THE CASE FOR CONNECTED MANUFACTURING

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1 THE CASE FOR CONNECTED MANUFACTURING TABLE OF CONTENTS 1 Executive overview 2 A state of emerging opportunities 3 The infrastructure as-is and the infrastructure to-be 3 The transformational challenge for manufacturing CIOs 4 An approach to overcoming these transformational challenges 5 Summary Executive overview Manufacturing exists in a state of constant pressure: to optimize operations and supply chains, to turn IT into a digital revenue generator and to deliver in some new way something that will wow customers. The problem for many manufacturing CIOs is that they have already done all the obvious things to achieve the improvements and optimizations they seek. Today, they have any number of highly tuned processes and systems to produce products efficiently. Tuning them further will likely yield only incremental benefits. But every so often, something new appears something with the power to change an industry forever. Past examples include computer-aided design, plant automation and robotics. Today, it s the Internet of Things (IoT), which is disrupting the status quo by enabling manufacturers to: Optimize production and improve product quality Make seamless management of remote assets a reality Drive new business models, such as usage-based pricing and digital revenue channels But taking full advantage of these opportunities involves digital transformation on a grand scale, and none of the major IoT platform vendors are positioned to help manufacturers achieve these outcomes. For all their assertions and product releases, no major IT vendor can yet provide the full range of products, services and support that a large manufacturing organization needs to realize the potential offered by the IoT. WHITE PAPER

2 Naturally, this is not stopping any manufacturing enterprise from trying to move forward. Rather than wait for the platform vendors to catch up, many CIOs are looking at ways to build their own IoT platforms and shape their own IoT visions. The overarching question, though, is: How to do this? Not just without ripping and replacing a generation s worth of investments but how to do it at all in the absence of a comprehensive solution framework from the vendors you ve come to rely upon. This Software AG white paper will explore these questions and provide a framework for enabling forward motion. A state of emerging opportunities Manufacturers the world over continue to seek opportunities to optimize production and improve product quality, to make seamless management of remote assets a reality and to drive new business models, such as usage-based pricing. While some of these efforts are not wholly new, the pressures driving these efforts have evolved. Competitors and supply chains have grown increasingly global. Customer demands change more frequently and more rapidly. And technology? Technology enables a far greater degree of connectedness between products, systems and things as in the IoT than ever before. Consider some of the opportunities accessible to an enterprise whose infrastructure reaches into the IoT: Connected manufacturing The IoT could be used to optimize both the supply chain and the production of goods within a system of integrated manufacturing facilities. This would improve the supply chain as well as the reliability and performance of both the manufacturing processes and the products built. Three examples suffice to illustrate the potential: Condition-based predictive maintenance: The manufacturer leverages sensors on production machinery to predict equipment maintenance needs and consumables usage Wait time and testing elimination: By continuously analyzing piece positions, process requirements and production needs, a manufacturer can reduce wait times Replenishment automation and optimization: Ongoing analysis of production line sensor signals (both local and through the IoT) drives real-time replenishment and automated synchronization of inbound products Connected field services Inherent in these opportunities for connected manufacturing is the idea that remote monitoring of internal assets becomes more viable as a result of the IoT. This same idea can be expanded, however, to include the products your customers are using. The IoT enables you to monitor and manage your products in your customer s environments as easily as the products and systems on your factory floor. You can proactively identify issues with products in many cases, before those problems manifest themselves as interruptions to your customers which leads to increased product performance levels for your customers. Again, three examples suffice to illustrate the potential: Condition-based predictive maintenance: A manufacturer can leverage IoT sensors on equipment installed on a customer s premises to predict equipment maintenance needs and predict consumables usage Increase first-call fix rate: Field service personnel can leverage augmented reality tools and the IoT to facilitate faster, more accurate repairs Warranty and allocation assurance: Manufacturers can use the IoT to validate warranty transactions and support warranty decisions for equipment at customer locations 2

3 These use cases can be implemented using tools and technologies available today. Or, they could be implemented if your manufacturing infrastructure was more agile and open to interacting with diverse elements within the IoT. The infrastructure as-is and the infrastructure to-be CIOs live in a world of constant pressure: to optimize operations and supply chains, to turn IT into a digital revenue generator, and to deliver in some new way something that will wow customers. Customers increasingly want your products to interact with other systems and services they re using, and some of the systems and services with which they want your products to interact may not even have existed when your products were first envisioned and created. Customers also want higher levels of quality; they want services that extend and enhance the products you manufacture. In many different instances, they want the products you manufacture to be made available on a metered, usage- or outcome-based model. Today, with the connectivity enabled by the IoT, where sensors can track actual product use in the field, such new business models become viable in ways they simply were not a decade ago. If yours is a well-established enterprise, you already have deep investments in a manufacturing infrastructure. Furthermore, that infrastructure probably does a very good job at what it was built to do. It embodies all the experience and expertise that has accrued over the lifespan of your enterprise. Even in a changing world, that continues to be a source of competitive advantage. Yet that existing infrastructure the infrastructure as-is cannot enable you to act in the ways that the world s emerging opportunities require you to act. Too many disconnected operational silos are still present in what needs to be a cohesive and connected operating infrastructure. You may be able to fine-tune individual processes and systems within your as-is infrastructure (though many of those are already operating in a highly optimized manner), but such efforts will only result in siloed services that operate more efficiently. These siloed systems and processes may have been acceptable in an environment in which integration and interaction were less critical, but interaction lies at the heart of these connected manufacturing models that are emerging. You need to be able to interact effectively and efficiently both with other systems and services inside your manufacturing infrastructure as well as with a wide range of systems and services outside your own infrastructure. That calls for a different kind of infrastructure, what we call the infrastructure to-be. So, what s a CIO to do? Ripping and replacing the as-is infrastructure is not an option. That infrastructure still does what it was supposed to do. But neither is it an option to rely on an infrastructure that cannot facilitate participation in the evolving world of connected, IoT-enabled manufacturing. What you need is a way to extend the as-is infrastructure to create the to-be infrastructure that this emerging world requires. 3

4 Plant 1 ERP SRM Purchasing SCV Records Document Production Planning MES SCADA RCM MRO Energy Plant 2 Plant 3 ERP SRM Purchasing SCV Plant 4 ERP SRM Purchasing SCV Records Plant n ERP SRM RCM Purchasing SCV Document Records Production ERP Planning SRM MRO RCM Purchasing SCV Document Records Production Planning Energy MRO RCM Document Records MES Production Planning Energy MRO RCM Document MES Production SCADA Planning Energy MRO MES Multi-Protocol SCADA Energy MES Multi-Protocol SCADA Multi-Protocol SCADA Multi-Protocol Multi-Protocol As-Is and To-Be Infrastructure The transformational challenge for manufacturing CIOs A singular problem becomes apparent when a CIO contemplates transforming the infrastructure as-is into the infrastructure to-be: No technology vendor (mega-vendor or otherwise) offers a complete, integrated IoT platform. Many vendors claim they do but, in reality, none of today s offers are truly complete. This reality forces a difficult choice: Do you wait and hope that one of your preferred vendors develops a complete, reliable IoT platform (ideally with packaged solutions to meet specific business requirements)? How long will that take, and what are the risks of waiting? Moreover, if a single vendor were to offer a complete IoT solution, what type of vendor lock-in or other risk would that introduce? Do you settle for an incomplete solution which may move you incrementally closer to the to-be infrastructure you envision, though not quite close enough to enable you to deliver the services and optimizations that are part of your vision? Or, do you seize the moment and work with new partners to extend your as-is infrastructure with components from diverse vendors, thereby building the complete to-be infrastructure that you envision? Undertaking the construction of your connected manufacturing platform can enable you to avoid settling for less than the solution you envision. You can also avoid locking your organization into a single-vendor solution that may impose constraints or compromise agility. You can benefit from the best of the IoT products and services that are available today (as well as those that become available tomorrow). And, you can more readily deploy cutting-edge technology such as predictive analytics and machine learning, which may be available only from a select subset of vendors. 4

5 Moreover, by undertaking the construction an IoT-enabled infrastructure that can serve the entire enterprise without compromise, you can more readily make the case for support among your C-level peers and minimize (if not prevent outright) the proliferation of the kind of unsanctioned technology investments that frequently occur when groups of users are tired of waiting for sanctioned solutions that may be slow in coming from an approved mega-vendor. Your IoT platform, your way Of course, building out your own IoT-enabled infrastructure comes with its own risks and questions. What do you need to succeed? How will you build, manage and secure this extended infrastructure? An IoT-enabled infrastructure will generate data flows to and from devices that will be both on-site and remote; it will involve on-premises and cloudbased networks, internal and external parties. Do you possess the budget, skillsets and headcount to build and support this? You may not know the answer these questions but that s hardly surprising. The good news is that you don t need to answer them all yourself. This is where the expertise of an experienced IoT platform service provider becomes invaluable. With assistance from such a partner, you can respond to these challenges and succeed in turning your infrastructure as-is into your infrastructure to-be. Who is your ideal transformation partner? Ideally, a platform service provider that is large enough to ensure the delivery of your infrastructure to-be yet small enough to understand the importance of a strategic partnership with your organization. Such a partner should be able to offer at least: An integrated, enterprise-grade IoT platform, complete with edge services designed to extend and evolve with your IoT vision A state-of-the-art IoT architecture that enables the incorporation of components ranging from device connectivity, messaging, integration, streaming analytics, machine learning and predictive analytics to process modeling and IT portfolio management A vendor-agnostic approach that enables it to embrace your technology choices today and tomorrow Additionally, the ideal partner will possess the experience to facilitate your transformation from a preparation and planning perspective. An experienced partner will know what questions to ask and what plans to examine: Is your vision of your infrastructure to-be sufficiently complete? If not, what elements are missing? What products-as-services will appeal to your customers and what new business opportunities do they create? How will you support those opportunities? What optimizations do you expect to achieve though transformation? Have you considered all the components that those optimizations require? Do you have a thorough understanding of your infrastructure as-is? Do you know where the data resides? Where the real work gets done? Do you have sufficient operational acumen and headcount to plan the journey that will move you from today s infrastructure as-is to the infrastructure to-be of tomorrow? Do you understand how your infrastructure to-be will affect individuals and groups within your enterprise? And, have you prepared your teams to embrace and make the most of these changes? This aspect of transformation requires much more than cutting-edge technology; it requires thoughtful preparation, detailed planning and careful communication. Think of this as a right-sizing approach to partner selection. By choosing a partner that possesses these services, skills and characteristics, you can navigate the challenge of multivendor landscapes, ensure independence from any restrictive cloud infrastructures and position your company to expand its IoT platform when and as needed so that you can respond to new opportunities and adopt new technology innovations that will inevitably appear in the future. 5

6 This is where Software AG can play a crucial role. We offer the platform, the expertise and the track record that manufacturing firms need when embarking on a journey to transform themselves into connected manufacturers. Software AG s Digital Business Platform is vendor-agnostic and designed to facilitate the evolution of and to provide day-to-day operational support for your connected infrastructure to-be. Our experience in supporting the transformation of manufacturing companies extends from the automotive industry, to heavy industry, chemical, consumer goods and still further. Moreover, it extends from the factory floor to the C-suite, from the teams focused on planning and procurement to the teams focused on marketing, sales and service. We understand the dynamics of transformation at this scale, and we have a proven track record of putting that understanding into actions that can both accelerate the transformation of the infrastructure and the transformation of attitudes and understandings about why this evolving infrastructure represents a change to be embraced. Summary All the advantages of a connected manufacturing approach accrue: By relying on a connected infrastructure, you can optimize operations and supply chains and deliver tangible improvements on customer service. You can create products more quickly and efficiently, even roll out product-as-a-service offerings that can create whole new revenue streams. Each of these outcomes would be much harder, if not impossible, to achieve in the absence of a connected manufacturing environment. With an IoT platform that integrates all the diverse elements in your enterprise plant machinery, warehousing, logistics, finance and more you create opportunities to optimize your entire manufacturing environment, not just the individual functional areas that you have built up and fine-tuned over time. By enabling information to flow throughout this connected ecosystem, you can reduce human error and waste, link disconnected facilities and supply chain pipelines, facilitate coordination and collaboration among local and remote teams, and much more. These connections enable you to create new services based on a product-as-a-service business model that, in the absence of connectivity, would simply be out of reach. As a leader in delivering connected manufacturing solutions, Software AG offers the world s first Digital Business Platform. We can guide manufacturers in connecting all the elements in an operating infrastructure leading to lower costs and greater insights, greater operating efficiencies and a greater ability to respond, in real time, to changing conditions and changing needs. We can enable the connectivity that can lead to end-toend optimizations yet without requiring that a manufacturer rip and replace its existing investments. Indeed, by enabling new levels of connectivity among the disparate elements of an established infrastructure, we can help a manufacturer capitalize on existing investments and expertise while transforming itself into a force that is poised to compete more effectively in the connected world of the 21 st century. Take the next step Talk to your Software AG representative about creating an IoT platform that meets your unique goals for connected manufacturing. Visit to learn more about us and how our Digital Business Platform drives innovation. ABOUT SOFTWARE AG The digital transformation is changing enterprise IT landscapes from inflexible application silos to modern software platform-driven IT architectures which deliver the openness, speed and agility needed to enable the digital real-time enterprise. Software AG offers the first end-to-end Digital Business Platform, based on open standards, with integration, process management, in-memory data, adaptive application development, real-time analytics and enterprise architecture management as core building blocks. The modular platform allows users to develop the next generation of application systems to build their digital future, today. With over 45 years of customer-centric innovation, Software AG is ranked as a leader in many innovative and digital technology categories. Learn more at Software AG. All rights reserved. Software AG and all Software AG products are either trademarks or registered trademarks of Software AG. Other product and company names mentioned herein may be the trademarks of their respective owners. SAG_The_Case_for_Connected_Manufacturing_WP_6PG_Apr17