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2017: Predictions for Smart Manufacturers

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The start of the new year brings new hope, new resolutions, and new predictions from the pundits. For the year 2017 and beyond, IDC FutureScape has published their vision, 10 Predictions for the Manufacturing Industry.

“It’s important to note that technology continues to reshape the relationship between business and IT for innovation and digital transformation,” says the document summary.  “Manufacturers want to work smarter using digital technologies in their products and processes and throughout the value chain.”

Of the ten predictions given, at least five of them involve or imply Industrial IoT and Industrie 4.0.  Three of these five promise to be beneficial, while the other two represent stumbling blocks that any alert C-level executive would do well to heed.

Benefits

The proponents and early adopters of smart manufacturing have seen and expect to see more evidence of its benefits.  Among these benefits, here are three related to the IIoT that the IDC report predicts:

1. IT and OT integration will continue to provide advantages in efficiency and responsiveness within the organization.  By 2019, about 35% of large multinationals will be integrating their IT and OT systems at a significant level, and deriving those benefits.

2. Increased use of IIoT among as many as 75% of the world’s major manufacturers by 2019 will power real-time analytics, which in turn will drive predictive maintenance and similar initiatives.  As a result, these companies will reduce risk and bring their products to market more quickly.

3. Integration of supply chain, plant operations, and life-cycle management will offer gains in the overall value of their businesses for the 50% or so of manufacturers who are expected to be pursuing this goal by the end of 2020.  This integration will be made possible, to a greater or lesser extent, by the IIoT.

Stumbling Blocks

Offsetting these benefits, the IDC report foresees a few potential obstacles to unfettered growth and success through implementing the IIoT.  Understanding these predictions can be a first step towards addressing them:

1. An imbalanced approach will reduce ROI. Despite wide-scale adoption of smart manufacturing and IIoT initiatives, by the end of 2018 only as few as 30% of those investing in these technologies will be able to reap the full benefits.  Those few will be in this favorable position because while investing in IIoT, they were also actively keeping their related business models and technology up to date.  Rather than tacking on IIoT technologies at a superficial level, these are the ones who will grasp the deeper implications, and incorporate truly smart manufacturing.

2. Increased connectivity will demand a redesign of security architectures.  Most implementers of the IoT in the industrial space continue to pay lip service to security, while relying on architectures that are not secure by design.  The IDC predicts that by 2018 the number of interconnected devices, communication layers, and cloud ecosystems will have grown so large and complex that it will be painfully obvious that they simply cannot function in a robust and secure way, using traditional architectures.  We say, “Why wait?”  Using a secure-by-design approach now will pay off handsomely right away, as well as in the foreseeable future.

IBM Realizes the Value of the Industrial IoT

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A recent report in Fortune magazine claims that one of the key areas for growth at IBM this year has been its Industrial IoT (“IIoT”) business.  In the past 9 months alone, the number of their IIoT customers shot up 50%, to 6,000.  The area of IIoT is one of IBM’s “strategic imperatives”, which contributed an overall increase in growth of 7% for the company.  In contrast, the more traditional hardware and services areas experienced a 14% decline year-on-year.

The report quotes a survey released last month from IDC (International Data Corporation) that found the trend towards IIoT implementation is increasing industry-wide. Over 30% of the companies participating in the survey have already launched IoT initiatives, and another 43% expect to do so in the coming year.  “This year we see confirmation that vendors who lead with an integrated cloud and analytics solution are the ones who will be considered as critical partners in an organization’s IoT investment,” said Carrie MacGillivray, Vice President, Mobility and Internet of Things at IDC.

Results of the IDC survey of 4,500 managers and executives from a wide range of industries in over 25 countries suggest that many companies have completed proof-of-concept projects, and are now moving towards pilot implementations and scalable IoT deployments.  This trend is acknowledged by Bret Greenstein, IBM’s vice president for IoT platforms, who commented in the Forbes interview, “There was so much tire-kicking a year ago. Now you are seeing adopters in every single industry actually building solutions.”

What is driving this demand for IoT among IBM’s customers?  The Forbes article didn’t say, but the IDC survey found that much of the value of the IoT is seen to be internal to the company itself, to become or stay more competitive.  Respondents cited boosting productivity, streamlining procedures, and cutting costs as reasons for implementing the IoT, rather than any direct services or other benefits for customers.

Although the IDC survey was for the IoT in a broad range of industries, including manufacturing, retail, utilities, government, health, and finance, its results correlate with the experience of IBM in the Industrial IoT.  The company plans to bring on 25,000 new people for IIoT-related projects and services worldwide, with 1,000 of them in their Munich global IoT headquarters alone. As we see it, both the survey results and the experience of IBM point to a common reality: the Industrial IoT is quickly moving into the mainstream.

System Integrators Prepare for Smart Manufacturing

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Luigi De Bernardini, CEO at Autoware, in Vicenza, Italy, sees that system integrators are going to need to adapt quickly to the idea of software-as-a-service in manufacturing.  In a recent guest blog in AutomationWorld, he says, “System integrators will have to be ready to change their business model, at least in part, by offering subscription services …”

According to De Barnardini, assuming that every company will sooner or later  incorporate the Industrial IoT, cloud computing, analytics and Big Data into its evolving smart manufacturing formula, system integrators need to wake up right away, and smell the coffee.

He offers two insights:

1. The move from system and software ownership towards software-as-a-service makes good economic sense.

2. Although adopting software-as-a-service reduces the complexity of that specific service, there is still a need for system integrators to bring together the different solutions into a coherent whole.

The upshot, he says, is that system integrators need to support the traditional business model, while at the same time offering services to customers moving towards the Industrial IoT.

Interestingly, this is the same approach that Skkynet takes–with the Cogent DataHub supporting traditional, in-plant data connectivity and integration, and yet also connecting seamlessly to SkkyHub and the ETK for secure, remote data access and other Industrial IoT applications.

Bridging the IT Resource Gap

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An interesting study has recently come out of the UK that points to a broad gap between the IT requirements of a large number of companies, and their available resources to meet the needs. What’s more, the top priorities for the coming years include cloud computing, big data, mobile computing, and security. Altogether, these findings suggest there may be significant potential for Skkynet’s SkkyHub service to bridge the IT resource gap.

The report, Digital Leaders Survey from BCS, The Chartered Institute for IT in the UK, presents the results of surveys circulated among BCS members, clients, and non-member companies, addressed specifically to CIOs, digital leaders, IT managers, and CEOs. Among the key findings are:

  • For the next 12 months, the 3 top IT concerns will be mobile computing, security, and cloud computing.
  • For the coming 3 to 5 years, the concerns are similar: security, cloud computing, and big data.
  • When asked what concern most keeps them awake at night, the overwhelming response was security–how to implement the various technologies in a secure way.
  • Close to 90% of the companies surveyed felt they do not have the resources needed to meet these priorities. About half of them said their existing workforce needs to upgrade their IT skills, or they require more manpower, or both.       Over a third said they could use a bigger budget.

Keeping it Secure

Maintaining security at all phases of implementation of cloud and mobile computing is high on everyone’s list. Mission critical industrial systems must not be compromised in any way, or it could mean significant damage to infrastructure and possibly even human life. Financial systems risk ruin if data confidentiality is breached. No major corporation is immune from attack. Just look at the recent chaos at Sony Picture Entertainment resulting from a breaches in security.

Clearly, any cloud, mobile, or big data services offered must be secure. And as this is a relatively new area of IT, old approaches to security may not be sufficient. Industrial and financial cloud applications represent a special case, as their security requirements are higher than most, and yet they also require high-speed data throughput, as close to Internet latencies as possible.

This is why SkkyHub has attracted such interest in these markets. Secure by design, it takes a unique approach to security that requires no additional hardware or VPN, and yet opens no firewalls, leaving no attack surface exposed to the Internet. Data can flow through the system at speeds approaching real time, making it an ideal solution for industrial and financial cloud systems.

Doing More with Less

Valuable as it may be, a secure, mobile-friendly cloud and big data service may not be snapped up so quickly if there is no way to bring it on board. According to the survey, the vast majority of companies don’t have the budget or personnel to carry this off.

Wait, did I read that correctly? Aren’t we talking cloud systems? Isn’t one of the main draws of cloud computing cost savings? You shift your costs from capital expenses to operating expenses. No up-front investment, no amortization calculations. Just pay as you go.

And doesn’t a good SaaS solution reduce the need for highly qualified programmers? The purpose is to leave the specialty programming of data communication and connectivity to the experts, freeing up your people to do your work. So where is the problem?

Our vision at Skkynet is that with cloud computing you should be able to do more with less. The service should provide end-to-end connectivity with no programming required. Just sign up, configure, and start working with your live data. It should work transparently beside your existing systems, providing you and any other authorized user with secure access to the data you need. Software as a service should reduce your dependence on in-house IT resources, while saving you money.

We invite the respondents to the BCS Digital Leaders Survey, and anyone else, to try out SkkyHub and see. SkkyHub addresses the key issue of security, and bridges the IT resource gap by providing real-time software as a service in a way that is affordable and easy to implement.

Early Adopters Win Digital Dividends

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Does the early bird really get the worm? According to a recent Harvard Business Review report they do, if that bird is an early adopter of technology. The report from HBR Analytic Services titled, The Digital Dividend – First Mover Advantage, states that according to their survey, companies that adopt the newest technologies are more likely to grow their revenue and improve their market position.

Executives, top-level and mid-level managers from hundreds of medium- and large-sized companies in the USA and around the world responded to the survey. Each company self-categorized its corporate posture as “IT pioneer” (34%), “follower” (35%), or “cautious” (30%). Each participant was questioned on the degree of adoption in their company of what the report calls the “Big Five” technologies: mobile computing, social media and networking, cloud computing, advanced analytics, and machine-to-machine (M2M) communications.

The results show that early adopters of technology experience the most growth. Overall, the IT pioneer companies grew twice as much as the followers, and three times as much as the cautious. Linking this growth to the adoption of new technologies, the report states that over half of the IT pioneers had made technology-powered changes to their business models or to the products and services they sell. On the other hand, less than a third of the followers implemented such changes, and only about one-tenth of the cautious did the same.

A Holistic Solution

Tony Recine, Chief Marketing Officer of Verizon Enterprise Solutions, the company that sponsored the report, made this comment: “The value of these new technologies lies not in what they can achieve on their own, but in their combined power as a holistic solution.”

Indeed. That is our vision as well. Each one of the “Big Five” technologies has significant value, and combining them offers a huge advantage to any early adopter ready to move quickly ahead of his peers. For example, linking machines to other machines, passing their data to the cloud, running real-time analytics on it, and putting the results into the hands of any user with a smart phone is no longer a futuristic vision, but reality. Consider the following scenarios.

1) A machine operator on the factory floor in Germany gets an alarm on his tablet PC. As he walks towards the problem area, he runs live analysis on the data coming in from the system, comparing it to historical data, and doing an archive search on similar scenarios. He also checks with his colleages at branch plants in the UK and Canada, and looks at how their systems are performing at that time. Based on all these inputs, he can make a more informed decision about how to respond to the alarm.

2) Every few seconds each panel on a large, interconnected installation of solar arrays sends details about cloud cover and other local weather conditions, as well as the amount of power generated at that moment. This data is pooled and analyzed by big-data applications to determine the cost and output of any part of the system in real time. Management and customers can view up-to-the-second output trends and statistics for their area in a web browser or phone.

3) A water resources management company relays pump-station and tank-level data from small local utility companies to remote agricultural facilities using that water for irrigation. Farm managers and utility executives alike are given access to the relevant data for their systems, allowing them to monitor the entire supply and usage matrix, and collaborate on adjustments in real time, when necessary.

This kind of scenario, and many more, are possible. The technology is here. Secure access to in-house, remote, and M2M data via the cloud, redistributed to qualified users anywhere, is what the Secure Cloud Service is all about. Now it’s just a question of who adopts it, and when. And as we have learned from this latest Harvard Business Review report, early adopters tend to win.

BYOD Impacts the Factory Floor

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The growing worldwide trend for workers to “bring your own device” (BYOD) to work has impacted the industrial space, according an IHS Technology survey.

The past few years have witnessed a remarkable growth in the popularity of smart phones and tablet computers. The Pew Research Center’s Mobile Technology Fact Sheet reported that by January 2014 58% of adults in the USA owned a smartphone, and 42% of them had a tablet computer.  A Nielsen Company report says that people in the UK used their smartphones nearly twice as much by the end of 2013 as they did in the beginning of that year.

With such broad usage of smartphones and tablets, it is not surprising that people expect to bring that power and convenience into the workplace. Indeed, this is rapidly becoming the case, as reported in the 2nd Annual State of BYOD Report issued last year by Good Technology.  According to their survey, 95% enterprises either support BYOD in the workplace, or are at some stage in planning or considering it.

These worldwide trends are resonating in the industrial space, according to Toby Colquhoun and Tom Moore at IHS Technology.  In a recent article, Mobile devices spread to the factory floor, they share the results of an IHS global survey of companies in the manufacturing and energy sectors.  Of the companies surveyed, almost half of them (46%) are currently allowing their employees to use smartphones and tablets at work, and another 11% plan to adopt such technologies within the next three years.

Integration of smartphones and tablets into the company network adds a potential new point of vulnerability for hackers/malware to exploit.

To clarify, this is not actually BYOD in most cases.  You won’t find many factory workers monitoring mission-critical systems on their personal cell phones.  Typically, companies that allow smartphones and tablets on the shop floor issue them to the personnel, preconfigured for the data they are authorized to access.  The investment in equipment is offset by the advantages of this portable technology for monitoring processes from anywhere in the plant, responding quickly to alarms, and in some cases doing supervisory control.

But not everyone sees it this way.  About 7% of the participating companies that are currently using mobile devices plan to discontine this kind of program within the next three years, and another 20% surveyed responded that that they have no plans to adopt the technology over that time period.  The reasons for this reluctance include device performance in an industrial setting, as well as concerns for the security of the data.

“Integration of smartphones and tablets into the company network adds a potential new point of vulnerability for hackers/malware to exploit,” states the report.  It also mentions concerns related to human error and carelessness, which can be addressed by company policy.  But the report does not mention how companies can protect their vital data from exposure to the Internet.

To ensure the success of BYOD in the industrial sector, security questions must be resolved. The approach of Skkynet’s Secure Cloud Service™ addresses these questions in a unique way. Details about the service will be shared in a Skkynet white paper to be published soon. Put briefly, the traditional architecture for industrial networking was not designed for access via the public Internet, because it requires opening the firewall into the production system. With the proper design, as implemented in the Secure Cloud Service, BYOD is not only possible in the industrial space, it can be secure, quick, and convenient. As this kind of high quality service becomes widely adopted over the next few years, we can expect to witness some remarkable changes taking place on the factory floor.