What is ‘co-creation’ in IoT (with doughnuts), and what can 5G providers learn from it?
The enterprise IoT sector has moved up a gear, out of the lab and onto the ‘shop floor’, because the various parties involved have hit upon a way to collaborate on digital-change solutions. Perhaps the remarkable aspect of this is that it has taken so long.
Perhaps, that is just a hack’s view, but the answer is simple: to knock heads together, to come up with a collaborative solution to an abstract problem. 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 tech provider, or at least the master vendor.
For it to work, these three have to be united around an organisation’s core change strategy, which runs deep, right to the heart of the business. This must be represented by the management team, outside of IT and OT, which effectively brings a fourth party to the table. Real change cannot not happen, in the end, without leadership buy-in.
This is the setup, and the basis for this concept of ‘co-creation’, which has taken root as a means to solve the fundamental questions of industrial change: what does change look like, and how to achieve it? 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, which forces these twin elements together.
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?”
By contrast, OT departments have rather bought solutions (‘outcomes’), instead of technologies. They want a fix for preventative maintenance, 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.
So what does ‘co-creation’ look like? It starts with a white board, and a bunch of people, hammering out ideas. The key is all these different stakeholders are at the brain-storming, and this process of collaborative creation keeps in mind the capabilities of both the technology and the business, in order to design and influence the stated change programme.
The process is hardly new, actually. Businesses hash out business plans, alone and in collaboration, taking reference from all parties. But the stakes are different with IoT, because it goes to the heart of the business, and because nothing is written yet. Industrial change is not available off-the-shelf; it is deeply personal, highly complex, and totally unknown until the process starts.
Back to the earlier comment, that this is old-hat, but that mine is just an outsider’s view. The process of ‘co-creation’, and the stakes in play, seem akin to the kind of brand positioning and big-brand marketing corporations engage in periodically, for a shot in the arm or strategic pivot. It’s a familiar scene: doughnuts and cappuccinos with an expensive uptown agency, which scrawl on a white-board about corporate ‘ethos’ and ‘narrative’.
The point is these marketing sessions attempt, at least, to get to the heart of business strategy, even if only to tell a fluffy story about it. They require significant investment and senior sign-off. It is only surprising the technology market, more intrinsic to an organisation’s makeup, and more capable of influencing its story, should be so late to get the doughnuts-and-coffee treatment.
We should consider a couple of quick examples, because the leading operatives in this sector have been working in collaboration with enterprises to design enterprise IoT solutions for some time. Software AG, in Germany, which gets routinely placed atop analysts’ leader-boards of industrial IoT providers, has made a formal pact of its co-creation work with a group of machine makers.
The ADAMOS (Adaptive Manufacturing Open Solutions) collective includes German industrialists Dürr, DMG MORI, and Zeiss, and is geared towards the co-development of high-end machine and process analytics based on Software AG’s streaming and batch analytics, and its Cumulocity IoT platform. It now counts 15 members; all of them are machine builders, bar Software AG.
Bernd Gross, the company’s chief technology officer, says: “We are a technology enablement company. The domain specific know-how comes from partners. We have these technologies, these capabilities, and we want to make them relevant to customers through these partnerships.”
Another keen proponent is Hitachi. Innovation is not available to pre-order and take-away, it observes; it has to be worked at, in partnership. “These technologies have turned a lot of heads, but the market doesn’t get it from an organisational and cultural perspective,” explains Greg Kinsey, vice president of industrial solutions and innovation at Hitachi Vantara, the firm’s digital-change division.
“It’s a ‘people, processes, technology’ discussion, as always – where the tech is the driver. But as we mature, we will find that is backwards – that we still need to be driven by processes and talent. The technology has to fall in line.”
For the Japanese firm, it is always the same conversation: it starts as an exploratory pursuit, in close collaboration with the client, before it finds it mark, and shifts hidden levers in their systems and processes. “It is all done in co-creation,” says Kinsey.
The operator community – in both public and private instances – should pay attention, perhaps. After all, the UK government has just produced a (excellent) SWOT analysis on industrial 5G, which says there is everything is to play for (to the point of national economic resurgence), but much to fear. The biggest obstacle is the lack of demonstrable return on investment from industrial 5G, according to 71 per cent of UK-based manufacturers – as polled and presented in the new Made in 5G state-of-the-market report.
There are other concerns, too: the cost of deploying and managing 5G networks and a simple lack of understanding about the technology, as well as concerns around security from connecting IT and OT environments, and interoperability, from joining legacy equipment into the bargain. But the more enlightened and well practised among the industrial IoT set have already hurdled these barriers.
Dürr, which makes painting robots for the automotive industry, has reworked its DXQ equipment analytics programme with Software AG record, analyse, and eliminate faults in the painting process. The software has been rolled-out to around 10 car factories so far in Germany, owned by a tier-one automotive manufacturer. It will be deployed in all its sites, and picked up by its peers.
Software AG is now looking to replicate the ADAMOS model in just about every other industrial domain, for bringing value to everything from swimming pools to power tools.
For its part, Hitachi sets a 3:1 threshold for its digital transformation projects at the outset; Kinsey’s team will not start work, proper, until its hypothesis is projected to achieve such a return. If the ROI does not stack up, then they should down tools, and start over. If it does, they should expect to “turbo-charge” their business, even if there is an initial lag as the analytics are hammered out.
“That’s the magic number; if a client invests €1 million, they should get €3 million out the other end, in 12 months. It’s a hypothesis; but we won’t start without it,” says Kinsey.
And industrial 5G is just a technology to plug into industrial IoT systems; the hard talk is about an internet of things, and not a single connectivity protocol.