We spoke with Howard Heppelmann, Divisional Vice President and General Manager for Connected Manufacturing at PTC, on the current state of the Internet of Things (IoT) as well as the direction he thinks IoT will take in the future.

Howard Heppelmann PTC

PTC works with more than 28,000 businesses worldwide to help them create, operate, and service products in rapidly-evolving, globally distributed manufacturing industries.

In this two-part discussion, Howard discussed the difference between connected products and connected factory operations, how smaller companies and multinational conglomerates can take advantage of the Internet of Things, and how the IoT will likely transform how business is done in the next ten years like the Internet did in the 1990s.

Manufacturers have used M2M, connected, and smart devices for some time now. How has connecting these devices to the Internet changed things?

I think this is an excellent point to bring up because many times people ask what’s the difference between M2M and the IoT. The folks that have been doing M2M say this is just a new name for something that we have been doing for a long time.

I think the M2M world was about connecting two machines, and maybe monitoring those machines remotely. The IoT world is about blending machine data on the factory floor. That is the transformation that’s happening in manufacturing. We would refer to that as an operational technology with business data, or combining data coming from IT systems with other sources of data.

So at the end of the day, you get structured data, unstructured data, and time series data. Then add in other sources – like environmental and external data – and you get a real-time view of what’s happening.

The Internet of Things is about bringing data together to automate the business process across an enterprise, or within functions in the enterprise, versus just monitoring data off the sheets.

I think M2M laid a great foundation for IoT but, in and of itself, it was not all that comprehensive. In this new world of IoT, we are unifying all of that business data, OT data, and other data sources together. Then we are applying modern technologies to it like big data analytics, edge analytics, mobile, augmented reality, virtual reality, and 3D cloud.

When you roll it up at that level, IoT does not look anything like the old world of M2M.

M2M vs IoT


The IoT is about bringing data together to automate the business process across an enterprise, or within functions in the enterprise, versus just monitoring data off the sheets.

What have you observed to be the driving factors for decision makers investing in IoT, specifically for manufacturing?

I think this is interesting. We commonly use the term “tip of the spear” to describe what is most valuable for manufacturers, and there are a couple of areas that stand out. Then really there is a transformation that’s happening across almost every function in the company.

The prominent places that stand out are in service. The old model of delivering customer service for products is perverted today. The manufacturer designs the product, they manufacture the product, they ship to their customer, and they do not hear about that product until the customer picks up the phone and calls them with a problem.

They do not hear about all the other times when the customer is using it, and things are working great.

In the area of service, that whole model can be disrupted.

Instead of customer relationship management where you staff an entire organization to field phone calls from your customers, you can actually start listening directly to the products.

The old model of delivering customer service for products is perverted today.

You can get a much richer stream of information about their health, their utilization, their performance, and their environment. Then you can use that data to talk to your customer about your product. You will learn a lot more.

You will learn when they use your product, what features they use, how they use them. If you design new, connected products in a smart way, you are going to have many features that can be activated once they are in the hands of the customer.

In general, the service model goes from selling a product to selling a product on a maintenance contract, to selling outcome-based services, to ultimately selling products as a service.

That whole model is changing. All of the processes, or a significant number of the processes behind it, are going to change the whole idea of what a call center is today.

There is so much low hanging fruit for IoT in the service area. First-time fix rates – which are critical to any company that has a mobile service organization driving around to maintain customer products – can be improved because now people can remotely monitor those products.

They can do a lot of diagnostics. They can add analytics, and in many cases, fix the problem remotely through software. However, if they do show up, they show up strategically armed with information about what the problem is.

This is completely different than what is commonplace today where you show up, spend some time looking at a situation, and then almost inevitably have to go back, order parts, and come back again later.

IoT service business

Service is the tip of the spear, in particular, for capital goods or computer equipment or any of the kinds of products where uptime is crucial.

I think the other one is the factory floor. Again, part of that is because the whole service model applies there. You have factories that have millions of dollars of assets that have been placed in those factories, and uptime is critical, and downtime is the enemy of progress.

IoT can unify team data, business data, and external data into a common dashboard, so now you can have instant visibility to how production is running. 

Everything applies to the factory floor – the service model, remotely monitoring and diagnosing problems, understanding trends before they become issues, using analytics to avoid problems altogether. IoT makes the factory production environment and the maintenance process of servicing equipment much more efficient

The other big thing that’s happening in the factories is moving from a waking stage of information to real-time information. Almost all factory operations reporting today, except in the highly automated industries, is done based on business intelligence reports that were generated the day before, or sometimes the week before, but almost never a minute before, and that is a significant transformation.

IoT can unify team data, business data, and external data into a common dashboard, so now you can have instant visibility to how production is running.

What does that mean? It means you can respond immediately if a problem is starting to trend in a direction that calls for help and you can fix things or act on things in real time. That is just not a capability that exists in a factory today, but it is a capability that every factory manager would like to have.

The critical thing here for manufacturing is the feedback loop now becomes real. It becomes instantaneous, and it can be noded and architected into the product.

So instead of guessing what the customer requirements are, engineering can now start actually to gather data about how their customers are using their products and that data can have excellent fidelity regarding geographical distribution, and more.

In turn, sales and marketing can leverage a new type of product that is mechanical but with physical capabilities employed through software that can be turned on after the product is in the customer’s hands. They can actually monitor all the aspects of when their customer is using the product, how they are using it, if they are using it in warranty or out of warranty conditions, when they are pushing the threshold of new capabilities, if there’s some upsell capability, etc. So it changes how they sell and market to those customers.

Read Part 2 of this conversation here.


The Internet of Things series is brought to you by Treeline Interactive and is authored by Tim Homuth and Joe Austin. Our objective is to provide you with information about the rapidly evolving field of the Internet of Things by bringing you interviews and insight from industry leaders. If you have any questions, insight, or suggestions for articles please email us at IoT@treelineinteractive.com.