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Delivering dramatic RoI and customer value with IoT

Kenny MacIver — March 2016
With the help of a strategic IT partner, the application of IoT can both reduce costs and boost customer value, says Patrick Bass, ThyssenKrupp North America CEO.

For some industries, the business case for applying Internet of Things (IoT) capabilities across their operations is relatively easy to make — though not always easy to fulfil without the right technology partner.

According to Patrick Bass, CEO for North America at diversified industrial group ThyssenKrupp, building the business case from a vision for IoT in its €8 billion ($9bn) elevator unit was “quite straightforward. One of ThyssenKrupp’s key focus areas, the elevator industry is a service-based industry, so if you can, say, eliminate just one unscheduled visit by a technician per elevator per year, then that amounts to a significant dollar return.”

“In a mature labor market such as the US, for example, a single visit to an elevator, regardless of what work’s done, costs around $300 — at the absolute bare minimum,” he says. With one million units under service worldwide, the potential value to ThyssenKrupp from an IoT-enabled predictive maintenance solution was obvious — and likely to easily outweigh the “double-digit million dollar investment” it ultimately took to build MAX, the cloud-based system it launched in October 2015 and which will be rolled out to 80% of its elevators worldwide over the next two years.

“Through the application of cloud-based IoT and data analytics we’ve seen uptime improve by 50%.”

But the value creation has not been restricted to ThyssenKrupp alone. By gathering and analyzing real-time data on the operation of the component parts of individual elevators and taking action before any serious problems arise, it has been able to dramatically reduce elevator downtime — the critical KPI for its clients, the owners of many of the world’s tallest buildings.

ThyssenKrupp has already backed its vision with some hard numbers. “We’re well down the journey, we’ve done our proof of concepts and our pilots and we’re ramping up now, connecting more and more units every day. The standout early result: we’ve seen an improvement in uptime of 50%,” says Bass. “Think about the disruption in a building [when even one of its main elevators is out of service] and the cost in terms of unproductive time to companies in that space. We can now improve that significantly, increasing traffic flow and efficiency for office space around the globe. It’s very powerful.”
Constant improvement cycle

And that only gets better with time. “The model progresses from [raw, sensor] data to the ability to derive intelligence out of that through analytics,” says Bass. “But your analytics are improving day-on-day because every time you have an insight you have a [preventative maintenance] actionable and can despatch a mechanic who in turn can provide further intelligence. So it’s a constant algorithm-improvement cycle in which even the smallest percentage gain in efficiency has huge returns because of the scale.”

IoT will also enable the company to stand out from the crowd in the various industries in which it operates, Bass believes. “From an industry standpoint you have the capability to break out of the mould, to differentiate yourself. The predictive capabilities generate a lot of positive momentum with the regulatory authorities that have jurisdiction over testing and acceptance of new systems. That’s because they see preventative capabilities as actually improving on what is already the safest mode of transportation in the world. So it’s pretty phenomenal.”
Partnering for the future

Given the scale of its ambitions and the challenges of applying bleeding-edge IoT technologies, finding the right partner was critical to the success of the MAX project, says Bass.  “We knew we couldn’t do this alone and we went through a lot of pain before finding Microsoft.” The company’s MAX system pulls data from around the world into a Microsoft Azure Cloud, and the IT giant has recognized the huge potential of the partnership by committing considerable expertise and resource to ensure the project’s success.

“When you start talking about connecting a million pieces of [elevator] equipment across the globe that becomes very attractive,” says Bass, who points out that many of the processes used in MAX are expected to be applicable across several of its other businesses — from components supply in the automotive sector to aerospace systems. “So this initial spawning of MAX has built a vision, focus and momentum for ThyssenKrupp as a whole to be a digital company.”

• Photography: Matthew Stylianou
First published
March 2016
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About: Patrick Bass
CEO for thyssenkrupp North America, Inc, Patrick Bass is spearheading digital transformation at €43 billion ($48bn) German industrial group thyssenkrupp AG. Phase 1: IoT-enabling a million elevators worldwide to deliver dramatically enhanced reliability and lower costs.

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