The industrial IoT requires the merger of IT and operational technology. The merger was predicted 10 years ago; it's time to make it happen...
Almost a decade ago, Gartner predicted a tectonic shift for CIOs that would see their purview expand across all technologies in the enterprise, including industrial and operational assets. Ten years, millions more sensors, and zettabytes of data later, Gartner’s vision has proven prophetic — yet far from realized for industrial organizations.
While IT teams at non-industrial companies have made tremendous strides in integrating and exploiting enterprise-wide data from CRMs, ERPs, and other cloud-based transactional data platforms, industrial enterprises continue to struggle with getting their arms around fully leveraging the cloud and Industrial Internet of Things (IIOT). This is far from a knock against these IT leaders. The challenge is indeed steep, with significant technological and cultural barriers.
Operational technology has been traditionally siloed from IT — literally and figuratively. Operational assets typically operate disparately. Their time-series data is unintegrated and lacking critical context for meaningful, timely extrapolation, analysis and action. Individual machines and sensors collect their own data. That data is stored in spreadsheets. And that data and those spreadsheets live inoculated from each other, from one facility to the next.
At the same time, and perhaps even more critically, OT and IT professionals have functioned in parallel work streams with conflicting mindsets. OT has focused on delivering and maintaining optimal performance, protecting its equipment and people. IT has been charged with managing and safeguarding technologies and intellectual property. Their technologies, processes, aims and professional worldviews are sometimes at odds, even if they share ultimate goals for business efficiency, continuity and profitability.
The journey to IT/OT convergence that Gartner predicted is underway, but it’s been a bumpy road. A 2017 ABB survey of more than 200 utility executives revealed that over a quarter of respondents indicated their IT/OT technology integration was not going well at all, and another 41% noted that it was only going “fairly well.”
There is incredible value and opportunity in overcoming these barriers and figuring it out has become a strategic imperative for companies.
Why Now More Than Ever
The COVID-19 pandemic has exposed risks and revealed opportunities for improved cost efficiencies, greater resilience and new revenue streams.
IT is being charged with delivering digital transformation across the board and creating competitive advantage. OT has exhausted most traditional measures to extract efficiency and productivity from its operations.
There is no single factor creating the tipping point for IT/OT convergence. Rather, there is a perfect storm of process, market, organizational and technological dynamics driving business-critical convergence today.
The OT imperative
Whether through Lean, Six Sigma or any other type of continuous improvement approach, many industrial organizations have already maximized the amount of efficiency they can harness from their operations. Digital technology needs to be the next lever for automated productivity and performance gains – and IT/OT data convergence is required to make it possible for data to be analyzed versus simply wrangled from operational assets.
Although manufacturing software investment is now more than double what companies spend on their property, plant and equipment, U.S. manufacturing productivity has plateaued over the past ten years, according to 2019 Bank of America Global research.
OT needs more predictive analytics and agility in order to limit the frequency and duration of service interruptions. This is essential to maximizing overall equipment effectiveness (OEE) and improving facility uptime – both business-critical metrics for OT to drive revenue and contain costs.
Asset owners and operators increasingly face exposure to shocks, vulnerabilities, and financial losses. In order to assure security, safety and business continuity, OT needs the ability to orchestrate its supply chain, asset lifecycle and production/maintenance. All of this is dependent on data and IT/OT connectivity.
In order for OT to achieve higher levels of productivity and performance, it needs to empower people with the right information at the right time to gain critical insights and make better decisions. Concurrently, as labor shortages, skills gaps and a retiring generation of plant professionals continue to plague OT, they need technologies that will be intuitive to use and automate tasks in order to achieve more with less.
Assets need to keep running and producing, and OT needs to reduce spend to keep them online as opposed to big planned outages. This is the key to lowering O&M costs and increasing the profitability of operations.
The IT imperative
According to a recent study from OT security company Claroty, the COVID-19 pandemic has forced IT to be more agile and responsive, and has accelerated the convergence of IT and OT networks. The study reports that 65% of U.S. respondents say their IT and OT networks have become more interconnected since the pandemic began, and 73% expect them to become even more interconnected as a result of it. That said, convergence can also open the door to security threats that require IT’s focus.
From taking down critical infrastructure and services to threatening the environment and public safety, a cyberattack on a connected operational environment could be catastrophic. And industrial cyber threats are on the rise. Claroty’s survey found that a majority of U.S. industrial enterprises (53%) have seen an increase in cybersecurity threats since the start of the pandemic.
This is on top of one of the worst years for industrial cybersecurity; according to research by Risk Based Security, reported breaches last year increased by 33% over 2018, with a total of 7.9 billion exposed records. At the same time, according to Deloitte, 90% of OT sector companies have reported at least one security compromise to their infrastructure in the previous two years resulting in the loss of confidential information or disruption to operations.
Digital transformation will have clear winners and losers – and those who expect to compete can’t sit on the sidelines. In its 2020 Hype Cycle for Managing Operational
Technology, Gartner cautions that CIOs and technology leaders in sectors such as mining, material processing, manufacturing, power generation and distribution need to prepare now for innovations that are only two to five years from mainstream adoption. Specifically, it recommends that business cases should be prepared and proofs of concept should be in motion; ramping to full-scale production should also be starting within the next 12-18 months.
C-suites and boards increasingly expect IT to be able to “tie the algorithms to the income statement and the balance sheet.” With IT/OT integration, IT will be much better positioned to not only deliver on digital transformation initiatives but also to more effectively report on materials and machinery costs, empower OT and other teams to be proactive, and drive effective business intelligence enterprise wide.
Part of the disconnect still impeding IT/OT convergence is that expectations are misaligned. There are differences IT should understand about OT in order to be successful but the potential crossed wires begin at the most fundamental level – with who is responsible for IoT to begin with.
In short, industrial companies are under pressure to align and integrate IT and OT to survive and thrive in the new digital economy. This need has only been accelerated by the COVID-19 pandemic, and those that are able to do it well will be the winners in the end.
— Andy Bane is CEO of Element Analytics