In this episode of the Futurum Tech Webcast – Interview Series, our conversation today centers on the integration of two worlds in manufacturing environments to achieve digitalization and Industry 4.0.
In many manufacturing environments there is the physical world, or OT systems, composed of machines and industrial equipment. Then there is the digital world, or IT systems, composed of servers, networking, and other apps to run and process data. Thanks to advances in technology, we are seeing a convergence of these two worlds, but there are still a number of challenges that organizations must overcome. In this episode, I’m joined by Silvio Rasek, Head of Marketing, Factory Automation and Smart Data, Siemens, to discuss common challenges we are seeing with the IT/OT convergence and what Siemens is doing to help organizations overcome these roadblocks and find success.
Our conversation centered on the following:
- Current trends that are impacting today’s production environment
- The opportunities that come with connecting the shop floor to IT systems
- Top barriers to implementing smart factories and complete IT/OT convergence
- How organizations can overcome these barriers
- An overview of the Siemens MindSphere and Siemens Xcelerator open digital business platform that will support the IT/OT convergence
This was a great conversation and one you don’t want to miss.
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Daniel Newman: Hey, everyone. Welcome back to another episode of the Futurum Tech webcast. I’m your host today, Daniel Newman, founding partner, principal analyst at Futurum Research. Excited about today’s conversation we’re going to have. We’ll be talking to Siemens about what’s going on with IT/OT convergence and learning a little bit more about the company’s Accelerator platform. Very important topic. And by the way, a topic that I’ve been focused on for a number of years. We have seen this convergence taking place. We’ve seen a lot of progress made. But we’re also seeing a number of challenges in terms of seeing all companies achieving what’s possible as technology, data, AI and other big secular trends find their way to the edge and to industrial applications. And that’s why I’m really excited to have Silvio Rasek here with me. Silvio, welcome to the show. Tell everybody a little bit about yourself and your role at Siemens.
Silvio Rasek: Thanks, Daniel, for the kind introduction. Yeah. And I’m really happy to share thoughts with you. I’m basically now 15 years, or over 15 years with Siemens. I have done different business units, starting at sensors, crossing over to controller who’s steering the processes through edge and cloud. So I’ve seen quite a vast part of our value chain or the difference we are making in automation. And yeah, I’m currently heading our marketing for IT as well in our digital industry’s factory automation.
Daniel Newman: That’s big role working in within a big organization, Silvio, and I’m really excited to have this conversation. Over the last several years, our firm, Futurum, we’ve done a number of research studies on this exact topic, the IT/OT convergence. I remember one we did a few years back. Hoping you’re going to help me find that there’s been some change, because I remember that there was a bit of a headbutt that was going on between IT and OT. I remember the data that we came away with was that these groups are not working together as well as they need to be, that projects are stalling out, that there’s a lot of finger pointing. And that there is a huge opportunity for companies to get more out of their data and out of their technologies. But ownership was a challenge. Leadership was a challenge. And then of course, awareness of solutions has been a problem. So let me start with you, because like I said, this is where we were, but I want to talk about where we are. What are some of the current trends that you’re seeing in this particular arena of IT-OT convergence?
Silvio Rasek: Yeah. Honestly, saying I see things really moving. And not moving Siemens internally, but also see with our customers. So basically there’s much more collaboration between those formally different parties, IT/OT, much more thriving to get things done together rather than securing their current positions. And that’s great. That’s great. I see that change happening. And some things we’ve done earlier, honestly, I honestly must say, I believe they were maybe ahead of time. So you always have to find the maturity in the market with your customer and with yourself. So it’s not so easy to match it. And if you asked for the trends, the trends that are really enforcing that change are from my point of view, individualization. It might sound commodity, but it’s not so easy for companies to manage. For example, for each season to have different packagings, if you talk about a chocolate or something like this.
Or a common factory who has to cope with more and more variants and a much accelerated speed of innovation. And this requires new ways of doing things. And the second big trend or mega trend from my perspective is sustainability. So a couple of years ago when we talked about sustainability it was rather niche. But as the society, and I think us as well are changing, we really take it seriously. And we are holding also the manufacturing companies responsible in driving sustainable production, and also giving me transparency in how that product has been produced which footprint it has. So this is really something, these are the two big things that are happening in the market. By the way, I would like to mention that for sure quality, safety as well and the price are non-negotiables as well. So it’s not that the new trends are coming and others are completely disappearing. So that’s a base requirement, what I call non-negotiables.
Daniel Newman: Yeah. You hit on a lot of things there. There is the fundamental technologies and the integrations, which is sort of where you started there. It is, are those two groups working more strategically together? And I mentioned that older survey. And like I said, I think even just a couple years ago there were still some challenges. But it sounds to me like what you’re seeing through the innovation, the evolution, availability and new technologies being offered, you’re seeing more coordination. And that’s a good indicator that you were going to be able to move forward. I also really like though, Silvio, that you mentioned something like sustainability. Obviously heavy industrial manufacturing and some of these areas where industry 4.0 and IT/OT convergence is going to be so important are also some of the biggest culprits as it comes to greenhouse gases, as it comes to carbon emissions.
And those companies are all under a significant amount of pressure to figure out how do we deal with this? How do we utilize technology, data, systems to understand everything from sourcing materials that might be more sustainable to implementing technologies in our factories that lower emissions and improve the carbon footprints of these organizations? So like I said, sounds like at the fundamental technology level we’re progressing. And it also sounds like on some of these seculars that are becoming increasingly important to being a good corporate citizen, we are progressing. So I’d love to kind of have you put this in context though. We’ve heard about the industry 4.0 for a long time. I mean, gosh, I feel like I’ve been going to events and attending webinars for decades plus now using that terminology. So put that in context for me. What are some of the big opportunities that you’re really focused on right now in this particular space?
Silvio Rasek: The most important thing, actually I would like to elaborate shortly about IOT in that context. You might know this famous statement from Jeffrey Moore saying without big data, you are blind and deaf in the middle of a freeway. And if you just imagine this picture, the truth is we are still not exploiting the data to generate insights. And just to connect it to what you said earlier, and happy that it resonated to you to emphasize sustainability here, we have seen so many projects where we at first talked about saving money about product activity, about profitability in the end, but it was so often about saving energy, about saving waste of water, about reducing use of chemicals. So in the end, how did we do it? We leveraged data we did not use before. And mostly it was already there.
So in automation, if you look today in a shop floor and in a manufacturing site, there’s a massive amount of things of equipment, of software, and they are processing data and they are generating an even bigger amount of data. And to me, the purpose, and it’s not only a theory, it’s also used in real life of industrial IOT is to enable a non silo data flow and to flexibly deploy analytics, AI machine learning in the shop floor, but also in IT.
Daniel Newman: Yeah. I think that’s really important. And like I said, the collaboration is probably one of the most challenging things that companies have had to overcome, because those two groups, the IT and OT, the shop floor, and the back office and the integrations were historically demarcated fairly in a wall. There was a wall between these two things. OT did their thing and IT did their thing, and there wasn’t much coordination. So as I mentioned, kind of that breaking down that wall has been the big hurdle, but it sounds like the wall is coming down. But I’m still not certain. I know you’re saying there’s a lot of progress being made, Silvio, but I’m still not certain that we’re there yet. I think companies all seem to understand this. They all seem to be aware that, hey, we need to leverage the data. Like you said, what Jeffrey Moore said, we can’t be in the middle of the freeway.
And I would actually sort of even take what Jeffrey said one step further, because it’s not just big data. It’s the analytics, it’s the intelligence and the insight. So big data is what you need to create that. And then of course you got to put that into a system of record or an unstructured database, and then you need to extract insights. You can get more visibility. But the term rational drowning might be the right term right here. It’s that companies are sitting there. They know they need to do more, but they’re not doing enough, because even though all this is available, there’s tons of surveys and data out there, Silvio, that actually says companies that perform, operate and utilize in their analytics are outperforming the rest. But where are we? Are the companies 30% of the way to their IT?OT convergence? Are they 50? Are they 70? In your experience from what you’re looking at, where are we and how many companies are rationally drowning versus how many are really getting ahead of the curve?
Silvio Rasek: That’s a great question. And I needed to laugh shortly because I thought about this earlier. And to give you an example, we are using our tool chain of course as well for our own manufacturing. We are big manufacturing company as well, especially electronics manufacturing. And we have that great factory in Amberg, which is in Southern Germany, in Bavaria. And all couple of years, we get really highly decorated prices for being a smart factory, for being a digital factory, for being an industry fall out zero factory. However, honestly, I would say we cannot claim to be the smart factory. So if you look a bit back, and I think that’s necessary if you talk about digitalization, smart factories and so on, digitalization has started much earlier, but we call it differently. So our automation business, from my perspective, digitalization, they are started with the introduction of sematic.
And it went even beyond with TIA, totally integrated automation. And this already made factories more digital and smarter. But today we have much more than that to make factories smart. So also with a much larger scope to optimize along the value chain. So in the end, our clear ambition and goal is to help customers to become a digital enterprise. But honestly, I would not dare to give you a percentage of, for example, our Amberg factory, because otherwise our head of manufacturing might get angry with me because it’s too low or too high. So I think it’s somehow a moving target, but it’s a positive way because it’s showing the progress of opportunities, and the opportunities are huge.
This is what we definitely know from each single small proof of value we are doing through leveraging data that is already there and having a tremendous positive impact. And the first step is the smallest one in terms of outcomes, because the value usually grows exponentially when you tear down even more walls along your value chain.
Daniel Newman: Yeah. I think that’s probably still though, Silvio, going to be a big challenge. I look over the next few years and I think this is really fundamental digital transformation at its best, meaning the IT/OT convergence and the challenges that it actually creates are very similar to the adoption, and implementation and success of almost any technology project in any organization. I think companies that have the strongest cultures are able to overcome the hurdles and the barriers, whether that’s a security barriers, whether that’s technology compatibility, whether that’s expertise, or whether that’s just the relationships that have to exist between the two groups to say, hey, we’re going to put our egos aside. We’re going to put our issues aside and we’re going to figure out how to get this done, because that’s what’s important to the customer. That’s what’s important to our operations.
I mean, really the rational drowning in my opinion is the challenge of every technology project in every company. I think this just creates an even bigger gap because these are two groups that often have, what I would call a separation of powers that has not been … This is an unknown and has never happened before. So kind of with that in mind, what is the impact when these things don’t go well together? If the companies cannot make this happen, what are you seeing the snowball effect on the ongoing effect of an organization and its long term success?
Silvio Rasek: Basically from my perspective, you are quickly out of the game, because here we talk about concrete proof of value. We see it in many different of our customer sites, applying those technologies, driving IT/OT convergence. And if you don’t get started now, if you don’t do the first POVs, if you don’t start to tackle the first challenges, you will miss out this huge potential for data driven decision making, for applying analytics. For example, machine learning or AI, it’s a big topic. Everyone talks about it. How are you going to apply this properly if you don’t optimize the system as a whole and you just look in those different silos? So to give another example, you have seen two years or three years ago, we would not have thought that our supply chains could all the sudden disrupt in a way how it has happened today.
So to really react properly to this without only task forces and manual stuff you try to adjust. And also Siemens is struggling, of course, and we have professional teams working on this. But we would benefit so much from connecting all those systems and getting this transparency, and we could serve our customers much better and solve those issues really on a new level. So for me, it’s not a question to get started or to really do it. It’s only the question about how bold you are starting the journey on doing IT/OT convergence.
Daniel Newman: Yeah, it does take a little bit of a boldness in general to see projects succeed. It seems like something, Silvio, you guys have a lot of success with. I mean, Siemens is a world renowned organization as it comes to industrial. And a leader in technology too. And sometimes, like I said, on the IT side, maybe less known than on the OT side. But as these two things come together, the company has to become more and more known across the board. The investments in MindSphere, digital software, you guys really are a core holding and asset to almost … I mean, I don’t want to say, you can tell me how many customers you have, but it has to be hundreds of thousands probably of customers worldwide, not just no Siemens. And then of course, your broader portfolio continues to expand because the company continues to disrupt.
But you’re disrupting a space that sometimes people say is maybe the older technologies, these industrial companies. The constant push is how do we get them to come faster into the modern era? So what do you see? What is Siemens recommending? What is the new way to bring companies into the next generation and get the OT teams, IT teams collaborating? By the way, one’s not right and one’s not wrong. We need them to both be working with the same goal together to bring all the technology up to speed, like I said, to serve the customer, to serve the supply chain, to serve the industry, and of course, to serve the employees.
Silvio Rasek: That’s a great question as well. And honestly, a difficult one, because I do not dare to say I know everything and there’s the one single blueprint for everything. But there are patterns. There’s very clear patterns. And before I come to trying to give an answer to that question, to give an example on the challenges our customers are seeing. So one of the big ones is this brownfield challenge. And it’s about having existing equipment that you are highly dependent on, sometimes even with a safety certification. You have legacy applications, you have hardware. And the approach here is not to look at solving everything at once, rather considering it a journey and a stepwise approach.
So I think this is very important. You don’t have to look at it like an open heart surgery, rather look at it like a transformation journey that really stepwise is being executed and exponentially grows in value, extending the integration of the different systems.
And so what I would like to point out here, let’s say on the non-tech level, from my perspective, it’s not a project, it’s rather mindset. So what you need is management commitment. You need of course budget, you need skilled people. But you don’t need to do it all on your own. So also here, you don’t need to be scared if customers say, well, I don’t have that integration knowhow. We bring in Siemens. We bring in partners. So it depends on where to have the knowhow, but it’s a team effort in the end. So again, starting stepwise with concrete proof of value projects along an overall journey. And if you look at it a bit more technically, then it is first very, very important to have the connectivity. The connectivity to the brownfield to integrate your production equipment into a coherent data model, which is kind of also already a second step, but beyond the connectivity itself.
And next you need to standardize the interfaces between OT and IT. So standardization is key here. You can of course cope with, and we can also cope with diverse environments, but the customization effort and on the long run, the transparency you get along the whole chain, it’s limited if you don’t go for standardization. And finally, let’s say the technical third aspect, you need to establish tools and systems for data analytics and evaluation, and this both locally and on the enterprise level.
Daniel Newman: Yeah. It’s always great when you break things down into really digestible steps. And I think as I’m reading into this, I noticed Siemens putting together this accelerator. The open digital business platform accelerator, I think just launched right before July, end of June. Actually on my 20th wedding anniversary. I know you guys wanted to launch that on my anniversary. Thank you for doing that. Now everyone also knows my anniversary date. But talk a little bit about that, because it sounds to me as I was kind of reading that this is a little bit of a combination of A, under better understanding the market dynamics and what’s going on, B, clearly giving visibility to your customers and prospects, what your technologies could potentially offer them. Some of a framework for how they can implement this. Why’d you do this? What’s available? And why should customers and listeners that maybe are in this particular space check this out?
Silvio Rasek: Yeah. For customers and for ourselves, and I would even say for the industry, this is really a next big thing. So Siemens Accelerator is something the whole of Siemens is fully committed. So it’s not only in my business unit. It’s not only in my business. So we are really embracing this change. So Siemens Accelerator is here to boost and accelerate digital transformation. And the key values we want to deliver is increasing ease of use. We want to really be more open than we have been before. And we want to do this in an integrated way. So summarizing, easy, open integrated. And this is really a big change. So our IOT offerings, MindSphere and Industrial Edge, are of course key elements of this. Let me shortly touch those two.
Industrial Edge is here to enable our customers not only to connect assets and to globally manage devices, but also to enable a flexible deployment of apps, let it be analytics or machine learning on site in the shop floor, close to the machine where sometimes really big data happens and needs to be processed very, very quickly to react on what is going on there, but still globally managed. And MindSphere, MindSphere brings in IT services as a service that are specifically built for industry. So really to the need of manufacturing companies with the possibility to flexibly combine capabilities. And this includes, of course, also analytics and integration with enterprise systems. So as I said earlier, Accelerator includes much more than that. So I would like to point out one thing that actually I could have mentioned earlier, I have somehow touched it already, Accelerator, Siemens Accelerator includes third party offerings and it includes partners, and we embrace to onboard even more partners.
And this might be a current competitor as well. So in the end, I am fully convinced that we can solve today’s challenges, and also this IT/OT conversion, what, from my perspective, we are really driving in further with an IT/OT fusion. And this is what we are capable of doing. We can also only drive this together with partners and with our customers. So it’s not a Siemens show alone. This change is only happening together.
Daniel Newman: Absolutely. And I love that you pointed out the fact that you’re thinking ecosystem. You’re thinking additional partners. You’re not trying to say we’re the one stop to solve every problem. You’re kind of trying to say, we want to be a centerpiece. We want to be a core partner in enabling you to find all the technologies that are required to make this leap. Silvio, I think that’s really important. For everybody out there, I’m going to go ahead and put some links in the show notes so hopefully you can go out and check out the Accelerator. It seems like there’s a lot to learn there. And also for those that are in various stages of this IT/OT migration, integration and transformation, things that end in ation, it looks like the Accelerator is a great, it just looks like a great learning place. Like I said, I love the fact that you guys are trying to be an enabler. And that’s something I think the market really needs, because as much as we’ve seen progress, going back to what we sort of talked about earlier about rational drowning, I think a lot of companies are still struggling.
And so hopefully they look at this and say, here’s some great resources that can help you on your journey. Speed it up. And of course identifying the right partners to work with. Silvio Rasek, I want to thank you so much for joining me here on the Futurum Tech webcast. Great show. Great conversation. This is not over. And that’s one thing I’m going to tell you, this conversation, I think in two years we’re still going to be having it, but hopefully we’re a lot further along.
Silvio Rasek: Sure. Thank you very much for having me.
Daniel Newman: All right, everybody. Go ahead, hit that subscribe button and definitely check out the show notes, check out the Accelerator and learn more about what Siemens, and MindSphere and Siemens digital software are up to. We appreciate you tuning in. We appreciate all of our listeners here on the Futurum Tech Webcast. Thank you, Siemens, for your partnership and joining us here on the show. But I’ve got to say goodbye now, so see you all later.
Silvio Rasek: Bye. See you.
Daniel Newman is the Principal Analyst of Futurum Research and the CEO of Broadsuite Media Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. Read Full Bio