Engine or Anchor?
No doubt everyone is aware of well-publicized, data-driven business transformations, for example, in the consumer-based industries— financial, transportation, hotel, entertainment, that have been extensively discussed within the CIO community. I also expect that everyone is aware of the buzz and a building reality of transformation and disruption underlabels that include Internet of Things (IoT), Industrial Internet of Things (IIoT), Robotics and Automation, Driverless Vehicles, Smart Health, Smart Cities, Smart Buildings, Smart Homes, Smart Manufacturing, Industry 4.0 and others. These constitute a next wave of data transformation and disruption that is upon us-when people, data and physical assets integrate and interoperate in new and innovative ways. Our CIO community seems to be in a remarkably unique position to be either an engine or an anchor to these innovations and disruptions. This is especially true as these cyber and physical systems are expressed as enterprise value chains that break down traditional physical, business and IT boundaries.
I had the good fortune to be a co-founder of Smart Manufacturing in the U.S. and see growth and business traction, not only as a CIO, deeply plugged into the Southern California CIO community through the IS Associates, but also as an engineer and researcher/practitioner in AI, machine learning and intelligent data systems. Smart Manufacturing has grown and expanded into a national Department of Energy/Manufacturing USA Institute called the Clean Energy Smart Manufacturing Innovation Institute (CESMII). CESMII involves many practitioners, coalitions and operations and IT providers doing the work that enables and accelerates the adoption of Smart Manufacturing business, technology, workforce and infrastructure practices across the manufacturing industry. 40 years of IT within long held organizational structures, market-driven practices with software, hardware and security, and business practices with data and IP are all being upended. The experiences of considering the integration of IT with operations technologies (OT), e.g. sensors, control systems, operating devices, execution systems and business systems offer some CIO insights into a next wave of “cyber physical enterprises”.
Patterns of IT and OT
There is a pattern of IT that threads through all of the IoT/Smart driven cyber and physical initiatives. Networked data reflects rapidly expanding sensor-based touch points to physical assets and operations throughout an enterprise. Good data is still the foundation to make the right information with the right technology available at the right time in the right form to the right machine and to the right people to take action across an enterprise. Cyber physical systems are the physical assets, sensors, data, computation, communication, actuation, and human components that are co-engineered to interoperate as networked systems to produce new capabilities that are possible only with integration. Connected devices, robots, physical operations, vehicles, energy systems and facilities all form into cyber physical systems in which data are key assets. Platforms are disruptive IT entities, generally built as edge-to-cloud structures and technologies, designed to be ecosystems of capability and innovation for rapidly building and changing entirely new virtualized businesses and operating structures that are centered around data–think Amazon and Uber or even an ATM network as business building IT platforms.
The explosion of connected devices and data is surely a CIO’s nightmare with today’s views of cyber security and enterprise systems
There are also patterns of industry opportunity, innovation and disruption. The starting point is typically increased performance, precision and productivity. But these rapidly give way to much deeper change as data become key assets and engines for shifting to objectives-centered businesses. For example, the health of the patient drives the operation of the hospital or the food industry can sell health and not just food. Data centric processes open the potential for new opportunities derived directly from the data. On-demand business virtualization repositions physical facilities and operations into modular business entities. Compartmentalization gives way to enterprises and data, energy, material, transportation and distribution infrastructures are redistributed into highly managed resources. A smart workforce shifts to knowledge and data management skills, people interact with machines synergistically, automation and productivity drive new jobs, and new jobs are deployed in entirely different ways. The sustained business opportunity rests largely with innovation and how fast operational practice can change from facilities-centered and compartmentalized structures of today to modular enterprise, ecosystem structures for data driven innovation that next generation OT/IT can support. Equally important is how fast, effective and agile next-generation IT can be synced with operational practice to both pull and push new business practice and innovation and economic and performance benefits. As a practical requirement there is a need to accommodate faster IT changes than OT changes.
We don’t want to repeat the 90’s
The CIO role and leadership plays a key role, negatively or positively. I continue to be struck by the remarkable similarities between topics discussed at CIO meetings and conferences and IoT Operations meetings. For example, an on-going IT conference I have been associated with for over a decade is the Gartner Evanta Southern California CIO Executive Summit. The topics for this year’s 2017 conference were strongly in this data disruption space- Building the Disruptive Enterprise, The Platform Effect- Big Data for Digital Transformation, Going all in with the Cloud, Block Chain, IoT ROI Strategy and Executing the Smart Enterprise, Securing the Smart City and A Practical Guide to AI, to name a few. When I interact with MESA (Manufacturing Enterprise Solutions Association) for example, the topics are near parallels in title-Smart manufacturing, IoT, Cyber Security, Analytics, Supply Chain and Block Chain but also Asset Management, Chain of Custody and Life cycle management. What is most striking is that CIOs are by and large not at the MESA meetings and IT Operations folks are not at CIO meetings. Vocabulary differences are more like different languages from different countries and gaps in emphasis are large-almost invariably with a very bright line drawn between the business enterprise and operational enterprise and between the IT and OT infrastructures.
By and large the CIO is not at the table at least in the area of manufacturing cyber physical systems. Yet those companies that have been most successful with Smart Manufacturing have organizationally integrated the CIO and operational IT/ OT functions. New companies have already baked the IT/OT integration into the organization and operating model and don’t necessarily call it a CIO function.
CIOs are in a unique and exceptionally opportunistic position to enable data-driven business innovation but generally speaking need to find ways to approach data, systems and risk in new ways while still managing the present day definition of enterprise data, IT systems, security, risk and liability. There is substantial IT innovation going on in the OT space and there is no better time to join enabling and innovation forces. I dare say this requires embracing new technologies and practices that present new pathways to managing collaborative, interoperable cyber systems and that run counter to our traditional enterprise systems views. This is a leadership move and there is a need to just get started. Fortunately, technologies even today allow us to do better than just trying to deal with more and more connected devices (which quickly becomes impossible) and they allow us to avoid a repeat of the late 90’s in just stitching one-off data systems into unmanageable complexity.
Security is a good place to start
A key place to start is by joining with Operations IT on cyber physical systems security. The explosion of connected devices and data is surelya CIO’s nightmare with today’s views of cyber security and enterprise systems, and can lead to building a CIO anchor to innovation. On the other hand, I continue to argue that CIO’s have critical security expertise that Operations needs to enable the enterprise data engine. There is opportunity to choose the path of an innovation engine when CIOs and Operational leadership address the recognition that the expansion of connected devices throughout an enterprise will be too large to be managed centrally. Cyber physical system enterprises will need to form as recursively connected cyber physical spaces. In a recent study of cyber security among manufacturers, there was considerable concern that the CIO’s responsibility stopped at the network level.
At its roots, the business and performance potential of cyber physical systems boils down to interrelated opportunities for innovation that involve both the IT and OT professionals. Sensors, models and platforms are deployed not only to “see, manage, control, optimize” but to also build data and intelligence significantly better. There is considerable room for innovation within and across existing compartmentalized, vertical physical operations or by just building brand new business platforms. All involve the ability to use data well beyond traditional business and security boundaries to see new opportunities, whatever the objective and to move fast.