Industry analyst Frost & Sullivan has projected the total spending on ‘Internet of Things’ (IoT) will hit nearly US$79 billion (A$104.2 billion) by the year 2020. Within the Asia Pacific region, the manufacturing industry expected to grow the quickest, with a rapid compound annual growth rate (CAGR) of 52.7 percent that started in 2015 and is projected to do so until 2020.
As each year passes, what we refer to as the ‘things’ that are interconnected, are constantly evolving and do not look and behave like they were the previous year – they always are performing quicker and more efficiently. On the bright side, manufacturers have been seeing the opportunities in IoT by embracing a new mindset of designing devices with interconnectivity as a baseline.
PACE spoke with David Hegarty, managing director Rockwell Australia and New Zealand about how IoT represents a real jumping-off point for innovation, what it means for manufacturers in the Oceania region and some tips on moving forward to embrace a new era of business with connectivity and analytics as the driving force.
PACE: Could you elaborate on the impact that IoT has on Rockwell here in Oceania and perhaps some insight on the journey towards The Connected Enterprise?
David Hegarty: IoT awareness and the increasing understanding based on commercial and personal examples (smartphones, personal activity trackers, home and building automation, etc.) has seen executives at manufacturers and industrial operators asking for ideas and plans on how IoT technologies and processes can impact key operational challenges (particularly productivity). This is critical given that largely the technologies to make significant progress are available, and it is innovation and investment in business transformation and change in management that is required to make progress.
As a manufacturer ourselves, we recognised the value IoT could add to our business. Rockwell Automation has manufacturing plants across the globe, a variety of manufacturing processes creating a huge number of standard parts as well as engineered to order equipment. We realised we needed a new view of the enterprise that allowed plant managers and operators to read actionable information quickly. By integrating information across IT and control systems, and from the plant floor to the enterprise, we optimised our communication capabilities and business agility by creating our own Connected Enterprise. We have seen real impact in our ability to deliver the right product in the right time to customers regardless of where it originates from in our global supply chain. We have also seen significant overall productivity increases across the company.
PACE: Is progress being made on addressing cyber security concerns that arise relating to IoT?
David Hegarty: Definitely, but I think we need to be careful not to think of addressing cyber security concerns as a journey that has a destination. As our technologies evolve and our security blocks existing attacks, the threats will evolve too which means the security measures needed will need to evolve too.
There are some key activities and processes here that we recommend. Existing plants and systems should be audited for vulnerabilities (e.g. Facilities often have network access points that are not secure, or documented), and a plan developed to protect and upgrade access points and network infrastructure (both from malicious actors and well-meaning employees and contractors).
Common network infrastructure for IT/OT can deliver secure, adaptable connectivity from plant floor operations to enterprise business system. Availability of documented reference architectures for converged IT/OT network infrastructure (such as Rockwell Automation and Cisco’s jointly developed and published Converged Plantwide Ethernet Reference Architecture) allows for simplified design and implementation of secure network architectures.
PACE: How does IoT redefine situational awareness which is important for the process sector?
David Hegarty: IoT technologies provide huge opportunities through availability of increasingly wide ranges of intelligent devices that provide more diagnostic data, and the cost of devices is trending down so situations or variables not viable to be measured historically now are. Location based services also mean tracking of personnel is easily achieved allowing for occupational health and safety (OH&S) improvements and the ability to identify closest appropriately skilled resources for maintenance, or breakdown assistance. Location based services also combine with persona based mobile operator interface software running on smartphones/tablets, etc., to provide visibility and context to assets in the operators’ proximity.
PACE: What is the rate adoption or integration of IoT in Australia and how will the paradigm shift in the adoption of IoT here affect the classic production process and the manufacturing value chain?
David Hegarty: The adoption rate of IoT in Australia varies greatly by industry and by organisation (as does traditional automation adoption). Overall, our assessment is that Australian organisations are no further advanced in IoT adoption than other mature markets. Although to put this in context, we believe that IoT value is arguably greater to Australian organisations than other larger and lower cost markets. Assuming Australian executives are at around the same adoption position as other markets, the majority of them have only “some understanding” of IoT, and less than 10 per cent have a comprehensive plan. In saying this, around half see IoT as a key productivity tool.
Adoption of IoT technologies and effective business process transformation around them will (in Rockwell Automation’s experience) lead to improvement in these core business KPIs:
- Responding to customers faster – moving from forecast driven to demand driven operations
- Minimising supply chain risk and variability
- Inventory reductions know when and where you need materials
- Production efficiencies, through things like faster changeover times (self-adapting machines), error proofing processes, and real time quality analysis.
PACE: What sort of advice would you give to a company that wants to employ more IoT to its operations but are worried about the potential costs involved? Aside from this, would there be other concerns that would hold a company back from adopting IoT?
David Hegarty: For companies operating in an Australian context (high cost; people/energy/logistics etc., relatively small local market and wide range of relatively low volume product) employing IoT technology and solutions is really a necessity. However, there is typically much low hanging fruit for organisations and as with all change, the journey starts with a single step in the right direction. It is not an ‘all or nothing’ decision.
The journey should start with an understanding of your organisation’s value streams. To help manufacturers and industrial operators safely navigate the IoT along with other smart manufacturing initiatives and take advantage of real-time information that drives profitability, Rockwell Automation offers a five-stage Connected Enterprise Execution Model that outlines how companies can safely and securely boost productivity:
- Assess: Evaluate current culture and all facets of an existing OT/IT infrastructure (information, controls and devices, networks, and security policies).
- Secure and upgraded network and controls: Securely upgrade the OT/IT network and controls to prepare for future configurations and advanced technologies (e.g. mobility, big data, and cloud computing).
- Defined and organised working data capital (WDC): Determine how to leverage available data and turn it into information for better business decisions and optimum gains.
- Analytics: Utilise the WDC yielded through the use of hardware, devices, software, and networks for continuous operational improvement.
- Optimise & Collaborate: Optimise operations and engage with internal business processes and teams, suppliers and customers; extend real-time information throughout the enterprise and supply chain, and leverage it to respond to internal and external events (e.g. supplier and customer activities, business trends, markets, political events, weather patterns).
PACE: What trends do you expect to see from IoT over the course of the next three to five years and the kind of potential developments are we looking at here?
David Hegarty: I expect to see more focus develop in the following areas over the coming three to five years as the opportunity and urgency becomes increasingly visible to manufacturers and industry:
- Availability and engagement of specialised IoT/value mapping/business transformation consulting services.
- Development of IoT/tech/digital manufacturing strategies and execution planning/funding.
- IoT training and upskilling including for network design and security.
- Modernisation of control systems for both security and to remove limitations for data availability and management.
- Proliferation of new intelligent devices and services.