Digitization of plants: An effective ROI model

Cyber-physical production systems (CPPSs) strive to merge the real and virtual worlds, improving return on investment (ROI) by accelerating operations, reducing errors, and lowering costs. Interoperability is important to digitization.

By Vinay Bhanot, L&T Technology Services in North America November 15, 2017

What has long been considered a futuristic vision is already seeing the light of day: Industrie 4.0 is here, and it is time to be a part of the revolution. Competitive advantage today hinges on digitizing plant operations and creating cyber-physical systems that can accelerate operations, reduce errors, and cut costs. In due course, however, digitally connecting plant operations won’t remain just a matter of choice with the competition getting steeper. Staying ahead of the game will require a seamless amalgamation of ever-evolving industrial technologies with available process knowledge.

Going smart

With consumer demands and preferences perpetually evolving, industries are at the cusp of making calculated choices regarding whether to embrace process automation, cloud, and connectivity-driven changes that represent Industrie 4.0. It is crucial to time the transformation precisely. Industry dynamics are changing rapidly, and with one eye on the quality and timeliness of delivery and the other on cost-effectiveness, industry leaders are faced with the all-important question—is it time already to assimilate the doctrines of cyber-physical systems?

Business leaders worldwide increasingly are warming up to technological solutions that can streamline their operations and overcome challenges posed by conventional infrastructure and systems. These challenges have to do with outdated protocols, a lack of efficient sensor integration in factories, and current maintenance frameworks, which are starting to prove regressive and counterproductive. A plant needs to adopt four fundamental principles for undergoing a digitally smart makeover, which is perfectly aligned with the Industrie 4.0 perspective, according to a June 20, 2016, Forbes article. [See reference links below.] 1) Interoperability is pivotal, with machines, sensors, devices, and people connecting and communicating with each other; 2) Information transparency must be achieved through sensor data contextualizing information; 3) Technical assistance by systems is critical in supporting humans with tasks that are too difficult or unsafe; 4) Decentralizing decision-making by empowering cyber-physical systems to make simple decisions and attain a basic level of autonomy. 

Risk vs. profit

With the manufacturing industry taking swift and positive steps toward transforming its systems, a paradigm shift in business models is anticipated. According to a Feb.7 Gartner Inc. press release that cites Gartner studies, the hardware spending on the Internet of Things (IoT) is expected to be worth $3 trillion by 2020. Moreover, the global Industrial IoT (IIoT) market is poised to expand at a compound annual growth rate of 23.7% from 2017 to reach a valuation of $783,881.1 million by 2025, cites a July 28 Transparency Market Research press release. Other critical areas that will witness rapid uptake are artificial intelligence (AI), the cloud, innovative convergences of information technology and operational technology, constructive supervisory control, and data acquisition. Maintenance models too are expected to see a gradual uplift.

For manufacturers, the main challenges in going digital are an immediate spike in costs and striking a balance between human efforts and technological innovations. Though the risks are daunting, the dividends are promising. The benefits of unmatched productivity, speed, efficiency, and precision have a positive impact on return on investment (ROI). No wonder approximately 80% of organizations have a favorable view of IoT, said Gil Press in a Sept. 2, 2016, Forbes article.

The seeds of a favorable ROI from the digitization of industries lie in cyber-physical production systems (CPPSs) that strive to merge the real and virtual worlds to accelerate operations, reduce errors, and lower costs in the long-run.

Switzerland is perhaps one of the forerunners in successfully integrating automation in industries, as Deloitte AG noted in a 2014 report. Since taking to Industrie 4.0, most Swiss companies have reported an increase in global competitiveness, business opportunities, and technological prowess. One might ask: what about the resources? Surveys show that though there have been initial uncertainties, injecting Industrie 4.0 modules have so far signaled long-term benefits.

The automation of tasks doesn’t just increase productivity across channels but also enhances the output of staff and speeds delivery. It must also be noted that savings from process automation are incremental. While looking at the initial investments to digitize processes, long-term benefits must be considered. For instance, the automation of a small task may seem insignificant, but the perspective changes when you take into account that the task is performed multiple times throughout the day and hundreds of such tasks are performed repeatedly over months and years. 

Profit is long haul

Risk assessment vis-à-vis revenue and profit generation is vital to the future of any business and industry. Riding the wave of changing times is more effective than being stifled by cynicism. To pave a better, brighter future for industries and consumers, it is of utmost importance to rely on analytics and available intelligence.

Research and surveys underline how significant it is to be a part of the "modern software factory," as suggested in a CXOtoday.com, Sept. 18. 2017, article, "Increased Automation, Agile Development Drive Greater RoI: Study." Global business leaders agree that exploring digital opportunities and balancing risks with security parameters are going to forge best practices of the future. To believe that the future is still far away is foolhardy. It is time to amplify growth technologically and galvanize the market that is beckoning us to the future-a future that is already here.

Vinay Bhanot is vice president and business head, Americas – plant engineering, L&T Technology Services. L&T Technology Services is a CFE Media content partner. Edited by Mark T. Hoske, content manager, Control Engineering, CFE Media, mhoske@cfemedia.com

KEYWORDS Digitalization, manufacturing ROI 

  • Industrie 4.0 and IIoT platforms are being implemented by manufacturers today.
  • Interoperability is part of effective plant digitization.
  • Consider long-term benefits in return on investment (ROI) calculations.


This online version provides links to sources cited above and some other L&T Technology Services articles below.

Consider this

Are competitors improving the value of their decision-making processes faster than you are? Is that sustainable for you? 

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References and attributions for information provided follow.

Forbes, June 20, 2016, Bernard Marr, "What Everyone Must Know About Industry 4.0"

Gartner Inc., Feb. 7, 2017, press release, "Gartner Says 8.4 Billion Connected "Things" Will Be in Use in 2017, Up 31 Percent From 2016

Transparency Market Research, July 28, 2017, press release, "Industrial Internet of Things (IIoT) Market (Component – Hardware (Sensors, Robotic Systems, and Connectivity Devices), Software (IoT Platform, Embedded Software, and Analytics), and Service; End-user – Aviation, Oil & Gas, Transportation, Power Generation & Utility, Manufacturing, and Healthcare) – Global Industry Analysis, Size, Share, Growth, Trends and Forecast 2017 – 2025"

Forbes, Nov., 27, 2016, Louis Columbus, "Roundup Of Internet Of Things Forecasts And Market Estimates, 2016" 

Forbes, Sept. 2, Gil Press, "Internet Of Things By The Numbers: What New Surveys Found"

Deloitte AG PDF report dated Oct. 24, 2014 "Industry 4.0 Challenges and solutions for the digital transformation and use of exponential technologies"

CXOtoday.com, Sept. 18. 2017, "Increased Automation, Agile Development Drive Greater RoI: Study" https://www.cxotoday.com/story/increased-automation-agile-development-drive-greater-roi-study/