Digital Platforms, Digital Programs and the IT-OT Convergence

IoT, IIoT, IT and OT: what are these famous abbreviations and why did they emerge in our vocabulary?

The term Internet of Things (IoT) was first mentioned in 1999 to describe a physical network of objects or devices - the things - that should be provided with sensors, computer programs (software), communication capabilities and other technologies, to enable them to connect and exchange data and information with other devices and systems.

Over time, the term IoT has been used to refer to connected “things” in the context of consumer goods, such as cell phones, mini computers, tablets, etc. It has also become very common to associate the IoT term with applications in the Computer and Internet world (or Information Technology world, IT), where the things we are referring to are software, networks, computers, routers, servers, datacenters, telecommunication systems, Apps, etc.

The popularization of the IoT opened space to its Industrial equivalent, which was called the Industrial Internet of Things (IIoT).

The IIoT deals mainly with information coming from the so-called shop-floor devices; machines, tools, sensors, industrial networks, electrical systems, automation systems, control systems, industrial software, etc. This set of industrial “things” or devices we call Operation Technologies (OT).

It must be said that the idea of connecting machines, “things'' or devices in the industrial shop-floor precedes the IoT era. Some experts give as the starting point the creation of the first programmable logic controller, in the 1960s. Others say that an important milestone was the movement trying to standardize communication protocols for machines and devices, in the 1990s, in a way they could exchange information with each other.

IT applications are dominated by IT companies such as Google, Microsoft, IBM, SAP, Amazon, Oracle, etc, while OT applications are dominated by companies providing technology to the Industrial sector, to the shop-floor, such as Honeywell, Rockwell, Schneider Electric, ABB, Siemens, Eaton, Emerson, Yokogawa, General Electric, Hitachi and machine and equipment builders.

The list of companies mentioned above is neither exhaustive nor complete. It is a small sample of names, to help to explain and associate the concepts of IT and OT. There are a lot of companies working hard and acting actively, in the IT and OT areas.

There has been collaboration between OI-OT companies to develop the Industrial Internet of Things.

The objectives of this collaboration are varied, but in general IT companies look for increasing their reach and knowledge on the shop-floor. While OT companies look for having the dynamism, speed and technology used in the IT environment, applied to the industrial environment.

In addition, OT companies are looking for new revenue streams, unlocked by the intensification of the IT-OT convergence on the shop-floor. A broad range of new services have been generated from the data collected from OT devices and “chunched” and put available by IT software.

A widely known scheme used to show this IT-OT convergence can be seen in Figure 1. This scheme shows three application layers.

Layer 1 is dominated by IT applications, IT manufacturers and their software and computer infrastructure (databases, operating systems, software, analytics suites, servers, storage and hosting infrastructure, etc).

Layer 2 is where OT software and systems are hosted, for specific shop-floor applications. Some experts call these applications “islands”, “standalone” or “on premise” areas because historically they were kept disconnected from external networks and from the Internet itself.

Layer 3 represents and encompasses the devices, sensors, machines installed on the shop-floor, which have the ability of communicating with other devices-“things”. This layer is dominated by the OT manufacturers.

With the progress of the IIoT, Layer 2 began to be provided with "connectors", interfaces and bridge software and hardware, which process and "carry" information from the shop-floor to upstream networks, operated outside of the "island" (outside of the local networks). This means that with the rise of the IIoT, many Layer 2 applications started and could be moved to the “Cloud”.

Figure 1 still shows the path that OT and IT players are taking, to cover the layers other than they were historically present. For example, due to the IIoT evolution, OT companies have been trying to increase their participation in Layer 1 (IT domain), while IT vendors have been investing to increase their reach in Layers 2 and 3 (OT historic domains).

Digital Platforms and Programs

In this context of convergence IT-OT, since the 2010s, I could see several OT companies making investments to benefit from the IIoT evolution. The 2 main transformations observed, related to OT companies are:

Transformation 1: OT vendors started to create their Digital Transformation Programs or Platforms, to show the market the ability to integrate industrial digital systems with the technologies coming from the IT world.

They promote the idea that they can provide customers with more efficiency, savings, sustainability and better decision-making processes, supported by data science, analytics, professional consultancy and IT elements itself.

In Figure 2 you can find the names of Digital Transformation Programs and/or Digital Platforms of some companies:

It should be mentioned that some companies use the same name for their Digital Platforms and their Digital Transformation Programs. Others only promote their Digital Platforms (hardware, software and services) outside of the company and use different internal names for their Corporate Digital Programs.

Transformation 2: OT vendors acquiring software or software-hardware integration companies, in order to accelerate their insertion into the Industrial Internet of Things journey, ensuring they remain relevant and generate new revenues in the future. The Crumchbase website allows you to consult companies acquired by OT companies in the last few years: https://www.crunchbase.com/discover/organization.companies

In addition to these two transformations, what is also happening is the association-collaboration between OT and IT companies. This appears in the form of MoUs, simple collaboration, joint-ventures (rarer), etc., and aims to accelerate the insertion of these companies in applications where they have limited "expertise" and in areas where they look for external synergies.

Finally, we can ask: how successful OT companies are with those transformations to become relevant in the IIoT space? This is difficult to say, but we can comment that the most successful ones were those that made gradual, planned and steady actions, adding IT elements to their current product & systems portfolio, at the same time that they took advantage of the stakes and longstand presence they already had in the shop-floor.

Companies like Siemens, Schneider Electric, Legrand and Rockwell are already benefiting from the actions and investments they have made in the last few years. They were able to combine existing digital systems, with additional internal developments / investments and acquisitions. Again, this is not an exhaustive list. Many other companies are moving in the IIoT direction.

According to some analysts, General Electric (GE), which was the first one to launch a Digital platform, Predix, reduced its initial ambition and activities around its Digital Program-Platform.

GE's ambition was to connect all kinds of “things”, from trains to power generation turbines and medical equipment. For some, the strategy was too ambitious. And some say that it wanted to do a lot of “in-house” development, starting from scratch, without associating with Technological partners and without generating external synergies.

GE is undergoing an extensive restructuring (sales of assets, such as bank activity, lighting, home appliances, medium-low voltage products divisions, etc.). Maybe the deceleration of Predix Program deployment is also linked with this restructuring.

The fact is that many companies are keeping their investments in order to play an important role in the so-called Industrial Internet of Things.

The championship is not over. The ones doing best are those that did as follows:

1- relied on the leadership they already had

2- added elements of the IT space into their existent applications

3- increased collaboration with other companies (especially from the IT world)

4- added acquisitions, bringing digital & software DNA inside of their corporations

5- did not give up to invest in IIoT applications

The championship of the Industrial Internet of Things will still have many games until we know the name of the real winners.

This article was first published in Portuguese. You can read it at: https://www.dhirubhai.net/pulse/plataformas-iiot-programas-de-transforma%C3%A7%C3%A3o-digital-e-edi-carlos