I had the pleasure talking to Sunny Trinh, VP of Demand Creation and Cool Stuff at Avnet, and Brett Lane, CTO atPanduit. Both are Corporate Partners of our Industrial Internet of Things (IIoT) Accelerator cohort at mHUB Chicago. We discussed examples and trends in IIoT and smart manufacturing, and how corporations can collaborate with startups to drive innovation.
We started talking beer, bourbon and cows as examples of IIoT – quite a different start compared to the typical asset monitoring in manufacturing. Bourbon ages in barrels – but barrels leak and bourbon evaporates, so sensors are installed to measure leaks – an opportunity of 8M barrels in Kentucky alone. Imagine the value created by knowing which barrels of these millions leak. Cattle reproduction is big business. Imagine the value of having sensors detecting when a cow is in heat and mounted by a bull. Imagine a Seat-as-a-Solution (yes, another SaaS) in a co-working space to measure when a seat is used. Think of warehouses where beer is stored – there is a need to maintain low temperatures from manufacturing up to delivery. The value that can be created in each case is enormous: save money, reduce waste, increase efficiency, etc.
Both panelists believe we are still in the shiny-object phase: a lot of experimentation and trials, and organizations that are still trying to realize returns on their investment in IIoT. But they also think we are at a tipping point. Cost is going down: component cost is decreasing, connectivity cost is dropping, collecting and managing data is getting cheaper too. On the revenue side, different business models are being explored. One avenue is the interplay between fixed cost and variable cost, between CAPEX and OPEX. There is no one solution fits all, every customer has different requirements – even within one organization. A cold food packing company has different products that require different treatments; commodity products (sandwiches) where cost is a key metric whilst high end food products (caviar) needs precision and accuracy.
Moving to implementation, both Sunny and Brett indicated there is a lot of noise. The challenge is deciding what architecture to choose, which partner to work with, etc. Both learned it the hard way through experimenting; mistakes and learnings are part of the journey. They have experience startups can tap into. Here are some challenges they see startups having and the advice they can give:
- Validate the problem statement first, then find solution and technology. They have seen too many instances where technology is looking for a real problem. They can support in validating the problem and the market opportunity.
- Talk to as many customers as possible – tap into corporation’s customers to validate assumptions, and, choose pilot customers that have skin in the game.
- IIoT is not just about devices, it is an end-to-end solution; device, connectivity, edge, cloud, data, AI, security. Bringing all pieces together is daunting and the biggest challenge. Corporate Partners can provide access to end-to-end-solutions where the startup’s product fits in.
- Don’t try to do everything yourself – focus on core competence and secret sauce – know what your gaps are and get help. The immature nature of the ecosystem results in a labyrinth of players – but you have to choose who to work with to de-risk your journey. Corporate partners can open up their value chain, supply chain and manufacturing capability where it makes sense.
It is not a one-way street though. Corporates tell us what they can learn from startups too: the entrepreneurial spirit, passion and curiosity that sometimes larger corporations have lost. That for sure, is a great invitation.