INDUSTRIAL CYBERSECURITY IS A BOARD-LEVEL PRIORITY
Attacks on Industrial Infrastructure are rising.
The U.S. CISA issued a joint advisory with its Five Eyes partner agencies in the U.K., Canada, Australia and New Zealand warning “a recently discovered cluster of activity state-sponsored cyber actor, also known as Volt Typhoon. The activity affected networks across U.S. critical infrastructure sectors including in the U.S. territory of Guam, home to home to three American military bases. The likely aim of the operation is to disrupt critical communications infrastructure between the United States and Asia region during future crises, according to Microsoft.
TEN QUESTIONS FOR INDUSTRIAL SOFTWARE COMPANIES TRANSITIONING TO SUBSCRIPTION BUSINESS MODEL
ArcInsight Research Analyst Note
Traditional perpetual software licenses with add-on implementation & consulting services, and the periodic upgrade fees every couple of years was the dominant revenue stream for industrial software companies. Each piece of software sold supported a specific operation often on standalone basis – process monitoring, plant design, production planning, manufacturing execution, product/process simulation, supply chain and many others. Each tied to a certain set of operational business processes and all associated data residing in its own demarcated world. The model worked great for the past several decades generating reasonable profit margins and cash flows for such companies.
New developments in the business environment are driving them to pivot to a new business model supported by an new packaging, pricing, and a new go-to-market and execution strategy – Subscription-based business. The new model promises to open up new growth and profit opportunities for industrial software. They also throw up significant execution challenges for businesses new to the model. Not navigated correctly this risks causing financial dislocations for the company. The paper draws on research into software companies, other sectors (gaming, streaming media, fintech and others) and ArcInsight Research’s own advisory work with clients. We will highlight insights gained from companies that successfully navigated this transition and made it successfully to the other side, and the challenges they managed to overcome.
ArcInsight Research has designed a questionnaire to better understand how industrial software leaders are managing the transition path to a Subscription-Business model. We invite you to take 5-10 minutes of your time and complete. GO TO SURVEY
A View From The Corner Office
THE GROUND REALITY OF INDUSTRIAL DIGITAL TRANSFORMATIONS
Digital Transformations in their fundamental form aim to reduce a reliance on people, maximize the use of digital tools and algorithms to support better decision quality and reconfigure the enterprise to support a new business future state that represents a discontinuity from its past past trajectory. A more tangible message to shareholders talks about transformation initiatives being launched with the dual promise of reducing structural costs, and supercharging growth.
PROFIT FROM THE SOURCE
Rethinking Buyer-Seller Relationship Dynamics
The auto and other industries have been brought to their knees by the scarcity of a tiny, and normally ubiquitous, piece of technology: the semiconductor. Plans for millions of cars have been cancelled and the damage will continue for years to come. How can business leaders prevent this from ever happening again? They need to transform their business by putting suppliers at the center.
Currently, CEOs typically spend a tiny fraction of their time with suppliers. Instead, they need to follow the procurement-centric model of Apple and other Big Tech companies by re-engineering and re-balancing the way they collaborate with direct and indirect suppliers, specifically: initiating one-on-one conversations with supplier CEOs; working with suppliers to develop mutually profitable joint business opportunities; making commitments about loyalty during future semiconductor and other crises – in general taking procurement to a more strategic level. Tesla is an example of a company that has done this phenomenally well.One or two tactics won’t work; to ensure resilience and success, what’s needed is a systemic approach that puts procurement at the core.
EMERGING INNOVATORS: Radiflow’s CIARA Industrial Risk Assessment and Management Platform
Attacks On Industrial Infrastructure Are Rising At An Alarming Rate.
OT/ICS Cybersecurity Threats Remain An Underappreciated Risk Area.
Radiflow is a next-generation cybersecurity company focused entirely on protecting from and preempting attacks on industrial infrastructure. this emerging innovator based in Isreal takes an enterprise impact perspective with a view to prioritizing the most vital assets to secure first, before designing and implementing mitigation strategies.
EMERGING INNOVATORS: Winegrid
Winegrid is a smart solution based on a network of innovative sensors placed in a container (barrel, tank, press) during the vinification process of wine. It is capable of providing, for the first time ever, real-time analysis and control the 5 crucial vinification parameters (level, colour, turbidity, density and temperature), sending information directly to a specially built online platform. It is the internet of things (IoT) for wine production.
HEXAGON AB – A PLATFORM + INSIGHT STORY
ArcInsight Research Note
Sustainability & Circularity was a driving theme at the annual HxGN Live! event this year. Held in person after a long two year pandemic gap, and with a record attendance. Hexagon’s enterprise wide Sustainability imperative is very effectively demonstrated through its portfolio of solutions which focus on waste reduction both for input materials and of energy and labor-usage, by streamlining tasks.
Almost every large public company is expected to talk about sustainability, and dedicate a few pages and slides in their annual performance reporting. A large number of them see sustainability initiatives as an unnecessary loading on to their overall product cost. A few actually believe sustainability can be a profitable business. One has gone ahead and invested its own money into actual sustainability projects with real profit goals, in order to prove what they believe in.
Hexagon’s R-evolution business unit focuses on leveraging the power of solar power, wind energy and solar thermal energy to ultimately build the blueprint for a fully sustainable green hydrogen economy.
The World Economy May Be At Risk Of Global Recession
We compared America’s present economic situation that America and the rest of world find themselves in to one in the grip of a multi-headed hydra, each head operating independently. Collectively they threaten to tip the entire world into recession, even if its for a short duration. We have identified a set of risk-drivers that we believe are acting in parallel paths to create a recessionary scenario.
SUPER SIGHT – The Promise & Perils Of Insight From A New Reality
As an industry analyst sitting in the heart of Silicon Valley, I have been fortunate enough to sit through thousands of exciting demos and witnessed numerous product launches and life cycles of emerging technologies – some long and fruitful, some (sadly) very short. But then the game of emerging technologies game is all about product development challenges, market acceptance risk, timing accuracy and more frequently the uncertainty of market execution . Investors backing these early technology plays choose to place multiple bets on future outcomes, and even back multiple horses. Cashing out big time on the ones that panned out while moving on from a vast majority of the remaining duds in the portfolio that didn’t.
Author David Rose picks one such emerging capability with a lot of early promise. He has grouped many related and diverse concepts and technologies that have potential to work together delivering tremendous benefits for consumer as well as industry, under the broad capability he calls “SuperSight“.
FUTURING IN THE PRESENT
An organization’s future success depends on their decision makers’ ability to anticipate changes and disruptions in the marketplace. But how do you get information about tomorrow today? How can your decisions today account for tomorrow’s uncertainty. Sensing the faint signals that provide a glimpse of our evolving future is never an easy task. Nor is it foolproof. An even trickier job is sorting out false background radiations masquerading as information, from the true signals.
Martin Schwirn, author of a new book “Small Data, Big Disruptions” works for Strategic Business Insights. SBI is the former Business Intelligence division of SRI International that has worked with clients on opportunities and change since 1958 to help identify and map new opportunities based on emerging technology and market insights. SBI focuses on seizing information opportunities that exist between the moment you sense early signs of emerging disruptions and when it becomes public knowledge to capitalize on. He introduces a brand of the futuring methodology, called Scanning.
JD DIGITALIZING CHINA’S THERMAL POWER WITH AI-BASED PROCESS OPTIMIZATION SYSTEM
The algorithms used in the thermal power optimisation project could also be used in similar industries and related fields in the future to bring efficiency gains to more industries and create greater value to society
Thermal power generation will remain the main source of electricity in China for years to come. The country remains heavily dependent on fossil fuels and accounts for nearly 30 per cent of global greenhouse gas emissions.
As part of a grand plan, China has begun deploying across 70 power plants a new artificial intelligence based optimization and control system developed by a unit of its eCommerce giant JD.com that automatically adjusts a range of variables for thermal boilers in real time. The goal being to transform the plant’s power generation management systems to improve boilers’ efficiency and reduce coal costs and pollution.
ATTENTION FACTORY - A Book Review
The Story Of TikTok and China’s ByteDance
Matthew Brennan’s new book “ATTENTION FACTORY was a natural one to examine given our firm’s deep research interests in artificial intelligence driven applications markets.
Product-Market Fit may well be the hardest things to nail down for an early startup, and also one of the key steps paving the way to successful venture funding. ByteDance finally hit its stride with a clear platform strategy, an excellent founding team, and an intense focus and discipline that’s the hallmark of all mega-successful consumer internet platforms we see around us today.
ByteDance founder Zhang Yiming’s genius was in recognizing very early the shift in the way information was distributed and consumed in the newly emerged mobile medium. He made the bold choice to move away from human-centered content selection and distribution, to a platform almost entirely enabled by artificial intelligence based on machine learning on user-generated big data. He was convinced about the big shift taking place from people searching for content to “content searching for people”.
COMPETING IN THE AGE OF AI: Strategy & Leadership When Algorithms And Networks Run The World
HBR Press has a unique record of publishing seminal books written by Harvard Business School’s academics.
This one is in a line of three books books released roughly 20 years apart that have documented fundamental shifts in the way companies compete in their markets, deliver unprecedented value to their customers, and becoming phenomenally successful global companies. Marco Iansiti & Karim Lakhani document a fundamental shift in the way companies create value with “COMPETING IN THE AGE OF AI“.
What is a AI-driven Company?
How are these companies different from traditional global corporations we have seen operating so far?
How does AI-driven approach create new competitive advantage?
What happens when AI-driven companies confront traditional companies in the marketplace?
A HUMAN’S GUIDE TO MACHINE INTELLIGENCE | REBOOTING AI
Gary Marcus & Ernest Davis’ REBOOTING AI takes a long meandering path to examine the historical and philosophical underpinnings of what we know as AI today, and gives the reader a deeper look at the major shortcomings. However, it chooses to touches upon conceptual ideas that may serve as a historical guide, as thumb-rules while fixing AI’s issues. It focuses on concept rather than practice, and stops short of providing very actionable ideas.
Kartik Hosanagar’s A HUMAN’S GUIDE TO MACHINE INTELLIGENCE on the other hand, does include one (of three) of its parts on the overall landscape of machine-based intelligence. However its primary focus is about examining AI’s many issues objectively, testing and debunking the many myths and perceptions surrounding them. It then proceeds to provide a very clear framework to think about AI’s issues and our actions aimed at regulating and minimizing the impact of its frequent demonstrations of infallibility.
THE MAKING OF INTELLIGENT DIGITAL CITIES
A GLOBAL IMPERATIVE TO EVOLVE INTELLIGENT CITIES. CITYWIDE DIGITAL-TWINS USHER IN A NEW ERA OF EVOLUTION.
“ Intelligent Cities Are Not Defined Entirely By Technology. They Are Foremost About People Who Live There And A Quality Of Life They Expect From The City. Beginning A Conversation About Intelligent Cities With Technology Risks Taking Us Down A Path Of Unintended Outcomes. ”
In Order To Cope With The Coming Surge In Growth & Demand For Innovation, Intelligent Cities Must Necessarily Become Digital Cities At Their Core.
What Are The Dimensions Of An Intelligent Digital City?
THE BIG WINNERS AT SMART CITIES EXPO WORLD CONGRESS 2019
CITY OF STOCKHOLM | HEXAGON for HERA (Italian Utility) | Los Angeles - Office of Technology | FCC Environment Barcelona | City of La Paz
In Order To Cope With The Coming Surge In Growth & Demand For Innovation, Intelligent Cities Must Necessarily Become Digital Cities At Their Core.
Technology provider Hexagon built a analytics solution that triggers predictive maintenance for utilities, using satellite monitoring combined with operational data it improved the effectiveness of inspections by 40% and improved capability to predict future problems.
The City of Stockholm’s Smart and Connected City initiative leveraged city planning tools from Digital-twins technology provider Bentley Systems, and worked with Stockholmers to build integrated solutions in a number of areas such as low energy districts, integrated infrastructure and sustainable urban mobility.
THE BIG NINE: How the Tech Titans and Their Thinking Machines Could Warp Humanity (A BOOK REVIEW)
Quite likely to become one of the most influential books on Artificial Intelligence in recent years. Amy Webb, quantitative futurist and professor of business strategy at NYU Stern, author of The Big Nine: How the Tech Titans and Their Thinking Machines Could Warp Humanity covers a a broad analytical swath in her sometimes sympathetic, sometimes brutally honest assessment of America’s path towards AI innovation, sharply contrasting with its counterparts in China. Based on analyses of patent filings, policy briefings, interviews and other sources. Webb sets sensationalism aside in favor of careful arguments, deep historical context, and a frightening degree of plausibility.
TECH TITANS OF CHINA: How China's Tech Sector is Challenging the World by Innovating Faster, Working Harder, and Going Global (A BOOK REVIEW)
Following the VC money, Rebecca Fannin became one of the first American journalists to write about China’s entrepreneurial boom, reporting from Beijing, Shanghai and Hong Kong. Her book is a journalistic journey through the immense strides China’s technology sector has made in recent years, the underpinnings of that growth, the vaunted technology players that are now giving American technology players a run for their money.
As we work through the China developments shared by Rebecca Fannin, we have chosen to intersperse thoughts from another AI/Emerging Tech. expert, unabashed China-cheerleader and a former head of Microsoft’s AI business Dr.Kai-fu Lee, who published a book on very similar lines last year – AI Superpowers.
THE CODE: Silicon Valley and the Remaking of America (A BOOK REVIEW)
Silicon Valley came to represent the innovative power of capitalism freed from clutches of government. The reality of its past 40 years of evolution, however, is a vastly different tale of intense policy support, government funding, carefully crafted market personas and lobbying. Argues Margaret O’Mara author of THE CODE: Silicon Valley and the Remaking of America.
HOW PERVASIVE DIGITAL TWINS ARE EXTENDING ENTERPRISE INTELLIGENCE
The Maturity Path Of Digital Twins Along The Lifecycle Of An Infrastructure Asset.
“The Single Greatest Need In Business Today Isn’t Automation, Its Autonomous Insight. It Means Being Able To Leverage Vast Amounts Of Data – Behind The Scenes, Where Connected Devices And Machines Interpret What’s Happening And Why, And Then Act Accordingly, Autonomously”
The Digital Twin is used to create demonstrable business value along several axes. The twin models are continuously updated as the physical asset is operated. At any moment the twin represents a faithful representation of the current state of the asset. They are also scalable. Benefits are derived when hundreds or thousands of similar assets have their own digital twins. A twin tracking a single asset learns from similar assets. They are also adaptable, and can transfer learning to another part or asset class, or adapt to new scenarios or new factors.
THE A.I. FRONTIER OF INDUSTRIAL-IOT ANALYTICS
Optimizing For Outcomes In Complex Process Manufacturing Environments | A Multi-Dimensional Algorithmic Challenge
ArcInsight Partners’ new report examines analytics innovations from three companies, bringing some field experiences solving domain-specific problems using IIoT analytics. Oil & Gas midstream refining and chemical process/batch manufacturing often throw the hardest multivariate problems for optimization of processes. Two are early technology companies with a track record combining domain specific models with AI to solve client process issues. The third, a business unit of a large global conglomerate. The three companies exemplify the use of deep-domain expertise with operating experiences in upstream & midstream of oil &, gas and downstream aromatics process and chemicals industries. One is based in Europe, the other in Asia, the third headquartered in the United States.
SPANISH ENERGY MAJOR REPSOL VENTURES INTO AI-SUPPORTED PROCESS OPTIMIZATION CAPABILITY BUILDING AT ITS TARRAGONA REFINERY
A Refinery Comprises Multiple Divisions, Including Units That Distil Crude Into Components Processed Into Fuels. And Those That Convert Heavy Residual Oils Into Lighter, More Valuable Products.
Repsol, the Spanish energy major, plans to deploy big data and artificial intelligence tools to optimize performance of its Tarragona integrated refining complex in eastern Spain, and ultimately across its five other refineries with a total capacity of 896,000 b/d. The Tarragona Industrial Complex processes 9.5 million tons of raw materials a year and has the capacity to distill 186,000 barrels of oil a day. The company already uses Tools such as Siclos which Repsol’s refinery control-panel operators use to forecast in real time, the economic impacts of operating decisions; or Nepxus, which increases planning, analysis, and agility in decision-making in the control rooms at these sites.
As part of Repsol’s broader digital transformation program, this new initiative will leverage Google’s ML Cloud to to analyze hundreds of variables that measure pressure, temperature, flows and processing rates among other functions for each unit at Tarragona. Repsol’s developers will build and deploy machine-learning models for refinery production. Ultimately, the company plans to redesign more than 300 functions from its traditional operation to a digital version.
OUR LATEST THOUGHTS
SMART CITY: A Framework For Intelligent Value Creation
Smart Cities Are About Data-Driven Insights;
Smart Cities Are About Delivering Unique Contextual Citizen-Facing Services;
Smart Services Do Not Exist In A Vacuum. They Depend On A Pre-Existing Infrastructure Linked to A History Of Goals-Driven Economic Investments.
DIGITAL TRANSFORMATION: Enterprise Value Creation
Enterprises Must Transform Digitally To Face The Next Phase Of Their Competitive Lives.
Together With Digital Platforms, Content Ubiquity, Social Amplification And New Dimensions Of Customer Experience Insight Available Via Internet-of-Things, This Is A Transformation Opportunity Like No Other.