The age of the dinosaurs came to an abrupt end with the arrival of a large meteor. As the huge reptiles died off, the quicker, nimbler creatures adapted and rose up. Today’s digital transformation of business and government is having a similar effect, making short work of organizations that do not evolve rapidly. CEOs must quickly define where their organizations can compete for success and lead them on that journey. If they can’t — or won’t — change, they risk fading away like the dinosaurs.
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Transformation at the speed of digital
If digital transformation is the outcome of the digital revolution, leaders must position their companies to ride this digital tidal wave. Operations technology (OT) isn’t going away, but a rise in the convergence of information technology (IT) and OT infrastructures means that evolution is necessary to survival.
Leading analyst group IDC predicted that IoT will be a $7 trillion industry by 2020. This is a tremendous growth trajectory with significant implications. According to a recent study, 40% of companies at the top of their industries will be replaced in the next ten years. Yet, the same survey found that 45% of respondents do not think digital disruption is worthy of attention from their organization’s board of directors.
Digitization presents both danger and opportunity. No industry is immune.
Netflix has been able to capture the online streaming content subscription market as traditional brick-and-mortar video rental stores are rarely seen today. So would you rather be a Netflix or a traditional video rental store? It is important for industry leaders to plan for digital transformation proactively instead of reactively. Nearly 30% of businesses worldwide have already begun limited IoT deployments, according to Strategy Analytics’ 2015 IoT Deployment and Usage Trends Survey. Organizations cannot wait for change to overtake them. If they are not prepared and have not set up the infrastructure to adapt quickly, change could sweep them away.
IoT opens up new worlds of possibilities because organizations now can extract data from network connected devices and sensors — data that was never available before. Insights from this data can add enormous value to organizations, but they must reshape their current infrastructures in order to use their data effectively. And they must hire and train the right people to bring their digital change strategies to fruition.
In the IoT age, part of the infrastructure reshaping means that siloes cannot remain. IT and OT were once separate and did not often communicate with each other. Now they must come together. It’s a huge and critical step in the digital journey.
However, it’s easier said than done. Most organizations don’t know how to merge IT and OT. At this point in the evolution in the industry, many IT and OT professionals do not fully grasp converged IoT networking. Industrial IoT security adds another challenge, as do endpoint data management and analytics. And it remains to be seen how all of the preceding will add value to their organizations. How will it lead to new business models? Or new services and revenue sources?
Both new talent and the right training to update the skills of existing staff will be required to find answers to these questions. The World Bank predicts that over the next decade, there will be 2 million unfilled information and communication technology-related jobs worldwide. There will be a global need to train 220,000 new control engineers every year for manufacturing plant operations alone.
The IT department is better positioned to take the lead in the digital journey due to its historic role of information processing. Data from IoT-connected devices is just one more information stream to parse, interpret and monetize. But IT must collaborate with OT during the transition.
Here’s a real-world example to underscore the need for this collaboration. A steam valve system that controls water flow through a cooling apparatus has and will continue to operate within the OT domain. However, manual intervention had been required to take its readings and make decisions. Now, in an IoT environment, the data is collected, analyzed and acted upon via the interconnected network and IT software that monitors all of the valve systems’ parameters. Therefore, data generated from these OT managed devices and sensors is delivered across the IT system to take critical, real-time action to maintain or drive to specific parameters.
Benefits and challenges of the IoT
In the long run, IoT data analysis leads to new revenue opportunities, which all departments will benefit from. What organizations must avoid is a scenario where their IT and OT departments never talk to each other; each working in siloes. If both departments build networks that exclude the involvement of the other, the organization can incur unnecessary costs and reduced efficiency.
It doesn’t have to be this way, and for companies that want to survive, it can’t. In a major cultural shift, OT executives must align with current IT initiatives in addition to breaking out of existing silos. It is a tall order because OT executives are facing a major talent gap, in addition to a lack of process or any industry-recognized talent framework for IoT job roles and related trainings and credentials. Insufficient staffing and lack of expertise are the top-cited barriers for organizations currently looking to implement and benefit from IoT, according to research from Gartner.
A successful journey arises from two factors.
Leadership is the first one. Digital champions need to be installed in every organization that wants to thrive. These leaders will have a firm IoT vision and the enthusiasm to motivate employees to make transformational changes in systems and processes. Companies that take bold actions to align their value proposition, capabilities, products and services together view their culture as their greatest asset.
The second factor is current skills. Time after time, CEOs report that key skills are a top concern. Both IoT and OT require digital expertise, and training staff for this is essential for organizations to avoid the proverbial meteor and thrive.
The old-school silo approach is the fastest approach to extinction these days. To avoid the fate of the dinosaurs, organizations must embrace digital transformation in a way that coordinates IoT with the OT and IT departments.
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