Note, this is an excerpt from a new Enterprise IoT Insights editorial report, called ‘Crossing the IT/OT divide – co-creation, co-configuration, and how to bring industrial IoT to scale’. Go here for the full report (free to download). It takes from and extends a previous (7-inch single edit) article on the same subject, of ‘co-creation’, which can be found here.
The enterprise IoT sector has started to move up a gear, out of the lab and onto the ‘shop floor’. The design of industrial IoT systems and architectures brings together three key protagonists: the IT (information technology) department, the OT (operational technology) function, and the new-fangled IoT solution provider.
For industrial change to work, in factories and other industrial spaces, these parties have to be united around the enterprise’s core change strategy, which goes to the heart of the business. (The failure of IoT platforms – as total solutions – is that they miss key ingredients.)
This must be represented by the management team, outside of IT and OT. This brings a fourth party to the negotiating table. Real change cannot not happen, in the end, without leadership buy-in. This is the setup, and the basis for the concept of ‘co-creation’, as a back-to-basics methodology to knock heads together and come up with collaborative solutions to abstract problems.
Co-creation has taken root as a means to solve the fundamental questions of industrial change: what does change look like, and how is it achieved?
It has come to a head because the old ways IT and OT departments consumed technology do not work in the converged game of IoT. The IT/OT divide is multiplied inwards and outwards, between internal departments (involving bean-counters in procurement, as well) and external vendor-types.
“The challenge is structural and organizational – the IT has domain for certain things, and OT folks have responsibility for another set of things,” comments Ryan Martin, principal analyst at ABI Research. “The reality is OT professionals can benefit from IT tools. Similarly, the role of IT is changing in nature – functionally, it is becoming more operational.”
Internally, IT departments have been accustomed to buying technology solutions in piecemeal fashion, choosing from off-the-shelf parts, and mastering their assembly in-house, to their own ends. Christian Renaud at 451 Research puts it well: “It is really refrigerator-door cooking – what can I make out of the ingredients I have?”
It is the same accusation France-based ‘OT operator’ Alizent levels at IoT platform vendors, outside the enterprise.
By contrast, OT departments within organisations seek to buy solutions (‘outcomes’), instead of technologies, the argument goes. They want a fix for preventative maintenance, typically, or a way to automate the production line. But industrial IoT combines these philosophies in service of much grander schemes, which promise to change business processes, enhance customer value, and redefine service offerings. These ends require more thorough beginnings.
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“There is definitely a problem – and the problem is there are at least three sides involved in the transaction,” says Lorenzo Veronesi, research manager at IDC. The IT set, he says, is concerned with functionality and integration, the OT set wants usability and functionality, and the procurement department is hung up on cost and returns.
Each has a function in the procurement and design of industrial IoT, he says, and a balance should be struck – to drive scalability, value, and application, respectively.
Systems integrator KPMG acknowledges the issues, but suggests the IT-side is improving, and actively seeking collaboration. “Tech organizations are pretty good at engaging domain experts,” says Greg Corlis, managing director for emerging technologies at the consultancy. “In some cases there may be an air of arrogance on [their] side, but they tend to listen to the domain experts.”
He adds: “It has changed over time. [They used to] produce solutions they felt would meet the business need, but often missed the mark. This resulted in expensive development cycles and a lack of adoption. [But] over the last few years they have started to see the value of co-collaborating.”
So where are we up to, then?
451 Research has polled the enterprise market about collaboration between IT and OT on IoT projects, and offers a qualified (albeit limited) view of around 500 industry types. Its 2019 ‘voice of the enterprise’ says a little under half (45 per cent) of enterprises reckon cooperation between the sides is close, “from concept to operation”, and a third (34 per cent) says cooperation is just about sufficient.
But as many as one in five admit a failure to bridge the divide, citing either “active conflict” about project control (15 per cent), or else no working relationship at all (five per cent). Nevertheless, the sense is, from the poll, the job functions are merging; nine in 10 (87 per cent) said IT and OT roles will either blend in brand new job types (46 per cent), or steadily overlap (41 per cent).
Martin at ABI says the joining of IT and OT in IoT should be redefined. “This idea of IT/OT convergence is a problem statement. The challenge is around integration and collaboration, and not convergence. Because that’s the goal. That’s what the market is trying to achieve, ultimately.”
Integration and collaboration are the twin principles of co-creation, of course. The point, we should remember, is real change will not come with point solutions; the idea of industrial revolution, by definition, seeks to make enterprises anew, and raise them up as more than the sum of their parts. Spot purchases get past procurement, often, but they do not bring enterprise-wide change.
The ambition of Industry 4.0 is to go beyond pick-me-up line applications to redefine entire operations, where data insights are gleaned across factories and factory footprints. “Quite right,” says Martin. “That’s the real sausage making, and it’s highly complex and highly volatile.”
The process of co-creation, between IT and OT specialists, seeks to explode business-wide opportunities by industry type, but also for each player within each industrial discipline. Again, it does not work without input from the OT cohort. A minute’s downtime in the automotive sector is worth about $30,000, reckons Martin; an additional minute’s productivity is worth the same.
“The question is about the cost of not embracing Industry 4.0? When OT folks see this, it’s very clear. But they need to involve IT to make things happen. That’s where things start to break down. That’s where we talk about pilot purgatory, and this whole IT/OT convergence issue comes about.”
But what does this abstract process of ‘co-creation’ look like? Well, it starts with a white board, probably. The key is all these different stakeholders are at the brain-storming, and the initiative keeps in mind the capabilities of both the technology and the business, in order to scope out a suitable change programme. It describes the task to define the ‘problem’, in fact, and not to solve it, which only comes after.
The process is hardly new, actually. Businesses hash out business plans and marketing reboots, alone and in collaboration, taking reference from all sides. But the stakes are different with IoT, because relatively little is written yet, and every business – and every production line and every plant, within each business – is different.
Industrial change is not easily available off-the-shelf; it is deeply personal, highly complex, and totally unknown until the process starts.
Check out the new Enterprise IoT Insights editorial report, called ‘Crossing the IT/OT divide – co-creation, co-configuration, and how to bring industrial IoT to scale’.
