The Internet of Things in Industry 4.0: the digital revolution arrives at Italian companies

Rome, 9 November 2016

In its analysis on the great innovation of Industry 4.0 – complete digitalisation and sharing of production processes – the Politecnico di Milano focused, in particular, on upstream implications: the Internet of Things and its field of applications.

The IoT, standing for the Internet of Things, is not just a casually put together acronym: it was coined in 1999 at the Massachusetts Institute of Technology (MIT) in Boston by Kevin Ashton, a British researcher, engineer and manager who co-founded the Auto-Id Center at MIT for the creation and development of the Rfid standard (Radio-Frequency IDentification), a Wi-Fi information recognition and exchange system that lets you update data and databases in real time.

Mr Ashton describes the IoT as “the physical world connected to the Internet via sensors”, a phrase which, in amongst many technical terms, certainly has the value of clarity.

MIT released the Rfid standard under a free licence.

In other words: advanced research and discoveries become huge opportunities within everyone’s reach (which allows, among other things, continuous evolution), particularly for businesses.

In the report by the Politecnico di Milano, the practical use of the Internet of Things, innovatively turned to the Internet 4 Things, was divided into four macro-sectors: Smart Cities, the smart city for innovation in services; Smart Homes and Smart Buildings, the use in homes and offices of the Internet and the passage of artificial intelligence on the web; Smart Mobility, the use of IoT in cars and, in particular, for railways, given the possible optimisation of costs; and lastly, Smart Manufacturing, i.e. Industry 4.0.

FS Italiane has signed an agreement with SAP, a European multinational based in Walldorf (Frankfurt) and a leader in the use and development of software for, in particular, industry and services.

The strength of SAP (also an acronym standing for “Systeme, Anwendungen, Produkte in der Datenverarbeitung” or “Systems, Applications and Products in Data Processing” in English) lies in the ERP platform, Enterprise Resource Planning, a piece of company software scaled according to the size and features of the companies themselves.

Its most famous clients include Porsche but also Bayern Munich’s stadium.

The Trenitalia-SAP agreement is for technology that extracts real-time data generated by sensors during journeys, stops and maintenance.

Any fans of Formula 1 will understand what it’s about: every car is equipped with software that self-updates during the race, generating the famous telemetry used in the pits to study the various stages of the race.

All the data is then stored on devices not much bigger than normal USB keys and processed for subsequent engine and chassis developments.

Trenitalia’s Frecciarossa trains can reach 300 km an hour but they don’t have to compete with the Mercedes silver arrows or with Red Bull and Ferrari.

However, they can improve their own performances by guaranteeing greater control, in particular, when convoys are braking and accelerating, as well as better comfort (and obviously more effective Internet coverage) for passengers, notably making a step forward in terms of reliability. They will also lower costs, for example, by getting rid of useless maintenance work for anomalies that had been unidentifiable up until now.

This agreement was scrutinised over at the National Railway Museum in Pietrarsa, in the suburb of San Giovanni a Teduccio, Naples, following a one-hour journey from Rome to Naples on board a Frecciarossa train with managers, experts and insiders. 

This included Bill McDermott, CEO of SAP, who announced €2 billion of investment through to 2020.

From Trenitalia’s, and therefore FS Italiane’s, point of view, there will also be significant large-scale cost reduction: Barbara Morgante, CEO of Trenitalia, anticipates a reduction of 8-10%, at standard capacity, in maintenance costs, i.e. €100 million a year.

For Richard Kelly, a partner of McKinsey, a consultancy multinational involved in the IoT in many ways, Italy is one of the countries that will receive greater economic and productivity benefits from Industry 4.0, both in terms of manufacturing and services, “because there is much to do”.

The Politecnico di Milano highlights how analysts (such as Accenture) predict that over 25 billion IoT appliances will be working around the world by 2020.

The 2017 budget earmarks 13 billion for Industry 4.0 over the next four years, anticipating about ten times as much from private investors.

After all, even in 2015, Italian industrial digitalisation generated 1.2 billion worth of business without any State intervention, with the IoT representing 790 million in turnover.

But also keep an eye on the development of national applications: there were over 600, an increase of 30% year on year.