The Connected Future: Industry 4.0

Simon Kennedy

Chief Operating Officer

9 August 2018

Daryl Willis, Google’s VP Oil, Gas & Energy, was recently quoted in the Wall Street Journal stating, “Companies in the oil and gas industry will either be a catalyst for change or they will be a casualty of change”. Adoption of digital tech is lagging badly in heavy industry, with significant potential upside for improved business performance and competitive advantage. First movers are starting to drive material business benefits from their digital investment, with six key digital themes impacting and shaping the ongoing transformation. These digital themes are enablers—for today’s workforce to work faster and better; to drive operational efficiencies and to ensure on-site safety at an unprecedented level.

New digitalisation innovations in the oil and gas segment alone could add over USD 1.6 trillion in value to the sector, according to a 2017 World Economic Forum report. Meanwhile, the chemicals segment could grow its market cap value by USD 4.4 billion.

Theme #1: Industry 4.0/X.0 and plant ecosystems

The first theme is one that encompasses aspects of the other five, and where a number of longer-running technology trends are starting to intersect: the concept of the digital plant and digital plant ecosystems. These are typically clustered under the terms “Industry 4.0 or Industry X.0”.  

We are all aware that plants are going more and more digital, with trends like the Internet of Things, big data, mobile, augmented reality and the cloud bringing huge benefits to the business in terms of operational efficiency and reduction in risk.

In the past, companies and technology have been focused on the hardware/IOT side of digitalisation, but the digital enablement of people and processes will drive as much, if not more value. Companies that understand and act on this will thrive and drive significant competitive advantage. Those slow on the adoption curve will become those ‘casualties of change’.

 Theme #2: “Everything-as-a-service”

You will notice the absence of the cloud as a theme because just as cloud solutions are truly beginning to scale in heavy industry, edge computing is changing the game again—and with more and more smart devices in the Internet of Things, computing power is shifting towards the edge, with, for example, Hewlett-Packard and Cisco Systems making huge bets in this space.

However, not just Software-as-a-Service, but also Infrastructure- and Platforms-as-a-Service are becoming increasingly important, something that we believe is only going to become more so in the coming years. We are beginning to see a robust uptake of the service model in heavy industry, owed in large part to the flexibility that fully service-enabled software platforms offer.

Theme #3: Consumer tech driving the industrial experience

Probably the biggest hallmark of consumer tech trends is the exceptional quality of consumer technology and its speed of development. Industrial businesses have no choice but to adapt to this or fall by the wayside. It also means that business processes and technology are constantly playing catch-up to advances in consumer tech. This is something that I believe will only accelerate in the coming years.

Yet still, the value does not come from high-tech gimmicks and innovation for the sake of innovation but changing ways of working to take advantage of what is already there—the pragmatic use of existing technology to drive material business value—both for the operators of the plant and for the increasingly younger and tech-enabled generation working there.

Heavy industry is faced with the fact that the new generation of workers are digital natives who expect the same kind of technology, tooling and user experience that they have in their personal lives in their work environment. And if they don’t have these tools available, they will look for employment elsewhere.

Consumer tech trends can leak into the business by driving technological uptake and change from customer-facing applications, then to the office and finally back into the plants at the heart of the business.

Theme #4: Demise of the monolith and single-use apps 

This is perhaps the most contentious trend that I have observed, but it is one for which there is a lot of evidence for at both at a business and application level. At the business level, monolithic enterprise ERP is being increasing replaced by smaller, faster and service-based best-of-breed systems and emerging platforms—Workday and Salesforce are classic examples.

This is also happening at application level where monolithic applications are increasingly being replaced with componentised and modular microservices, coupled with each other, and external applications, through clean APIs.

At the same time, platforms are rising, and very niche single-application vendors are being swept off the field.

 Theme #5: Data everywhere

In a meeting with Scott Wahl, Shell’s upstream CIO earlier this year, he called data “the new oil”. “Big data” is a very overused term, and the default response to this trend is using machine learning to sift through mountains of data. For me the critical area of focus, and where industry is really lagging, is putting actionable data in the hands of front-line workers and operational staff who really need it, when they need it, and in a way that is most relevant to their context.

This not just improves their working experience, but also drives measurable business results through efficiency and effectiveness gains.

Theme #6: Blurring of the digital and physical worlds

As technology advances, digital and physical worlds are starting to blur. We not only see this in our personal lives with social media but also in work environments with tools like telepresence, shared digital workspaces, etc.

Key areas where the digital-physical interaction impacts your business and ours include:

–         Digital twins, for assessing remote site operations from your central office

–         Augmented reality gaining traction over virtual reality

–         Scenario modelling and simulations to understand future state and risk

The Bottom Line

With digital enablement of your plants as a core business priority, you can use the power of digital to integrate the opportunities of tomorrow into your operations and dramatically enhance your business results. Taking a focused, business-driven approach will allow you to take your business to greater heights than ever before, improving efficiency, empowering workers and driving new innovations.

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