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IoT Technological Maturity Model and assessment of Norwegian

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 IoT Technological Maturity Model and assessment of
Norwegian manufacturing companies

Bjørn Jæger ([email protected])

Molde University College, Norway

Lise Lillebrygfjeld Halse

Molde University College, Norway

Heidi Wiig
Molde University College, Norway

Agnethe Hylseng Bø
Molde University College, Norway

Abstract
The accelerated use of technologies has led to what is termed the fourth industrial
revolution, or Industry 4.0. It is based on machinery, robots, lines, items and operators
connected via the Internet to each other and to back-end systems, as a part of the Internet
of Things (IoT). In this paper, we propose a new IoT Technological Maturity model that
can assist manufacturers in giving directions for adopting new technologies. To
demonstrate the applicability of the model, we present four case studies of applying the
model in four Norwegian manufacturing companies.

Keywords: Internet-of-Things, Technology Maturity, Manufacturing

The need for an IoT Maturity Model

International competition, global sourcing of production and financial crisis calls for a
new level of excellence in manufacturing. A fourth industrial revolution is envisioned
based on innovations in technologies, smart materials and manufacturing operations. The
revolution includes initiatives termed Industry 4.0, the Industrial Internet, Factories of
The Future, and Cyber Physical Systems. A driving force for this development is the
accelerated use of Internet of Things (IoT)-technologies (Porter and Heppelmann 2015,
FoF 2016). A challenge for manufacturers is the escalating technological change as
exemplified by 72 % of Fortune 500 leaders asserting that keeping up with technological
change is their biggest challenge (Murray 2015). Thus, manufacturers need a tool to
measure and analyse their current technology level, assisting them in giving directions
for adopting new technologies. A suitable tool for this is a maturity model. Maturity
models serve as a reference to implement improvements while assessing one's own
capabilities compared with others, and have been successfully applied in other industries
most notably the software industries (Wendler 2012). There has been a growing interest

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in maturity models within many domains (Wendler 2012, Lasrado et. al. 2015, Kühnle
and Bitsch 2015). However, no current models address how to evaluate the technology
maturity level of manufacturing companies. In this study, we present a new IoT Maturity
Model for measuring the IOT-technology maturity level of manufacturing companies, as
well as a case study assessing Norwegian manufacturing companies according to the
model. The results show the current technology level of Norwegian manufacturing
industry, and it defines a direction for managerial efforts that would take up the IoT
challenge move towards 4.0 maturity.

IoT Technological Maturity Model Development and usage

In general, maturity models outline a path to maturity, involving development stages
building on each other until maturity is reached (Wendler 2012, Lasrado 2015). In order
to ensure research rigour, we follow the Comprehensive Research Framework for
Maturity Model Research presented by Wendler (2012). This framework states that
maturity model development should be an iterative process where each cycle consists of
the three steps: Model Development, Model Application, and Model Validation. Model
Development follows the seven research guidelines of design science research. Model
Application and Model Validation are conducted by applying the model for assessing four
manufacturers, using interviews and a survey for validation purposes.

IoT Technological Maturity Model

The development of the IoT Technological Maturity Model is placed in the context of
previous technological generations and their corresponding industrial revolutions. This
study is limited to look specifically at the IoT-technologies, while leaving out the
consequences of their use on business process change, smart materials and smart
manufacturing, which also are the ingredients of the Internet of Things in general, and
complementary approaches like cyber-physical system, future factories, and Industry
4.0. A crucial issue is to define what distinguishes IoT-technologies from earlier
generations of technologies, namely mechanical-, electrical-, computer-technologies. De
Bruin et al. (2005) has proposed a methodology that consists of six phases for
development of maturity models.

Figure 1: Six phases of developing maturity model. (Adopted from de Bruin et al. 2005)
Our research follows the five first phases since the Maintain phase require a
longitudinal study.

Description of the IoT Technological Maturity Model levels

Level 1: 3.0 Maturity

Level 1 consists of three main characteristics and three corresponding level criteria. The
model originates with the perception that organizations are currently at the brink of
embracing the concept of “Internet of Things”. Organization at level 1 is regarded to be
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at the 3.0 maturity level of the third revolution, which can be considered being reached
around year 2015. The first characteristic of this maturity level, is that organizations have
implemented some use of “Track and Trace” technology, as RFID and/or barcodes in the
production and/or warehouse environment, but with limited functionality. The second
characteristic, is that the organizations are believed to have implemented an Enterprise
Resource Planning (ERP) system, or individual ERP-modules, that the organization can
use to collect, store, manage and interpret data from different business activities, as
product planning, manufacturing, inventory, marketing/sales, shipping and payment, etc.
The third characteristic can be identified by an initial automatization of production and/or
warehouse environment, with the use of at least one robot, performing an activity
independently in the production and/or warehouse. At this level, the ERP-system (or
modules) and the machine control are technically seen to be two different non-integrated
worlds. The organizations are characterized by being unconnected in the meaning that
there`s no requirements for any features of vertical or horizontal communication between
robots, machines and IT-systems. However, organizations at this level are searching for
solutions for improving the effectiveness of existing business processes, and moving
towards higher levels of intelligence of the connected world of devices. In addition to
these three main level characteristics, we should mention some additional potential
characteristics, which can be considered being essential elements of the maturity of the
third revolution. Since organizations have various needs for technologies, these
characteristics will not be included in the model. 3D printing is an example of an initial
technology that is a central part of the maturity of the third industrial revolution. 3D
printing can enable the printing of various products by simply using a computer and a 3D
model of an object. According to Leading Edge Forum, 3D printing is a classic disruptive
technology that is simpler, smaller, inexpensive and more convenient to use than
traditional manufacturing technology. However, the technology is not expected to prosper
into the traditional manufacturing markets for a number of years. Moreover, some
organizations have less need for 3D printing. Thus, 3D printing will only be seen as a
potential characteristic at this level, and it will not be a level criteria. Furthermore, sensor
technology, which enable the connection of the physical and digital worlds and allow
real-time information to be collected, shared and processed, is considered as being a key
technology enabler at this level. Sensors are vital for automatization, where every robot
is equipped with sensors for enabling the functioning of the robot and for the robot to be
familiar with the surrounding environment. However, the same does not necessarily apply
for products. Nevertheless, the equipping of products with sensors in order for the
products themselves to register events and store information about its functioning or
surrounding environment, are increasingly being explored by organizations. This is an
important prerequisite of the envisioned smart products tied to the concept of IoT.
However, having sensors on products at this level will, as for 3D-printing, only be
considered as a potential characteristic, it will not be a criteria. Lastly, the utilization of
Electronic Data Interchange (EDI) against suppliers and customers are potential
characteristic at this level. This entails that the manually handling of different documents
are replaced by EDI, which uses a standard format, making it possible for invoices,
purchase orders etc. to flow automatically from one parts` system to the other. EDI has
existed for more than three decades but the adoption of EDI in organizations has been
slow. Consequently, the utilization of EDI will also be seen as a potential characteristic,
and it will not be a criterion at this level.

Level 2: Initial (on the path to 4.0 Maturity)

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Level 2 consists of three main characteristics, and three corresponding level criteria.
Having at least one IoT-enabled object is determined to be the main entry requirement
for the path towards the 4.0 maturity, and thus, the first main characteristic for level 2.
Currently, the literature surrounding the concept of IoT is lacking a clear definition of
what an IoT-enabled object really is. Taken literally, it means things connected to the
Internet. Thus, it must be possible to communicate with the object via the Internet, either
directly if the object has IP communication capabilities, or indirectly via intermediate
software. Different terms are used like “Smart Object”, “Smart Thing”, “Intelligent
Product”, and “Ubiquitous objects”, among others. In addition, some authors have
proposed their own original terms that seems to refer to the same, or a very similar entity.
From a manufacturing perspective, an “Intelligent Product” is defined as a commercial
product with five specific characteristics; a unique identity, communication abilities,
storage or self-data, a deployed language, and decision-making capabilities. Similarly,
smart devices (as PDA`s and mobile phones), have been defined as physical objects with
computing resources that are able to communicate with each other and with other users
(Hernândez and Reiff-Marganiec 2014). Thus, in order to avoid confusion and for the
purposes of this research context, an IoT-enabled object needs to be defined. This is also
important in order to state the difference between IoT-technologies, and earlier
technologies (mechanical-, electrical-, computer-technologies). In the third revolution, a
major progress was the introduction of the PLC (Programmable Logical Controller),
which was designed for controlling manufacturing machinery and equipment. The PLC
contained all three elements of a computer in one unit, namely the computer memory,
processing capability and Input/Output (I/0) communication facilities. The PLC is thus
the core component of the IoT-technologies. However, some additional requirements
need to be included. According to Porter and Heppelmann (2015), all smart, connected
products from home appliances to industrial equipment’s shares three core elements.
These three core elements are; physical components (comprising the product`s
mechanical and electrical parts), “smart” components (comprising the sensors,
microprocessors, data storage, controls, software, embedded operating systems, etc.) and
connectivity components (comprising the ports, antennas, protocols enabling wired or
wireless connections with the product). While the smart components enhance the
capabilities and the value of the physical components, the connectivity components
enhance the capabilities and value of the smart components. In addition, the connectivity
components enable some of the capabilities to exist beyond the physical product itself
(Porter and Heppelmann 2015). Based on this, the definition of an IoT-enabled object in
this context exists of three different requirements:
1. The object needs to have the core elements of a PLC, namely that the object is an
electronic component with computer memory, processing capabilities and I/O
communication facilities (PLC).
2. The object needs to have a globally unique identifier, or an IP-address that can be
used if the object has IP-communication capabilities. Otherwise a globally unique
identifier must be assigned, e.g. by GS1 following the AutoID standards which is
typically used for RFID-tags.
3. The object has to be reached globally. Wherever the object is in the world, a two-
way communication with the object must be possible, meaning that the object has
to have the ability to send and receive messages. In practice, this means that the
object needs to be connected directly to the Internet or via some middleware
software. A non-IP object needs to be given IP-communication capabilities by
adding a reader/writer unit with IP-functionality. A typical example is an RFID-

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 tag that needs to be within the range of an RFID Reader (and Writer) antenna to
be considered an IoT enabled object.
According to the requirements outlined above, an organization fulfills the first main
requirement at level 2 if it has at least one IoT-enabled object within the assets
(manufacturing machines, robot, transportation units, etc.), or products (component/semi-
finished product). The second main characteristic at this level, is that the technology in
the organization is under development, meaning that robots, machines and IT-systems are
being connected, and set up with the ability to communicate vertically via the Internet.
The third main characteristic at level 2, which can be seen to be related to the ability of
vertical communication in the previous characteristic, imply that assets (machines,
robots) and/or products can be remotely programmed, accessed, and managed by for
instance the use of a PC, tablet, or a smart phone, from a remote location.

Level 3: Connected
Level 3 consists of two main characteristics, and two corresponding level criteria. The
first main characteristic is that an organization needs to have internal supply chain control
with at least two IoT- enabled objects, within the assets and/or the products, with the
ability to communicate vertically through a control system or the Internet. Cloud
computing can be regarded as another way of supporting vertical communication, as one
of the enabling platforms to support the connection of devices and sensors in IoT. Cloud
computing, commonly referred to as just Cloud, has become a popular IT-word in the last
decade. The definition of cloud computing is still somewhat “cloudy”. The simplest
working definition is provided by Kim (2009), who defines cloud computing as being
“able to access files, data, programs and 3rd party services from a Web browser via the
Internet, hosted by a 3rd party provider”. To illustrate, we provide some examples. For
assets, an example can be that Robot A communicates to the Cloud that Robot B should
slow down. The Cloud communicates this to Robot B. Robot B slows down and
communicates to the Cloud. For products, an example can be that: Semi-finished product
A communicates to the Cloud that part B is needed at workstation W at time T. The Cloud
communicates this need to part B. Part B communicates and confirms its availability
status to the Cloud, and its location, since it is an IoT-enabled object. The second main
characteristic at this level is that at least one specific operation within the production
and/or warehouse environment is automated. Meaning that for instance, a product
assembly or packaging operation has been automated by the use of robots.

Level 4: Enhanced
Level 4 consists of two main characteristics, and two corresponding level criteria. The
first main characteristics is that an organization needs to have an internal supply chain
control with at least two IoT- enabled objects, within the assets and/or the products. In
addition, the assets or products need to have the ability to communicate vertically through
the use of a control system, the Internet or a Cloud. Further, the assets and/or products
need to be able to communicate horizontally. Thus, at this level, assets and/or products
are internally connected. The second main characteristic at this level is that a specific part
of operations in the production and/or warehouse environment has been automated.
Meaning that for instance, robots, machines and IT-systems are connected into a
production network, performing the production of e.g. standard parts, monitored by an
operator. Alternatively, robots and/or automated transport carriers have fully automated
at least a specific part of the inbound and/or outbound warehouse operations.

Level 5: Innovating
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Level 5 consists of four main characteristics, and four corresponding level criteria. The
first main characteristic is that organizations need to have an internal supply chain control
with an increasingly number of IoT-objects (at least ten) within the assets and/or the
products. In addition, these IoT-objects need to have the ability of horizontal
communication (e.g. robot-to-robot) and vertical communication (e.g. robot-to-Internet).
The second main characteristic is that the IoT-objects are further developed and equipped
with advanced features. More specifically, that the objects at this level have self-
awareness capabilities, which means that the objects have the ability to know its own
status and structure, as well as any changes to it, and its history (Hernández and Reiff-
Marganiec 2014). The third main characteristic is that the production and/or warehouse
environment is extensively automated, e.g. the production and/or warehouse environment
is characterized by an increasingly use of robots replacing the manual workforce. The
fourth characteristic involves organizational understanding of the importance of, as wekk
as interacting to achieve, standardization (data standards, wireless protocols,
technologies). Without standardization, the communication between asset-to-asset and
product-to-product becomes hard, especially communication beyond organizational
boundaries. Thus, standardization and interoperability both can be regarded as two
especially central elements organizations should be engaged in at this level, since
standards are needed for interoperability both within, and between various domains.
Interoperability can be defined as the ability of a system to interact with other systems,
without application of special effort for integration, e.g. customization of interfaces, etc.
Interoperability has to be established on various levels, namely the physical level; when
assembling and connecting manufacturing equipment, the IT-level; when exchanging
information or sharing services, and on the business level; where operations and
objectives have to be aligned (IEC 2015).

Level 6: Integrated
Level 6 consists of four main characteristics, and six level criteria. The first main
characteristic is that there is an increasingly number of IoT-objects among both assets and
products. Moreover, the organization has further implemented the IoT-technology, and
the IoT-objects have the ability directly to communicate with humans and other
stakeholders internally in their organization, in addition to horizontal and vertical
communication. This feature passes beyond self-awareness at the previous level, and
includes the IoT-objects ability to use the information gathered - in order to manage its
own life cycle, including services, self-repair and resources. It also includes the ability to
learn from experiences and the ability to improve operations (Hernández and Reiff-
Marganiec 2014). The third main characteristic is that the production and/or warehouse
environment are highly automated, involving robots that perform a high degree of the
production and/or warehouse operations, further replacing the manual workforce. The
fourth main characteristic, is that the connected robots, machines and products constantly
and increasingly are exchanging various types of information. Consequently, the volume
of the generated data and the processes which is involved in the handling of the data,
becomes critical and important to manage. Data management is a crucial aspect within
IoT, and organizations at this level should have a deep focus on all the exchanged data
and initially develop a plan and strategy for further data management. The organizations
need to understand what information they need in order to create as much value as
possible (Tan 2015).

Level 7: Extensive

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Level 7 consists of four main characteristics, which we divide into seven level criteria.
The first main characteristic is that, in similarity with the previous level, there are an
increasingly number of IoT-objects among both assets and products. The organizations
have further implemented the technology, and evolved to external communication
between both products and assets, and supplier and customers. In addition, as from the
previous level, the communication can occur horizontally and vertically, between assets
and products. Thus, at this level the range of the organizations are extended from being
merely internal, to embracing the organizations external network. The second main
characteristic is that the production and warehouse environment are highly automated,
meaning that robots and machines performs a high degree of both production and
warehouse operations, replacing a high degree of the manual work operations. The third
main characteristic is that organizations move from Data Management, and towards Big
Data Management and extensive Data Analysis. Big Data is the result of an extensive
implementation of new technology, and the enormous amount of data that arises from the
internal and external communication, and the monitoring and measuring of objects (e.g.
a robots and/or a products performance), in the business environment. Consequently, Big
Data Management, which is the organizations administration and governance of great
volumes, of both structured and unstructured data, becomes of crucial importance at this
level. The aim of Big Data Management is to extract big data to gain business insights,
which further means to ensure a high level of data quality and accessibility for business
intelligence and Big Data analytics applications. The fourth main characteristic is
developed from the third characteristic, namely that organizations at this level are actively
engaged in Data Analysis, with the inspection, cleaning, transforming and modelling of
data from sensors, machine-to-machine, and networks, in order to discover useful
information and support business conclusions and decision-making (Tan 2015).

Level 8: Maturity
Level 8 consists of three main characteristics, and three corresponding level criteria.
Level 8, 4.0 Maturity, is the final and optimal level on the maturity model scale, which
represents the envisioned fourth industrial revolution organizations are predicted to reach
in the future. The first main characteristic is the vision of optimal IoT-technology use, in
which all objects in the organization are connected to the Internet and seamlessly
integrated, and that the objects can communicate with other objects using common
architectures, interoperability and open standards, enabling limited human intervention.
The second main characteristic is that the production and warehouse environments are
optimally automated, having manual work only because it is considered most appropiate.
The third characteristic is that Business Intelligence and Continuous improvement
characterizes the organizations. The business environment is characterized by continuous
improvement, enabled by continuous monitoring of real-time performance data, which
allows organizations to discover and figure out design problems that testing failed to
reveal. Further, it is anticipated that one will see smart factories, where the new
capabilities of smart, connected machines are reshaping operations at manufacturing
plants on their own, and where machines are linked together in networks. In these smart
factories, networked machines automate and optimize production. For instance, it is
believed that a production machine can discover and detect a potentially malfunction,
close down the machine and IT-system, and other equipment that could be damaged, and
further direct maintenance workers to the problem. The key enabler for such a smart
environment are seen to be Business Intelligence, which can be described as a set of
techniques and tools for transformation of raw data - into meaningful and useful

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information for the purposes of analysis of business (Porter and Heppelmann 2015). Thus,
at this level, organizations have become predictive, meaning that organizations can
forecast what can happen in the future, from the basis of Big Data management. For
instance, predictive analytics can identify consumers buying behavior, which
organizations can use for marketing trends, as well as production and capacity planning.
Furthermore, it is believed that new business processes and models might arise, since the
smart, connected machines and products create new production requirements and
opportunities. For instance, the final product assembly might be switched to the customer
site, where the final step will be loading and configuring software or the product itself
might be delivered as a service (Porter and Heppelmann 2015).

Case study assessing the IoT Technological Maturity level of four Norwegian
Manufacturing Companies
An in-depth study of four major companies was carried out to develop and refine the
model in the development phase, and the final model was used to assess the companies.
The four companies assessed in this case study were 1) a furniture manufacturer, 2) an
industrial pipe manufacturer, 3) a ship equipment manufacturer and 4) a shipyard. Table
1 presents a summary of the assessment, while Figure 2 visualize the placement in the
maturity model. For further details, see Wiig and Bø (2016).

Figure 2 IoT Technological Maturity Model with results of assessment of four companies shown

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 Table 1 – Summary of Maturity Level Assessment Ekornes, Pipelife, Kleven, Brunvoll

Conclusions
This IoT Technology Maturity Model reflects the evolution of the use of IoT-technologies
along a maturity scale with eight levels. It represents a presumed evolution path of the

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 use of IoT Technologies by manufacturing companies. It may serve as a tool for
management supporting the adaption of such technologies. The model can be a reference
frame to implement an approach for improvements, and assessment of one’s own IoT
technology maturity level as well as being used in benchmarking against other
manufacturing companies. The IoT Technological maturity level of Norwegian
manufacturing companies gives knowledge on the current technology level of these
industries, as well as providing a direction for adoption to the fourth industrial revolution.

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