Periodic Reporting for period 1 - IOTI4.0 (Integral Open Technology for Industry 4.0)
Reporting period: 2016-08-01 to 2016-12-31
The emergence of Industry 4.0 is creating new opportunities to enhance the competitiveness of manufacturing industries, especially in Europe. Factory floors are being equipped with new control architectures, smart machines, software, sensors and automation systems. A key challenge for industries is firstly to interconnect all these elements and any new ones that will be integrated in the future into intelligent manufacturing systems and secondly, to use the data generated to improve operational efficiency and generate growth through unexpected opportunities.
Whilst big players are in a stronger position to face the global competition, SMEs and mid-caps are having difficulties in incorporating industrial automation and control technologies. This is partly because existing proprietary technologies developed by large corporates are too expensive. This is a key barrier for modernising and maintaining the competitiveness of SMEs and mid-caps in the manufacturing sector that currently employs 17.8 million people in Europe.
Parallel to this, there is a clear trend towards the use of Open Source for professional environments, as companies try to avoid costly licences and look for solutions that provide the level of flexibility required in highly dynamic industrial environments. Firstly noticeable in software applications that have now become mainstream (e.g. Linux, OSx), Open Source Hardware was only introduced in 2007 (the first hardware with Open Source licence was a product called Arduino). Even if the concept of Open Source Hardware was initially developed for the purposes of training and “Do it yourself” applications, this market generated $50M in revenues in 2013 and headed towards $1Bn in 2015.
Boot & Work Corp S.L. operating under the brand Industrial Shields, is a young SME that develops and commercialises electronic, mechanical and mechatronic solutions for the industry based on the leading Open Source Hardware, Arduino. After an initial phase validating the technology and commercialising semi-professional solutions, the company is now focusing on reaching the wider professional market of industrial automation and control.
At the moment, users of Arduino-based hardware need to be familiar with its Open Source programming software (Arduino IDE). However this programming software is not compatible with the international standard IEC61131, which incorporates ladder, the most common language used by automation engineers and system integrators. Such limitation in its programming language is hindering a major market up-take of Open Source Hardware in professional industrial environments.
The overall aim of the IOTI4.0 project is to bring into the market a technology for industrial automation and control that is based on Open Source (therefore free from proprietary fees) and that at the same time, fulfils all the requirements of professional industrial environments (complies with IEC61131 standard, including ladder as programming language).
As part of Phase 1 of the IOTI4.0 project, Boot & Work has assessed the technical, commercial and financial feasibility of introducing such technology into the market.
The project took place between July and December 2016. The key conclusions of the feasibility study are:
• The new hardware products and software services will meet the Industry 4.0 user needs: higher connectivity, flexibility and reliability. They will also bring significant competitive advantages as regards cost, ease of use and improvement overtime.
• The software platform will fulfill the iIEC61131 standard, including ladder as programming language
• The new products will meet the regulatory and certification requirements of the most stringent markets (EU, US, Canada, Japan…).
• B&W will have “Freedom to Operate” without risk of infringing existing patents in the state-of-the-art.
• The company’s data protection strategy will be based on an Open Source licencing model that ensures a trusted collaborative environment whilst protecting the intellectual property of both users and Boot & Work.
• The market analysis confirms that the key market trends in industrial automation and control are the wider adoption of Internet of Things in industrial environments (IIoT) and the emergence of innovative digital service models applied to industry. It also shows a higher potential for introducing new IIoT technologies in discrete automation rather than in process automation.
• The competitive analysis proves the unique value proposition of the IOTI4.0 solutions compared to three different types of competitors: large corporates, open source-based SMEs, and Chinese companies.
• The market segmentation identifies two types of priority countries: those with the largest markets (US, China, Germany…) and those with the highest growth rate (Indonesia, South Korea…).
• The main market barriers are: the perception of lack of security of open source tools, the lack of IoT standardisation, the industry preference for end-to-end packages and the high initial investment costs.
• The commercialisation strategy will be based on direct sales through e-commerce and sales through distributors (both global and local distributors).
• Marketing efforts will be put into generating and publishing interesting content to increase the users’ trust.
• Technological: Technical assessment of seven new families of hardware products (identification of communication systems, electronic and mechanical requirements) and definition of the requirements for the cloud-based software programming platform.
• Regulatory: Analysis of existing regulatory and standardisation procedures and definition of the certification strategy for the new products.
• IPR and knowledge protection: Analysis of data protection requirements and definition of the IPR strategy (including ""Freedom to Operate"").
• Market and commercial: Development of a market study (including in-depth analysis of competitors and competitive solutions and market segmentation by industry and geography); redefinition of the company’s marketing and sales strategy (identification of new marketing tools and automation, inbound and outbound marketing techniques).
• Business plan: Delivery of an initial business plan for the new IOTI4.0 products and services, including investment plan and financial model.
Phase 1 of the SME Instrument has led us to re-assess our business model. Our existing commercial activities position us as Open Source IT hardware vendors for industrial automation and control. However, the market is evolving towards new innovative digital service models that offer industrial end-to-end packages. Therefore, the business plan developed as part of Phase 1 of the SME Instrument has focused on assessing the business opportunity of shifting towards a “platform as a service” business model where we become both product and service providers of industrial automation and control solutions based on Open Source.
• Functionality: Thanks to the increased range of communication systems and the modular design, the IOTI4.0 solutions will ensure total and flexible connectivity on the factory floor. This is a major improvement compared to proprietary solutions which are based on closed systems, often not compatible with other brands. Other companies that sell open source hardware for industrial automation and control companies have a much more limited range of products (two or three products only). Besides they manufacture their own circuit boards based on Arduino designs, which get easily outdated.
• Costs: Our products will be free from expensive proprietary licences. On average they will be 50% cheaper. Also, thanks to our modular approach, clients will only buy what they really need.
• Industrial standardisation: Once commercialised, our new software programming platform will be the only one in the market that integrates Arduino IDE (the Open Source programming software) whilst complying with the international standard IEC61131. Engineers and system integrators specialists will be able to program in ladder, the most popular language in industrial automation and control, and at the same time, benefit from the increased flexibility and affordability of open source hardware solutions.
• Ease-of-use: Our cloud-based platform with it library of ready-available code will lead to smarter programming, saving our users a considerably large amount of time. Besides, our hardware products will incorporate wireless communications, therefore they will be easily programmed from any PC, Smartphone or Tablet.
• Improvement over time: Our cloud based configuration will enable users to constantly generate new content, unleashing a new layer of intelligence based on Big Data analytics that will be fed back to the users. As a result, we will be able to identify new hardware requirements and bring new products into the market much quicker, fulfilling the changing demands of Industry 4.0.
As regards the wider socio-economic impact, the project will increase the competitiveness of European manufacturing industries through the digitalisation of industrial processes and products (Industry 4.0). This sector accounts for 2 million enterprises, 33 million jobs and 60% of productivity growth in the EU. However, SMEs and mid-caps risk missing the train of digitalisation because existing proprietary technologies and IIoT systems are too expensive and do not provide the flexibility required in highly dynamic industrial environments. The IOTI4.0 project will bring into the market a solution that is affordable for SMEs. It will also provide an economic option for large companies who want to optimise the costs of their processes and products. The project will reinforce European leadership in industrial automation and control, a sector currently dominated by North America.