Building the Internet of Things. Kranz Maciej

and organizations. IT/OT convergence is the solution, yet it didn't begin to happen until recently. Perhaps it takes a prolonged downturn, followed by a lackluster recovery, to make this happen. Alternatively, maybe the emergence of IoT multiplies the networked connections among people, processes, data, and things to the extent that it compels the worlds of IT and OT to converge out of necessity. The key driver, however (as shown in powerful use cases we will discuss later in this book), is the need for the data to flow between plants, enterprise infrastructure, and the cloud.

      Such a need forces IT/OT convergence at the technological, architectural, and organizational levels. Of course, with this convergence comes a culture clash. Each organization has a long litany of complaints against the other. And each has completely valid concerns, all of which have to be resolved quickly. (As we mentioned, Harley-Davidson's solution to this challenge was to put representatives from both teams together in a room and not let them leave until all of their issues were resolved.) Despite the potential for a culture clash, over the past decade or so, OT and LOB functions have increasingly adopted IT-like technologies, such as Ethernet/IP and even cloud services. A 2014 Cisco study by Andy Noronha, Robert Moriarty, Kathy O'Connell, and Nicola Villa titled “Attaining IoT Value: How to Move from Connecting Things to Capturing Insights” found that both IT and OT leaders now recognize the need to share responsibility for IoT solutions, although they may still need to negotiate decision-making authority over each stage in the adoption process.7 It also helps that increasingly IT organizations report to the LOBs, further aligning the technology and business agendas across the enterprise.

      ■ The proprietary/specialized technologies moving to open standards. In the last two decades of the 20th century, the manufacturing industry went through the so called fieldbus wars, where several camps of vendors fought to establish their proprietary technologies as de facto communication or security standards for the industry. In the aftermath, a bunch of overlapping semi-standard technologies (including proprietary extension to open standards) was embedded into products locking customers into specific sets of vendors. Thus, despite the initial good intentions, the industry further diverged from common standards. Add to that a large number of existing single-purpose specialized or proprietary legacy protocols and the result was chaos, higher costs, little innovation, and Balkanized market. Since then, however, an increased number of vendors started to embrace standard and unmodified Ethernet and IP technologies and integrate them into their offerings. Today, most of the end-devices have Ethernet interfaces and the momentum is mounting to establish common truly open standards in the industry. We see the same transition starting to happen in other markets too, from transportation to healthcare to retail. The customers are increasingly demanding open standards and interoperability. In addition, the IT and OT vendors are joining forces to evolve existing horizontal standards to address the OT needs and are adopting open standards in vertical standards bodies and consortia. According to the Cisco report cited earlier, by year 2020, there will be as many as 50 billion connected devices.8 Whether the actual number ends up being 50 billion, 30 billion, or even 7 billion, these are still staggering figures. Not long ago, on a typical manufacturing floor, there were just a few connected devices for every engineer; now there are dozens of these devices and soon there may be hundreds of them per every person working there. Converging all of these devices on one open unified standards-based network is not only a cost-effective and scalable way to get them connected but also a key to unlocking the revenue potential of IoT.

      This book will discuss these three trends, as well as new value propositions such as connected operations, remote operations, predictive analytics and preventive maintenance. Because IoT is still a nascent discipline, industry segments have only begun to address related issues in the last few years.

      A “Perfect Storm” of Technology, the Economy, and Culture

      IoT is bringing together three key elements – technology, the economy, and culture – to form what can be popularly described as a “perfect storm.” Whereas a lethal brew of elements is typically associated with a dangerous storm, IoT's wide open opportunities can be embraced by any organization that wants to be involved. In the process, we're all experiencing a massive rebalancing of key economic, social, environmental, and privacy/security priorities. Although the landscape is full of “900-pound gorillas,” none has succeeded in dominating this issue. (Full disclosure: My own organization, Cisco, aspires to be an influential IoT leader.)

      The truth is IoT presents an opportunity for every organization, not just a few chosen companies. Even small and midsize enterprises can participate. Winners will transform their businesses based on open standards and build ecosystems of partners to deliver vertical solutions based on horizontal capabilities. Meanwhile, losers will ignore these changes and stick to their old business models based on proprietary or semi-proprietary technology and ensure customer lock-in until those customers steadily abandon them. (With luck, some of these companies will realize the problem before it's too late. Others, sadly, never will. Remember the changes to the make-up of the S&P 500 over the past decades?)

      In terms of technology, IoT is adopting cloud-oriented technology even as it drives an architecture shift to fog computing as an extension of the cloud to the edge. At the same time, IPv6-driven networking and nimble open technologies have been driving the corresponding application explosion. Fog computing, meanwhile, is removing latency and enabling real-time analytics and responsiveness while Time Sensitive Networking is offering real-time guaranteed latency for time critical traffic. Very quickly, you will see new technologies evolve to clearly distinguish IoT as the next stage of the Internet. I call them IoT-native technologies and applications – designed and optimized around everything connecting to everything.

      1

      Trefis Team, Harley-Davidson's Success Story in the U.S., Forbes, December 19, 2014. http://www.forbes.com/sites/greatspeculations/2014/12/19/harley-davidsons-success-story-in-the-u-s/#58c4074550fc

      2

1

Trefis Team, Harley-Davidson's Success Story in the U.S., Forbes, December 19, 2014. http://www.forbes.com/sites/greatspeculations/2014/12/19/harley-davidsons-success-story-in-the-u-s/#58c4074550fc

2

Reeves, Martin, and Lisanne Pueschel. “Die Another Day: What Leaders Can Do About the Shrinking Life Expectancy of Corporations.” The Boston Consulting Group's bcg.perspectives, July 2, 2015. https://www.bcgperspectives.com/content/articles/strategic-planning-growth-die-another-day/

3

Manyika, James, and Michael Chui. “By 2025, Internet of things applications could have $11 trillion impact.” McKinsey Global Institute, repurposed in Fortune,

7

Noronha, Andy, Robert Moriarty, Kathy O'Connell, and Nicola Villa. “Attaining IoT Value: How to Move from Connecting Things to Capturing Insights.” Cisco Systems, 2014. http://www.cisco.com/c/dam/en_us/solutions/trends/iot/docs/iot-data-analytics-white-paper.PDF

8

Ibid.