Report Identifies 4 Changes CEOs Must Implement To Maximize Digitization

Report Identifies 4 Changes CEOs Must Implement To Maximize Digitization

Digitization is on everyone’s lips these days. If you have not taken steps to implement and improve digital data flow, you are probably already behind. I receive information regularly from PwC and here is a new report on how digitization is reshaping the manufacturing industry. The report takes a look at 8 companies and showcase how they improved their efficiency, productivity and customer experience by ensuring they have the right capabilities central to their operating model and by matching them with strong skill sets in analytics and IT.

Pressure from the consumer, new regulations and advances in information technology are all reasons that are pushing manufacturing organizations to digitize so they can avoid falling behind the new breed of market-leading ‘digital champions.’ The report identifies 4 significant changes CEOs must implement to maximize the benefits of digitization.

1. Drive organizational changes that address new digital capabilities and digitalized processes – e.g., product and process design and engineering, end-to-end procurement, supply chain/distribution and after-sales – right from the top, because these are so new and different

2. Hire more software and Internet of Things (IoT) engineers and data scientists, while training the wider workforce in digital skills

3. Learn from software businesses, which have the ability to develop use cases rapidly and turn them into software products

4. Extend digitalization beyond IT to include significant operational technologies (OT) such as track and trace solutions and digital twinning

From the report, “Already, digitally ‘smart’ manufacturers are gaining a competitive advantage by exploiting emerging technologies and trends such as digital twinning, predictive maintenance, track and trace, and modular design. These companies have dramatically improved their efficiency, productivity, and customer experience by ensuring these capabilities are central to their operating models and by matching them with strong skill sets in analytics and IT. “

During 2018 and early 2019, PwC conducted in-depth digitisation case studies of eight industrial and manufacturing organisations in Germany, the US, India, Japan and the Middle East. Drawing on discussions and interviews with CEOs and division heads, we explored the key triggers for change these companies faced, assessed how digital solutions are being implemented and how digitisation is affecting key aspects of their operating models. We also compared our eight organisations with other publicly cited digitisation case studies, and leveraged PwC’s 2018 study Digital Champions: How industry leaders build integrated operations ecosystems to deliver end-to-end customer solutions and other ongoing PwC research.

This paper is the result of ongoing collaboration between PwC and the Global Manufacturing and Industrialisation Summit (GMIS). GMIS provides a forum for industry leaders to interact with governments, technologists and academia in order to navigate the challenges and opportunities brought about by the digital technologies of the Fourth Industrial Revolution. PwC has been a knowledge partner with GMIS since 2016.

The eight case studies in this report make clear how far the role of digital technology goes beyond traditional IT systems. It also encompasses OT and data and analytics technologies. Full integration and linkage among these different technologies, and the ecosystems they are part of, are essential to a successful digital transformation. Yet success is impossible without a digitally smart workforce that is familiar with Industry 4.0 skills and tools.

These challenges are the subject of the second part of the report Digital Champions: How industry leaders build integrated operations ecosystems to deliver end-to-end customer solutions, which will be published in January 2020.

The report will elaborate further on the emerging theory of digital manufacturing and operations, in which successful, digitised industrial organisations will increasingly have to act like software companies in response to four key factors:

  • The connected customer seeks a batch size of one, necessitating greater customisation of products and delivery time, improved customer experience, use of online channels and outcome-based business models.
  • Digital operations require both engineering and software abilities to enable extensive data analysis and IoT-based integration, as well as digitisation of products and services.
  • Organisations need augmented automation, in which machines become part of the organisation via closely connected machine–worker tasks and integrated IT and OT.
  • Future employees will be ‘system-savvy craftspeople’ with the skills to use sensors in order to collect and analyse accurate data, as well as design and manage connected processes.

About the authors

Anil Khurana is PwC’s global industrial, manufacturing and automotive industry leader. He is a principal with PwC US.

Reinhard Geissbauer is a partner with PwC Germany based in Munich. He is the global lead for PwC’s Digital Operations Impact Center.

Steve Pillsbury is a principal with PwC US and the US lead for PwC’s Digital Operations Impact Center.

Report Identifies 4 Changes CEOs Must Implement To Maximize Digitization

Is the IoT In Danger of Splintering?

I picked this news item up from The Economist Espresso app.

For years, technologists have gushed about the promise of the “Internet of Things”, enabling ordinary objects—from kettles to cargo ships—to communicate autonomously with each other. The two essential technologies speeding the IOT’s arrival, inexpensive sensors and super-fast networking kit, are advancing rapidly. Gartner, a research group, predicts that the global number of devices embedded with sensors will leap from 8.4bn in 2017 to 20.4bn in 2020. So is 5G, a telecoms-networking technology superior to today’s 4G mobile networks. But the world’s 5G system could split into two different and potentially incompatible entities. One has been developed by Huawei, a Chinese telecoms-equipment giant, at a cost of $46bn. But some are worried about the company’s links to the Chinese Communist Party. Several countries, led by America, have banned the use of Huawei’s gear in their systems for security reasons. The year 2020 could herald the arrival of the Splinternet of Things.

I daresay that most likely many countries in the world are concerned about the ability of the US government to monitor internet traffic through the technology of American companies. These swords always cut two ways when you take the larger view.

More relevant to this topic, though, could a potential splintering into two 5G systems globally impact IoT?

In the short term from what I can gather interviewing technologists, benefits from 5G will accrue from the ability for private, plant-wide broadband rather than from some global linking of sensors.

Perhaps we are a bit early for journalists’ raising fear, uncertainty, and doubt. Listening to people actually building out the technology, I think we are going to experience much benefit from 5G in the not-to-distant future.

Report Identifies 4 Changes CEOs Must Implement To Maximize Digitization

A Look At IoT Trends for 2020 and More

Top Tens and Top Twenties of the past or future year have never been my favorites. However, one can perceive trends and strain out little nuggets of gold by scanning several. Especially industrial taken broadly along with Internet of Things (IoT) and other current digital trends. I just had an interesting chat with Sean Riley, Global Director of Manufacturing and Transportation for Software AG, who released his Top Ten for 2020.

Following are his ideas interspersed with a few of my comments.

Cost Management Becomes Exceptional

As uncertainty enters the global manufacturing outlook, enterprises will become myopically focused on cost reductions. This will drive organizations to find more efficient methods of providing IT support, leveraging supplier ecosystems and simplifying value chains. [GM-much of my early work was in cost management/reduction; this is a never-ending challenge in manufacturing; however, tools continue to evolve giving us more and better solutions.]

A Blurred Line Between Products & Services

Manufacturers continue their product innovation quest and more manufacturers will begin focusing on how to deliver products as a service. The Manufacturers that have already created smart products and have elevated service levels will now begin to work out the financing considerations needed to shift from a sales based to a usage based revenue model. [GM-This is a trend most likely still in its infancy, or maybe toddler-hood; we see new examples sprouting monthly.]

Moving To Redefine Cost Models To Match Future Revenue Streams

Anticipating the shift to continual revenue streams, manufacturers will seek to shift costs to be incurred in a similar manner. This will be initially seen as a continued push to subscription based IT applications. While much progress has already been made, a larger focus will occur. [GM-I like his idea here of balancing capital versus expense budgets, continually finding the best fund source for shifting costs.]

IT Focuses on Rapid Support for Growth

The lines between business and IT users become blurred as no-code applications allow for business users to create integration services. IT professionals will leverage DevOps & Agile methodologies alongside of microservices and containers to rapidly develop applications that are able to generate incremental growth as requested by business users. This will be critical to the near term success for manufacturers, especially with economic headwinds that seem to be growing stronger. [GM-I didn’t ask about DevOps, but this idea is springing into the industrial space; cloud and software-as-a-service provide scalability both up and down for IT to balance costs and services.]

Industrial Self-Service Analytics Become Mission Critical

Industrie 4.0 / Smart Manufacturing initiatives continue to receive greater amounts of investment but in the near term, manufacturers will focus on unleashing the power of the data they already have. Historians, LIMS, CMMS’ have valuable data going to and in them and enabling production engineers to leverage that data rapidly is critical. Industrial Self-Service Analytics that allow production and maintenance professionals to leverage predictive analytics without IT assistance will sought as a powerful differentiating factor. [GM-we are beginning to see some cool no-programming tools to help managers get data access more quickly.]

Industrie 4.0 / Smart Manufacturing Initiatives Continue to Draw Investment

It’s no surprise that Manufacturers will continue to invest in Industrie 4.0 as the promises are great however, the scaled returns have not been realized and won’t be realized in the near term. The difficult of implementing these initiatives has surpassed manufacturers expectations for several reasons. First, traditional OT companies were trusted to deliver exceptional, open platforms and that wasn’t delivered. Secondly, collaboration efforts between IT & OT professionals proved to be more convoluted and difficult than expected. [GM-I’m thinking these ideas became overblown and complex, and that is not a good thing; to swallow the whole enchilada causes stomach pain.]

Artificial Intelligence Enters the Mix

AI won’t allow for users to sit back and relax while AI handles all of their tasks for them but it will make an appearance in back office tasks. Freight payment auditing, invoice payment and, in some select areas, chatbots will be the initial main stream uses of AI and will be seen as not becoming an anomaly but be understood to be more mainstream this year. [GM-I think still an idea looking for a problem; however some AI ideas are finding homes a little at a time.]

3D Printing Find New Uses

While this technology has steadily crept into production lines, the push towards usage based product pricing will have the technology move into after market services. Slow moving parts will be the first target for this technology which will help to free up much needed working capital to support financial transformation. [GM-watch for better machines holding tighter tolerances making the technology more useful.]

5G & Edge Analytics Enable New Possibilities

As Industrie 4.0 is continued to be pursued, Manufacturers will implement new initiatives that could not previously be realized without the high speed data transmission promises of 5G or the ability to conduct advanced analytics at the edge where production occurs. This will also provide manufacturers with new methods to securely implement Smart Manufacturing initiatives and in new locations that were not previously feasible due to connectivity issues. [GM-5G is still pretty much a dream, but there is great potential for some day.]

Security Still Remains a Critical Focus

With the increasing rate of IoT sensors, IT-OT convergence, the usage of API’s and the interconnectivity of ecosystems ensuring data security remains a top priority for manufacturers. As more data becomes more available, the need to increase levels of security becomes ever greater. [GM-ah, yes, security–a never-ending problem.]

Report Identifies 4 Changes CEOs Must Implement To Maximize Digitization

EdgeX Foundry Reaches 1 Million Platform Container Downloads

Many engineers and programmers like open source projects combined with open APIs. Some open source catches on and quietly becomes widely used. Others languish. The Linux Foundation’s Edge project, especially EdgeX Foundry, keeps quietly growing. What are the odds that this becomes a widely used Internet of Things tool?

Today’s news in brief:

  • EdgeX’s fifth release offers more scalable solutions to move data from devices to cloud, enterprise and on-premises applications
  • The first LF Edge project to achieve Stage 3 ratification, EdgeX hits widespread adoption and production-level maturity
  • EdgeX and LF Edge onsite at IoT Solutions World Congress with demos from Dell Technologies, Home Edge, IOTech and Project EVE

EdgeX Foundry, a project under the LF Edge umbrella organization within the Linux Foundation that aims to establish an open, interoperable framework for IoT edge computing independent of connectivity protocol, hardware, operating system, applications or cloud, announced the availability of its “Fuji” release. This release offers additional security and testing features on top of the production-ready “Edinburgh” release launched this spring.

“EdgeX Foundry has experienced significant momentum in developing an open IoT platform for edge-related applications and shows no signs of slowing down,” said Arpit Joshipura, general manager, Networking, Edge and IoT, the Linux Foundation. “As the only Stage 3 project under LF Edge, EdgeX Foundry is a clear example of how open collaboration is the key to an active community dedicated to creating an interoperable open source framework across IoT, Enterprise, Cloud and Telco Edge.”

Launched in April 2017, and now part of the LF Edge umbrella, EdgeX Foundry is an open source, loosely-coupled microservices framework that provides the choice to plug and play from a growing ecosystem of available third-party offerings or to augment proprietary innovations. With a focus on the IoT Edge, EdgeX simplifies the process to design, develop and deploy solutions across industrial, enterprise, and consumer applications. As a Stage 3 project under LF Edge, EdgeX is a self-sustaining cycle of development, maintenance, and long-term support. As an example of the rapidly accelerating use of the code, EdgeX hit a milestone of 1 million platform container downloads, which almost half of these took place in the last few months.

“The 1M container download isn’t our only milestone,” said Keith Steele, EdgeX Foundry chair of the Technical Steering Committee and LF Edge Governing Board member. “The development team has expanded with more than 150 active contributors globally and the partner ecosystem of complementary products and services continues to increase. As a result, we’re seeing more end-user case studies that range from energy and utilities, building automation, industrial process control and factory automation, smart cities, retail stores and distribution and health monitoring.”

The Fuji Release

As the fifth release in the EdgeX Foundry roadmap, Fuji offers significant enhancements to the Edinburgh 1.0 release, which launched in July, including:

  • New and improved security features to include PKI infrastructure for token/key generation.
  • Application services that now offer full replacement capability to the older export services provided with previous EdgeX releases. These application services offer more scalable and easier to use solutions to get data from the EdgeX framework to cloud, enterprise and on-premises applications.
  • Example application services are provided with this release to allow users to quickly move data from EdgeX to the Azure and AWS IoT platforms.
  • A new applications function Software Development Kit (SDK) also provides the EdgeX user community with the ability to create new and customized solutions on top of EdgeX – for example, allowing EdgeX to move edge data to legacy and non-standard environments.
  • Unit test coverage is considerably increased (in some services by more than 200 percent) across EdgeX core and supporting microservices.
  • New device service connectors to BLE, BACNet, IP camera, OPC UA, GPS, and REST device services.
  • Choices for commercially-supported EdgeX device connectors are also starting to blossom with offerings for CANopen, PROFINET, Zigbee, and EtherCat available through EdgeX community members.

Inaugural EdgeX Open

The EdgeX Foundry community recently kicked off a series of hackathons, titled the EdgeX Open. More than 70 attendees participated in the first event on October 7- 8, 2019, in Chicago. Hosted by LF Edge and the Retail Industry Leader Association (RILA), and sponsored by Canonical, Dell Technologies, Deep Vision, Intel, IOTech, IoTium and Zededa, the event featured five teams that competed in retail use case categories. More details on the event, including the winning use case from Volteo, are available in this blog post.

The next hackathon will coincide with the Geneva release, targeted for Spring 2020. It will be centered on the Manufacturing vertical and held in a location in Europe.

IoT and Control Systems Soft Targets for Cyber Hackers

IoT and Control Systems Soft Targets for Cyber Hackers

Internet of Things installations along with industrial control systems constitute well known cybersecurity vulnerabilities within industrial plants and operations. CyberX, the IoT and industrial control system (ICS) security company, announced the availability of its “2020 Global IoT/ICS Risk Report” designed to sharpen awareness and knowledge of this critical area.

The data illustrates that IoT/ICS networks and unmanaged devices are soft targets for adversaries, increasing the risk of costly downtime, catastrophic safety and environmental incidents, and theft of sensitive intellectual property.

Some of the top findings noted that these networks have outdated operating systems (71 percent of sites), use unencrypted passwords (64 percent) and lack automatic antivirus updates (66 percent).

Energy utilities and oil and gas firms, which are generally subject to stricter regulations, fared better than other sectors such as manufacturing, chemicals, pharmaceuticals, mining, transportation and building management systems (CCTV, HVAC, etc.).

Now in its third year, CyberX’s “Global IoT/ICS Risk Report” is based on analyzing real-world traffic from more than 1,800 production IoT/ICS networks across a range of sectors worldwide, making it a more accurate snapshot of the current state of IoT/ICS security than survey-based studies.

Including the data presented in previous reports, CyberX has now analyzed over 3,000 IoT/ICS networks worldwide using its patented M2M-aware behavioral analytics and non-invasive agentless monitoring technology.

Recommendations Focus on Prioritization and Compensating Controls

The report concludes with a practical seven step process for mitigating IoT/ICS cyber risk based on recommendations developed by NIST and Idaho National Labs (INL), a global authority on critical infrastructure and ICS security.

Experts agree that organizations can’t fully prevent determined attackers from compromising their networks. As a result, they recommend prioritizing vulnerability remediation for “crown jewel” assets — critical assets whose compromise would cause a major revenue or safety impact — while implementing compensating controls such as continuous monitoring and behavioral anomaly detection (BAD) to quickly spot intruders before they can cause real damage to operations.

“Our goal is to bring board-level awareness of the risk posed by easily-exploited vulnerabilities in IoT/ICS networks and unmanaged devices — along with practical recommendations about how to reduce it,” said Omer Schneider, CyberX CEO and co-founder.

“Today’s adversaries — ranging from nation-states to cybercriminals and hacktivists — are highly motivated and capable of compromising our most critical operational systems,” said Nir Giller, CyberX GM, CTO and co-founder. “It’s now incumbent on boards and management teams to recognize the risk and ensure appropriate security and governance processes are in place across all their facilities to address it.”

Summary of Key Findings

  • Broken Windows: Outdated Operating Systems. 62 percent of sites have unsupported Microsoft Windows boxes such as Windows XP and Windows 2000 that no longer receive regular security patches from Microsoft, making them especially vulnerable to ransomware and destructive malware. The figure rises to 71 percent with Windows 7 included, which reaches end-of-support status in January 2020.
  • Hiding in Plain Sight: Unencrypted Passwords. 64 percent of sites have unencrypted passwords traversing their networks, making it easy for adversaries to compromise additional systems simply by sniffing the network traffic.
  • Excessive Access: Remotely Accessible Devices. 54 percent of sites have devices that can be remotely accessed using standard management protocols such as RDP, SSH and VNC, enabling attackers to pivot undetected from initial footholds to other critical assets. For example, during the TRITON attack on the safety systems in a petrochemical facility, the adversary leveraged RDP to pivot from the IT network to the OT network in order to deploy its targeted zero-day malware.
  • Clear and Present Danger: Indicators of Threats. 22 percent of sites exhibited indicators of threats, including suspicious activity such as scan traffic, malicious DNS queries, abnormal HTTP headers, excessive number of connections between devices and malware such as LockerGoga and EternalBlue.
  • Not Minding the Gap: Direct Internet Connections. 27 percent of sites analyzed have a direct connection to the internet. Security professionals and bad actors alike know that it takes only one internet-connected device to provide a gateway into IoT/ICS networks for malware and targeted attacks, enabling the subsequent compromise of many more systems across the enterprise.
  • Stale Signatures: No Automatic Antivirus Updates: 66 percent of sites are not automatically updating Windows systems with the latest antivirus definitions. Antivirus is the very first layer of defense against known malware — and the lack of antivirus is one reason why CyberX routinely finds older malware such as WannaCry and Conficker in IoT/ICS networks.

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