INDUSTRIAL

Kenton Williston: Welcome to the IoT Chat, where we explore the trends that matter for consultants, systems integrators, and enterprises. I’m Kenton Williston, the Editor-in-Chief of insight.tech. Every episode we talk to a leading expert about the latest developments in the Internet of Things. Today I’m talking about IT/OT convergence.

As the manufacturing sector becomes more connected, businesses just can’t afford to have their IT and OT teams operating as separate islands. But what’s the best way to bring these two teams together? And what does this trend mean for systems integrators? Here to talk more about this is Jan Burian from IDC, and Sunnie Weber from Intel.

Thank you so much for joining us today.

Jan Burian: Hello, thank you for having me.

Kenton Williston: Tell me about your role at IDC and what brought you to the company?

Jan Burian: My current position is a manager, or I’m leading a manufacturing insights team in IDC for EMEA. I’m based in Prague, Czech Republic. And I’m with IDC for about two and a half years, and the role is just like… Besides, let’s say, leading team, I’m also leading the practice which is called Future of Operations, which is very IT/OT convergence–driven. And before joining IDC, I was working for EY and Deloitte for 11 years as a consultant. And I was in charge of performance improvement in the manufacturing and supply chain here in the center of Eastern Europe. But I also used to travel a lot, sometimes in Asia, in Western Europe, and I was, at the very beginning, at Industry 4.0 area.

That was 11 years as a consultant, and prior to that I was working in the factories. These were the suppliers for the automotive industry and these were both based in Czech Republic, or located in Czech Republic but owned by German enterprises. My role there was focusing on the quality management and owner project management. So I was responsible for ramping up the new production—the new parts within the production environment.

Kenton Williston: That’s really cool. I didn’t know you were in Prague. One of my best friends is from the Czech Republic, although not from Prague, he’s from—out in the middle of nowhere. I don’t even know if there’s a town of any meaningful name nearby, but he’s very much a country boy. That’s good to meet a city boy from the Czech Republic. So, Sunnie, tell me about your role, and what you’ve been up to at Intel.

Sunnie Weber: Sure, thanks. And thanks for having me as well. I’ve been fortunate to work in the world of IoT for the last eight-plus years now. And I’ve worked in sales and partner enablement, sales operations, and channel scale design before being able to focus on setting up partner programs for our edge partners, the operational-technology solution and systems integrator. These are those domain-expert integrators who consult and recommend solution hardware and software components, and provide end users that custom solution-deployment integration and those maintenance services. So, over the last two years I’ve spent time focusing on that just-right value exchange for this partner type, and trying to understand and implement the programmatic ways for Intel to be able to support them. But just recently I moved into a broader role in IoT as the ecosystem-partner strategy lead.

And I’m really excited to be able to take everything that I’ve learned and build a bridge across the ecosystem, helping our partners cross over from get- to go-to-market with a goal of getting everyone faster time to market and more service opportunities. So, really connecting our ecosystem is a highlight of our partner programs value exchange, and that’s definitely the focus that I want to be able to bring to the table.

Kenton Williston: Yeah, that’s great. So, a couple quick things that come to mind from hearing both of your backgrounds. First of all, I absolutely should mention that this podcast and the greater insight.tech program as a whole are published by Intel. So, good to talk to a fellow Intel person here, and also everything you’re saying about how important the role of systems integrators is, and how central this concept of IT/OT convergence has become, really are playing out a lot on the articles that we’re publishing on insight.tech. So, definitely encourage all of the folks listening today to go check out all the articles we have over there, because there’s lots of really, really interesting stuff happening. Sonny, why don’t you tell me, from your perspective, what is behind this IT/OT convergence becoming such a big thing?

Sunnie Weber: Actually, Intel sees a really big shift in digital transformation—this connection of IT and OT. It’s no secret to anyone that IoT is extremely complex. It requires a strong convergence of technologies and people. I like to refer to the Merriam-Webster dictionary definition of “convergence”: it’s the merging of distinct technologies, industries, or devices into a unified whole. And that’s exactly what I see happening with IT and OT. There’s distinctly different players, invested stakeholders, and mutual priorities that are being forced to merge and produce these common solutions. And so Intel sees a significant play that operationally focused solutions systems integrators play in connecting the dots between IT and OT, and helping to bring holistic solutions to the market. So that’s why, as I mentioned before, we created these programs to support these partner types in the IoT ecosystem value chain to enable them to deploy faster, offer improved services, and really ultimately grow that business at the edge.

And I think, Jan, you’ll be familiar with this, but some of the supporting research that IDC did in the 2021 IoT spending report on IoT and edge—the global IoT market size in 2020 was posted as $309 billion. And despite the significant effects of COVID that happened after that, the market is actually projected to still grow to $1.8 trillion in 2028. So, in fact, COVID impacts have accelerated this need for convergence of IT and OT into that digital transformation, and it’s now a leading concern for the enterprise, who essentially is captive audience now. So, what we’re seeing is that there’s high demand for improved user experience with, an example being, applications-focused human-machine interfaces. So IT and OT converged is able to deliver that kind of value. It fulfills that need around secure infrastructure that gives the enterprises the ability to make those fast decisions, increase their efficiencies, improve their resilience, and perform this unlimited scalability. And this demand is what I think is very telling and directly tied to that IoT and digital transformation.

Kenton Williston: Yeah, and you mentioned a report, and we actually are hosting on our site right now this really great, very detailed report from IDC on the topic of IT/OT convergence. So if you’re looking forward there, the title is “IT-OT Conversions: A Growing Opportunity for System Integrators.” So, Jan, I’d love to hear some more details of what you saw in that report in terms of why is this such a growing opportunity, and what are the business benefits that are driving so many companies to look into this?

Jan Burian: That IT/OT convergence would be definitely, or the word of IT/OT, would be expanding after the pandemic, in post-pandemic world. But that’s not just driven by the remote work and all the stuff like the service or the focus on our services and so on, but it’s also driven by the different disruptions. So, especially what we see in supply chain—all these, let’s say, the problems with the containers or with the transparency of the whole chain, and also from another angle that’s about the growing or rising prices of the commodities, of the raw materials and components and so on. So there is a definitely the bigger focus on transparency and flexibility within the whole chain, and also the manufacturing organizations—they are re-engineering their products. They are trying to embed the new services to become even more resilient in terms of business and securing the new revenue streams for the future.

These are the area where IT/OT—these both are playing the crucial role. This is framing the situation. When it comes to the benefits, I just look into the outputs of the IDC survey we just run recently, and we see some, let’s say, classic benefits, like operational-performance improvement, like a throughput and service reliability at the same or lower cost, for example, or as a cost reduction in terms of ability to share the resources across IT/OT, that’s improvement in customer service. I mean, personally, what I see here is also one of the—I don’t want to say a new benefit, but something which is now appearing quite a lot in the results of several different surveys, is that sustainability perspective—that IT/OT could be seen or understood as the enabler of the CO2 footprint reduction, for example.

This is something which is going to get, I would say, not just like a big attraction, but also there’s a really growing importance of that because there are different regulations in the different parts of the world, but with pretty much the same goal to reduce the CO2, and the technology and the data from the OT environment is really something which is helping the organizations to start their journey. Sustainability, definitely—that’s something where I see as the next big trend and also one of the biggest benefits. And maybe let me share also one quite important experience.

I mean, typically we see these benefits could be like an OEE, or could be waste reduction, whatever, by 5 to maybe 10 percentage points, which is good. But what’s very important is also to have ROI or Return on Investment, within, let’s say, boundaries of one or two years and to be able to reach this target, one or two years in ROI—this is about the broader connection or integration of the systems. This is not definitely about the pilots or about isolated solutions, but this is about the ability to leverage the whole ecosystem of solutions within the organizations. So we’re talking always about the ability to scale. This is very true when it comes to the building a solution with the one year ROI. But this is also, I would say, one of the most mentioned barriers when it comes to the IT/OT integration in real life.

Kenton Williston: Interesting. So there are a couple key points there I think are worth digging into deeper. One is the issue of sustainability, and I absolutely agree that that is going to become just increasingly important as we go forward. I mean, it’s already a big, big topic, and I think not only will companies desire to be more sustainable, but they’ll be required to be more sustainable over time. So I think this is a very important criteria for everyone to look at. And the other thing that you mentioned here at the end of your very good points was the challenges to actually achieving this IT/OT convergence, and there’s a lot of factors at play there, not least of which is that, historically, these groups have been totally separate from one another, have very different outlooks on how they do their work, and what metrics are important to them.

So, for example, on the operations side very often it’s crucially important to maximize up time. You’ve got to keep the factories running, the containers are being shipped, as we were just talking about. That can be challenging sometimes, so more important than ever. And on the IT side, on the other hand, it’s been more about trying to innovate and keep up with all sorts of new technologies and rapidly deploying things. There’s a very different mindset between these two groups and of course, historically, the technologies they have used have been quite different as well. So, Sonny, what do you see as being some of the key things businesses can do to bring these two teams together?

Sunnie Weber: I think it actually can depend on the perspective. So, from an end customer perspective you just literally need to get those CTO and COO teams in the same room, talking about what their objectives are and understanding the business experience and the use case that they’re trying to ultimately deliver—that’s just from the core side. But really what you see for partners is that they’re the ones—the systems solution integrators, Intel on our side, our sellers—we’re the ones that have to help our end customers start having those discussions. We need to ask the right questions to get our end customers to be thinking that way as well. So one thing we strive to do is create coalitions. The coalitions are making sure that you’re representing both the IT and the OT side, as well as the partners that need to be involved in this conversation who are going to be the ones that are part of creating the solution together—the software provider, the OEM—who at the table needs to be together.

So, for our partners, another thing that’s interesting, just in addition to getting that correct assessment down with the end customer, our partners are actually being forced to either expand their working knowledge in either the IT or the OT depending on their original focus, or they’re actually partnering up with some complementary partners who are already experts. Well, that has maybe traditionally been seen as a little competitive, or feeling like you’re giving away business; it’s actually turning into greater opportunities. So, one example is one of our larger NSIs. They saw some tremendous value in business growth by partnering with one of our OTSIs, and now they’ve grown a huge pipeline together. So while they were traditionally maybe a competitive relationship, they’re now going to business together and excelling. So one way that Intel is trying to help, especially our solution and systems integrators, is through our Intel partner association membership.

The unique opportunity is understanding and having relationships with partners all across the ecosystem. And when you have the membership with Intel, you can get connected very easily to Intel validated partners through the solution marketplace, through Intel partner connect events, and through specialized matchmaking event opportunities that we’re starting to have regionally. And the reason that’s important is because we’re working with partners who have solutions that are vetted and really deployed out there. So we’re able to help partners connect to solid partners that they can go to market with with confidence. So, bottom line, in summary, I guess you could say the partners need to be willing to have those partnerships expand so that they can come to their end customers as holistic experts. And our end customers need to start merging and having those—remove the siloed effect that has been traditionally known, and bridge those CTO and COO teams to have those holistic conversations.

Kenton Williston: Got it. Now you’re going to have to help me with a little decryption. Is NSI a network systems integrator?

Sunnie Weber: Actually, they’re the National System Integrators. So they tend to be the larger systems integrators. A lot of times they will partner up with the smaller, more regionally focused solution integrators or systems integrators on the operations side. So maybe they’re more on the design side, and the operations-technology experts are doing the physical integration onsite.

Kenton Williston: Yeah, that totally makes sense. And that’s something we’ve talked about a lot on the insight.tech program as well, is how there are all these niche markets where the local SI is really going to understand their customer extremely well in a way that a larger SI can’t do. But, conversely, the larger national SI will have technical capabilities and a breadth and scope of expertise that really is important in bringing these very different groups together. And so it is very much a complementary match. Totally agree with you there. So, what I am wondering about at the same time, and, Jan, maybe you can speak to this, is you do need a certain set of skills to be successful in pursuing these relationships and helping your end customers. So, Jan, what do you see in terms of being some of the key skills and roles and responsibilities that might be changing in the interest of putting this IT/OT convergence forward?

Jan Burian: Firstly, let me draw the typical structure or the different groups within the company, within the manufacturing organization. We have a C-Suite, so, decision makers, budget holders, influencers. So these type of managers, they definitely should be having better understanding of what or how digital technology could help to improve their KPIs. How digital technology could bring the value to their company, how this could be helping them to reach their KPIs. So, that’s very crucial, because these people, typically they have quite a big influential power, and if you’re not able to convince them that that solution really brings the value, then it’s very hard to just get there.

That’s the first group of the people within the typical manufacturing organization. Then there’s another group. This other—maybe let’s start with a Chief Digital Officer and people around this person. And I would say typical role of CDO is searching or looking for the new technology, for new solutions, and bringing these solutions or ideas into the organization and discussing with the stakeholders, or with the owners of the processes, with line of business leaders about how this solution could help them to improve what they do.

These people, they should—it’s not just about like a detailed understanding of these solutions, but they also should be having the understanding of—I mean, how to work, for example, with the systems integrators. This would be also like a first point of contact between the company and the systems integrators. They really need to understand what’s possible on a market. Technically you can buy anything, but is the ROI really like one or two years, or is a solution—could it be scaled within, I don’t know, a short term period? And also does the solution comply with the long-term company strategy? That’s also extremely important. So the people around, or the team or CEO, should be really getting that deep understanding of technology, but also of the implementation deployment process. Then you have, let’s say, another group—these are the IT people.

And there’s no doubt that these are the experts in IT security and in the, let’s say, integration of these IT systems—typically RPA, PLM, whatever. So, supply chain–management systems. But what they really need to do is to get a better understanding of how the OT world works, what kind of protocols that could be. I mean, what’s the cybersecurity threats or potential issues that might be happening? So that’s another group. And, by the way, before I get to the OT people, let me share one thing or one thought that a lot of people see IT-OT integration more from the, let’s say, data perspective. So you’ve got data generated on the edge, then they’re being transferred to the cloud or to the on-premise IT systems, and then will be analyzed then—I don’t know what we can do, but a thousand different things with that.

But that’s one perspective. The other perspective is that automation—I mean IT data could be triggering different situations, or this could be controlling the production lines. There could be communication between IT layer and PLC, and PLC is operating, controlling, driving the production line. So there is, let’s say, two-way flow of the data. Also the IT people should understand the logic of this, because if IT won’t work properly, then the production line could collapse. If it’s just, like, about data, getting the data from a line to the system—I mean, sometimes it’s not vital for the systems, but if it goes other way around, this could end up with, like, a catastrophe in production. And of course there’s also the group of the OT. As Sonny already said, these are two different worlds.

So these people should really understand how the IT works. How they could leverage—how the data they are acquiring, providing, could be then processed in the learning steps. This is also very important. And in IDC we see there’s also maybe another group, and we call them digital engineers, and they are positioned exactly between IT and OT. It’s like a converged team of the experts who are able to be a partner for the systems integrator and are able also to be a connector between IT and OT within the company, and these people, they typically are managing IT/OT deployment projects. And they also take care of the logic and of the overall architecture. And of course the data management—that’s another part of what they do.

Kenton Williston: There’s a lot to think about. You’ve given me a lot of good points there, but I’ll see if I can summarize everything you just said by—basically, there’s two key elements. There’s the “what are you doing,” but there’s also really the “why are you doing it.” You need to understand the perspective of the other side of the table, as it were. So, Sonny, something that’s making me think about is, we heard a little bit from Jan just now about how the end customer needs to have people who are bridging this gap. There’s a real good to having people specifically in that role. But what about from the systems integrators’ perspective?

One of the things you talked about was matchmaking between different systems integrators. I’m sure that’s a very important part of it. I imagine also it’s pretty important to be able to identify the right solutions that are already designed with this type of IT/OT convergence in mind. Hopefully I’m not leading the witness here too much. Is that a key consideration? Anything else that you think is really important for SIs to consider?

Sunnie Weber: I think what this really means for the systems integrator is that there’s actually greater opportunity. To Jan’s point, they do need to scale up, or at least educate themselves so that they are familiar with both sides of the world, and then be in that position to help the end customer merge those worlds as well. So there’s this consultative approach that they can take in order to answer this holistic solution. If everybody is able to start having a conversation with the value and the experience that they want out of it first, it’s really going to open up the conversation for that greater opportunity that they can deliver on. What I see the most is that the enterprise customers are in that position where change is being forced on them in order to remain agile enough to stay ahead, yet they may not recognize that. And so the systems integrators are going to be that voice of reason, that voice of consultation that, “Hey, this is actually what’s happening, and why you need to remain agile and be able to stay ahead.”

So they need to be able to improve their operational efficiencies, provide that faster time to market their products and services to meet the demand. And, again, that flexibility to respond to changes in things like product quality and maintenance services using reliable data analytics that Jan was just talking about. But having this greater opportunity—I’m just going to go back to it again—it requires having the best parallel partnerships to be able to deliver and drive more business. So that’s what’s going to allow a systems integrator to position themselves as a trusted advisor and a long-term strategic partner who can support that digital transformation, the IT/OT convergence that the customers are demanding at the edge.

Kenton Williston: That makes sense. And, Sonny, I think one of the interesting things you’re pointing to there is this sense that companies are being forced along in this direction. And I think it’s always helpful to take these changes and look at them more as opportunities than as challenges. I think that shift in perspective can really bring a different thinking. So, Jan, I’d love to hear a little bit more about some of the opportunities you see ahead. So, for example, one of the things that people have been talking about a lot in the last little bit is this idea of a metaverse. Are there new opportunities ahead in spaces like this that companies may not be thinking about already that they can reconceptualize why they need to do IT/OT convergence?

Jan Burian: Yeah, good point with the metaverse. I can get to that a little bit later, but let me just say that what we consider—the organizations need to be more resilient, generally speaking. That means they should be more transparent, more flexible, and be really able to react on almost any disruption that might appear. So, no one knows what’s going to happen. So, even in months or for longer term, it’s almost impossible. So that risk-based approachthat was applied in risk management, that’s already the old thing. So the resilience is probably like a combination between the resiliency concept and the risk-based management, is the best way for the future. And this is where the technology is really helping, through providing the data. It doesn’t have to be real time to be better, but almost in a near real-time data—some of them being processed on the edge, some of that being processed on the cloud.

So that definitely helps the organizations on their transparency, flexibility journey. There’s also so many, maybe not new issues, but I would say maybe some issues which are more important than the others. I mean, from the conversations with the end users, we always hear about capacity issues, people issues, or people and organizations. It’s very hard for them to drive the capacities. So, one day they have too much, and then the other day they don’t have people to produce something.

So that’s a big problem with the supply chain as well. So that’s why also companies are looking for new ways how to improve the customer experience, how to secure new businesses. And this is where we get to that metaverse idea, for example, which is a totally virtual world. We probably know that from the environment like a Fortnite or Roblox on these types of worlds, where also industrial players have already stepped in and they are selling or promoting their products or their brands in that metaverse—that’s one part; I call it “civil metaverse.” But there’s also the industry metaverse, which could be—and this is more like digital twin based.

And, by the way, we didn’t mention “digital twin” during our podcast, but that’s one of the key solutions or outputs wherever—when it comes to the convergence of IT and OT. So, for this industrial metaverse, where the manufacturing organizations could be building the entire virtual production plans, which they can use for—there could be a number of use cases, from the simulations or the testing or customer experience improvement, and so on. These digital twins should be driven, fueled, or powered by the data coming from a real environment. And this is where convergence between IT and operational technology is happening. Definitely, as I said at the beginning, the future would be even more about convergence of IT and OT systems.

Kenton Williston: Yeah, absolutely. I have to say, again, both of you have given us so many great ideas to think about, but unfortunately we are reaching the end of our time. So, Sonny, I just want to give you the last chance here to add anything you think we might have overlooked, or just any closing thoughts you’d like to leave with our audience.

Sunnie Weber: Yeah, sure. The advice that we’ve been giving, and the training we’ve been giving our own sales field is that sometimes the best way to have this conversation on IT/OT convergence is to start at the end. What is the value that the end customer’s looking for? Because you need to be able to help the partners and the end customers define, communicate, and deploy these value-based solutions that really inspire them and their customers, changing their business outcome. And then you can begin the evaluation of both the IT and the OT forces. So, for example, identify what their current capabilities are, how do they source data? What is their end-to-end interconnectivity enablement? What device management systems are they working with? How are they managing compute, and what is their analytic setup? And then you can take that and say, “Okay, are these actually working together in this continuum to be able to provide the information they need that produces the outcome they’re striving for?”

And so, a systems integrator can walk their customer through this conversation, through that continuum—that’s when they can identify, for example, what is their existing quality control methodology? And how is their supply chain for operations management? Does it apply the benefits to the bottom line? All of these things end up helping to enable those better operational models that buffer them from situations like COVID, allowing them to be more agile and responsive. And so when somebody is able to help identify their customers strengths and weaknesses, that’s when they can tap into the just right partners, and then show up as that comprehensive, trusted advisor. So taking that time to dig in during those initial conversations, and then covering the true value and experience they’re trying to deliver—that’s going to take their conversation from stopping at, “Hey, I just need some machine condition monitoring.”

It’ll turn that conversation to, “Oh, actually what I think you’re saying is, you want to improve product quality to drive business revenue and keep your customers coming back.” And that’s when you can bolt on the additional conversations around, “Well, maybe we need to think about employee safety monitoring in addition to this machine condition monitoring. And how can we turn these improved and targeted data analytics for tracking the quality control?” It becomes this holistic-enablement conversation of a greater value and service at the end of the day. So what that does is it provides greater value to the end customer, and it provides more business for the systems integrators.

Kenton Williston: Perfect. Well, with that, Sonny, I just want to say thanks so much for joining us. Really appreciate your time.

Sunnie Weber: Thank you so much.

Kenton Williston: And, Jan, I’d like to say thank you to you as well.

Jan Burian: Thank you.

Kenton Williston:  And thanks to our listeners for joining us. To keep up with the latest from IDC, follow them on Twitter and LinkedIn at IDC. And you can also follow Intel on Twitter at IntelIoT and on LinkedIn at Intel-Internet-of-Things. If you enjoyed listening, please support us by subscribing and rating us on your favorite podcast app. This has been the IoT Chat. We’ll be back next time with more ideas from industry leaders at the forefront of IoT design.

The preceding transcript is provided to ensure accessibility and is intended to accurately capture an informal conversation. The transcript may contain improper uses of trademarked terms and as such should not be used for any other purposes. For more information, please see the Intel^® trademark information.

This transcript was edited by Erin Noble, copy editor.