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Industry Chooses Internet: IIoT Development Worldwide and in Russia

22 March 2018
Industry Chooses Internet: IIoT Development Worldwide and in Russia

Cyber Physical Systems

In the near future, the Internet of Things (IoT) market will grow, ensure higher incomes, and incorporate more economic segments. By 2025, companies which create IoT applications and control systems might generate over $80bn in revenue. The IIoT segment that focuses on digitalization of enterprises and constitutes a set of instruments which allow for the creation of cyber physical systems is also gaining ground. According to ABI data, IIoT platform developers can make as much as $16bn.

According to Allied Market Research experts, in 2016 the market of hardware and software for IIoT projects amounted to $115bn, and in the near future it will be growing by 7.5% per annum. Thus, in five years the number may increase to $197bn.


Responding to Demand

Large corporations are actively implementing their own IIoT platforms into their production processes and at third-party facilities in order to increase their revenue. Participant pool includes German industrial giant Bosch, Swedish telecommunications company Ericsson, Japanese Mitsubishi Electric, etc.

American manufacturer of gas turbines General Electric provided a vivid example of efficient IIoT application: the company implemented a remote-control system which performs non-stop worldwide equipment monitoring, allows for the avoidance of downtime, and produces timely notifications on required repairs. In order to meet these objectives, GE developed a system which processes extensive data from thousands of operating turbines. Total profit for enterprises which implemented the equipment is estimated at $100bn p.a.

German concern Siemens has also become a prominent player in the IIoT platform market. The company developed its own cloud platform MindSphere. This operating system links the digital world to various real objects, such as industrial machinery, infrastructure, devices, etc. Thanks to the platform, the enterprise can use Big Data technologies, create digital services and new business models, manage its equipment online, etc. MindSphere can operate at a single enterprise or as part of a vast network within a holding.

"MindSphere allows for a dramatic reduction in capital expenditure associated with the construction of data processing centers and the purchase of servers, network equipment, and software. Typically, these qualify as long-term investment, since a complex with adequate capacity becomes obsolete in five to ten years. MindSphere ensures an immediate response as it pertains to the demand for more computational power,"

Sergey Soloviev, Head of Siemens LLC Competence Center, pointed out.


According to ABI Research, last year Siemens connected 2900 digital production clients to its system.

Optimization Platform

American software developer PTC is a major supplier of IIoT platforms. Company products include the ThingWorx platform, which incorporates technologies for fast development of IoT applications and augmented reality projects. Production facilities typically have three ways of system implementation to choose from.

Partner organizations which are cooperating with production facilities use ThingWorx to create their own set of targeted services for a wide range of clients (i.e. the OEM format). For example, optimization of energy consumption is relevant for fast food chains, ports, and industrial enterprises. ThingWorx ensures quick adaptation to each specific implementation project as it pertains to data model, device network connection, user interface, etc.

The second format of platform application is the so-called Smart Connected Operations (SCO) installed directly at production sites. Apart from the ThingWorx platform, users utilize preliminarily customized ThingWorx Manufacturing Applications instruments which provide off-the-shelf solutions capable of ensuring an operational efficiency boost and made compatible with 80-90% of equipment and existing IT systems literally within days.

The third way of using the PTC system is the SCO and Smart Connected Products (SCP) format for mechanical engineering enterprises. In addition to ThingWorx Manufacturing Apps which increase operational efficiency, PTC offers these companies Navigate and ThingWorx Studio solutions.


"With its broad expertise in the automation of engineering design and technological and service process preparation, PTC managed to deliver a dramatic increase in the functionality of its ThingWorx platform by introducing Navigate and ThingWorx Studio solutions which improve onsite computer-aided design (CAD), product lifecycle management (PLM), and service level management (SLM) systems and increase the efficiency of product servicing through the application of augmented reality instruments, among other things,"

Andrew Sholokhov, Country Manager for Russia and CIS at PTC.


Currently, ThingWorx platform manages five million items (ranging from sensors to complex industrial systems) at 75,000 industrial sites worldwide. The company estimates that the market of instruments used in the creation of IoT apps amounted to $200-250mln in 2017.

PTC management believes that augmented reality(AR) technology which allows for the visualization of data packages is a useful IIoT instrument.


"There are numerous ways in which AR application transforms business operations in such areas as customer service, personnel training, product design, and after-sale servicing of complex equipment. AR also presents a powerful new interface which facilitates human interaction with the expanding digital world,"

Jim Heppelmann, President and CEO of PTC, stated.

Benefits against Inertia

The Russian IoT market may grow to $4-9bn in 2020. According to the Russian office of PricewaterhouseCoopers (PwC), the national public segment possesses the highest economic potential for IoT application. For example, energy companies could implement IoT projects in order to ensure a performance boost in spite of tariff restrictions. Healthcare providers form another niche for IoT application in Russia.

For-profit companies are currently quite inert in Russia when it comes to IoT implementation. PwC experts cite several factors which hamper the implementation of IoT in the private sector. No return on investment in the next 2-3 year is but one reason.


"No one is going to invest in technology if it does not pay off in the short-term perspective because top management wants to appease shareholders with quick returns and immediate results as opposed to starting dividend payments in five or more years," PwC advised.


In order to facilitate IoT implementation in the national economy, the federal Government is developing support mechanisms for innovative projects.

"By May, the Industrial Development Fund will launch a new program which will provide soft loans at 1% p.a. to companies developing IoT technologies,"

Denis Manturov, Minister of Industry and Trade of the Russian Federation, promised.


Telecommunications companies will be preparing the foundation for IoT project implementation in Russia. In the end of 2017, PJSC Mobile TeleSystems (MTS) in partnership with Nokia opened the first full-time IoT lab in Russia. The site presents pilot solutions which can be implemented in day-to-day activities, security systems, and the public utilities segment. The lab also showcases commercial IoT services and allows for joint development of new solutions.

"The lab can be used to improve promising technological solutions which will be applied in various areas in the near future. We sincerely hope that as soon as regulators adopt the Narrow Band IoT standard in Russia we will be able to offer off-the-shelf innovative products and services for smart home and smart city systems, monitoring and security, and process control at industrial facilities,"

Vice-President for Sales and Customer Service at MTS PJSC Kirill Dmitriev shared.

Russia is working on the development of statutory framework regulating the IIoT, and the Russian Association of Industrial Internet was specifically created to accomplish this task. Association members include PJSC Rostelecom, Kaspersky Lab , etc. Participating companies study international experience and prepare the foundation for the development of industrial internet in Russia.

IIoT implementation is a key area of industrial digitalization. INNOPROM exposition and round tables will focus on Digital Manufacturing, the main theme of the exhibition, and its Business Program will feature special projects and tracks dedicated to the future of global industry. We invite your participation in the exhibition and upcoming events.

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