IoT and ERP are Strangers at Most Industrial Firms

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Drawn in by the promise of hyper-efficient operations and innovative, data-driven business models, organizations are beginning to encounter the drawbacks of the technology, including some major disconnects that are keeping enterprises from fully capitalizing on the IoT’s potential.

Linking a company’s industrial IoT systems with its enterprise resource planning (ERP) software seems like a match made in heaven. Yet, at most companies (84 percent), data from their IoT devices aren’t flowing into their ERP environments, according a recent survey of 200 IoT decision makers at North American industrial organizations from IFS, and industrial enterprise software provider.

Only 16 percent of companies have connected their industrial IoT and ERP systems, indicating that most companies are missing out on the strategic decision-making and operational benefits afforded by the technology, hampering their digital transformation efforts.

IoT adoption and integration, or the lack thereof, can have various effects on the business application environments of so-called digital transformation leaders and laggards, discovered IFS.

“Digital Transformation Leaders were more likely than Digital Transformation Laggards to be able to access IoT data in applications used beyond the plant floor,” stated IFS. “They were more than four times as likely to have access to IoT data in enterprise asset management software, twice as likely than digital transformation laggards to be able to access IoT data in high-value asset performance management software, and almost twice as likely to be able to be able to use IoT data in ERP.”

The business and operational decisions of digital transformation leaders are also being swayed by the IoT. Leaders are nearly three times as likely to incorporate IoT data in business intelligence and service-level agreement (SLA) performance than laggards, stated IFS.

The gulf between IoT and ERP systems isn’t the only disconnect that industrial firms are grappling with.

Another recent study from industrial equipment and automation vendor Emerson revealed that while 60 percent of manufacturers have at least dipped their toes into the industrial IoT scene, only five percent are letting their investments be guided by a clear-cut business case. Those who take a more strategic approach to their IoT deployments are likelier to reap the rewards of IoT data coursing through their business applications.

The key is to take the first step, however small, according to Mike Train, executive president of Emerson Automation Solutions.

“The small percentage of companies that have already developed clear business plans for Industrial IoT are positioning themselves to realize tremendous competitive advantages,” said Train in prepared remarks. “We encourage everyone else to consider two critical first steps: start small and invest in applications that enable a clear business case.”

Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.