CONNECTED

BUSINESS
TRANSFORMATION

How to unlock value from the

Industrial Internet of Things

1
As computing costs decrease and Cloud and
Big Data technologies mature, thousands of
digital start-ups and big platform players that
combine the power of information technology
(IT) and operational technology (OT) are driving
industrial connectivity on an unprecedented
scale.
By 2020, spending on the intelligent, embedded
systems and connected digital devices and
platforms empowered by analytics that
constitute this Industrial Internet of Things
(IIoT) is expected to reach at least $500 billion1.
By 2030, the IIoT could be adding $14.2 trillion
to the global economy2.
The IIoT promises to accelerate the reinvention
of sectors that account for almost two-thirds of
global output. But how many organizations are
ready to make the most of this vast and complex
ecosystem of connected devices, data and
processes?
Many already recognize that the IIoT can take
them “beyond product” and toward new, digital
customer services that drive unconventional
growth. Ninety-five percent of business leaders
expect their company to use the IIoT within the
next three years4; and 87 percent believe that
it will contribute to long-term job growth. Few,
however, are extracting real value from their
efforts: 73 percent of businesses acknowledge
that they have yet to make concrete progress5.
An IIoT-driven Connected Business
transformation strategy would help them.
Indeed, Accenture experience suggests
that such a full-cycle transformation, from
ideation to operations, could deliver a three-
fold reduction in time to market and boost
incremental revenues exponentially.

FROM CONNECTED
PRODUCTS TO
DIGITAL SERVICES
Implementing the IIoT helps to unlock a rich, escalating spectrum of business outcomes in three
tiers: unconventional revenues, incremental revenues, and operational efficiency. Figure 1 illustrates
such outcomes across a range of industries.

Many companies are already preparing for this Yet research also reveals that organizations will
revolution. By 2018, 78 percent of US organizations be challenged to achieve their goals. Hampered
say they will have implemented (or are planning to by insufficient expertise, security concerns, and
implement) such operational improvement initiatives the absence of end-to-end sponsorship, half of
as automated workflow management, while 66 respondents in a recent survey acknowledged that
percent will have implemented (or are planning to they were failing to build a strong business case for
implement) smart connected products that transmit IIoT implementation7.
customer data to the enterprise. Meanwhile, 57
percent will also be using (or are planning to use) such
connected asset management systems as predictive
equipment maintenance. And 43 percent will be
leveraging (or are planning to leverage) new, value-
added customer services that generate new revenues
for the enterprise6.

2
Figure 1
CONNECTED FACTORY
Operations optimization —
5–12.5% cost reduction
Predictive maintenance —
10–40% cost savings
Inventory optimization — 20-
50% cost reduction
Health and safety — 10–25%
savings
FACTORY
CITY
CONNECTED CITY
Air and water monitoring — 15%
reduction
Adaptive traffic management —
10–15% less time in traffic; 10%
reduction in congestion from smart
parking
Autonomous vehicles (fully
and partially) — ~40% accident
reduction; 10–15% fuel /CO2
savings
Resource/ infrastructure
management — 35% fewer electric
outages; 50% reduction in water
leaks; 10% reduction in theft
A TRANSFORMATION
STRATEGY
Organizations urgently need a transformation strategy and roadmap to industrialize their digital
services, at speed, from ideation to operations. That will involve building an ecosystem of
interconnected, end-to-end processes. And those processes will need to be enabled by powerful
partnerships to fill skill and capability gaps: partnerships that include leading IIoT platform vendors
as well as the leading vendors of both IT and OT solutions.
CONNECTED RETAILER CONNECTED OFFICE
Automated checkout — 40–88% Human productivity — activity monitoring —
time reduction; 75% reduction in 5% productivity improvement
cashier cost
Human productivity — augmented reality —
Real-time, instore promotions — 10% productivity improvement
3–5% productivity improvement
Energy monitoring — offices — 20% savings
Energy management — 20%
improvement
CONNECTED
OPERATIONS
Operations
optimization — 5–10%
OFFICE increase in worksite
productivity; 10–20%
of consumables,
RETAILER 10–20% of personnel
Improved equipment
maintenance —
3–5% productivity
gain; 5–10% of
equipment costs;
OPERATIONS 5–10% of equipment
maintenance
Health and safety
DIGITAL management — 10–
20% decrease in health
SERVICES and safety costs
CONNECTED HOME
Chore automation — 17% time saved
HOME from relevant activities
Energy management – home — 20%
energy savings
Safety and security — 10%
TRANSPORT reduction in property damage
incidents
CONNECTED TRANSPORT
Safety and security — personal
transportation — 25% improvement
HEALTH
Passenger vehicles maintenance/
replacement — 10–40% reduction CONNECTED HEALTH
in maintenance and 3–5% longer Monitoring and treating illness —
vehicle life Up to 20% reduction in disease burden
Aerospace equipment and Improving wellness — $80–600 per
maintenance — 10–40% reduction year in wellness benefits per user
in maintenance; 25% fewer delays;
3–5% longer aircraft life
3
In partnership with Accenture, Schneider Electric has embarked on this transformation journey—and is already driving
significant value from it (see page 5). The IIoT Connected Business leverages the power of this transformation strategy with an
operational architecture facilitated by the fast-growing convergence of IT and OT (see Figure 2).

In order to succeed, organizations need to acquire both Figure 2

origination capabilities with a strong emphasis on open-
innovation partnerships, and delivery capabilities that
IOT CONNECTED BUSINESS = User Experience
leverage design thinking and a fast-prototyping approach
BUSINESS OUTCOMES E2E DESIGN , Industrial Footprint
that is end-to-end—in addition to technological capabilities. INTEGRATION & CYBERSECURITY Ecosystem Integration

For many organizations, achieving end-to-end ownership will User Interface, Mobility
DRIVE PROCESS INTEGRATION
be challenging. Our experience reveals six common pitfalls: Bus. Process & Collab
CAx PLM APS MES ERP CRM CHANNELS ... Reporting & Monitoring

1. Designing without significant customer and ecosystem IT

involvement, lacking clear business benefits as well as a Analytics & Triggers

customer centric approach. ANALYZE & PREDICT Data Aggregation & Access
Data Storage

2. Applying “traditional” product innovation approaches in a

situation that requires, instead, a dramatic re-think. OT COLLECT & TRANSMIT DATA
Connectivity, Network
Embedded Software

3. Developing IIoT initiatives that prioritize technology before

exploring and validating the business case. Chips, Sensors (low
DEVICES/HARDWARE capex)

4. Investing too heavily in technology solutions and not

enough in business capabilities.

The IIoT is critical to this digital transformation and it requires

5. Underestimating the criticality of analytics, data and cyber
security.
6. Underestimating the impact of a Connected Business
transformation on the operating model.
a shift in mindset—from connected products to connected
services. To capture value, organizations will need to address
emerging customer needs predictively, and leverage the
information convergence that enables the personalized,
contextual, innovative services that drive recurring revenues.

Organizations should first consider the customer journey: A digital “factory” model, customized to the specific needs of
everything the customer experiences in dealing with them. each organization so that the right component is leveraged
Armed with a clear picture of the customer journey, they end-to-end at the right time, might offer a way forward (see
can then align it with internal operations and technology Figure 3).
infrastructure: those aspects of the business that customers
don’t see, but which nevertheless can make or break the
customer experience.

Figure 3 FACTORY CONCEPT

(TO BE CUSTOMIZED/CLIENT)

GO-TO-MARKET/OPERATING BUSINESS OFFERINGS

MODEL STRATEGY

Define the right Set business

END-TO-END SERVICE LIFECYCLE
Go-To-Market model offerings aligned
per new service and Industrialization with extensive
global operating Ideation Run & Operate customer
model to develop (Business and interaction,
customer satisfaction Incubation Technology) customer journey
BUSINESS OUTCOMES

mapping and
business model
Data - Analytics – Cybersecurity
CUSTOMERS

definition

Provide end-to-end
support throughout OT/IT Platforms Vertical Solutions
new services. Use
design thinking Implement Analytics
approach academy, catalog of
Change Management & Digital Transformation algorithms available
to the BUs, data
repository, end-to-
Value Creation Office/Program Driven end cyber security

Develop IoT culture across the organization

and develop service catalog to accelerate Manage end-to-end technical integration
BUs/organizations IoT innovation, run & Monitor value creation and foster IoT components to accelerate industrialized
talent as-a-service adoption/innovations offerings and synergies

4
THE SCHNEIDER
ELECTRIC DIGITAL
SERVICES FACTORY
Schneider Electric is a leading
global industrial equipment
manufacturer headquartered
in France. The company’s
mission is to develop
connected technologies and
solutions to manage energy
and processes in ways that
are safe, reliable, efficient
and sustainable. Schneider
Electric has recently launched
EcoStruxure™, its next
generation architecture and
platform, to support all IoT-
enabled solutions and make
it easier to scale new digital
services.
Figure: EcoStruxure.io

In a five-year collaboration, Accenture is helping Schneider

Electric build and accelerate these digital services. A
first step in this collaboration is the development of the The magic combination through a strong Ecosystem
“Schneider Electric Digital Services Factory”, which will
enable the company to leverage millions of connected
assets across its infrastructure and customer sites, in order INNOVATIVE
IDEATION
to build and scale new offerings rapidly in areas such as INDUSTRY INCUBATION & CONNECTED
predictive maintenance, asset monitoring, and energy EXPERIENCE CUSTOMER INITIATIVES
optimization. -CENTRIC
APPROACH
The Schneider Electric Digital Services Factory will provide
a complete range of services to speed development from
ideation to industrialization — including generating and BUSINESS
incubating new ideas, designing and testing potential MODEL
CUSTOMER
offerings, deploying and scaling offerings, and providing SHAPING &
PORTFOLIO
the analytics and IoT capabilities to accelerate application ANALYTICS NEW DIGITAL
development. Within its first seven months, the Factory had EXPERTISE SERVICE
LIFECYCLE @
created a clear vision and strategic intent to drive digital SPEED
offerings across seven domains, and had launched three
ideation and incubation cycles across multiple business
units to unlock value from new opportunities, and cut the
Schneider Electric Accenture
time from product ideation to market testing from three
years to less than eight months.

5
THE ROADMAP:
THINK BIG, START SMALL
AND SCALE FAST

An IIoT-driven Connected Business execution

focuses on a full-cycle transformation, from
ideation to operations (see Figure 4).

Figure 4 TIME TO
MARKET (TTM)
ACCELERATION

IDEATION INCUBATION PROTOTYPING INDUSTRIALI- OPERATIONS

ZATION

6
Taking services to market faster requires a “think big, start small, scale fast” approach (see Figure 5)

Figure 5

THINK BIG START SMALL SCALE FAST THINK BIG

REVENUE

One has to keep the innovation

process going. As innovation
cycles become ever shorter there
is little time to sit back

TIME

Digitalization means that business models and services must come to market faster. Iteration and scaling are the enablers of this acceleration.
• ‘THINK BIG’ – Create the holistic picture of the business idea and find a strong and viable business model in it
• ‘START SMALL’ – Evaluate the business model or service quickly through rapid tests that give quick insights
• ‘SCALE FAST’ – When finding a viable business model or service, scale it up quickly by utilizing the existing resources

The roadmap for such an approach comprises three phases,

customized to the needs of each individual organization:

PHASE 1: PHASE 2: PHASE 3:

Launch 1st PILOT and Build the INDUSTRIALIZE – SCALE: Jointly managed across
FOUNDATIONS GROW the full digital services initiatives
portfolio

• Test the Ideation/Incubation/Fast
prototyping process and ability to
create value/work together but with
a limited scope
• In parallel, shape the IIoT vision and
partnership approach:
- Identify opportunities (customer
experience, digital manufacturing,
new services & business models)
- Business capabilities to be set-up/
implemented
- Enablers to be developed
(analytics, IIoT platform)
- Global business case and business
roadmap for digital services
capabilities
- Partnership model
• Set up the key required partnership • Accelerate and optimize the delivery
capabilities (e.g. IIoT: Digital factory) model in a cost-to-serve-efficient
way (offshore capabilities, synergies)
• Start to implement and execute
business and technology capabilities
and services
- Ideation
- Incubation and Fast Prototyping
- Industrialization
- Analytics
• Track and monitor outcomes and
delivered value (with the appropriate
KPIs)

THE PROMISE OF AN IIOT-DRIVEN CONNECTED BUSINESS TRANSFORMATION

STRATEGY IS CLEAR: AN ESTIMATED THREE-FOLD REDUCTION IN TIME TO MARKET
AND AN EXPECTED INCREASE IN INCREMENTAL REVENUES. BY FOLLOWING THIS
THREE-PHASE ROADMAP, ORGANIZATIONS CAN STRENGTHEN THEIR CHANCES OF
ACHIEVING SUCH OUTCOMES. THE TIME TO START IS NOW.

7
 Join the conversation About Accenture
@AccentureInd
Accenture is a leading global
For more information, please professional services company,
contact: providing a broad range of
services and solutions in strategy,
Jean Cabanes consulting, digital, technology and
jean.cabanes@accenture.com operations. Combining unmatched
experience and specialized skills
Cédric Vatier across more than 40 industries
cedric.vatier@accenture.com and all business functions –
underpinned by the world’s largest
Karim Chaabouni delivery network – Accenture
karim.chaabouni@accenture.com works at the intersection of
business and technology to help
François-Xavier Dufau clients improve their performance
f.dufau@accenture.com and create sustainable value for
their stakeholders. With more
Christophe Brasselet than 394,000 people serving
c.brasselet@accenture.com clients in more than 120 countries,
Accenture drives innovation to
Philippe Seguin improve the way the world works
philippe.seguin@accenture.com and lives. Visit us at
www.accenture.com.
Cédric Bourrely
cedric.bourrely@accenture.com

References:
1. Driving Unconventional Growth through
the Industrial Internet of Things,
Accenture 2015
2. Accenture analysis in collaboration with
Frontier Economics
3. Copyright Oxford Economics Ltd. Global
Industry Databank
4. Accenture CEO Briefing 2015: From
Productivity to Outcomes; The
Economist, The Internet of Things
Business Index; IDC-IoT Buyer Behavior
2015: Trends by Industry & Company Size
5. Ibid
6. 3Q16 Gartner Survey (US): The IoT
Scenario, Bettina Tratz-Ryan, November
2016
7. 3Q16 Gartner Survey

This document is produced by

Copyright © 2017 Accenture
All rights reserved.
Accenture, its logo, and
High Performance Delivered
are trademarks of Accenture.
8
consultants at Accenture as general
guidance. It is not intended to
provide specific advice on your
circumstances. If you require advice
or further details on any matters
referred to, please contact your
Accenture representative.