There has been a lot of advancements in the field of industrial automation & technology over the decades especially during the last three industrial revolutions. The economy has grown over the years but at the same time, there has been an increase in the competition. Organisations realised the need for managing growth and delivering sustainable business performance. However, the sudden downturn of economy in 2008 has upset the plans of many and suddenly there were over-capacities across the industry. Although the economy has recovered since then, it has made organisations realise the importance of optimisation within their operations. The cost of unplanned downtime, inventory, waste, energy and so on have become more expensive than ever before. This marked the need for the 4th industrial revolution which primarily intends to leverage evolving digital technologies, like industrial IoT, to avoid such deterrents and make operations more predictable. Capital expenditure has taken a back seat for a while, with the focus being more on utilising the existing capacities and unleashing the capital/resources hidden within the operations.
Deriving business outcome before technology adoption
Organisations have adopted various technologies/products which have provided significant level of automation and intelligence already. But still, there have been surprises in industrial operations which one can ill afford in the current competitive market in a not so growing economy. Organisations have become very cautious in making further investments in products/technologies unless and until they are sure of the outcome with a shortest payback period.
They are looking at filling up the silos which are still existing, despite their substantial investment in products and technologies. Modern day organisations expect digitalisation to be the thread which can fill up the gaps and connect the silos to overcome the bad actors, like unplanned downtime, waste, process variations and so on. They do not want another product/ technology whose features are generic and not clearly aligning to the business need. The CIO/CDOs of the world are making their intent amply clear that they are not willing to invest on anything which is ‘nice to have’, but not a ‘must have’. They are being equally challenged by the business stakeholders to implement solutions delivering a business outcome.
Need for outcome driven consulting – discovering use cases of transformation
Advisory level strategic consulting has been prevalent in the industry for quite some time. Organisations have derived benefit and have high regards for such consulting firms. But for adoption of digitalisation, they are expecting consulting which can encircle the total journey starting from the discovery of the use cases which can drive business outcome & ROI, the solution blueprint and finally implementation followed by adoption leading to realisation of the envisaged benefit. This challenges the basic taxonomy of the players serving the industrial market in various forms. Typically, the advisory level consulting is followed by the recommendations which are fulfilled by the respective solution providers typically the OEMs & product companies. The scale-up is then done through the System Integrators (SIs) typically the IT service providers. But the current expectation of the industry on digitalisation, challenges this segregation and expects a complete ownership from discovery of the use cases up to fulfilling the outcome realisation. This is driven by the lack of confidence from the end user on hether the offered technologies would be able to fulfil the business outcomes envisaged. The consulting has to be done by a team of experts who are not only well-versed with the understanding of management goals but are also able to leverage the various technologies to design and implement solutions which can derive the expected business outcomes. In other words, a team which can connect all the dots and becomes the single window of engagement for the customer. This can be achieved by a combination of experts who have industry domain of operations, maintenance, digital technologies and also have a good understanding of the overall industry business process.
Digital industrial apps – The crystal ball
So, how should digitalisation-enabled industries look like & what should be their deliverable? As explained earlier, the customers expect digitalisation to fulfil the gaps & connect the silos across their existing systems. The gaps may be fulfilled by providing contextual visibility or AI driven analytics or a digital thread which ensures flow of information between the systems. But the key deliverable of apps needs to be an actionable insight on near real-time basis maximising and integrating the data generated from the existing systems. In other words, a single pane of glass equivalent to a ‘crystal ball’ which can connect people, data and machines together to drive the desired business outcomes. Such apps differentiate from a typical product approach, which are sometimes generic, along with overlapping functionalities compared to the existing systems. The apps have to be designed for a customer on the basis of consultative assessment, which can fulfil the ‘delta’ or ‘gap’ in the existing automation footprint needed for an enterprise to deliver a specific outcome. Thereby, complimenting the existing automation system to become more effective.
For instance, maintenance engineers are typically governed by the CMMS and also derive a lot of insights from condition-based monitoring enabled through frequent inspections. But even then, there are unplanned downtimes which are very costly. The need is of a system which can provide data science driven early warning advisories which can detect the anomaly at an early stage ahead of the CMMS and condition-based monitoring. The important point in this case is that the ‘delta’ or the ‘gap’ is the need of a system which can provide actionable insights at an early stage complimenting the existing CMMS and condition monitoring system. This can in turn improve the effectiveness of the maintenance personnel in avoiding downtime and also reduce maintenance cost. Such a system is also called a ‘digital twin’ of an equipment or a process.
Disruptive business models
The customers are shying away from a Capex-based investment for IT/digital technology, spending and preferring an Opex-based investment. They would like to measure the outcome of the investment on quarterly basis with a flexibility of an exit if the desired outcomes are not met. Moreover, technological advancements are occurring at a pace faster than the companies can digest. A Capex would mean to remain stuck with a technology for a longer period even if at a later point it does not provide the envisaged benefit for an organisation. While, Opex offers the flexibility of a changeover aligning with the company’s need, what it means for the market players is that the development cost has to be borne by them and cannot be passed on. In other words, one needs to offer a SAAS model. The SAAS model is quite accepted in the B2C world which has adopted an app-driven culture already with the advent of smart devices based on android or IOS. Such an evolution is not so easy in an industrial environment, which deals with equipment and processes, where internet enablement is still evolving. What it also demands from the market players is to develop apps on use cases, which are repeatable across the industry, to derive a desired benefit of scale resulting into a sustainable business. On top of this, people are also grappling with the aspect of sensors. Implementing sensors in aging equipment is not easy without the OEMs support.
While it is true that some equipment are black boxes where one cannot proceed without putting additional sensors but there are also many equipment where data driven models can still be developed with existing set of sensors. But in either case, the physics of the equipment/process needs to be understood by the app development team. We need to be clear while selecting an equipment/process whether the cost benefit ratio of implementing sensors would make sense. There are certain wireless sensors available in the marketplace which can be installed in any rotating equipment without disrupting the existing wiring or installation. All the above factors are a major showstopper in accelerating adoption. There are quite a few pilots being done which is encouraging, but still the market is at a nascent stage of adoption.
Some of the customers / end users are putting up their own team of developers, data scientists to embark upon their digital journey. Such customers are offered a platform of their choice on a PAAS model. In such a scenario, a right mix of insourcing and outsourcing has to be thought through for a successful adoption, and thereby, realise the desired business outcome. The purpose of setting up an in-house team should be on delivering outcomes needed by the organisation and not drifting away from their core competency. Although some organisations are planning to set up such teams to generate additional revenue stream for themselves in addition to their core business, such decisions surely have to be driven by market study and the vision of respective organisations.
There is a need for all the approaches to converge and align towards a sustainable business strategy for all the stakeholders. Only then the pandemonium in the marketplace can be put to rest and a proper ecosystem can evolve.
Who owns the business outcome?
Business outcome has been the driving force for the entire journey of digital industries, as explained earlier. Logically, the end-user who owns the operations should be the outcome owner; after all, the benefits would add up to the organisation’s margins. However, the ownership can be on the basis of the actionable insight proposed by the solution provider at the consulting stage. This would enable a seamless connect between use case identification, solution blueprinting, implementation and realisation of the business benefit.
Digitalisation driving optimisation
The digital industry journey is still at a nascent stage. Although a sustainable business strategy is yet to be seen, many customers have started the journey. The current state of global economy is driving the need for optimisation across the industry stronger than ever before. We eagerly await the 4th industrial revolution to finally find its ‘holy grail’ as in turn, digital industries become the new way of life for the entire ecosystem.
Disclaimer: The views expressed in this article are solely of the author and are not to be construed as views of the organisation he works for.