For the industrial giants that Rockwell Automation serves, the value of the Internet of things isn't theoretical. It’s transformative.
Think about it: The raw materials we need to survive in the modern era—oil, gas, metal—often come from remote, dirty, hostile environments. We process them in environments that are equally intolerable.
You can imagine, then, why so many industrial companies are keen on the so-called Internet of things. Enabling an oil-rig operator do his job from a climate-controlled room rather than a desert where temperatures can reach 120° F is a godsend. To help him identify which machine part will malfunction next and save the company big money? Icing on the cake.
All this comes courtesy of sensors that collect data, wireless infrastructure that transmits it, data centers that store it, and software that analyzes it. Properly applied, these technologies can change the way an industrial company operates.
Rockwell Automation ROK has been working with companies like Shell Oil RDSA and Australian mining giant BHP Billiton BHP to “instrument,” as Rockwell calls it, their field operations. A $10 air filter that sucks in too much grit can crash a million-dollar compressor, says John Nesi, vice president of market development for Rockwell. By monitoring sensor data, an operator can pinpoint when that filter may fail and dispatch a repairman with a new part well before disaster strikes.
None of these “predictive maintenance” technologies existed when Rockwell was founded as Allen-Bradley in Milwaukee in 1903. (Back then, rheostats and motor starters were all the rage.) But visit a mining operation in Australia today and “there are sensors in the ground to understand ore characteristics that are beamed up to a satellite and from there to the cloud,” Nesi says. Meanwhile, driverless trucks do the heavy lifting. It all adds up to fewer people on-site and more operators minding the shop from Perth.
“It’s impossible to get workers out there without spending a million dollars a year per worker,” Nesi says. Frequent site visits to check things come at a cost.
Market researcher Gartner predicts that there will be 25 billion connected “things” in use by 2020; GE GE says they could eliminate more than $100 billion in waste. Sure, it’s a dirty job—all the better to have a machine do it.
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Rockwell company snapshot
Ranking in Fortune 500: #409
Revenue: $6.6 billion
Profit: $826 million
A version of this article appears in the August 1, 2015 issue of Fortune magazine with the headline “Canary in a coal mine.”