Azure Industries Experiences

Manufacturing use case:

Extracting actionable insights
from IoT data

Diego Tamburini
Contents
01
Introduction

02
Solution overview

03
Should you build or buy?

04
Next steps

© 2018 Microsoft Corporation. All rights reserved.

This document is provided “as is.” Information and views

expressed in this document, including URL and other internet
website references, may change without notice. You bear the
risk of using it.

This document does not provide you with any legal rights to
any intellectual property in any Microsoft product. You may
copy and use this document for your internal, reference
purposes.
01
Intro
IoT is at the cornerstone of the digital transformation
journey for most manufacturers. It enables them to
collect data from their machines on the plant floor,
their assets in the supply chain, or their products as
they are being used by their customers.
As a result, the industry is seeing an explosion in the
adoption of IoT, in all manufacturing segments:
• On factory floors and plants of discrete and
process manufacturers.
• Discrete manufacturers monitoring the health
and performance of their products as they are
being used by their customers.
• In the supply chain to track the movement and
health of assets and products.
Connecting to your devices and ingesting and storing
their sensor data is just the first step. The whole point
of collecting this data is to extract actionable
insights—insights that will trigger some sort of action
that will result in some business value such as:
• Optimized factory operations: reduce cycle time,
increase throughput, increase machine utilization,
reduce costs, reduce unplanned downtime.
• Improved product quality: reduce manufacturing
defects, identify design features that are causing
manufacturing problems.
• Better understanding of customer demand:
validate usage assumptions, understand product
usage patterns.
• New sources of revenue: support attached
services, Product-as-a-Service models.
• Improved customer experience: respond more
quickly to issues, help them optimize their usage
of your product.
01
[continued]

“We have transformed our product for our

partners and are optimizing our business
with data. With Microsoft, we have found a
way to ‘re-invent’ the water business -
getting it to customers fresher and in a more
sustainable, efficient and profitable way.”
Andrey Salatsky, CFO, Ecosoft
https://customers.microsoft.com/en-us/story/ecosoft-manufacturing-power-bi-dyn
amics-nav-2015-azure-api-ukraine

“Our goal is not data for the sake of data,

but to embrace the cloud and analytical
technologies to deliver more expert insights
to the right stakeholders at the right time. If
we can do that and link new digital
capabilities into our services, we can
collaborate more deeply with our customers
and solve many more of their problems, as
well as improve execution in our own
business.” Nick Farrant, Senior Vice President,
Rolls-Royce
https://customers.microsoft.com/en-us/story/rollsroycestory

“What sets our company apart is our deep

knowledge of the machining process and our
ability to translate that knowledge into the
algorithms used to analyze the data.” Mats
Lindeblad, Global Product Manager, Sandvik
Coromant
https://customers.microsoft.com/en-US/story/sandvik-coromant-process-manufact
uring-sweden
02
Solution overview

Strategy

Extracting insights from IoT data is essentially a big Extract insights

data analytics problem. It’s about analyzing lots of
data, coming in fast, from different sources and in
different formats. But it’s not your garden-variety
analytics problem because:
Collect Visualize Analyze Predict Act
• Data comes from “things” (as opposed to from
humans or other software systems). Therefore,
Figure 1: Things we normally do with IoT data
data collection and ingestion have their own,
non-trivial, challenges (for example: establishing
reliable, secure, and performant connections to
the things, overcoming latency issues, dealing
with disparatestandards and protocols, aggre- 1. Collect: Get the data from the devices to a data
gating and compressing data, dealing with repository from which it can be visualized and
connectivity intermittency, etc.). analyzed. Includes connecting to the devices,
• IoT data is almost always real-time, streamed, ingesting the data they send (using various
time-series data, coming in at different frequen- protocols), processing it, and storing it.
cies.
• IoT data often supports scenarios that require 2. Visualize it: Answers “What’s happening?” type
real-time decisions (such as machine failure of questions. Such as:
prediction, operational optimization, autono-
mous exception handling, safety, etc.), which • Is production going according to plan?
often require that some of the processing be
• What’s the throughput and utilization of this
performed on or very near to the machine (an
machine?
approach known as “edge computing”) to avoid
the delay of sending the data to the cloud and • Are there any anomalies that require
waiting for a response. immediate attention?

• There is often a significant semantic and syntac-
tic gap between the sensor data you get, and
the metrics and KPIs you want. For example, you
may want to calculate OEE (Overall Equipment
Efficiency), but your machines are sending
sensor data such as temperatures, feed rates,
and energy consumed. It requires considerable
subject matter expertise to map these sensor
readings to the inputs required to calculate OEE.
• How much energy are we consuming in this
cell?
• How many parts are we producing with this
tool?
• How are customers using our products?
• Where are my assets?
This is typically a dashboard that displays a
combination of raw sensor data and calculated
metrics, stats, and KPIs. It may combine sensor data
with data coming from other systems such as PLM,
ERP, MES, etc.
02
[continued]
3. Analyze: Answers “Why is this happening?” and
performs root cause analyses. Typical questions
include:
• Why is the OEE of this machine so low?
• Why is this machine producing more
defective parts than the others?
• Why is this machine consuming so much
energy?
• Why are we producing so few parts with this
tool?
• Why are we getting so many returns of this
product?
• Why are we getting so many product returns
from our European customers?
This typically involves the ability to drill down on
the data and look at it from multiple angles. It may
also involve machine learning techniques to
identify anomalies, correlations, clusters, or trends.
4. Make predictions: this is about answering
“What’s going to happen?” questions. Questions
such as:
• Is this machine likely to fail in the next 24
hours?
• What is the remaining useful life of this tool?
5. Act on the insights: is about doing something
with the insights we extracted from visualizing,
analyzing, or predicting using IoT data. Actions
may range from sending a simple command to a
machine, to tweaking operational parameters, to
performing an action on another software
system, to implementing company-wide
improvement programs.
02
Solution description

If you choose to build your IoT solution directly on top of Azure, this section describes a cloud-based solution for ingesting,
storing, visualizing, analyzing, and acting on IoT data; and we recommend specific Azure services to consider.

IoT solutions can be described as things (or devices), sending data or events that are used to generate insights, which are
used to generate actions to help improve a business or process.

Things Insights Actions

(generate data) (based on generated data) (based on insights)

Drilling down into each components and identify the subsystems of a typical IoT solution (Figure 2).

Things Insights Actions

UI &
reporting
tools Visualize data and insights

Devices
Stream processing +
rules evaluation over
Cloud Stream Business
gateway data processing integration

Edge
Data
devices transformation

Warm Cold Machine

path path learning
Store data store store

Integrate with business processes

Figure 2: Subsystems of a typical IoT solution

At the core, an IoT application consists of the following subsystems:

1. Devices: Devices can be connected to the cloud directly or indirectly. Directly, using IP-capable devices that can establish
secure connections via the internet. Indirectly, devices connect via a field gateway for these conditions: (1) the devices
communicate in industry specific protocols such as CoAP5 or OPC UA, (2) the devices use a short range communication
technology such as Bluetooth and ZigBee, (3) the devices are resource-constrained, (4) the devices cannot host a TLS/SSL
stack, (5) the devices are not exposed to the internet, and (6) you need to aggregate the stream of data before sending it
to the cloud. Both devices and field gateways may implement edge intelligence including analytics capabilities. This
02
[continued]

enables aggregation and reduction of raw device data before transport to the backend, and local decision-making
capability on the edge. For edge implementations we recommend Azure IoT Edge.

2. Cloud gateway: provides a cloud hub for secure connectivity, device data and event ingestion and device management
(including command and control) capabilities. We recommend using the Azure IoT Hub service as the cloud gateway.
Azure IoT Hub offers built-in high-scale secure connectivity, data and event ingestion, and bi-directional communication
with devices including device management with command and control capabilities. Azure IoT Hub can securely and
performantly connect millions of devices to the cloud, from a variety of devices and protocols.

3. Stream processing: processes large streams of device data records and evaluates rules for those streams. We recommend
using Azure Stream Analytics for IoT applications that require complex rule processing at scale. For simple rules processing
we recommend Azure IoT Hub Routes used with Azure Functions.

4. Storage: can be divided into warm path and cold path stores. Warm path data is required to be available for reporting
and visualization immediately from devices. Cold path data is stored for a longer term, and used for batch processing. We
recommend Azure Cosmos DB for warm path storage and Azure Blob Storage for cold storage. For applications with time
series specific reporting needs we recommend using Azure Time Series Insights.

5. Data transformation: Data transformation involves restructuring, combination, or transformation of the data stream
either before or after it is received by the cloud gateway service (Azure IoT Hub in our architecure). Manipulation can
include protocol transformation (e.g. converting binary streamed data to JSON), combining data points, and more. For
translation of device data before it has been received by the Azure IoT Hub we recommend using the protocol gateway.
For translation of data after it has been received by the Azure IoT Hub we recommend using Azure IoT Hub integration
with Azure Functions.

6. User interface: to visualize device data. The user interface for an IoT application can be delivered on a wide array of device
types, in native applications, and browsers. The needs across IoT systems for UI and reporting are diverse and we recom-
mend using Microsoft Power BI, Time Series Insights Explorer, native applications, and custom web UI applications.

7. Machine learning: enables systems to learn from historical data and experiences and to act without being explicitly
programmed. Scenarios such as predictive maintenance are enabled through ML. We recommend using Azure Machine
Learning for ML needs.
02
[continued]

8. Business systems integration: facilitates executing actions based on insights garnered from device data during stream
processing. Integration could include storage of informational messages, alarms, sending email or SMS, integration with
line-of-business applications (such as PLM, ERP, MES, CRM), and more. There are three main approaches to business
systems integration:

• Business process execution: we recommend Azure Logic Apps. The service supports long-running process orchestra-
tions across different systems hosted in Azure, on-premises, or in third-party clouds. Logic Apps allow users to
automate business process execution and workflow via an easy-to-use visual designer. The workflows start from a
trigger and executes a series of steps, each invoking connectors or APIs, while taking care of authentication, check-
pointing, and durable execution. There is a very rich set of available connectors to a number of first-party and third
party systems, such as database, messaging, storage, ERP, and CRM systems. Logic Apps also supports EAI and EDI
services and advanced integration capabilities.
• API integration: we recommend Azure API Management, which provides a comprehensive platform for exposing and
managing APIs. It includes end-to-end management capabilities such as: security and protection, usage plans and
quotas, policies for transforming payloads, as well as analytics, monitoring, and alerts.
• Integration at the data layer: we recommend Azure Data Factory, which provides an orchestration layer for building
data pipelines for transformation and movement of data. Data Factory works across on-premises and cloud environ-
ments to read, transform, and publish data. It allows users to visualize the lineage and dependencies between data
pipelines and monitor data pipeline health.

Power BI Web Apps Time Series Insights

UI &
IoT Edge reporting Visualize data and insights

Devices IoT Hub Logic Apps

Stream processing + Stream Analytics
rules evaluation over
Cloud data
Stream Business

gateway integration

Azure Functions
Edge AzureData
Functions
devices
transformationCosmos DB Storage Azure ML
Machine
Warm Cold API Management
Store data path path learning

Integrate with business processes

Data Factory

Figure 4: Subsystems of a typical IoT solution (with recommended Azure services overlaid)
03
Should you build or buy?
To decide whether to build or buy your IoT solution, it
is important to understand exactly what you are
building or buying. This is not always as obvious as it
sounds, since in IoT the lines between what’s a
platform and what’s a solution are often not very
clear. So, let’s try to clarify this a little. To that end, it
helps to identify the main components of an IoT
solution stack (Figure 5):
IoT solutions
IoT platforms
Analytics
IoT services
services
Cloud platforms
Figure 5: Building Blocks of an IoT Solution
1. Cloud platform: a set of PaaS services used by
developers to develop their cloud-based
solutions. These services include messaging,
storage, compute, security, etc.
2. Many cloud platforms include analytics services.
These are applications to visualize and analyze
big data sets in real-time. This includes data
warehousing, data lake analytics, stream analyt-
ics, time series analytics, AI and machine learning.
3. Some cloud platforms also include IoT services.
These are the plumbing service to process
messages securely and reliably. They must
process huge amounts of globally-distributed
device data, coming in a variety of formats over
multiple protocols.
4. IoT platform: A set of PaaS and SaaS services to
facilitate the development of IoT solutions.
Sometimes referred to as “Industry Clouds”. IoT
platforms are being built on existing cloud
platforms. This frees up developers from concerns
such as scalability, reliability, performance, and
security. They can worry less about the develop-
ment of highly-specialized capabilities such as
analytics and machine learning. They can concen-
trate on the industry value-added and core
competency. IoT platforms offer additional value
compared to cloud platforms that could acceler-
ate your time-to-value. This is often thanks to the
fact that the companies that develop these IoT
platforms usually have extensive experience in
manufacturing.
5. IoT solution: the end-user applications that help
users in manufacturing companies to extract
actionable insight from IoT data. Examples of IoT
solutions include: monitoring a production line,
optimizing factory operations, delivering predic-
tive maintenance services for industrial equip-
ment, tracking product usage for marketing
intelligence, optimizing inventories, optimizing
supply chains, tracking assets, etc.
When companies set out to develop their IoT
solutions, they have two options:
1. Buy an IoT platform from a vendor to develop
their solutions on top of it (perhaps with the help
of consulting services from the vendor or a
systems integrator).
2. Build the solution directly on top of a cloud
platform, leveraging its IoT and analytics services.
03
[continued]

We do not mention the option of buying an IoT locations, prior relationship with the cloud vendor,
solution, because each company has its unique and the cloud vendor’s commitment to the industry.
requirements and use cases. It’s not realistic to expect
that a software vendor will deliver a solution that will
be used by its customers as-is, off the shelf. Most
customers will build their own solutions or extend
solution accelerators and templates offered in IoT
platforms.

We do not discuss the option of building your own

cloud platform. Most companies will leverage an
existing cloud platform from a cloud vendor like
Microsoft rather than developing their own. Building
a cloud platform is likely to be an impractical proposi-
tion for most.

So, again, the options for those building an IoT

solution effectively boil down to the two listed above
and reproduced in Table 1 below, along with their
pros and cons:

Option Pros Cons

Buy faster time-to-value More expensive

May offer limited or no

choice of underlying
cloud platform

Build More flexible Requires cloud

More controllabler devrelopment skills

Less expensive

Company’s existing
cloud subscription
might be usable

Table 1: Pros and cons of build vs. buy

Lastly, if you choose to buy the IoT platform, import-

ant considerations will be functionality, performance,
reliability, security certifications, data centers
03
Partner showcase

C3 IoT is the world’s leading AI and IoT software platform for digital transformation. C3
IoT delivers a comprehensive platform as a service (PaaS) for the rapid design, develop-
ment, and deployment of the largest-scale big data, predictive analytics, AI, and IoT
applications for any business value chain. C3 IoT also provides a family of configurable and
extensible SaaS products developed with and operating on its PaaS, including predictive
maintenance, fraud detection, sensor network health, supply chain optimization, invest-
ment planning, and customer engagement.

C3 IoT and Microsoft have a strategic partnership to fully integrate their solution with
Azure

https://c3iot.ai/c3-iot-microsoft-strategic-partnership/

https://c3iot.ai/alliances/microsoft-azure-alliance/

With Element’s software, organizations can achieve the real-time, real-world analytical
context they require by aggregating, standardizing, and contextualizing data in a matter of
days. Through this process, the data is continuously up to date to reflect the real world
environment—ensuring that your data is ready for analytics at any time. In addition to
innovative software, Element brings a team of big data and industrial veterans who
understand your industry and processes, and value your unique expertise.

https://www.elementanalytics.com/platform

Element Analytics announced in May of 2018 that it earned Microsoft Co-Sell

status
03
[continued]

ThingWorx is a robust industrial IoT platform that includes technologies and tools to
rapidly develop, deploy and extend apps and augmented reality. ThingWorx eliminates
complex connectivity and programming - speeding time to market for Azure deployments.

https://www.ptc.com/en/products/iot/thingworx-platform/

PTC recently announced that Azure is its preferred cloud platform for the industrial sector t

https://www.ptc.com/en/news/2018/ptc-partners-with-microsoft-to-help-customers-accel
erate-their-digital-transformations-in-itot

relayr Analytics is tailored for industrial use cases. It uses AI to deliver actionable insights
where traditional anomaly detection software falls short. It also enables predictive mainte-
nance.

PTC recently announced that Azure is its preferred cloud platform for the industrial sector

https://www.ptc.com/en/news/2018/ptc-partners-with-micro-
soft-to-help-customers-accelerate-their-digital-transformations-in-iot

Symphony creates customizable templates to train ML models for specific machines or

equipment (e.g., compressors).

https://www.symphonyindustrial.ai/

https://www.prweb.com/releases/2018/06/prweb15537658.htm
04
Next steps

The real value of the IoT is that it can be used to

extract actionable insights that inform decisions.
Those decisions translate into actions, and those
actions get you closer to a business goal.

End-to-end IoT solutions are complex solutions with

many moving parts. The range of development skills
required is too broad for most companies to tackle
alone. As you consider IoT solutions to run your
business, you want to concentrate on extracting
insights, not worrying about the plumbing. You want
to focus on adding your “secret sauce,” and devise the
right analytics to extract insights. You need to select
the right machine learning models and the right
training data for your application. Then you must
determine the right actions in response to these
insights. This chain of actions will ultimately improve
your or your customers’ business and get real value
out of IoT.

Continue your journey with IoT and Azure, and learn

more with these resources:

• Access further resources, partner information and

technical resources through the Extracting
insights from IoT data overview
• Learn more about Microsoft’s investment in
manufacturing solutions on the Azure for
manufacturing website
• Stay up to date with all the manufacturing
industry news focused on cloud transformation
with Azure.