Mr. Breidenbrücker, IoT projects finally seem to have arrived in German companies. What is the current situation in the industrial IoT market?

Michael Breidenbrücker: Digitalization means upheaval, which sooner or later affects every industry. Machine and plant manufacturers, which are very much SMEs, have also been facing the challenge of dealing with this topic for years. German SMEs are definitely on the right track - at least in terms of their ambitions. Studies show that industrial IoT projects are now also gaining importance in SMEs and that the first projects have already moved beyond pilot status in many places.

In general, the trend is towards 'buy and create', i.e. the solution is not developed from scratch, but an existing solution is purchased and then adapted to the company's own requirements. Many SMEs also seek external help with implementation. The reason for this is usually that IoT solutions still require a great deal of explanation and SMEs have a lack of software development resources. Although the industry enjoys a good international reputation, it is not sufficiently equipped for IoT, big data, cloud or machine learning. This is why SMEs are also looking for suitable external partners who have the expertise and can support them in the digitalization of processes.

"SMEs have nothing to gain from IoT platforms having to be managed by a host of IT specialists"

What do SMEs need to consider when choosing an IoT partner?

Breidenbrücker: SMEs are characterized by their innovative strength and flexibility. When choosing a partner for the implementation of IoT projects, it is important to ensure that flexibility is maintained. In concrete terms, this means that the solution can be easily integrated into existing systems, migrated from one system to another and, above all, scaled. If the requirements of customers and industry partners change, SMEs must be able to continue to react flexibly.
If internal IT resources are limited, it is advisable to look for an out-of-the-box solution that requires as little customization as possible and has industry-specific interfaces and functions on board. If customizations are necessary, for example the creation of department-specific apps or dashboards for sales or service, care should be taken to ensure that these can be created without the use of IT experts or data scientists.

The complexity of the market

Senseforce GmbH was founded in 2016 by Michael Breidenbrücker and employs 13 people at its headquarters in Dornbirn, Austria. Senseforce offers customers a platform-as-a-service solution for the implementation and management of industrial IoT projects.

© Pixabay

What are the biggest hurdles when it comes to the long-term implementation of IoT projects in SMEs?

Breidenbrücker: In the long term, two aspects are crucial: firstly, it is important to keep an eye on the return on investment and profitability. Will the purchase of my IoT solution pay off? Medium-sized plant and machine manufacturers invest in an IoT platform in order to digitally enhance their products and sell them on to their customers with corresponding services. However, if the costs, or more precisely the costs for commissioning and ongoing consulting contracts, are correspondingly high, the margin melts away. We often see this, especially with the large hyperscalers. They offer a basic platform that cannot be used without appropriate support. If these costs cannot be passed on, operation is simply uneconomical.

A second aspect that also has to do with costs is ongoing operation. Can my platform be operated with the existing IT resources? Both SMEs and their customers have nothing to gain from a platform that has to be managed by a host of IT specialists - especially in the current situation, where experts in big data, IoT and AI are in short supply.

When it comes to choosing an IoT provider, SMEs still often fall back on well-known providers. Why is that?

Breidenbrücker: It's true, many companies tell us that they go to the big software groups. It's like in private life: People always tend to go to the well-known providers when buying a product. This is certainly also due to the complexity of the market. As a result, IT decision-makers often no longer have an overview of what is on offer and find it difficult to assess which services can cover what they are hoping for. They then hope for an all-round carefree package from one of the large cloud operators. However, the services offered by these providers are tailored to large corporations, not SMEs. My advice: invest time in choosing a partner and steer clear of the big players.

Convincing solutions

What are the advantages and disadvantages of using IoT solutions from established providers?

Breidenbrücker: Established providers such as Microsoft or Siemens have a decisive advantage - they offer an incredible number of options and have the corresponding resources. However, this starting point is no guarantee of quality or an offer tailored to the needs of a company. This is because IoT solutions from well-known service providers are often expensive, inflexible and maintenance-intensive. They also encourage vendor lock-in, implementation often takes longer than average and employees in medium-sized industrial companies often find it difficult to operate the integrated IoT solutions because their IT skills are inadequate.

What do IoT solutions need to offer to win over SMEs?

Breidenbrücker: Above all, IoT solutions need to be flexible, comprehensible, transparent and easy to use for specialists in industrial SMEs. This is the only way for SMEs to avoid having to rely on middlemen and to remain independent. Such a prerequisite enables SMEs in the mechanical and plant engineering sector to develop ideas for new and innovative products and thus remain internationally competitive in the long term. In order to achieve this, however, it is essential that the chosen IoT solution meets the needs of SMEs from the outset.