storage server and a mobile device3
.
Michael Ehret & Jochen Wirtz explains how the industrial iot offers new opportunities and
threats that companies cannot be explained in current business models. Entrepreneurship and
transaction cost theories for non-ownership business models with uncertain opportunities and
downsides and transforming these into business opportunities. Non ownership contract are for
the productivity sharing of uncertainties in IIoT manufacturing networks following 3 are the
main types of IIoT enabled are Provision of manufacturing assets, maintenance and repair, and
their operation and then innovative information and analytical services that help manufacturing
(e.g. based on artificial intelligence (AI), big data, and analytics), new services targeted at end
users (e.g. offering efficient customisation by integrating end users into the manufacturing and
supply chain ecosystem)4
Alice Tai-Ying Lin, Jeffrey Lee Dem Lee and Cheng-Chih Chen predicted that there will be
an almost 30% growth rate for IoT semiconductor from 2013 to 2020 which will come from
industries spanning customer .industrial, medical, automotive and others. The demand will
increase in entire value chain from software and services to semiconductor. Due to rise in IoT
trends, several IoT alliances have been created to develop a seamless and consistent IoT
standards5
.
3. José Ignacio Rodríguez Molano , Víctor Hugo Medina, Javier Felipe Moncada Sánchez “ Industrial Internet
of Things: An Architecture Prototype for Monitoring in Confined Spaces Using a Raspberry Pi”International
Conference on Data Mining and Big Data DMBD 2016: Data Mining and Big Data pp 521-528 LNCS,
volume 9714
4. Michael Ehret & Jochen Wirtz “Unlocking value from machines: business models and the industrial internet
of things” Journal of Marketing Management 11 Nov 2016 Volume 33, 2017 - Issue 1-2
5. Alice Tai-Ying Lin, Jeffrey Lee Dem Lee and Cheng-Chih Chen “The development of IC packaging under the
Internet of Things standards” (IEEE Electronic ISSN: 2150-5942 IEEE Xplore: 29 December 2016)

7. 6
Radislav A. Potyrailo Modern gas monitoring scenarios for medical diagnostics, environmental
surveillance, industrial safety and other applications demand new sensing capabilities. The
review provides analysis for development of new sensors based on multivariable principles.
Design criteria of these individual sensors involving a sensing materials with multiple
responses for different gases and multi-variable transducer with independent output to
recognise different gas responses. The new sensors quantify individual components in mixture
and rejects interferences and offer more stable response over sensor arrays. Such performance
is attractive when selectivity advantages of classic gas chromatography and mass spectrometry
instruments are cancelled by requirements for no consumables, low power, low cost, and un
obstructive form factors Internet of Things, Industrial Internet and other applications(6)
.
Johnson. C compared the use of control systems in the past and in the present. In the past they
were isolated from more conventional networks. They uses specialised protocols such as
Modbus that are very different from TCP/IP and individual device used proprietary operating
system. Now there is a move for greater connectivity for instance so that higher level enterprise
management systems can exchange information to optimise production processes. Industries
are also influenced by concept from IoT where information from sensors and actuators in
industrial components can be addressed through network interfaces. For identifying a range of
cyber security and safety concerns that arise from development7
.
6. Radislav A. Potyrailo “Multivariable Sensors for Ubiquitous Monitoring of Gases in the Era of Internet of
Things and Industrial Internet”ACS publications Chem. Rev 2016 DOI: 10.1021/acs.chemrev.6b00187
Publication Date (Web): September 7, 2016, 116 (19), pp 11877–11923)
7. Johnson. C “Securing the Participation of Safety-Critical SCADA Systems in the Industrial Internet of Things”
Enlighten: Publications 11th International Conference on System Safety and Cyber Security (SSCS 2016) London,
UK, 11-13 Oct 2016)

8. 7
Dieter Schweer, Jan Christian Sahl considered that mobile internet, social media and digital
services are part of our daily lives. The era of IoT the new products and machines has begun.
Entire value chains are transformed by digital technology some of it evolutionary, some are
disruptive. He also questions are Germany and Europe at the forefront of this movement? And
also concluded that digital transformation could add 1.25 trillion euros to Europe industrial
value creation by 2025 by diminishing 605 billion euros8
Dumitru Cristian Trancă, Daniel Rosner, Adrian Surpățeanu and Miroljub T. Pešić proposed
on one of the common measured parameters which is most problem in specific application is
temperature. So in the current paper they presented one method of reading thermocouples
without the need of a high resolution digital calculations of complex polynomial functions by
focusing on the linearization circuit measurement results, errors and present a short
supplication using NI WSN nodes as a part of IIoT.9
Charbel El Kaed, Imran Khan, Hicham Hossayni, Philippe Nappey explained the solution for
the Advent of Internet-of-Things (IoT) paradigm has brought exciting opportunities to solve
many real-world problems. IoT in industries is poised to play an important role not only to
increase productivity and efficiency but also to improve customer experiences. Two main
challenges that are of particular interest to industry include: handling device heterogeneity and
getting contextual information to make informed decisions. Two other contributions include
multilevel ontologies and mechanisms for semantic tagging in our commercial products. The
implementation details of SQen IoT (Semantic Query Engine for Industrial IoT) and its
performance results are also presented10
.
8. Dieter Schweer, Jan Christian Sahl “The Digital Transformation of Industry – The Benefit for Germany” The
Drivers of Digital Transformation Part of the series Management for Professionals Springer International
Publishing pp 23-31 Date: 01 September 2016
9. Dumitru Cristian Trancă, Daniel Rosner, Adrian Surpățeanu and Miroljub T. Pešić “A compact size signal
conditioning circuit for thermocouple linearization and amplification for industrial IoT devices” RoEduNet
Conference: Networking in Education and Research, 2016 15th
10. Charbel El Kaed, Imran Khan, Hicham Hossayni, Philippe Nappey “A compact size signal conditioning circuit
for thermocouple linearization and amplification for industrial IoT devices” RoEduNet Conference: Networking
in Education and Research, 2016 15th IEEE, 12th
Dec 2016

9. 8
Michael Ehret and Jochen Wirtz argue that the Industrial Internet of Things (IIoT) offers new
opportunities and harbours threats that companies are not able to address with existing business
models. Entrepreneurship and Transaction Cost Theories are used to explore the conditions for
designing non-ownership business models for the emerging IIoT with its implications for
sharing uncertain opportunities and downsides, and for transforming these uncertainties into
business opportunities12
.
Kun Wang, Yihui Wang, Yanfei Sun, Song Guo, and Jinsong Wu in their article how they
adopt an energy-efficient architecture for Industrial IoT (IIoT), which consists of a sense
entities domain, RESTful service hosted networks, a cloud server, and user applications. Under
this architecture, we focus on the sense entities domain where huge amounts of energy are
consumed by a tremendous number of nodes. The proposed framework includes three layers:
the sense layer, the gateway layer, and the control layer. This hierarchical framework balances
the traffic load and enables a longer lifetime of the whole system. Based on this deployment, a
sleep scheduling and wake-up protocols designed, supporting the prediction of sleep intervals.
The shifts of states support the use of the entire system resources in an energy-efficient way.
Simulation results demonstrate the significant advantages of our proposed architecture in
resource utilization and energy consumption13
.
12. Michael Ehret and Jochen Wirtz “unlocking value from machines: business models and the industrial internet
of things” Journal of Marketing Management, 33:1-2, 111-130, DOI: 10.1080/0267257X.2016.1248041
published on 11 Nov 2016 Volume 33, 2017 - Issue 1-2
13. Kun Wang, Yihui Wang, Yanfei Sun, Song Guo, and Jinsong Wu “Green Industrial Internet of Things
Architecture: An Energy-Efficient Perspective” research gate December 2016
10.1109/MCOM.2016.1600399CM

10. 9
3. PROJECT APPROACH.
3.1 PROFILE OF COMPANY
Our company dates back to May 5 2011 founded by Harsha in India. Since then business
have grown from solo enterprise into worldwide leading suppliers of efficient and innovative
solutions employing 500 and with sales in more than 5 countries. Gaining an early focus on
emerging markets and a clear focus on innovative products and innovative technology to
reduce cost with increased quality.
Vision of company XYZ: To be a leading supplier of cooling system in collaboration with
solar suppliers. We will master advanced cooling that comforts and saves energy consumption.
Mission statement: To be known for quality and on time delivery of goods. We will achieve
this by implementation of IoT for zero defects products with collaboration with suppliers.
Strategies to achieve and be unique
Energy: Global energy demand is rising with higher standard of living so we have to be very
concern how can we contribute to reduce energy consumption.
Climate: - As global emission is rising we have to care about the prevention of CO2 emission
with increase human well-being through innovative technologies. We follow UN Global
Compact guidelines, training and programs which governs our behaviour. 20% lesser CO2
emissions and 20% more renewable energy.
Innovation in heritage
XYZ is dedicated to developing innovative products which customer wants everyday. It was
started with expansion to regulate cooling and heating system to automotive, household and
commercial buildings. Today we are in 5 different product lines and invest around 5% of its
sales in new products and technologically innovative products. Ex: food refrigeration, heating
and cooling of buildings, regulators, electric motors in powering mobile machinery. We also
sub lease some of the raw material other sub-vendors.
Employees: 500
Worldwide sales: 5 countries (India, Poland, Germany, China and Denmark)
Headquarters: Harihar Karnataka India

11. 10
3.2 Scope of project
The main objectives of the implementation of IoT in the industry is to minimize the overall
cost of production by reducing the cost of inspection of raw material inspection. As we know
that in any company the inspection of raw material depends on the different criteria for example
supplier, new variety of product etc., If we reduce cost of certain quality levels will have
reduced final cost with good quality products.
Here in this project I am going to consider the supplier quality control using IoT in the supplier
plant by which we can reduces time, cost of inspection, number of defective products being
transported to customer and supplier and vice- versa which will increase the efficiency of plant
and faith of the customers for a longer life of objectives and goals which company wants to
achieve.
Technical trend
The Industrial Internet of Things (IIoT) is narrowly-defined as the use of Internet of Things
(IoT) technologies in manufacturing.
The Industrial Internet of Things (IIoT) is
 Integration of automation and ICT technologies
 Digitalization of devices, communication, platforms, and industrial data
 Major trend with significant implications for the global economy*
 Including manufacturing, energy, agriculture, transportation.
Source: Accenture, Driving Unconventional Growth through the Industrial Internet of Things

12. 11
3.3 Project Methodology
Procedure
 Selecting the company XYZ which does raw material inspection from suppliers.
 Selecting in which department of the plant like we saw the cases in transporting or
inspecting etc.,
 Selecting the cost of inspection of raw material from a supplier.
 I am going to reduce the cost by using the IoT technology as follows
 4.1) firstly connect the supplier plant with IoT sensors and devices to get the real-time
quality results from the supplier which is monitored by one of the worker in our
company.
 4.2) The worker in our company will follow all quality control tools and determines the
required results.
 4.3) If the quality outputs are out of control are rejected by the worker in our company.
 Which will reduce the cost of unnecessary travel of the rejected goods from supplier to
us and vice-versa.
 4.4) Once we get all the goods raw material at our doorstep can be used directly to
further processing without inspection.
 4.5) Since we are using the raw material directly without inspection will reduce our
time.
 4.6) Since we have done the quality check prior to entry of raw material we can rely
completely on goods, we no need to depend on the 3rd
party certifying agents like TUV
etc.,
 Finally comparing the company which implement our new methodology and without
our methodology ie., old way like inspecting or depending on the 3rd
party inspection.
Outline of the intermediate integrated project.
The thesis has been proposed in 7 different chapters and appendix
The first chapter deals with the peer review of the literature of previous research relating to the
IoT in the industrial environment, objectives and methods involved.
Reporting of different costs involved in inspection of raw material in different companies.
Selection of the bottlenecks and working on it for improvement and cost reduction.
Technical requirements for implementation of IoT in our company.

13. 12
Comparison with tradition and new concept.
Estimation and costing of the project.
Finally the seventh chapter is dedicated to the summary, conclusions, limitations and scope for
further studies
As we know the various types of cost of quality for the final product like prevention cost,
appraisal cost, internal failure and external failure.
For reducing the defective products being manufactured we have to look at prevention cost and
appraisal cost in the suppliers company. And other two are for reducing the production of
defective products.
COQ= prevention + appraisal+ internal failure+ external failure
3.4 Gantt chart
For any project management one of the most important task is to complete the defined work
within the defined time. Many project is failed due to delay in the implementation of the tasks
within defined time. So the below Gantt chart shows the scheduled time of the various activities
required to meet the deadline of the project.
Table 1 Gantt chart for the project
16-01-201505-02-201525-02-201517-03-201506-04-201526-04-201516-05-201505-06-2015
review floor plan
design floor
cost estimation
order and customise
review equipment cost
connect to smart factories
quality check of the products
install all the requirements
closure of the project
Gantt chart for implementation of IoT for XYZ
company

14. 13
The above table shows the various tasks required to be completed to accomplish the final goal
of the project.
1) Review the floor plan: - This is the most important and initial task to be completed. In
this we are going to review all the suppliers’ floor and review what are the requirements
to start the designing of the project? This task will take around 19 days because we have
to monitor all the suppliers’ plant.
2) Design floor: - After review the report from all the suppliers’ plant. We are going to
design the requirement, modifications considering how best we can utilise the shop
floor and increase the efficiency of the plant from this position.
3) Cost estimation:- Any task we perform the cost analysis is most important because
whatever we are going to do is to reduce the cost by fulfilling the requirements. When
we calculate all requirements we get the cost estimation report which takes around 6
days.
4) Order and customise:- Which takes just 1 day to make calculation and order all the
suppliers who are in market at a competitive price.
5) Review equipment’s cost:- When we get the cost analysis by different suppliers we
decide to implement we are going to order the one who supply with good quality and
appropriate price, we order to the suppliers as per the floor requirements to get the
competitive price.
6) Connection to smart factories:- In this stage we start connecting to all the suppliers
to company XYZ. Which takes around 45 days to reach and connect all. Fulfilling all
the requirements for the factories in remote areas which will be monitored in company
XYZ.
7) Quality check of the products:- This quality check refers to the main work which we
going to implement using IoT, which takes around 15 days to take report of the quality
check from each and every suppliers.
8) Install all the requirements:- When all the quality check is confirmed we are going to
complete all the requirements like getting cloud service and all other needs are fulfilled.
Getting legal documentation, making patents etc., this task takes around 20 days to
finish.
9) Closure of the project:- This is the final part of the project, in which all the
requirements are accomplished to finish the product. It takes just 1 day to submit all the
clients

15. 14
In total the total 153 days are required to implement this project to our clients and from there
we start working on reducing the cost of the product.
4. FUNCTIONAL ANALYSIS
Much of the infrastructure that underlines the internet are now firmly established. The IoT has
still not yet reached that level of stability. In our business we are going to use IoT platform.
Moreover the platforms and technologies are not compatible that makes decision complicated.
4.1 Functional requirements
There are functional requirements of an IoT platform, following are
 IoT Platforms Require Diverse Connectivity
 IoT Platforms Leverage Applications
 IoT Platforms Manage a Range of Devices
 IoT Platforms Generate Massive Amounts of Data
 IoT Platforms and Security
 IoT Platforms and Scalability
 IoT Platforms and Availability
IoT Platforms Require Diverse Connectivity
Any kind of connectivity most familiar for the internet and for IoT is Ethernet. In addition to
Ethernet we also connect with wifi and other technologies. The main aim of the connectivity
is an Iot platform must support as many nodes of connection, wired, and wireless as possible.
Wireless option which we are using are GPRS, LTE, RFID, and WLAN.
IoT Platforms Leverage Applications
IoT software application are developing and are emerging business in every industry as well
as for home users. These application is going to provide us automation capabilities which is
making IoT so much valuable. These software and middleware are helping in reducing costs,

16. 15
increase efficiency and improve regulatory compliance. For achieving this we are platform
which are compatible to specific applications.
IoT Platforms Manage a Range of Devices
IoT sensors gather information about conditions in their vicinity such live videos, senor data ,
turning on or off, recording and other condition in their vicinity. In the functional requirement
for an IoT platform is that it has ability to manage a heterogeneous set of devices.
IoT Platforms Generate Massive Amounts of Data
Devices that are connected which we discussed above don’t just perform tasks. They will also
report on the tasks they perform. Through their connection to an IoT platform to each other,
they will transmit detailed data about their each actions. The devices will simply send the data
from the companies to main company XYZ will send data, potentially in real-time for storage
and analysis. One foresees the IoT generate about few thousands of GBs. Therefore must be
able to support massive data.
IoT Platforms and Security
Even with the recent improvement in the security for IoT devices it can be easy to overlook the
need for end to end security for an IoT platform. So every part of platform is analysed for
security purposes. From internet connections to the application and devices to the transmitted
and stored data, there is also potential for an attack vector. Most important non-functional
requirement for an IoT platform is that robust security.
IoT Platforms and Scalability
The data which are produced In term of thousands of GBs are scalable and clearly a requirement
in an IoT platform. Which is very much essential for knowing the potential only for scale. The
IoT platform is to support a small and initial implementation for business growth.
4.2 Features of cloud backup system
Features of Cloud Backup System
In the companies cloud data backup are used for non-critical data primarily.

17. 16
For better offering of the critical data that requires very short time for recovery because there
are physical limits as to how much data can be moved in a given amount of time over a network.
When a large amount of data to be recovered requires shipping of data to some other storage
devices. And also cost of keeping the in cloud will add up.
Cost of cloud data backup
In addition, costs rise as the amount of data to be backed up to the cloud increases. In terms of
return on investment (ROI), it is important for an organization to consider the long term costs
of backing up to the cloud. A five-year projection is recommended to properly estimate future
expenses and decide whether using the cloud will help the organization break even after initial
costs.
The cost of storing 1TB of data on Amazon's S3 cloud is $97 per month. What about the
bandwidth cost? My local ISP offers $350 per month for 1TB of data, the maximum theoretical
capacity of that link (15Mbps) is approximately 4.6TB a month - which is not realistic over a
cable modem, business package or not.
INTEGRATION
 Systems that could benefit from integration with the TOI:
 Manufacturing Execution (MES)
 Quality management and process control (may be a part of MES)
 Warehouse Management (WMS)
 Transportation Management (TMS)
 And/or other “outside” systems
KEY REQUIREMENTS:
Strong authentication with one-time password to safeguard sensitive data on the Internet
Accurate, real-time fraud/threat detection with minimal impact to user experience Solution that
is interoperable with third-party applications.

18. 17
Business model for IoT implementation for company XYZ
`Key partners
 Data service
providers like IBM
for back end
connectivity
 European funding
for the industry 4.0

Key activities
• Providing feedback
to the suppliers
regarding defects in
products
• changes in work
culture
Value proposition
• Transparency and
control over the
flowline of the
materials
Operational
Excellence
• Strong supply chain
partnerships
• Sustained cost
reduction
Transforming to
world-class
production
capability Cost-
focused lean
enterprise
• High-performance
•
Operational
Capturing
aftermarket
value
• Long-term
relationships with
desired customer
requirement
• Decades of in-
service experience
• Flexible range of
service offerings
with collaboration
• service footprintGrow market share
and installed base
• Original equipment
and services
provides good
visibility of future
revenue growth and
provides a firm
foundation to invest
with confidence.
Key resources
• IoT sensors,
cameras, actuating
elements,
• Organizational
members involved
in completing the
cycle
Secure ,maximize quality and increased efficiency
• Our equipment is in service for years. Our deep design knowledge
and in-service experience ensures that we are best placed to optimize
production performance and availability of equipment's for a
smoother flowline.
Cost structure
• The reduction in the appraisal cost will reduce the overall
production cost per product.
• Reduction in the flow of defective parts from supplier till
customers.
Figure 2 innovative business model
Source: http://bmimatters.com/tag/business-model-canvas-examples/06/07/2017

19. 18
The innovative business model is proposed in the above table.
Key partners: - data service providers like IBM are of major importance because they provide
service for back end connectivity. We have chosen IBM because of its good service and
competitive collaboration for future growth of our company. A good service provider is
essential for the trust between both of us and our raw material suppliers. For financial part as
Germany plays a major role in converting to industry 4.0 so the partners are European funding
and government of individual country which will benefit the people for their employment.
Key activities:- One of the major activities is to monitor the suppliers plant in real-time for the
quality check. Providing the feedback to the suppliers regarding the defective parts being
produced. This implementation will change the working environment of the employees making
everything digital.
Value proposition:- The good understanding between the suppliers and our company will
increase the transparency and gain control over the flowline of the materials by reducing errors
in the parts being supplied.
Operational excellence: - After implementation for IoT we can enhance strong supply-chain
partnerships with large reduction in the appraisal cost. Improved quality will also enhance
sustained cost reduction by supporting for the transformation to the world class production
capability cost focussed lean enterprise. By all the changes we can enhance high performance
culture.
Key resources:- The key resources of the information from the remote location to the main
control is by the IoT sensing elements which are connected to all the machines for extracting
the data. Actuating elements, cameras, platforms, devices which can provide internet facility
and finally a human interaction. Organizational members involved in completing the cycle.
Secure, maximize quality and increased efficiency:- Our equipment is in service for decades.
Our deep design knowledge and in-service experience ensures that we are best placed to
optimize production performance and availability of equipment's for a smoother flowline.
Cost structure: - The reduction in the appraisal cost will reduce the overall production cost
per product. Reduction in the flow of defective parts from supplier till customers.

20. 19
Capturing aftermarket value:- Long-term relationships with desired customer requirement
Decades of in-service experience. Flexible range of service offerings with collaboration service
footprint
4.3 Functional requirements
The above figure shows the management model for our product
All the required devices are placed in the raw material suppliers for the company XYZ. These
connected devices will generate the data from the sensors and sends all the data in real-time
into the cloud. The gateway which acts like link between suppliers and main office. Gateways
are like internet connection which we are going to use in the remote companies. The data from
all the suppliers from the different locations are being accessed by the people in the main office
in a real-time and make a reporting. If there are any deviation from the normal standard line
will be noticed by the people in the main office. They will also monitor all the machineries
whether the maintenance are made properly or if any problem in that machines are also reported
to them for repair or if the control of the machines are from company XYZ we are going to
contact the person who is responsible for looking after these and within no delay everything is
in the correct position because we have made a good relationship with the everyone.
By making all these IoT implementation we are going to reduce some of the costs and the
percentage of each saving is show in details. For example 5% saving on the cost of quality. 5-
10% reduction in the downtime of the machines and also the flow of the defective products in
between suppliers and ultimate customers. When we are going to make all these improvement
will attract the customers towards our company products. Which will also increase the revenue
to our company and when majority of the customers will be converted to loyal customers who
will buy all our new products because of our quality and services will increase around 15-20%
of our total revenue.
Finally implementation IoT will not only reduce the cost of production but also enhance the
growth of our company.

21. 20
Figure 4 management model of IoT for company XYZ
Source: http://www.iamwire.com/2017/01/iot-ai/148265

22. 21
4.4 Requirements for the current IoT implementation in a an xyz company
Devices required for the industrial IoT: - sensors, actuators and robots. Providing intelligent
devices is the first step of Industrial IoT
Devices should be digital, functional and scalable
System should provide complex resource, information, and computing power to devices
Figure 6 General IoT requirement
The above figure shows the general working of the IoT system in an company as follows,
Starting from the cameras which will give real time pictures of the working atmosphere of the
plant to the main company XYZ. These data which are recorded in this will submit the data to
the online platform through the required support system. The platform will do advanced
analytics by comparing the deviation in the value of the desired result with the standard set of
the preloaded data which are already embedded inside the standard data. By comparing the
data it will finally give an delivery command which is desired at the remotely located
companies as per the reviews from the person in the main company. The output from the
delivery command is uploaded in to the platform all these function will takes place at a
faster rate. The platform will manage the devices which are connected to the actuators for
resolving the deviation in the system.

23. 22
Figure 7 use case of a resource/ data sharing architecture

24. 23
CONVERGED SYSTEM FOR IoT
Interoperability, flexibility, cross domain applications
Figure 8 converged system for IoT
IoT is a vertical platform which is evolving at a faster rate, each suited for the specifically
chosen scenario and adopt as per the requirements by communicating, devices and resource
protocols. This emerging need of the cross- domain IoT applications and services highlights
some of the necessity of interoperability across IoT platforms for a unified and secure sharing
of the sensed and actuating resources this made flexible for the companies to interact with the
machines and humans through a signal transfer.
Resource sharing with build in automation management system from the remote location to
the main office. Through the cloud technology and getting back the response signal with the
production safety and monitoring and control system.

25. 24
4.5 INDUSTRIAL BIG DATA
Figure 9 General working of big data
The entire IoT system is divided into 3 sections like generate, analytics and interoperability.
Generate: all the data from the machines and workpieces will generate some data from it
manufacturing plant, quality report from the control chart and the cameras used in all the remote
companies which are collectively called industrial data.
Analytics: with all the data generated by the manufacturing plant will be resolved by the person
at the main company office. After complete analysis of the report and by verifying with the
standard data requirements will eliminate all the un-useful, reduce cost and improve quality
decision are directed to all the supplier companies in the remote locations.
Interoperability: the final decisions for the modification to the remote plants all the necessary
changes are directed to the people or the workers in the remote location by the use of IoT and
verification of all the data which are out of the control limits are brought back to within control
limit conditions for the smooth running of the plant with desired output and quality.
This plan will be implemented in all our suppliers manufacturing plant. The detailed
description is given as follows.
4.6 SAP HANA (High Performance Analytic appliance)
Since we are going to deal with lots of data from the suppliers and are collected at the hub. In
order to differentiate the data which are useful for us in determining the exact defects without
affecting back-end enterprise applications. The SAP HANA engine which is very much
flexible, multipurpose, data agonistic, in memory appliance which are built on Intel processor

26. 25
of 7500 series by combining software components on hardware provided and delivered. SAP
HANA in a real-time replication service and data modelling and data services.
4.7 Advantage of the SAP HANA as cloud support
Figure 10 synchronisation of the data from the central data centre (modified source (1)
As all the IoT connected industries will have multiple accounts which is very difficult to
analyse the data from the central control system of the company XYZ by using this SAP HANA
cloud support will help in synchronising all the multiple data as per our requirements. The data
synchronisation is also at a faster rate because it will send the data directly from the short term
memory rather than collecting the data, storing all the data and finally sending it to our
company which we can process at a faster rate.
While the requested changes from the main company XYZ to any of the suppliers at a faster
rate it can also communicate info to all the suppliers in a real-time.
Source: SAP HANA online teaching https://www.youtube.com/watch?v=v7ZKFJXEbPY 08-06-2017

27. 26
4.8 SAP HANA engine
Figure 11 structure of the HANA engine)
In memory database: - it is a main memory database management that mainly depends on the
main data storage, in contrast to this database management systems that employ a disk storage
mechanism. main memory database are faster than disk optimised because disk access is slower
than memory access.
Calculation and planning engine: it is related to the processing speed of the data within the
calculation engine and allow a possibility to use alternative execution engines such as L native
execution. As most of the calculated engine plan operators are converted internally and treated
as SQL operations. Depending on the optimisation required it is configured, mixing calculation
engine plan operators and SQL which lead to significant performance when compared to the
plain SQL implementation.
Data management services: Sybase IQ is a foundational component of SAP’s data management
platform. Over time, Sybase IQ will be powered by in-memory computing technology from
SAP and be used to provide very high-performance data management solutions.
Source: https://dockoc.com/sap-hana-afhotq.html

28. 27
5. FINANCIAL ANALYSIS
Viability is the state of development of an project is sufficient to enable it to survive overtime
and provide ongoing benefit. Project must show good potential for financial viability be
capable of evolution and expansion be financially viable with ongoing benefits.
5.1 Balance sheet of the project implementation
financial statement
Cash inflow due to
defects
Category Description Cost
COQ ($1 million in
sales)
Prevention
Send workers to
yearly workshop
10 employees @
$2,500 = $25,000
2.50%
Appraisal
Raw material
inspection cost
1 hour @ $45/hr x
52 weeks = $2,340
0.23%
Internal Failure
Cost of fixing
rejected items
4 hours/week $
45/hr x 52 weeks =
$9,360
0.94%
Failure Warranty returns
15 warranty returns
per year @ $5,500
= $82,500
8.25%
11.92%
COST OF QUALITY $119,200
cash outflow
fixed assets for IOT
system
Camera $2000
Hardware $20000
infrastructure $20000
Application $18000
Total $60000

29. 28
monthly expenses
cost of cloud
service
$200
platform(amazon) $300
sap hana cloud
charges
$36000
monitor control $10000
total $46500
Table 2 COQ in the company
The above table shows in details of all the cost involved in the project to accomplish the final
delivery of project to the customers. One of the major cost of the project is the sap hana cloud
services charges and the cost of the software development and remaining cost of
implementation are accordingly similar to each other.
Financial contribution decisions which are very important decisions made before any project
implementation. These investments are very important as it involves substantial cost outlay.
There are no financial supporters for this project. But this projects are for the improving the
efficiency and reduce overall cost involved in the final delivery of the project.
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
Prevention Appraisal Internal Failure Failure
COQ ($1 million in sales)

30. 29
Table 3 cash flows in future years
Financial contribution Year 1 Year 2 Year 3 Year 4 Year 5 Total ($)
Cost
License 18000 18000
Hardware 20000 5000 20000 45000
Functional analysis 10000 10000
Set-up (development +
maintenance)
200 200
Staff Training 25000 10000 15000 15000 15000 80000
IT Infrastructure 20000 20000
Total ($)
93200.0
0
10000 20000 15000 35000 173200
The above table shows the cash flows for the project every year for the next 5 years from setup.
We have total investment of $173200 for the completion of the project.
5.2 Discounted present value
We have considered the discount value of 6% for the 5 year value terms,
Table 4 discounted present value
Amount
($)
Benefits
($)
net cash
flow ($)
discounted
cash flow
($)
year 0 93200 -93200 -93200
year 1 10000 11300 -1300 1226.415094
year 2 20000 13200 6800 6051.975792
year 3 15000 12700 2300 1931.124351
year 4 35000 16800 18200 15281.07095
year 5 173200 18000 155200 122932.9365
Total 346400

31. 30
total net
flow 88000
total
inflow 434400
Npv 54223.52272
5.3 Benefits
Table 5 benefits of IoT implementation in cash
Benefits year 1 year 2 year 3 year4 year 5
increased production 50000 60000 65000 75000
increased quality 45000 50000 55000 60000
enhanced customer 8000 10000 12000 15000
reduction in the
transport cost 10000 12000 15000 18000
Total ($) 113000 132000 147000 168000
The above table shows the various parameters which are enhanced by the implementation of
the IoT for companies supplying XYZ. We can also see the trend of increased revenue every
year by reducing the cost every year on different aspects.
0
50000
100000
150000
200000
year 1 year 2 year 3 year4 year 5
benefits comparision
increased production increased quality
enhanced customer reduction in the transport cost
total

32. 31
5.4 Net present value
Table 6 NPV for our project
Amount
($)
Benefits
($)
net cash
flow ($)
discounted
cash flow ($)
year 0 93200 -93200 -93200
year 1 10000 11300 -1300 1226.415094
year 2 20000 13200 6800 6051.975792
year 3 15000 12700 2300 1931.124351
year 4 35000 16800 18200 15281.07095
year 5 173200 18000 155200 122932.9365
total 346400
total net
flow $88000
total
inflow $434400
Npv $54223.52272
Since the net present value of the project is positive consider the project viable for the
implementation in the companies.
-40%
-20%
0%
20%
40%
60%
80%
100%
year 0 year 1 year 2 year 3 year 4 year 5
comparision of discounted and net cash flow
amount benefits net cash flow discounted cash flow

33. 32
5.5 ROI
Total amount being invested = $346400
Total amount returned = $43440
Then ROI gain = $8800
ROI = 25.40%
Figure 12 Profitability
6. CONCLUSION
As implementation of IT systems has become an important part of almost all the organisation
which involves huge risk, funds to support and feasibility study gives the conclusion for an
organisation to go ahead and implement or to follow the same old traditional system.
In the current project i have completed the functional analysis of implementation of IOT in
company XYZ which gives the higher return on investment within few years after completion
and selling of the project. We have studied the various compliances with the IT strategy
implementation pertaining to certain policies specified by the standard organisation for this
project. The future scope of the project is also set. The general objective of the project is also
set depending upon reducing cost and increase productivity.
As we have set the objectives to fulfil that the technical analysis is also performed like the
functional requirement and comparing with the current IT system from which after investing
how much extra revenue adds to our company is evaluated. Depending on the result of the
outcome indicators we started preparation of the server room, preparation and implementation
of new systems, compliances with rules in the field of IT project. The functioning of the IOT
for company preparation begins to achieve this we used Prince-2 project management

34. 33
methodology for managing the entire project. We made an innovative business model
according to our comforts and supplier requirement.
The financial analysis made some assumption and methodology by considering around 5 years.
We calculated expenditure for the project in the years by considering 6% of the discounted
present value.
Finally what will be the impact of our project on the social economic and environmental
analysis can be analysed further with leaving this as a future scope of the project.

35. 34
LIST OF FIGURES
Figure 1 innovative business model.........................................................................................17
Figure 2 management model of IoT for company XYZ..........................................................20
Figure 3 General IoT requirement ...........................................................................................21
Figure 4 use case of a resource/ data sharing architecture.....................................................22
Figure 5 converged system for IoT..........................................................................................23
Figure 6 General working of big data......................................................................................24
Figure 7 synchronisation of the data from the central data centre (modified source (1))........25
Figure 8 structure of the HANA engine1................................................................................26
Figure 9 Profitability................................................................................................................32

36. 35
LIST OF TABLES
Table 1 Gantt chart for the project...........................................................................................12
Table 2 COQ in the company ..................................................................................................28
Table 3 cash flows in future years ...........................................................................................29
Table 4 discounted present value.............................................................................................29
Table 5 benefits of IoT implementation in cash ......................................................................30
Table 6 NPV for our project ....................................................................................................31