Closed versus open loop thinking in industrial IoT

In examining the potential of the industrial internet, the benefits tends to be framed in terms of traditional business benefits—enhanced operational efficiency, preventative maintenance, or improved supply chain management.
And these are important markers for how adding sensors, connectivity and applying analytics to data can help an enterprise wring value out of their operations. But one other way of thinking of having a well networked industrial operation versus operating in more of a data silo is in the idea of closed versus open loop operations.
I first discussed these concepts with Daniel Sexton at GE who specializes in industrial control architectures and communications. He works in GE’s corporate research group where he interfaces with diverse industrial groups from health care to aviation to power generation.
Open loop enterprises effectively have visibility into their operating expenses on a monthly basis. Data (and costs) are understood retrospectively. An enterprise that functions this way knows its inventory, supply chain, labor usage, output, customer demand by looking back at information once it hits the CEO or CFO’s desk.
Closed loop enterprises, on the other hand, are highly networked, employing near real-time information to answer the most basic question: Was my operation profitable today? Access to this information can “close the loop” by aiding managers in more quickly taking steps to reduce inefficiency and waste. Knowing inventory levels, customer demand, the health of machines on a floor and tens of other data points results in more educated decision making.
If this sounds abstract, consider the power industry, which due to the fact that smart meters now report usage every 15 minutes, are nearing a complete closed loop. At any time, a utility can see customer demand at incredible granularity. This results in opportunities to apply applications and solutions to lower utility costs associated with demand response or provisioning additional peaking power plants.
“If you really think about it a lot of enterprise systems are running open loop. They adjust their operations more on a monthly financial cycle as opposed to on the immediate information on what their current cost of materials, demand and distribution system are,” Sexton noted to me.
Sexton does see that there are challenges to a fully networked industrial system, namely scalability across the globe and security at mission critical infrastructure like power plants. But he thinks the path forward is to try to address those security issues, perhaps even one day having every sensor on a network containing its own firewall. The key is to provide a secure channel into the enterprise operation so that data isn’t silo’ed there.
“All of this requires connectivity at the plant level that we haven’t really had before,” he said. “Technologies that will help provide that connectivity not just to the plant but into the plant and down to devices that reside within the plant will be critical to making the industrial internet and all the applications and services that we want to run on that.”
As I’ve previously written, standards are another barrier right now to the industrial internet, an issue that Sexton is also working on with the AVnu Alliance. Standards, security and scalability are all issues that need to be addressed for the industrial internet of things to really take off.
But the appeal of running a close loop business where a business can be visualized in terms of its operating costs in realtime is a significant incentive to move past those obstacles if for the most basic reason that failing to do so could reduce an enterprise’s competitiveness. For now, most companies are doing the incremental, step by step, work of adding connectivity and testing the water to see the benefits. No doubt showing that this can be done securely with clear ROI will be important to future industrial IoT efforts.