The trouble with co-creation in industrial IoT – why cities and telcos are dragging their heels on digital change
All this talk about a (industrial) revolution, and sometimes stuff gets left out. Scratching around for news last week, looking through half-written pieces from last year, this jumped out; about the Industry 4.0 market’s struggle to knock heads together in the name of ‘co-creation’, and the pursuit of digital change.
It came from a conversation, last autumn, with Germany-based Software AG (see here and here, for the rest of it), and a question about the firm’s plan to replicate its ADAMOS alliance of machine manufacturers in other industrial domains, including in the utilities, industrial automation, and smart cities sectors.
The ethos of the ADAMOS (ADAptive Manufacturing Open Solutions) group is to hone digital-change tech at the ‘coal-face’ of industry, where it is to be applied. It has worked well in the mechanical and plant engineering industry, by all accounts; German firms DMG MORI, DÜRR, and ZEISS, co-founders of the initiative, have put Software AG solutions to work in their industrial robotics. The collective has drawn at least 15 members, so far; all of them are machine builders, bar Software AG.
The point is one side knows about IT and the other side knows about OT, and together they can make a stab at industrial IoT. The ADAMOS project remains a seminal example of organic multi-party collaboration in the Industry 4.0 sector. The question about it last autumn prompted a follow-up, as well, about whether Software AG would also copy the model in the telecoms market, where it has a stronghold as a white-label IoT platform provider.
The same conversation revealed Software AG’s strategy to establish itself, with its analytics and integration tools, plus its relations with Germany’s industrial elite and America’s edge-cloud giants, as the glue in an all-new carrier-led private 5G ecosystem. But the response this time, from Bernd Gross, the company’s technology chief, was less rosy. “We are still pursuing those things, but they are going slower than we’d hoped,” he said.
The problem, it seems (of course), is with competition; to recreate this kind of collaborative idyll, with multiple industrial-side domain experts, requires companies to be able to put aside differences and rivalries in pursuit of a common goal – a more deep-rooted industrial change, to carry across a whole sector. The reason the likes of DÜRR and ZEISS work well together is because their differences are marked, in fact, so their rivalries are not.
The machine builders in the ADAMOS collective serve different industrial disciplines, and are happier to share both the wheel and the bounty on their new digital crossings. Gross explained: “One is making for the textile industry, one is producing machinery parts, and another is doing optical measurements. So they’re all the same, insofar as they are selling globally and want to digitise. But their customers are very different at the same time.”
He added: “That is very specific to that industry.” By contrast, the other sectors Software AG had earmarked for ADAMOS-style co-creation – utilities, industrial automation, and smart cities, plus telecoms, perhaps – are more secretive. “In some industries, the competition between players is stronger – compared with the machinery industry, where the companies we are working with produce very different products, for different sectors.”
The irony of the move towards distributed power, with deregulation of the energy sector and availability of advanced metering and analytics, is this paranoia has been fortified among utilities, which can now cross old ‘county lines’ to sell energy anywhere, but also face fresh competition at home. “Deregulation is creating a new competitive dynamic, which means these utilities are less inclined to cooperate on digitisation, as such.”
Gross explained: “So that is a bit of a challenge for what we are trying to do. We are in various discussions in the energy market, as well as in the industrial automation market, around sensor equipment and so on, and in the automotive sector, as well. But I have to say, progress is not comparable with what we did a few years ago with ADAMOS.”
What about smart cities? There is a market, surely, which is crying out for serious-minded collaboration? After all, most public funding for smart-city projects is predicated on sharing ideas and scaling solutions; discussion about ‘blueprints’ for ‘replicable’ smart cities arises every time a new project turns up.
Practically every smart-city cliché out there is about collaboration – between sectors, between companies, between departments, between technologies. Just because the whole ‘smart cities’ market is at the most fragmented end of the fragmented IoT industry.
Software AG has deals with Saudi Telecom in Saudi Arabia, Oreedo in Qatar, and Du in Dubai (most recently), all of them for its Cumulocity IoT platform, and all of them heavily focused on enabling smart city functions; it has a contract with the Saudi government’s IoT development unit, too. The difference is just the Middle East is “more aggressive with investment”, said Gross; an ADAMOS-style co-creation system for cities could work there.
He explained: “There is less of a fixation on the short-term returns. They see a longer picture, and want to be perceived as the most modern and fully digitised societies, in terms of e-government services. Dubai will have completely paperless citizen-services by the end of 2021 – so you can buy a house, or register a car, or do whatever else online. Compare that with Germany, where the target is in 2035. It is not even comparable.”
What about Europe? No chance, it seems. “There is a different appetite and perspective in Europe. These smart city companies are often the ‘daughter’ companies of the city governments themselves, and they are very focused on their own initiatives. The collaborative energy isn’t really there. That’s my perception, anyway – that it is very fragmented.”
The talk about carrier deals in the Middle East leads to the question about a carrier-geared ADAMOS alliance, more generally. Software AG has a good-looking stable of telco partnerships around the Cumulocity IoT platform, which is being white-labelled by at least 20 mobile operators (across 60-odd installations) to provide IoT device and application management.
Germany-based Deutsche Telekom, Spain-based Telefónica, Netherlands-based KPN, Austria-based A1, Japan-based NTT, and Australia-based Telstra, among others, are on board. There was talk some time ago about working with AT&T in the US, as well; that has not yet come to pass, it seems. “No. Not yet,” came the response.
Gross added: “But we have added Du, we have a few prospects in Asia Pacific, and we are working on a few other big deals; we are still by far the leading software platform provider in the telco domain.”
What about ADAMOS-for-telcos, then, especially in light of the company’s ambitions to cobble together a band of edge hardware and software experts to drive the private-networking game into the path of the operator set? Software AG already has deals with AWS and Dell, for example, alongside a long-standing affiliation with Deutsche Telekom in Germany, the home of Industrie 4.0 and the chief national agitator on ‘vertical’ spectrum.
Might a Nokia or a Samsung, for example, be roped in as well? “Yes, yes, whatever… You know, all of that’s a discussion; in the perfect world, that could happen. Because if telcos are not doing it, they will fragment the market – and they will not differentiate, and they probably won’t succeed. And defragmentation of the market is a business risk for plant owners. So it is something I am heavily evangelising with our telco partners.”