Retrofitting and updating
Wolfgang Decker, Global Managing Director at Accenture, Germany, explores the complications and challenges of retrofitting machinery and systems to the Industrial Internet of Things.
Plant manufacturers who want to switch to smart products often consider retrofit strategies for upgrading machines already sold. This is a wise approach, but there are a few things to consider.
When talking about smart products and new business models, another buzzword quickly comes up, at least among plant manufacturers – Industrial Internet of Things (IIoT) retrofit. This refers to the retrofitting of existing plants, usually using setup kits made of pre-configured computer and network technology. The process enables even the oldest existing plants to be networked economically – and therefore promises good business.
The main reason for this is that many industrial plants are simply too old for the increasingly progressive digitisation. Estimates put the average age of factory equipment at around 20 years old. Most machines therefore date from times when there was no talk of the IIoT. Consequently, a large majority – about 85% of the stock – is not yet networked.
Retrofit as an entry into digital business
Simply replacing these machines, however, is out of the question, even for those companies that absolutely need the IIoT. Firstly, many of these plants have not yet reached their depreciation age, which is often around 30 years. And secondly, even the biggest digitisation profits seldom justify the purchase of an entirely new industrial plant, amounting to millions.
Retrofits, on the other hand, cost considerably less and can usually be carried out comparatively quickly and easily. The demand for retrofit solutions and services is growing accordingly. Market reports show how sales of Internet of Things (IoT) gateways – which are needed for retrofits, among other things – are expected to reach around US$45bln by 2021, an increase of up to 15% per year. The retrofitting market should, therefore, be growing, and thus open up additional business opportunities for manufacturers.
New business is, of course, less the result of pure retrofitting itself but rather of the sale of digital services, which retrofits make possible in the first place. Plant monitoring and optimisation, predictive maintenance, remote control and similar services promise not only additional but also recurring revenues – with margins far higher than usual in the industry.
But this is also the challenge for any kind of retrofit strategy. If you don’t yet have a broader digital and service strategy, you don’t really need to think any further about selling retrofits. Only those who already know what added value and services they want to offer their own customers later, what conditions must be created for this and with which business models a return-on-investment will be achieved, can really enter into further planning.
Develop your own retrofit strategy
The first step towards digitisation usually consists of creating a business case. It usually describes which existing machines are to be retrofitted, which business objectives the retrofits pursue, both for the company itself and for the buyers, and what sales and costs are to be expected.
When selecting the machines to be retrofitted, those responsible can almost always calculate using the number of machines already sold – or the machines in the field. After all, what counts most in the digital services business is reach – the more machines and data a manufacturer can take online and onto their own platform, the better the basis for a new service business of their own.
In terms of targets and sales, though, the scope is somewhat larger. Retrofit strategies can certainly focus primarily on efficiency. Machine manufacturer Biesse Group, for example, initially introduced its predictive services to reduce its own warranty costs. However, more turnover-oriented approaches are just as possible, as how much can be generated with the respective approaches naturally depends on the concrete value of the respective solution.
Costs mostly entail both the design of the actual retrofits and the subsequent service provision. Those who do not have the necessary IT know-how or the required IIoT infrastructure can also purchase from third parties, often as a service and against comparatively low, usage-dependent rents.
The right technology, the right uses
Manufacturers now have a choice from a range of robust, industry-standard solutions. Many original equipment manufacturers offer retrofit kits with controllers or preconfigured IIoT gateways, which are comparatively easily connected to existing systems and then hooked up to the IIoT platform.
Manufacturers can largely base their selection on their own digital strategy and existing technology. For example, if you already use a specific IIoT platform, you should be able to find suitable retrofit kits and then choose the one that best suits your technical requirements.
Those requirements usually result from the services or use cases planned for later sale. For most measurement and analytics-based services somewhat less powerful kits that pass incoming data to an IIoT platform for further processing are usually sufficient. Control services for self-controlling systems, on the other hand, require more computing power and robust edge computing features.
One machine, one gateway is almost always mandatory. In addition, the gateways used should be installed as close as possible to the machine to be controlled. This is the only way the overall solution can achieve high reliability and safety – conventional fieldbus structures do not achieve maximum values in this respect and are therefore almost always the worse choice.
Key requirement IT security
Keyword security is the central theme in any kind of retrofit approach and those responsible in companies should give it the highest priority in all considerations. After all, every retrofit connects an industrial machine to the internet, and makes it accessible to third parties – at least in theory.
The risks associated are particularly high for existing machines. In the development of operational technology, also referred to as factory IT, in past decades, speed and efficiency were almost exclusively in the foreground. So the corresponding protocols and applications offer little scope for the insertion of protective measures, even in purely technical terms. These must, therefore, all be implemented within the retrofit solution, such as the kit or IIoT gateway.
Put simply, the solutions have to achieve two things above all. First, reliable authentication of machines, computers and employees, ensuring that machine and network inputs really stem from authorised persons. And secondly, the protection of all connected machines, computers and data against unlawful access, to guarantee of the highest possible IT security.
The path to both goals leads to a corresponding structure of the IIoT retrofit solution. Common gateways usually have encryption technology, certain development approaches – security by design – and so-called trusted execution environment (TEE) procedures. The latter create a trusted runtime environment for applications on a hardware chip by loading the application data into this special area and isolating it there as well as protecting the hardware and software.
The technology required for safety and reliability is available, but corresponding results can only be achieved through its targeted use. Manufacturers should make sure to describe safety rules and standards before deciding to use certain retrofit kits. And they should ensure that the selected kits have common security architectures and protection procedures – keyword TEE.
It doesn’t work without caution
IIoT retrofits can indeed be an option for the digitisation of existing systems, and as such, facilitate the entry into the business with smart products and digital services. The required technology is not only ready at hand, but also available in the form of preconfigured solutions. However, these solutions may reduce costs and effort for retrofitting projects, but they are by no means simple, nor can they easily be used. Instead, they demand prudence and preparation, especially when clarifying the business context, goals, and requirements – especially with regard to IIoT security.