Transcript 0:00 [on-hold music] Talk to me. Information, news and entertainment on demand. WS Radio.com. 0:10 [on-hold music] Welcome to The Peggy Smedley Show, the voice of IoT in our connected world, with your host, Peggy Smedley. [on-hold music] Hello, listeners, and welcome back to The Peggy Smedley Show. 0:26 My first guest today focuses on understanding how engineering and manufacturing organizations use technical software applications to meet their business needs and to assist the software companies who develop and market those applications with their market planning. 0:42 He has a particular interest in the impact of cloud computing and the industrial IoT on digital transformation. Please welcome Alan Griffiths, Principal Analyst of Cambashi. Alan, welcome to the show. Thank you, Peggy. 0:58 I'm, uh, grateful to be here. Well, I'm delighted you could join me, Alan. Uh, the IoT is changing a lot, and I'm delighted that you can really talk about the different things that are happening. 1:11 And before I even have you do that, I would love for you to give an introduction of Cambashi because we've never had you on the show before, and I'd love you to talk a little bit about what you guys do and, and give an introduction for me. 1:24 Okay. Very quickly, for over thirty years now, we've been [clears throat] analyzing the engineering software markets. 1:31 Uh, historically, CAD/CAM and PLM, but more on the design side, but also into ERP systems and manufacturing execution, uh, and various other, uh, CAD, uh, BIM and AEC systems for building design. 1:48 Uh, I've, for the past few years, been focusing on what's happening in the IoT, the industrial IoT markets, trying to understand the, uh, the, the landscape, who the players are, how they work together, how they compete. 2:04 And our real... Our USP, if you like, is that we measure the markets. We don't just talk about it. 2:11 So we have to understand it in detail so we can measure revenues and use econometric analysis to predict growth by country and industry, et cetera. 2:21 So we have to have a real good handle before we can, uh, before we can measure it. So that's what I've been trying to do for the last couple of years. So, Alan, talk a little bit that... 2:32 'cause that's an interesting point, because right now the IoT market has changed considerably from when I started covering it, you know, fifteen, almost twenty years now, when it's been changing. 2:43 And it's an interesting dynamic, and the players are changing. 2:47 And I'm sure since you started getting into it and when you see what's happening, when you look at PLM and you look at CAD and just trying to understand the OT types of systems that come in, operational systems, when you're looking at those and IoT and, and the differences. 3:01 Talk about the shifting market right now, because everybody's trying to understand that. Help us understand how the differences of all of this and what that really means, because I think it helps people to understand. 3:14 And now we'll start talking a little bit about AI and all that, but really start laying the groundwork for that right now, for someone who's trying to understand that under part of the market. Yeah. Thank you. 3:25 Well, very briefly, starting at the big picture, when I or anyone looks into this market, that they find lots of different players coming from lots of different directions. At the top and the bottom extremes, we have 3:39 the big management consultants who are offering digital transformation, uh, as either projects or, or, or, uh, programs within the company at a very high level. And then at the very... 3:53 And that's usually management consulting, uh, speak that they use, and it's normally organizational change they're mainly talking about. 4:03 At the other end of the, the, the technical end extreme, you have IoT technology, where a lot of IoT companies, big and small, are talking about the technology to put sensors on devices to, uh, edge, edge computing to control the data, cloud computing of various types, distributed computing, fog computing, all, all these technologies, uh, and all of the, uh, DevOps which is required to manage the data either on-premise or in the cloud or increasingly in hybrid, uh, uh, environments, which is what's happening now. 4:41 So th-those are very well developed and well understood, uh, extremes, if you like. And what this tends to happen, is tending to happen at the moment is that most IoT projects are projects. 4:56 They are one-offs, uh, they may be proof of concepts or particularly built for a company within a, an overall program. The way we see it evolving is it's... 5:09 A lot of the more secure, uh, uh, more, um, mature and sophisticated, uh, software vendors, the big players like, uh, SAP, Oracle, IBM, Microsoft, [clears throat] and the CAD/CAM players like, uh, PTC with ThingWorx, uh, Siemens and, uh, all those guys are all, um, moving. 5:33 They want to do-- They don't want to be special projects all the time. They want replicable software that they can implement and install. 5:41 Similarly, most of the consumers, whether they're in manufacturing or in operations or in, uh, telecoms or in, uh, infrastructure, uh, or even in buildings, w-whatever market areas they're in, they want to buy some technology i-in the form of an application which can help themDo their business better. 6:05 So they're looking-- we think that this, this middle ground, uh, w-w-for, for applications i-is where, where it's going now. 6:15 So when you look at that area, right, and you look at companies like you just described, you know, PTC and, and Rockwell, let, let those companies that are coming into play, that Rockwell has been traditionally known for its automation side, its operational type of systems, and now it's kind of partnering a little bit with PTC. 6:37 It, it, there's like this merging of tech, kind of brainchild of technologies, you know. They're, they're not... They're partnering up to do things, and they're kind of in the market. 6:47 You've seen other marriages of technologies like that. Does that change the dynamic of how companies go to market and the way they provide capabilities 6:59 th-to the market, their, their buying power, their, their, their brawn, so to speak, and what, and what they're able to bring to systems and companies? 7:11 They're not necessarily acquired, but they're actually partnering in a way that can deliver services and technologies that others might not be able to do because of the brawn that they have. Absolutely. 7:27 And that, that's another dimension, if you like. 7:29 So when you get into the, [clears throat] um, implementation of IoT technology [clears throat] in big manufacturing companies, they will have, uh, the OEMs, the major players, will have substantial design engineering, uh, capability. 7:47 [clears throat] Historically, CAD/CAM systems, CAE, PLM, et cetera, for designing and going through all the gates which are involved in the complex design process before it is thrown over to manufacturing. 8:00 And typically, in the past, it has been thrown over to manufacturing. Um, now 8:07 companies like Rockwell, uh, and ABB and Bosch and Siemens and GE and guys like that, uh, have typically owned the operational side, you know, the, the shop floor, the line, [clears throat] the manufacturing, the process manufacturing, uh, which is high, highly automated usually. 8:29 Uh, and in a sense, they've been using IoT in the term of sensors and technology for quite some time. Now what's happening, uh, those worlds have tended to be, uh, apart pretty much. 8:41 Uh, companies like the ERP players, uh, uh, have, have plonked in the middle part successfully, but, um, they don't really address the design side of it. 8:52 So w-what's interesting about Peer, uh, PTC and Rockwell is that it's a, a joining up of the, uh, the core design technology that PTC has and the knowledge and the understanding of, uh, smart connected products, which is their terminology for IoT things, 9:13 um, with Rockwell's deep understanding of machine tools, uh, process engineering, process manufacturing. 9:23 Um, and the, uh, uh, I was over at PTC's conference in Boston a few months ago, and, uh, Jim Heppelmann, uh, when asked about this, um, uh, he said that the billion dollars which Rockwell is investing in PTC is not going to be spent on anything. 9:40 It's going to be invested in the company to, to help develop their technology. 9:44 And, uh, the-- With Rockwell's, uh, user base, uh, installed base all around the world in, in these manufacturing organizations where, where IoT can be deployed in terms of applications like predictive maintenance, uh, it effectively multiplies PTC's sales force by a factor of ten. 10:08 So it will greatly improve both companies', uh, footprint in this area. 10:14 Um, another, another example is a very different example, but you, you, you, you talk about consolidation, and w-we believe that this will happen a lot more in this market. 10:25 There was a very interesting announcement yesterday with IBM, uh, taking over, uh, Red Hat, uh, which is a massive, uh, merger, um- But that's under security...which is just taking place at the moment. 10:38 So h- but now we're talking about different types of things. You're talking about what that'll do on security and things like in that area, right? Are, are we talking like... 10:47 You were just talking about the M&A side is how that's gonna change. Are we gonna see... 10:51 Are, are you saying there will be a big shift not only on IoT and IT and operations and security, we're gonna see this huge amount of consolidation in the Internet of Things now even more than what we saw several years ago, there was a big consolidation. 11:08 But now as the market's shifting even more, we're gonna see u- uh, a greater consolidation again, that we're gonna be see that big movement again? Uh, yes, I, I think there will be. Um, the big, uh, consol... 11:24 The, the big mergers tend to hit the headlines, but I think y-you can see gradually smaller acquisitions taking place which don't hit the headlines. 11:34 And this is typically at the, at the IoT technology level, where companies have found a niche where they've developed some very clever IoT technology for s- for sensors or for edge computing or for analytics, and they tend to get, uh, gobbled up by the big players. 11:55 The next round of consolidation will be mainly at the IoT technology level. 11:59 Uh, we counted about four hundred companies that were loosely labeled as IoT platforms.Now, really, people don't want lots of different platforms. They want... They will tend to turn to their enterprise provider. 12:16 Um, if it's a big engineering design, uh, like an OEM in engineering or manufacturing, that could be the CAD/CAM PLM provider. 12:27 If it's a, a, a more conventional manufacturing company, it could be the ERP provider like SAP and Oracle. Um, and if it's in, uh, a process industry, it could be Rockwell or Siemens or someone like that. 12:41 And given that they're already using that, that vendor and that technology heavily, they-- the first port of call is to ask them what they're doing in this area. 12:54 And from what we can see, all of those guys are working hard to develop, uh, packaged solutions which will integrate with their existing technology. So that looks like the most likely place for people to go. 13:08 I don't think many- But how- Uh, smaller... Go ahead. Well, Alan, how can you offer a packaged solution for the Internet of Things? All this time, the big discussion was you can't offer packaged solutions for the IoT. 13:24 Is that changing? Uh, it won't, won't be completely packaged, but it will be more packaged than it has been in the past. So what use-- we see with, uh, SAP and Oracle and others is that they're offering, 13:38 uh, solutions in the area of connected transportation or connected supply chain or connect... And other, other companies are offering, uh, connected building sol-- oriented solutions. Now, each of... 13:53 Or there's, in general, there's connected production. Uh, now, th-these don't... They're not just simple plug and play, but they're much more, 14:05 uh, much better designed for that industry, uh, than just buying tools off the shelf. So there'll be characteristics about each of those, we call them market areas, 14:16 um, which, uh, enable the main players to provide a, a, a more packaged solution. 14:24 And you'll see on there, that you'll see those guys offering th-these connected applications already, and we think there'll, will be more of that in the future. 14:34 Are we seeing a giant blurring of what, you know, operations, IT, manufacturing, all of these coming together than what's ever happened before then? Is that what you're saying? Absolutely. Uh, it-it's getting, uh, um... 14:51 The lines are very blurred even between OT and IT, and between engineering and OT, and they're, they're blurring. 15:00 People like PTC, as they got into, uh, Internet of Things, and they got more and more into production, they found they had technical solutions, but they didn't have the user base or, uh, uh, the marketplace, hence the tie-up with Rockwell. 15:17 And I think there will be, uh, there will be more of that in the future. But if you talk to PTC and Jim, you, you talked about being at their event in, in Boston. 15:28 They pretty much said, you know, the IoT is not gonna be called the IoT anymore. That was the question that I asked him in front of all the media, and you were there then, and you heard me ask that question. 15:38 You know, and he pretty much said it, he thinks it's not gonna be called the IoT anymore. 15:43 I don't know what it's gonna be called, but so then are-- is this digital transformation that's occurring changing everything from manufacturing to CAD to CAM to everything we're talking about? 15:57 You know, the industrial IoT that we know it today, you know, industrial four point O, to being something beyond AI, beyond machine learning, to we don't know what that's going to-- the next thing's going to be called. 16:09 But it's going to transform this digital transformation into something that what companies have a strategy for today is going to reshape their businesses. I think companies will reshape their businesses, yes. 16:23 That, that, that will happen. 16:25 But what-- at, at the management consulting level, but, uh, uh, and they will use IoT technology at the low level in terms of the detailed sensors and, uh, computer systems that they will use. But in... Uh, and I agree. 16:42 Uh, and we, we believe that what Jim said, we agree entirely with that. Uh, and in the diagrams and the, um, uh, the messages that we put out, we don't use IoT anymore either. 16:54 We, we use the term connected because what's different between the thousands of applications that companies like, uh, SAP and Oracle and, uh, Siemens and those guys have today, uh, and the... 17:10 What, what's new but today w-w-- in, in this IoT world, it's that they're connected, so it's connected infrastructure. 17:17 It's solutions that can be deployed in the field to connect, uh, to take data from, uh, infrastructure which is out there and manage it more effectively. 17:29 Uh, it's connected transportation where you're collecting data from vehicles. It's connected production where you're collecting data from machine tools and using predictive maintenance. 17:41 So that, that we believe is, is the key term that will apply. So, but are we talking about infrastructure being critical infrastructure? 17:52 I mean, there's a different technology between infrastructure that's roads, bridges, and highways, and critical infrastructure that's financial systems and, you know, things like that. 18:02 How do you differentiate between what the governments call things and what we typically reference things? 18:09 But if they're connected, they're all gonna be one and the same?Uh, [clears throat] well, when we talk about connected infrastructure, we, we tend to mean utilities, uh, like electrical networks, uh, water networks, uh, th-those kind of, uh, that kind of infrastructure and infrastructure which goes into a building. 18:33 Um, and so the, the, the, uh, the connectivity and the, the use of sensors is, is very widespread in those industries. Uh, uh, we, we don't deal with-- directly with the financial world. 18:45 We, we tend to focus on, uh, the engineering, manufacturing, uh, and operational world. So we-- that's what we tend to talk about when we talk infrastructure. 18:57 So but how then, in this digital transformation, will it change then looking at things like the supply chain? Because some of the things you're talking about are greatly influenced by the supply chain. Right. 19:10 So the supply chain is, is a really good example because, um, even the most sophisticated supply chains today, which are heavily computerized, do not really make good use of IoT at the moment. 19:23 So there's a huge potential to do that. 19:26 As, um, sensors and RFID tags and other devices are, are placed on the products which are, are-- or the subcomponents which are used in the supply chain, there's tremendous capability for providing line of sight and- 19:45 Hey, Alan. Alan, could, could you say that again? I'm not sure I heard that response. Could you repeat yourself? Sure. Um, [clears throat] as, um, 19:54 the IoT provides the capability to put sensors on products and subcomponents in the supply chain, 20:04 um, this means that you can get much greater line of sight, uh, and visibility of what's happening, uh, throughout the supply chain than is used today. Um, so, 20:18 uh, uh, companies in that field will be able to, um, know exactly where every component is within the supply chain and where it, where it's come from and where it's going to. 20:31 And with blockchain, which will typically work alongside that, it can carry its, uh, history with it, and it can also-- blockchain also allows it to the, the components to transfer ownership from, uh, company to company, uh, securely as they go through the pla-- supply chain. 20:52 So I think there'll be, uh, real changes in that area. So looking ahead, you know, talk a little bit about how you see AI and machine learning changing how businesses are gonna fit into all of this. Right. 21:10 Well, having, uh, got all this data, so, uh, yeah, I was at the SAP conference in Barcelona last week, and they talk a lot about AI with Leonardo and their other, um, uh, related applications. And 21:28 they, uh, uh... A good example is, um, where you've got, uh, time series data, i.e., uh, a, a long series of recordings of, for example, temperature or vibration, 21:44 uh, and a- another information from a machine tool or, or from a, uh, a compressor. A Kaiser compressor is one example that they gave. 21:54 Um, by using AI, uh, and just throwing all that data at it, in some cases they, they gave-- they had over years' data, um, which was about four terabytes, and they analyzed that data, and they were able to accurately predict when, uh, a failure would occur in a pump or a, uh, uh, or a compressor or whatever. 22:20 And the, the reason for that is because before a failure, there's often patterns of, uh, vibration or temperature changes which typically occur just before the, uh, failure occurs. 22:35 And they can be picked up by analyzing the data with, uh, AI, uh, machine learning tools. And, and looking at this, do you see a lot of this? 22:49 'Cause what you're talking about that and looking at manufacturing and going forward, do you see manufacturers seeing that this is all going to be something that they're gonna be able to use and effectively maximize to the best of when they're looking at servicing their customers, using it in a whole new way [beep] with algorithms and being able to get the most out of their operations and making the transition little bit at a time and making greater leaps forward? 23:20 Uh, [clears throat] absolutely. 23:22 And it'll probably lead to an even more fundamental change that's already beginning to happen, which is servitization, um, where because they can monitor and control and predict, uh, the failures of their products, uh, whether it's a compressor or a vehicle or a turbine, uh, better, um, the, it's in the manufacturer's interest to keep ownership of that product and to effectively rent it out because they can, uh, if then by renting it out in, in, in the servitization model, 24:01 uh, the savings that they make through their clever technology will turn into profit for them. So it-- there's two things happening at the same time. 24:11 Uh, the additional, uh, machine learning and analytics, which is being applied to the, um, uh, to the productAnd the servitization, which is a different model for, uh, providing the product to the markets. 24:27 Well, I have to tell you, Alan, it's been great having you on the show. Alan Griffiths, principal ana-analyst at Kanbashi. 24:33 Can you give us your URL so our listeners can go up and learn more about some of the reports and things that you guys have coming? Sure. It's, uh, www.kanbashi.com. All right. 24:46 Well, Alan, thank you so much for being with us. We appreciate your time today. Thank you, Peggy. It was a pleasure. All right, listeners, we're out of time, but stick around. 24:56 We've got more to come right here on The Peggy Smedley Show. In the meantime, we want you to check out our website, which is www.connectedworld.com, or you can check out any past archives at thepeggysmedleyshow.com. 25:09 And we've been putting up some great new content this week. 25:11 And as I mentioned, if you haven't had a chance to check it out, please go up to Connected World, because I know we, as we put up all the new content, I surely don't want you to miss it or any of the past shows. 25:21 As always, we want you to share your thoughts with me on Twitter, and you can tweet at me @connectedwmag or always, you know, put something up on LinkedIn. 25:30 I'd love to hear your thoughts and share with us up there because there's a lot going on in the space right now. It's a perfect time. 25:36 So this is The Peggy Smedley Show, the podcasting voice of IoT and relevant technology. Remember, with great technology comes great responsibility. 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