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Accelerate the internet of things in manufacturing lns research
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LNS Research. All Rights Reserved November 2014 www.lnsresearch.com One of the most potentially far- reaching technological trends on the horizon today is the Internet of Things (IoT). A nascent and ever- evolving concept, IoT is loosely defined as a scenario in which all potential objects are equipped with unique identifiers that enable the ability to transfer data over a network without human-to-human or human-to-computer interaction. The possibilities are vast and challenge the mind: sensors, equipment, production lines, machines, containers, transportation, buildings, homes, computers, software, private and public clouds, mobile devices, departments, companies, processes—all interconnected and communicating with one another to achieve the previously unachievable. Estimates on the number of connected devices range anywhere from 25 to 100 billion by the year 2020, and indeed, many in the commercial and industrial spaces are expressing their excitement and optimism through large R&D capital investments, acquisitions, and other market activity. But while the promise of IoT capabilities could have a transformative effect on the manufacturing sector, IoT has been approached with notably more trepidation and skepticism among manufacturers. Why? In this research spotlight, LNS Research will explore some of the main reasons that manufacturers have carried a more cautious attitude and been slower to embrace the initial steps to pursuing IoT. Specifically, LNS Research will cover: The challenge of communications and interoperability standards, as well as the current market response and direction The new challenges at hand with IoT network management and security The roadblocks to ROI and how these will be overcome as time passes Data on current and future IoT investment Actionable recommendations for positioning your organization for future success Research Spotlight Accelerating the Internet of Things in Manufacturing While the promise of IoT capabilities could have a transformative effect on the manufacturing sector, IoT has been approached with notably more trepidation and skepticism among many industry leaders. Why?
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Internet of Things in Manufacturing Page 2 © 2014 LNS Research. All Rights Reserved November 2014 www.lnsresearch.com The Internet of Things’ Scope of Opportunity The manufacturing industries are becoming increasingly excited about the future possibilities of these aforementioned devices and objects being simply and inexpensively interconnected and collaborating together via Internet technologies to achieve innovative and amazing results. IoT technologies create the potential for billions of everyday devices to become more self-aware and intelligent, and to be able to negotiate communications with each other via public and private Internets in order to create new ways of collaborating, working, and living together. Each of the physical, human, and computing elements involved will have the ability to directly negotiate communication – streamlining supply and demand chains along with the operation within the four consumer and supply chain areas depicted above. These opportunities are exciting and far reaching, but there are many hurdles to overcome to accelerate IoT’s potential in the manufacturing industries.
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Internet of Things in Manufacturing Page 3 © 2014 LNS Research. All Rights Reserved November 2014 www.lnsresearch.com A Lack of Established Interoperability Standards Over the past several decades in the industrial space, interoperability standards have been developed to enable different individual vendors’ sensors, actuators, controllers, supervisory systems, operations management software, and business systems to be combined into more cohesive solutions and provide freedom of choice. At the time, the ideas of IoT connectivity were not a consideration in the standards design or development. As a long-term consequence, there exists a diverse and vendor-specific landscape of device and component functionality, and there are currently very few analogous standard communications protocols and information models that exist for the IoT world today. Among modern systems and applications, the industry is accustomed to using fieldbus standards with interoperable device information profiles, information standards for application-to-application use like OPC/OPC UA, and higher level manufacturing to business integration models such as: OAGIS MIMOSA ISA 88 ISA 95 Even having these integration models broadly deployed, manufacturers are still potentially left with remaining integration and interoperability gaps that may need to be filled with vendor-specific IoT solutions. As of now, among machine-to-machine (M2M) devices, IBM’s MQ Telemetry Transport (MQTT) protocol is the default, openly published protocol for use in small computing footprint devices. Requiring limited overall bandwidth, this protocol communicates in a fashion that is directly supported by IBM’s enterprise Websphere MQ (Messaging Queue) software. While some of the vendors focused on building out IoT application platform toolkits, like PTC/ThingWorx, Xively, and others, support this open specification protocol, the initial message/information delivery to and from devices is really only the starting point in what is going to be required to make complete industrial IoT applications fully functional. Information profiles identifying and differentiating the many classes of devices will be required. So too will interoperability with the pre-existing information integration standards and models. In addition, new ones will be required, in large part to Even having integration models broadly deployed, manufacturers are still potentially left with remaining integration and interoperability gaps that may need to be filled with vendor- specific IoT solutions.
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Internet of Things in Manufacturing Page 4 © 2014 LNS Research. All Rights Reserved November 2014 www.lnsresearch.com handle the massive influx of new and unstructured Big Data. And all of this Big Data needs to be processed and analyzed in an efficient and timely fashion. New technologies such as SAP’s HANA, IBM’s Watson, and open source Hadoop are already being applied to address this aspect of IoT applications. LNS Research sees the landscape of these application frameworks and architectures evolving very rapidly right now, so the scope and positioning of these technologies are likely to expand in the near future. Advancing the IoT Framework and Architecture On the part of technology and solution providers, there has been plenty of activity and messaging around the claim of manufacturing IoT as a key area of future growth. In the past year or two, there have been alliances formed, such as the Industrial IP Advantage and the Industrial Internet Consortium (IIC), which involve large players like Cisco, Panduit, Rockwell Automation, AT&T, Cisco, GE, IBM, and Intel. New technologies such as SAP's HANA, IBM's Watson, and open source Hadoop are already being applied to process and analyze the massive influx of Big Data generated by the Internet of Things.
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Internet of Things in Manufacturing Page 5 © 2014 LNS Research. All Rights Reserved November 2014 www.lnsresearch.com In particular, the Industrial IP Advantage coalition is addressing the secure use of standard Ethernet and Internet Protocols for industrial purposes; however, in order to create a complete automation system solution, this pre-supposes the use of open EtherNetIP and CIP protocols with additional information profile and systems/network management features that are contained in hardware and software originating from the consortium member companies. While this can be considered a great start and a helpful industry initiative for the automation portion of IoT, LNS Research believes that an enterprise-level participation in interoperability standards will be needed to approach the many billions of connected devices, and their potential for associated manufacturing business value, which could approach and surpass trillions of dollars. From a public investment perspective, the governments of the United States and Germany are already investing over $1B to help accelerate commercial success in IoT to advance manufacturing. IoT Network Management While cellular networks blanket a much larger area than even five years ago and 4G is undoubtedly on the rise, outside of major cities, cellular is still not something that many companies can consider reliable. Particularly when a company operates in a large (and remote) geographical area where pipelines, rail lines, or other vessels and structures are dispersed across wide swaths of physical space for production/transportation/communication purposes, the logistics of building this network, or bolstering what currently exists, and implementing the sensors and devices in a standard way to create a functional and optimized network is certainly formidable. And as newer techniques and sensor capabilities advance, existing network infrastructure may find itself struggling to keep up. As the amount of potential data transmitted over this network is growing exponentially with increased connectivity and device intelligence generating larger volumes and velocities of data, there will reach a point where real-time network capabilities will be overwhelmed. As previously mentioned, the spearheading of defining and framing new and adapted standards is one of the most important roles of the IoT affiliations mentioned above in advancing the cause. While not as exciting to expound upon as the potential use cases and benefits of IoT, network bandwidth, availability, and standards are where the most immediate and in-depth conversation is needed. As Richard Soley, executive director of the IIC, has said, “Standards are the most important enabler for innovation in the world today.” LNS Research believes that an enterprise-level participation in interoperability standards is needed to approach the many billions of connected devices and their associated manufacturing business value. While not as exciting to expound upon as the potential use cases and benefits of IoT, network bandwidth, availability, and standards are where the most immediate and in-depth conversation is needed.
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Internet of Things in Manufacturing Page 6 © 2014 LNS Research. All Rights Reserved November 2014 www.lnsresearch.com New Security Challenges Issues and concerns around cyber security are nothing new, of course, and the manufacturing industries have gone through several instances of technological advancements opening new Pandora’s Boxes in the world of security. For instance, from the Ethernet based automation systems starting in the 1980s, standards evolved into multiple implementations of industrial network protocols that fit standard Internet Protocol (IP) and UDP communications stacks including but not limited to: Modbus TCP/IP PROFINET EnterNet/IP CIP FOUNDATION HSE Additionally, communications between controllers/PLCs and workstation applications have moved from slow serial ports to using high-speed Ethernet networks that commonly run the aforementioned protocols as well as OPC/OPC UA. All this Ethernet/IP networking and interconnection has resulted in an array of best practices established for different security aspects such as network and virtual LAN segmentation, firewalls and selective port openings, user and application authentication, intrusion detection, anti-virus, malware, security patching, and application software roles and privileges. Herein lays part of the issue. This same, previously mentioned legacy of differing and disparate standards is causing major problems in the migration toward IoT capabilities. IoT smart devices run much smaller footprints of computing power and operating systems. It is possible that their initial installation is permanent and that the software within may never be updated or replaced. This permanence creates a very high premium on the design security and impermeability of these devices to viruses or denial of service attacks. Since IoT devices may or may not participate in larger/centralized security domains (e.g. Active Directory) in order to operate, the concept of multiple distributed security domains will likely emerge from groupings of IoT devices, and be another new security management consideration. Additionally, IoT devices need to intercommunicate with existing controllers, automation, and manufacturing information networks, and applications—which will require adaption of existing While few forward- looking business leaders would question the eventual adoption and future applications of IoT, for many the investment opportunity has yet to appear ripe.
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Internet of Things in Manufacturing Page 7 © 2014 LNS Research. All Rights Reserved November 2014 www.lnsresearch.com security policies and approaches to meet these new IoT security challenges. Addressing the New Security Frontier While the challenges outline above present no easy task, and great stakes, the market is responding to them in different ways. One great example is Cisco’s Security Grand Challenge, which is an open solicitation for technical solutions incentivized by prizes, matching investments, and potential intellectual property protection. Cisco has also formed a partnership with software automation giant Rockwell Automation, which consists of several measures focused on building a common technology view, collaboration on reference architectures, people and process optimization, and joint product development—all of which aim to advance and standardize the way people, networks, and connected devices interact with each other. Another example of a partnership between large industry players is Siemens Industry Sector and McAfee. These two companies have formed a partnership to enhance security collaborating between the two companies’ portfolios and building upon a joint effort started in 2011. Among the advancements will include a next- generation firewall, security information and event management (SIEM), endpoint security, and global threat intelligence. These offerings are expected to improve visibility and control at the factory level while reducing the risk of intellectual property theft. Achieving ROI The final macro-challenge to the acceleration of IoT in manufacturing is one that is less concerned with IT and logistics, but nonetheless crucial to the business as a whole: the financial impact. While few forward-looking business leaders would question the eventual adoption and future applications of IoT—not just in manufacturing, but in every conceivable commercial arena—for many the investment opportunity has yet to appear ripe.
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Internet of Things in Manufacturing Page 8 © 2014 LNS Research. All Rights Reserved November 2014 www.lnsresearch.com A Perception of Redundancy Though media hype may lead the casual observer to believe otherwise, intelligent sensors and devices are not new. Truth be told, there are millions in current use, deployed over the last decade or so in plants and manufacturing facilities around the globe. An important distinction is needed: These devices and sensors currently deliver some of the functionalities often discussed when the phrase “Internet of Things” enters the conversation. Indeed, it is not uncommon to hear manufacturing executives comment with air of varying dismissal, “We’ve been doing machine-to- machine (M2M) and intelligent device integration for years.” This is true. Many of these sensors and devices work reliably with higher-level controllers and other computing devices; however, the great majority are not communicating via Internet protocols or directly over Ethernet networks. In consequence, many manufacturing leaders feel that they are already executing on IoT capabilities—at least those that they foresee as useful to operations—today, and a move toward upgrading to fully connected devices and sensors, is very difficult to justify from an ROI standpoint. An important point to make in this area is around cost effectiveness. As new generations of IoT sensors and devices are released into the market, their cost as compared to the currently implemented versions will need to decrease considerably for many manufacturers to consider upgrading. Defining Early Success While the IoT market has a long way to go in regard to functional, out-of-the-box applications to add weight to its case in manufacturing, there are manufacturing businesses that have shown early success and ROI gain. Many of these successes have been in the area of Asset Performance Management (APM), whereby industrial machinery and equipment is being monitored remotely, and large data flows are being analyzed to present an increasingly predictive picture of when these assets will fail based on specifications and historical data. In most cases, these success scenarios involve intensive, custom-made solutions built upon IoT platforms. And while the market may have a ways to go in presenting these types of solutions out of the box, this type of success story is a harbinger for what tomorrow’s IoT landscape may look like. While the IoT market has a long way to go, there are examples of manufacturing businesses that have shown early success and ROI gain.
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Internet of Things in Manufacturing Page 9 © 2014 LNS Research. All Rights Reserved November 2014 www.lnsresearch.com The State of Investment and Attitudes Looking at data from one of LNS Research’s recent surveys, we can see how attitudes around IoT are shifting forward as more companies begin to see the potential for business value. Asked how IoT is currently affecting their businesses, approximately 20% of respondents (n=367) have made some form of investment into IoT technologies, either for operations, customers, or some combination thereof. Fifteen percent of respondents are conscious of IoT capabilities, but are currently not seeing any impact in their businesses, and 21% have interest in IoT but have yet to fully investigate the impact they could see from IoT. A full 44% of respondents had yet to fully understand or know about IoT capabilities, so more marketplace awareness and education clearly needs to occur. Moving from present actions to future attitudes, respondents were also asked about the nature of their IoT investments moving forward. While 19% did not expect to invest in IoT technologies within the next 12-month period, 14% were in the process of establishing a budget and expected begin investment in the next 12 months, and 19% had either fully established a budget, or had begun investing in earnest in IoT solutions. Nearly half of respondents did not expect to invest in IoT technologies in the foreseeable future. 4% 6% 10% 15% 21% 44% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Investment started due to customer demands See value in operations and have begun investment Rapidly pursuing IoT, for operations, customers or both Understand/aware of IoT but see no impact yet Interested but still investigating the impact Don't understand/know about IoT According to survey data, 21% of respondents had made some form of investment into IoT technologies, either for operations, customer demands, or some combination thereof.
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Internet of Things in Manufacturing Page 10 © 2014 LNS Research. All Rights Reserved November 2014 www.lnsresearch.com While awareness and interest in IoT have shown signs of growth, the number of manufacturers for whom IoT has yet to cause any real ripples in this data echoes the need to address concerns, standardize networks, and communicate benefits highlighted above. Recommendations While there are still many questions to be asked and answered, such as: What role will pervasive sensing and intelligent devices have on Big Data and the Cloud through new fog computing models and the enablement of distributed, rather than centralized, orchestration systems? Will manufacturers adopt truly consumer grade user interface and personalized user experiences on the shop floor? How will collaboration, video, and the mobile operator change plant operations? How will manufacturers adapt to new IoT enabled business models? Can new financial models support what will be technically feasible in moving from a product to services based company? How long will it actually take for sensor prices to drop far enough and open/standard Ethernet protocols to be adopted broadly enough for rapid roll-out? There have also been some early successes in IoT in the manufacturing sphere, the development of IoT functionalities and standards has quite a ways to go before even the full breadth of possibility is understood by the manufacturing industries. Even so, forward-looking companies that have been early adopters of IoT solutions 1% 2% 7% 9% 14% 19% 47% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Have made significant investment already and expect it to decrease Have made significant investment already and expect it to stay the same Have established a budget for IoT in the next 12 months Have made significant investment already and expect it to increase Expect to start investing in IOT within 12 months but still establishing budget Do not expect IoT investment in the next 12 months Do not expect IoT investment in foreseeable future
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Internet of Things in Manufacturing Page 11 © 2014 LNS Research. All Rights Reserved November 2014 www.lnsresearch.com are experiencing benefits today. LNS Research recommends that manufacturers perform an analysis of where specific applications of IoT can enable quick returns on efforts in the short-term, while at the same time developing a long-term vision of how IoT capabilities can affect their organizations in a more transformative and far- reaching way as the space matures, and as IoT develops common standards and platforms as well as enhanced security measures and capabilities. As the space emerges and risk becomes less of a concern, it will be these manufacturers that have done due diligence around IoT research and capabilities that will be best positioned to build-off of short-term successes and reap the rewards that an increasingly connected enterprise, and its compounding spaces for revenue growth and cost reduction, will offer. LNS Research provides advisory and benchmarking services to help Line-of-Business, IT, and Industrial Automation executives make critical business and operational decisions. LNS research focuses on providing insights into the key business processes, metrics, and technologies adopted in industrial operations. Authors: Mark Davidson Principal Advisor, mark.davidson@lnsresearch.com Greg Goodwin, Research Associate, greg.goodwin@lnsresearch.com
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