Intel Corporation I All Rights Reserved

FUTUREPROOFING YOUR BUSINESS Creating Lasting Value in the Age of AI + IoT

FAITH MCCREARY I IRENE PETRICK December 2019

ACCELERATE INDUSTRIAL Production Area, End ManufacturerEnd Area, Production 1 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Twin Spiral Cooling Tower, Food Production and Processing THIS REPORT

The pace of technological change is accelerating. In factories this acceleration is coupled with a large installed base of legacy equipment and systems, supported by a workforce that is shrinking in size as workers retire and new entrants of younger workers are dwindling. In addition, the industrial sector is facing a skills gap as traditional workers cannot meet the needs of the new digital transformation sweeping factories. Ecosystem providers may not be dealing with their own large installed base of legacy equipment, but they are dealing with an ever-evolving IoT technology stack. They are facing stiff competition for limited AI and IoT savvy talent. Like their factory counterparts, ecosystem technologists struggle to keep their skills current to serve an everchanging digital world. Leaders and technologists struggle to identify best practices to futureproof their organization – how to keep their companies and themselves at the forefront of digital transformation. To better understand what was needed for future success, we distilled the data participating technologists provided into

the key strategies that they believed had the greatest influence on their ability FutureproofingStrategies to futureproof their businesses, their operations and even careers. The futureproofing strategies presented in this report are a means to achieving your goals. To understand what strategies are most effective for your context, you first must have in mind what you are trying to achieve. Each strategy must be applied in a way that is unique to the context where you "My worst possible future is that we go too slow. our commitment wish to apply them. There is no 1-size fits all solution to the challenge of has not been strong enough and some player who we have not anticipated futureproofing! Rather you must carefully consider the implications of these or who's already working on it, comes out and beats us at our own game. strategies in the setting where you wish to use them. I'm actually very worried about that, because I know we can go faster.” PRINCIPAL SYSTEM ARCHITECT ENGINEER, END MANUFACTUER

Since 2018, Drs. Faith McCreary and Irene Petrick have been exploring the industrial landscape to better understand the changes that digital transformation will drive in factories and in the ecosystem companies that support them. This work includes 404 manufacturing and ecosystem company participants, including 193 technologists directly involved in creating and implementing smart technologies. It relied on mobile ethnography and interviews, resulting in nearly 19,000 pages of participant transcripts. Those many inches of transcripts shown to the left helped us understand what really matters when trying to accelerate on the journey to the intelligent factory. This two-phase study began with a look inside the factory and highlighted Industry 4.0 would require that workers co-evolve with manufacturing operations. The second phase extends and expands on Phase 1, but focuses more on how Artificial intelligence (AI) and the Internet-of-Things (IoT) are orchestrating new rhythms in manufacturing. Powered by big data, these emerging beats and rhythms are revamping work in the factory – requiring both manufacturers and providers to learn new moves. To paraphrase an African proverb, "When the music (technology) changes, so does the dance.” While the opportunities are tremendous, execution of these new moves often falls short of ambitions. Phase 2 delves into the specifics of the problems that the factory is expecting autonomous capabilities to solve. It also identifies critical vectors and inflection points as factories and providers seek to realize their smart ambitions. Such information is much needed if these new rhythms are to become a lasting reality in the factories. 2 Years, 2 Phases, 3 Studies Please note that each of the photos shown in this report were provided by 77 Inches of CustomerofInches 77 Obsession 59 Research Topics participants as part of data gathering exercises. Similarly, the quotes used in 1089 Questions, 5805 Data Sets this report are verbatim participant comments with only minor editing for clarity. 96 Hours of Interviews Further percentages in this report are a measure of the relative strength of the 18997 Pages of Transcripts trend among participants, not a measure of statistical significance.

3 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. The WHY behind this work in the words of a participant "How do we begin to take advantage of those things? How do you actually invite them in? I don't have an endless capital budget. I don't have endless resources to implement. How do I set the organization up to be best suited to take advantage Strategies of not only what is available today, but down the road? What Strategies does the organizational structure look like and what is my role as an executive leader? What type of talent may be needed? Service providers?”

CHIEF OPERATIONS OFFICER, CUSTOM MANUFACTUER Plastic Injection Press , Plastics Manufacturer , PlasticsPress InjectionPlastic

In phase 2 to better understand what was People like D. who is a consultant and needed to make the new rhythms of the strategist who is working with a client to factory reality, we distilled the data our use predictive analytics to improve technologists provided into a “We write most of our code here, reliability of drive shafts on Navy vessels. comprehensive 12 strategies develop our architectures and use a Or. A. who works in hardware framework – strategies participants lot of innovative technologies to manufacturing and used computer vision believed had the greatest influence on solve specific problems. Working on and machine learning to ensure the their ability to overcome challenges and boards are assembled correctly. accelerate on the journey to autonomous. a confined space monitoring project The strategies reflect the wisdom of the for individuals that work in crawl There’s also M. an innovator whose focus 193 technologists in both the factory and spaces, airplane fuel tanks, oil rig was to “rapidly prototype and test an idea the ecosystem. Each of the 193 was refineries, and the like using various to determine if it is production-worthy.” actively engaged in shaping the AI and sensors, wearable technology, and Or N. who works at a system integrator IoT technologies that are changing low-energy BLE to stream health on the forefront of blockchain uses in manufacturing today. Their ranks include industrial settings. manufacturing leaders such as CTOs, and safety data to cloud services ecosystem innovation directors, capability and that allows remote folks to keep These are just a few of the technologists architects, hands-on developers, field an eye on individuals working in behind the strategies in this report. The detailed demographics of participating service teams as well as factory these very dangerous spaces.” maintenance, and many more. technologists is shared on the next page.

RESEARCH SCIENTIST, Accelerate Industrial Accelerate CONSULTANCY

5 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. THE TECHNOLOGISTS AT A GLANCE Study 2 - 193 Participants,3388 Data Sets

81% 69% 83%

AGE MALE > 50% SMART WORK AMERICAS

EDUCATION LEVEL

TOP AREAS OF TECHNICAL FOCUS TYPE OF COMPANY COMPANY SIZE

6 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. The 12 strategies framework that represented the wisdom of the 193 technologists was organized in terms of the activities they supported during the shift to autonomous – STARTING strategies help companies get from enthusiasm for smart technologies to 12 Strategies actual doing, DRIVING ones help companies turn smart investments into smart reality, SCALING ones help companies leap the chasm of pilot purgatory to become mainstream, and FUTUREPROOFING ones help companies find lasting value in industrial IoT. The full Framework set of strategies is summarized below. This report focuses on the two futureproofing strategies (numbered 11 and 12) called out below. Other strategies will be detailed in future reports to be released in the coming months.

(Really) Know Where You are Create Pull with Inclusive Be Realistic about the 01 Starting 02 Value 03 Journey STARTING STARTING STARTING

04 Go Slow to Go Fast 05 Grow Your Tribe 06 Be a Partner of Choice DRIVING DRIVING DRIVING

Focus on Growing Belief and Think and Act Holistically Bridge the Gap Between IT 07 Trust 08 09 and OT DRIVING SCALING SCALING

Accelerate with Frictionless Plan for the Future But Be in Build the Plane While Flying 10 11 the Present 12 SCALING FUTURE- FUTURE- PROOFING PROOFING

7 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. TABLE OF CONTENTS FUTUREPROOFING Making the transition from value today to lasting value with industrial IoT

Lasting Value 10 Strategy 12. Build the Plane While Flying 32

Planned Technology Investments ...... 12 Building Capacity in Motion ...... 33 13 Obstacles with Potential to Derail Investments ...... Lean but Not Too Lean ...... 36 Worrying about More Than Technology ...... 14 Leap Forward with Culture and Mindset ...... 42 The Pace of Progress ...... 15 The Future Ready Workforce ...... 46 The ‘Sell It, Set It, and Leave It’ Mentality ...... 51 Strategy 11. Plan for the Future But Be in the Present 17 The Proprietiery, Wild West Mentality ...... 54 Securing the Unknown ...... 63 Fit for the Future ...... 18 19 Find Your North Star ...... Taking Action 69 The Pull of the Short-Term ...... 24 Manufacturing Leaders Futureproofing the Factory ...... 70 Think Past Today ...... 25 71 Plan for Obsolescence ...... ,,...... 28 Ecosystem Providers Futureproofing Capabilities ...... Technologists Futureproofing Careers ...... 72

“Well the worst I can think of will be if we implement a lot of these new smart technologies – if we just implemented – we rushed to implement without thinking through what our long-term strategy of maintaining that would be. It is very easy to implement things, you know. You can do that in a rush. But the problem arises when you don't know how to handle it because you rushed into implementing it, that can really backﬁre, and you know result in downtime, or it can result in just people getting frustrated with the new technologies and just go back to the old, conventional way of manufacturing things. So I just believe it is very, very important that you think through – from your long term, or ﬁve year, or 10 year strategic standpoint and understand what makes the most sense and how you're gonna implement it, and more importantly, how will we build on it once it's implemented?”

SENIOR MANUFACTURING ENGINEER, MEDICAL EQUIPMENT SECTOR

The Oxford English dictionary defines futureproof as “unlikely to become obsolete.” Given the pace of change of advanced technologies, future-proofing may seen a doomed quest, for these capabilities will most certainly become technologically or functionally obsolete in the coming years. How should companies plan or get ready to deal with the risks

Assembly Line, Motorcycle Plant Motorcycle Manufacturing Line, Assembly associated with unknown future changes? 54% of participants raised concerns about the pace of technological change and the challenge of keeping up with technological advances. They worried that technological changes would outpace the intelligent capabilities that they have so recently invested in or their own ability to sustain them. They didn’t want to just accelerate their business today, they want to sustain LASTING VALUE their advantage over time. In the Age of IoT Futureproof or Future Ready?

10 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Futureproofing the Business Nowhere are the differences between manufacturers and the ecosystem more defined then when it comes to futureproofing – while the ecosystem players were looking to accelerate the pace at which they were “We as technologist's want to do is say, ‘Hey, this tech is awesome producing updated versions of their wondrous technologies and getting and it can solve all these problems and it can be great and it's them to market, the manufacturing participants often wished the amazing and it is the future.’ Our customers are often thinking, ecosystem would slow down and give the factory a chance to catch up ‘Well, yeah that's great if it's the future but I have to make a with over 70% manufacturing leaders in this study raising concerns about decision right now that it's safe for my workers, that it’s what they their ability to keep up. Despite going about it in different ways, both groups are trying to make their businesses less likely to become obsolete. need and that it works in the real world.’ We in tech, I think, need Each in their own way are trying to become future ready – it’s why they to be a little bit more empathetic, frankly.” embarked on the journey to a more autonomous future in the first place. HEAD OF PRODUCT, INDEPENDENT SOFTWARE VENDOR

Assembly Line, Operational Technology Manufacturer Initial Board Prototyping and Firmware Design Manual Mill Department

11 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. TOP PLANNED TECHNOLOGY INVESTMENTS IN NEXT 2-3 YEARS PLANS UNDERWAY 51% Artificial intelligence Looking two to three years in the future, 44% Predictive or big data analytics 83% of technologists indicated that their 35% Smart machinery or equipment company currently had plans to invest in advanced technologies – the table on the THE FUTURE IS ALREADY IN 31% Robotics MOTION – BRINGING A SENSE left summarizes their areas of planned 29% Smart upgrades existing equipment future investment. For some companies, it OF URGENCY TO 25% Additive manufacturing was a matter of further investing in FUTUREPROOFING 24% Smart building technologies they were already using, in 23% Smart asset tracking or monitoring other cases it was investing in ones they had not yet explored. 19% Virtual or augmented reality 18% Blockchain Who their customers were made a difference with 53% of those with in-house 17% Intelligent vision systems “You find that there is a lot of immaturity in customers planning smart equipment or 17% Industrial automation machinery purchases, while 60% of those the technologies that's still there, there's 15% Indoor location tracking with an external customer base prioritized still flaws. Let's just take blockchain for 12% Real-time coaching systems AI investments. Those with both an internal example on the specific example I gave 12% Industrial wearables and external customer base leaned more you with privacy. You could poison the heavily towards AI investments but also 10% Digital twins world if you manage to get into a chain were very likely to plan smart equipment or 10% Voice interaction and input the data that's not truthful, it's machines purchases. 9% 5G trustful because it's immutable but it's not Underlying were differences in the pace of 9% Autonomous guided vehicles truthful what do you do?" technology adoption with 42% of those from 8% Integrated Controls manufacturing saying their company was VICE PRESIDENT PRODUCT MANAGEMENT, 6% Fog or edge computing slow to adopt new technology, with 52% of SYSTEM INTEGRATOR 5% Drones those outside manufacturing identifying their companies as early adopters.

12 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. But Concerns about Obsolescence Have the Potential to Derail Future Plans …

WHAT TECHNOLOGY CHALLENGES ARE MOST LIKELY TO DERAIL FUTURE PLANS IN NEXT 2-3 YEARS?

36% TECHNICAL SKILL GAPS that prevent us from benefiting from our investment 27% DATA SENSITIVITY from increasing concerns over data and IP relative to privacy, ownership, and management 23% LACK OF INTEROPERABILITY between protocols, components, products, and systems “I think a major outage from a Work Desk in Factory Warehouse security-related attack to some IoT 22% SECURITY THREATS both in terms of current and emerging vulnerabilities in the factory systems that cause a big business Providers should not under- impact might just make everyone say, 18% HANDLING DATA GROWTH in amount and velocity as well as sense-making estimate the importance of ‘Hey, let's not do this. We are not finding ways to futureproof their ready.’ I think that is going to scare the 18% SCALABILITY ROADBLOCKS to accommodating growth capabilities especially those that hell out of many of us. I think that is without any business or performance loss customers perceive as more maybe the biggest factor that would 11% OUTPACING MARKETABILITY by our solutions getting immature. Many manufacturing make or break many of these projects too far ahead of customer and partner capabilities technologists reported their companies postponing or 10% MAINTAINABILITY CHALLENGES that make the and initiatives. " deferring purchases due to advanced systems difficult to keep up and running concerns about future capability IT AND AUTOMATION OPERATIONS MANAGER, 8% NOT TRUSTING advanced systems due to lack of ORIGINAL EQUIPMENT MANUFACTURER obsolesce despite the potential

transparency about smart actions and outputs benefits of the technology. Obsolescence Obsolescence Fears

Futureproofing WORRYING ABOUT MORE THAN TECHNOLOGY

“The worst that could happen? I guess maybe two scenarios. One is that your business changes so much that the capital that we're putting into this current line really Fails Technology When Down Shuts SmartWarehouse

doesn't have any relevance for any future Evolving by Leaps Bounds and work if we need to convert it over. The second thing would be if production rates Only 36% of all participant references about the drivers of regulations), (3) insufficient ROI or get to be so high that you can't adjust by obsolescence had to do with the actual technology. They often investment due to business changes adding multiple shifts where you can't make commented on how the fast evolving nature of advanced resulting from internal lack of the volume by running it 24 hours." capabilities amplified the impact of other factors that increase adoption, market shifts, or delays in the risks of obsolescence of factory technologies. In particular going to market, and (4) poor larger MANUACTURING QUALITY ENGINEER, they were concerned with (1) organization brittleness whether industry acceptance resulting in END MANUFACTURER in culture or process, (2) ecosystem shifts (e.g. trade wars, phase-out of invested in technology.

Setting Pace with the Factory While ecosystem technologists often assumed they are on pace to change the factory, those in the factory saw the need for a different pace to win the larger factory over. This pace takes into account the realities of the factory which include (at least for some) decades old equipment, unrelenting pressure to maintain efficiency, and long lead times for operationalizing changes. THE PACE OF PROGRESS This difference in pace was notable with 38% of those who worked in manufacturing indicating that their pace was about safety not speed, with 35% saying their pace was slow with bursts at times. Conversely, 39% of ecosystem players outside of manufacturing indicated that their companies focused on maintaining a fast “A lot of technologists kind of assume that everyone works on the and sustained pace at all time. same planning and execution cycle as technology, which is really not Becoming future ready will require finding an true. Because in operations the expensive part of changing isn't equilibrium between these clashing buying tech, it's operationalizing it, as your current operations are

perspectives on setting pace to the future – an Work Cell, Aerospace Sector Work AerospaceCell, equilibrium that does not necessarily involve efficient for the tech you have. As soon as you change that, you just changing either’s pace but instead buffering the de-optimize your operations, and it's really expensive to be factory from some of the harsh reality of the inefficient. So they have to spend very long planning and pilot cycles pace of technological change and changing how on implementation, then on how do we operationalize this and then both sides go about seeking their envisioned how do we scale. So there's kind of a mismatch in the timing of each future industrial reality 3-5 years out. cycle between the way the techs work and the way that manufacturing sectors work.”

HEAD OF PRODUCT, INDEPENDENT SOFTWARE VENDOR

Forklifts Out of Commission While Charging, Factory Warehouse

Whether thinking about themselves or thinking about their company 3-5 years out, what motivated becoming future ready was getting ahead – and for most, it was getting ahead personally. Only those (a) focused on innovation or (b) those equally expert in manufacturing and smart put company competitiveness over their own Control Room, Food and Beverage Sector personal gains. Those whose expertise was primarily smart focused on increasing their product’s competitiveness. Understanding what motivates this audience 3-5 years out and aligning with these motivations is the first step on the path to future ready.

11. PLAN FOR THE FUTURE BUT BE IN THE PRESENT

“Technology moves at a very rapid pace but we also have a While all these advanced technologies have brought about many good changes to manufacturing, it also has at times had a dark side business to run, so the epic challenge is balancing everyday – with participants reporting everything from financial losses to out- production with the race to maintain our position in the world of-control processes when technology suddenly changed. Tempting of technology. We can't halt production completely to learn as it might seem to avoid change, being future ready is not change things so we have to evolve at a balanced pace." avoidance. Instead it requires planning. It also requires companies to act in the moment, but think past the horizon of today and balance AEROSPACE INSPECTOR, the needs of today with those of the future.

CONTRACT OR CUSTOM MANUFACTURER Material Storage Area, Metal Fabrication & Machining Sector &Machining Fabrication MetalArea, Storage Material

Those participants who indicated that they were at least keeping their head above the ever higher tides of change in this space were actively managing and planning for change end-to-end in their lifecycle. They looked to adapt to change, not avoid it by locking themselves into functionally obsolete systems. They took a system- of-systems approach when thinking about change and saw it as a continuous process where they made choices and managed FIT FOR obsolescence risks on an ongoing basis. For those in the factory, there was a sense that they could not manage obsolescence in the same ways that they had in the past – ways that in part were FUTURE responsible for the decades old equipment on some factory floors. Some technologists and the senior decision makers also highlighted the need to build futureproofing efforts on a solid foundation of standard business processes, policies, infrastructure, architectures, and approaches for smart solutions – and recommended that this standardization be put in motion before transition efforts are kicked off. They also recommended assessing business health and technical debt as part of any future proofing efforts. Their reasoning was that if you knew upfront where the problem areas were in your organization, you would be better prepared to realistically manage the risks associated with getting future ready.

Frequency Inverter Used for Product Density Control

18 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Control Panel Troubleshooting, Petrochemical Sector Find Your North Star

Knowing today’s problems will only take you so far. To really understand whether or not you are solving the right problems, companies must have a larger vision. Without it, companies may be transforming fast, but what exactly are they transforming into? Staying fit for the future requires articulating what the future should look like for an organization. Certain core characteristics were shared by the majority of respondents when describing their desired future state -- namely, cost effective, competitive, maintainable, adaptable, and operator- friendly, but by themselves these characteristics Change with Purpose with Change were insufficient for companies to chart a course over time. 59% of participants highlighted the importance of a compelling vision as a guide for keeping their futureproofing efforts on track. They saw a vision as a powerful tool for companies (and sometimes partners) to align their actions and innovate with purpose as they moved forward.

19 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Build on a Foundation of Strength 43% believed a healthy vision must be built on the foundation of the present, on what made the company successful today, and should not try to turn the company into something it was not. It was not that these participants did not value innovation or weren’t committed to making it happen. However, their experiences suggested that “Determine what you are good at or can provide adjacent innovations where companies extended their core strengths into “new to here” diﬀerentiation. Don’t waste your money, time or innovations were more successful than breakthrough ones that attempted disruption. An talent on anything else -- and don’t delude yourself example would be an incremental shift to an existing solution such as adding predictive on how awesome you are.” analytics or new smart services. Such changes were seen as more within a company’s grasp – they might require new knowledge (e.g., new understanding of customers or PRINCIPAL SYSTEM ARCHITECT ENGINEER, END MANUFACTURER users) or behaviors, but were built on what a company was already good at while increasing its competitiveness. These participants saw breakthrough innovation as having its place – just not as the only innovations that a company was pursuing.

QA Leak Detection Tank, Food and Beverage Sector Wash-down Environment for Food and Beverage Chemical Safety Warning

11.1 Feed Vision to Keep It Healthy “I'm always trying to understand where we stand relative to the rest of the world. We have a small shop here. What 55% of participants stressed the need to adequately resource the does everybody else in the world do? Because obviously I organization to accomplish its vision, with 45% recounting times that can learn from other people. And I'm pretty sure I'm not so their company – or a colleague's company – defined a grand vision good that I can't afford to learn something. And I make without thinking realistically about what it would take to accomplish. lots of failures. So I can reduce the number of failures by But for some participants – and certainly the most successful ones – understanding what other people do and why. But most feeding the vision went well beyond just adequately resourcing it. It people don't like to learn new things. They would just as also meant taking an outside-in view of their business and actively seeking alternative perspectives on what they were doing and what soon wake up on Groundhog's Day. Me, not so much.” strategies those similar to them were adopting. For some that meant sharing plans with a trusted consultancy or system integrator, for CHIEF EXECUTIVE OFFICER,

CONTRACT OR CUSTOM MANUFACTURER others it meant ongoing environmental scanning. Laboratory Sector Petrochemical Environment. Laboratory 21 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Staging Production, Food & Beverage Sector Vision for Futureproofing

“I think having a clear picture of the road you want to travel to get to where you are going and having a roadmap that can get you through it to your final destination is the most important thing.” INTERNAL CONSULTANT, ORIGINAL EQUIPMENT MANUFACTURER

Roadmap

Those companies that participants believed were most successful at achieving their vision had a long range roadmap and execution plan that covered at least the next three years and for some the next 5 or 10 years. They not only knew where they wanted to go, they had a plan to get there for without a plan a vision is just a wish. Some, especially those working in more mature areas, Plan for Long Haul advocated for a slow and steady pace that minimized disruptions – they often engaged in incremental planning and prioritization to fine-tune their plans as the future unfolded. Equipment in Production Area, Industrial & Commercial Machinery Sector

22 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Personal Protective Equipment Ordering Machine, Biotechnology Sector Plans Change REFINE YOUR VISION For most participants, a vision was a living thing, not a static entity – one that would be shaped and refined as the future reality unfolded. The majority of participants focused on technology or The Road Will Shift business roadmaps but the forward thinkers also emphasized having a roadmap for change that laid out the change process in the form of a roadmap, with a precise understanding of what would be required. A good roadmap does not just focus on the destination visible at the start of the journey to autonomous. It must be regularly re-calibrated to align with the “The biggest challenge is getting destination appearing on the horizon, which may not be the one companies knowledge from all of these new things started out towards, but instead reflects for me. Every time there are new updates shifts due to unforeseen ecosystem and new products, our plan needs to be dynamics and market conditions. It updated too. There is no finish line.” must be refined iteratively and on a regular cadence as the fast moving SALES OPERATIONS, technical capabilities mature. END MANUFACTURER .

The Pull of the Short-term

The Oxford English dictionary defines a horizon as “the limit of a person's mental perception, experience, or interest.” Many horizons frame a company’s thinking about the future but none are so persistent as the time

BreakingOut horizons that arise from financial calendars. As one participant put it, “there's a constant pull towards the short-term mindset to meet the next quarter you know and to meet the next month.” It’s a force that at least half of those discussing the topic of vision said had derailed one or more smart projects, regardless of belief – for belief in the value of the vision was not always enough to sustain execution and fully realize a company’s smart vision.

11.2 Think Past the

“We in tech need to be more empathetic and assist our Horizon of Today customers in transforming at their pace for their industry. Because I think they're actually way more rational than we Those who reported the most success in countering short-term are and that we give them credit for. They're taking total thinking were often the ones who had considered the long-term time horizon from the start. When planning and getting organizational cost of ownership into account. They're taking cost commitment, they looked past just getting a solution implemented to structures into account. They have really great CFOs who what it would take to get it adopted and maintained long-term. They understand appreciation and organization. They're making looked backwards in time at a solution’s predecessors, even the non- very rational decisions for their businesses and I think smart ones, to identify lessons learned. They looked broadly at the tech actually needs to mature in order to understand that solutions that it would interact with and what their future might hold. not everybody wants to be in the future all the time.” They looked at risk in terms of lifetime risk, not just the immediate ones that they faced. They took a system of systems perspective to HEAD OF PRODUCT, getting future ready at a pace right for their business.

INDEPENDENT SOFTWARE VENDOR Packaging Line, Paper & Printing Printing Sector & Paper Line, Packaging 25 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Machine & Equipment Setup for Press Line, Horizons of Futureproofing Electrical Equipment, Appliance & Component Sector “We look at total cost of ownership when we look at investing and often 3D printers, robotics and such do not come cheap. I speciﬁcally help make the dreams come to life at as minimal cost as possible but not at the expense of quality. Ensuring a quality end product is paramount and we drove for smarter technologies to allow us to do that.” SENIOR BUYER, OPERATIONAL TECHNOLOGY MANUFACTURER Total Cost of Ownership

Manufacturing and ecosystem technologists alike seek to judge comparable solutions or components based on total cost of ownership (TCO). The decision-makers in particular are End-to-End looking to understand the fixed and variable costs – especially the reoccurring ones. Some reported their company being surprised by what it actually took to make their vision happen as they had not considered the infrastructure and indirect costs Brewery Input Leading to Evaporator, Food & Beverage Sector unrelated to the technology.

26 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Measuring Parts According to Blueprints Provider Opaqueness SO MUCH LEFT UNSAID Unfamiliar Terrain Now total cost of ownership is not a new concept, especially to manufacturers but AI and IoT do add a new twist. While the acquisition costs are typically clear, “I want to see a roadmap for your project. participants indicated that what it took to Where do you think – where it's going for your run these systems (e.g. maintain, network product in the future? Do we have an end of bandwidth needed) or modify (adapt, end- of-life) is less so. Some of this murkiness life already in one or two years, or will you can be attributed to unfamiliarity with smart develop this specific product also in many capabilities. But a major deaccelerator for other years? And of course, furthermore, I participants looking to better understand want to see the costs, and I want you to show TCO is a lack of information about it and us all the costs. I know there is some hidden about a capability’s future abilities to costs. There is not just, for instance, the retrofit, upgrade, secure, and customize solutions in the factory. Manufacturers are license we have to buy, the maintenance. used to buying with the long-term in mind, There are some add-ons which we maybe as they have purchased manufacturing need or want for our requirements, so clearly technologies historically. However, there point out what are the total costs of ownership are new requirements for long-term – not just a part of it, the obvious ones – information on advanced manufacturing everything.” technologies that are not being reflected in the data sheets and other readily available PROCUREMENT MANAGER, information from providers. SYSTEM INTEGRATOR .

“The big, big difference is if you deploy something and it 11.3 Plan for screws up anything I'm doing today, I'm going to pull it. And the burden to being able to try to introduce it again is even harder. So it's kind of a minefield and I'll be honest, I Obsolescence hate the term ‘disruption’ because disruption says, I'm Historically, many smart things have been designed to be replaced going to blow up what's there and come in with something every year or so even if only to acquire the latest feature set. That new. Disruption in things that power the grid, that make doesn’t work so well in industrial spaces where manufacturers have to products, that transport people, that's not a good thing. re-certify their processes and employees in case of change. It’s a You can't have a glitch. You can't have, oh, let's try this world where even updating is not taken lightly and equipment may be kept for decades not years. But AI and IoT capabilities are more and see what happens. I think that is the biggest emerging than mature guaranteeing that updates and replacements difference between the industrial Internet update and the will be required. This issue is exacerbated by the baggage of legacy plain old Internet update.” systems in the factory, with 49% calling it out as one of the biggest risks to delivering value and even longevity of these new industrial PRINCIPAL SYSTEM ARCHITECT, capabilities. So what, if anything, can companies do?

END MANUFACTURER Brewery Sector Beverage & Brewery Cellar. Food 28 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Production Floor, Horizons of Futureproofing Industrial & Commercial Sector

“I wanted to be able to keep up with the technology that exists in a major industry like security, except make it a hazardous area. will come out with a Q65 instead of the Q6055 next year. And I'm already prepared, and it takes me four hours to completely certify it over the entire world because of the procedures that we wrote and their quality system.” CHIEF EXECUTIVE OFFICER, SYSTEM INTEGRATOR Proactive Preparation

While many participants fretted about the issue of obsolescence, some have begun to proactively try to manage it by planning for it, and making conscious choices Deliberate Choices about (a) what to ignore and not make future ready, (b) what to make future ready today, and (3) what will be dealt with down-the-road at a more convenient time. They make it a part of their roadmaps and action plans – and like the other roadmaps discussed here, ongoing monitoring and Laser Engraving Machine Cutting Metal Sheets, refinement is a requirement for success. Industrial & Commercial Machinery Sector

“The worst is most likely a lifetime buy issue, whereby there's not a drop-in replacement or a replacement that comes close. That would mean a Stretching the Useful Lifetime of Investments complete redesign, and not only that, it would Regardless of their degree of proactivity (or reactivity) when attempting to require us to re-certify and apply for all the stretch the lifetime of industrial IoT solutions, companies often resorted to certifications and that sort of thing and that's a tried and true methods to keep smart systems running, such as keeping nightmare, besides being costly. Lifetime buy spare components on hand, stocking up on critical systems or components issues are always problematic, but particularly for that were about to be EOLed by the vendor, or cannibalizing “used” microprocessors because they have so many systems to keep current systems running. Some leveraged new smart approaches like predictive maintenance or 3D printing of spare parts; while functions, it's difficult to replace them and without others, especially small and medium sized manufacturers, related how the a doubt, three to five years from now, we'd be price of smart components meant their company would not invest in hopefully in the midst of our production and traditional approaches like keeping an inventory of spare parts. possibly thinking and working hopefully on the Manufacturers valued and actively sought vendor support to help them next generation. That doesn't mean that the extend the life of their systems, often paying for extended warranties or existing generation can be abandoned that easily. including required support periods into procurement contracts. They So, lifetime buy issues. Horrible!” sometimes struggled to build their own in-house maintenance capabilities for these smart things making the availability and responsiveness of post- CHIEF TECHNOLOGY OFFICER, sales support a key factor in their purchasing decisions.

END MANUFACTURER Office Desk Used for Data Processing, Transportation Sector Transportation forProcessing, Data Used Desk Office 30 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Hard to Work Through Error Messaging, Getting These Smart Things to Reliably Work Buffering Change The Hands-On Preparation DESIGN FOR OBSOLESCENCE The most proactive technology participants designed for obsolescence from the start “The way manufacturing environments using tried and true software engineering have been developed has been focused on techniques like designing for portability, minimizing costs and assuming essentially utilizing a core platform architecture across a set it and forget it attitude. And that has systems, or isolating critical functionality resulted in exactly these sorts of situations likely to be impacted by technology changes. that we currently see where systems are They also highlighted the need for planning for data expansion and evolution over the designed without any plan for updateability, course of a solution’s lifetime to increase maintainability, having them actually adapt robustness. over time or be adapted over time in order However, as some technologists pointed out, to successfully create industrial this process is much more robust when environments that are reasonably secure in providers design-in features that can be any fashion. need leveraged for this task. Among the most to change that attitude. That fundamental mentioned were comprehensive suites of attitude needs to go away. It needs to no APIs that provide full access to backend functionality likely to be impacted by down longer be this thing will be set up and the road changes, plug and play ignored forever. Or even if this thing will be components, capabilities that can be set up and ignored forever.” configured allowing for no code required adaption for current context, and capabilities PRINCIPAL ENGINEER, that are protocol agnostic or at a minimum ORIGINAL EQUIPMENT MANUFACTURER support a broad range of industrial protocols. .

12. BUILD THE “IOT is a hot mess of short-sighted investment behaviors taking every short-cut possible to make the worst possible product. And the idea of doing that in an PLANE WHILE industrial environment sounds like a great way to have industrial accidents. It’s really bad. And just with IOT, have you seen the articles on which smart TVs are FLYING watching people? So, if you keep in mind that The concept of building the plane while flying it is more than a little essentially, what you've got is a bunch of stuff wrapped alarming, but it reflects what participants see outside technology around what might be a piece of a companies asking of the factory. Those outside manufacturing solution. And then it's going to be there for a decade intend it as reassurance that they will help re-invent the factory because nobody's going to want to patch it." while it is up and running. However for many manufacturers the last thing they want to do is live production while changing their PRINCIPAL ENGINEER, technology and their operations.

Plant Floor, Aerospace Sector Aerospace Floor, Plant ORIGINAL EQUIPMENT MANUFACTURER

32 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Quality Assurance Area, Metal Fabrication & Machinery Sector Building the Future in Motion

Our participants – in and out the factory – often verbalized feelings of risk and uncertainty around transforming, transitioning, and innovating on the path to their envisioned future. They had the sense they were building the future in motion while also responsible for today’s operations or products and simultaneously shaking out new capabilities in the real world. Unrealistic deadlines and high expectations for AI and IoT increased their stress. Those lucky enough to work at companies that gave them the breathing room or capacity to deal with the pace of today’s progress, often equated being future ready with companies having institutionalized a

capacity for change. There was no magic crystal Thriving Despite Change Despite Thriving ball telling them what the future would bring or how fast it would come, instead there was an underlying confidence in their company’s ability to change. But how did exactly does it happen?

33 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Participants were split 50-50 on whether or not their companies were Capacity is a Living Thing willing and able to make big change happen today. Among those who thought their companies weren’t ready 23% said companies commit to change but don’t achieve, 16% willing but not equipped, “So my most important lesson learned for big change is that so there and 11% talk but don’t achieve. Those with expertize in both smart are many times when we receive advanced and more technological and manufacturing had the worst perception of their companies with equipment, machineries, or services. And even though they are only 25% indicating companies were both willing and able to change. great like they are the latest in the market but we don't have the Further participant’s perception of capacity shifted depending where capacity to use them or make them compatible with our resources they were on the digital intensity spectrum. Companies at both ends and our devices.” were perceived as having lower capacity to make big change. Those just starting out struggled to get past the talking stage, while those at PROGRAM ENGINEER, OPERATIONAL TECHNOLOGY MANUFACTURER the high end struggled executing on what they committed to.

Lab Equipment, QA Equipment to Detect Metal in Product, Pharmaceutical Sector Factory Floor, Biotechnology Sector Computer & Electronics Sector

Capacity is about Total Work, Not Just Change “…. very transient workforce when you get to that level. So it's difficult to put in a lot of good Participants who worked at companies that they perceived as willing and able training to bring them up to that level. You'd to make big change happen indicated that their companies understood that like to bring in someone with that level of change had to be resourced just like any other area. Their companies got that the total work that could be supported was a mix of what was needed training, so that you don't have to spend that operationally AND what was needed to achieve their smart ambitions. There upfront, because in this market, it's very hard might be tensions on a day-to-day basis, but the goal was to find balance. to hang on to people. It's been hindering us to In contrast, those who felt that their companies faltered on the path to big raise the level internally ourselves. So for now, change, often commented on having to assume innovation responsibilities on we’ve really tried to keep up by slowing down top of their day jobs – and their day jobs kept them busy already. Some some of the pace of that next level indicated that their leaders seemed under the impression that they (and their transformation on the manufacturing floor, fellow employees) weren’t working at full capacity already so had the time. until such time we have enough internal These findings point to the importance of companies actively managing and capacity.” monitoring the impact of their change projects on their larger operations – and on an ongoing basis try to minimize their impact as a means of futureproofing. PROGRAM LEADER INDUSTRY 4.0, Look to institutionalize a capacity for change not just make a change.

END MANUFACTURER Product Storage in Warehouse in Storage Product 35 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Capacity for Futureproofing Too Much of a Good Thing

12.1 Be Lean,

“That was an advanced technology that we were all But Not Too Lean excited about. It was expensive, real, real expensive but it cut down on a manual guy wrapping and stacking. It cut down on a guy transporting. So, I could get rid of three to Accelerate people. And that was a CapEx project that we were able to justify but it needed a team of three engineers to get it Some manufacturing participants (and those that worked with them in the ecosystem) were concerned that companies don’t have enough implemented and they were like, ‘No it's going to need too resources to successfully transform after many years of using lean many people to get it implemented.’ We were like, ‘Whoa, techniques to streamline processes, remove waste, and cut costs. we get rid of three people, three full-time people.’ And they They recognized that digital transformation towards Industry 4.0 were like, ‘Yeah, but it's going to take years.’ And I was needs new resources and metrics to support change in the long-term. like, ‘Yeah, but I get rid of three people.’ So that's an However, their company’s leanness in terms of people, finances, and obstacle sometimes.” metrics limited what they could do that is truly transformative – and had the unintended impact of decreasing the chances of successfully PROJECT MANAGER AND MASTER BLACK BELT, executing on smart ambitions.

END MANUFACTURER Moving Finished Product, Warehouse Product, Moving Finished 36 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Capacity for Futureproofing “So, it's good, but it's also bad with how lean we are. If we're so focused on this cost cutting and we're reducing our headcount, that's just The Double-Edged Sword of Lean pulling more and more resources from what I Participants recounted how a company’s leanness in terms of people, can use. And I mean we're going through an finances, and metrics limited what they could do that was truly transformative. assessment period right now and I know that From their perspective, too much focus on lean could hamper change efforts everybody that I work with is going to be in several ways: changing due to these assessments in our • Employees were inclined to distrust efforts at transformation as merely organizational restructuring. If we keep on ways to reduce headcount or increase their already weighty doing them, then my project is going to get responsibilities, passed between so many different people, that • Lack of internal headcount with the expertise and drive necessary to it will never see the light of day. I've had four accelerate Industry 4.0 let alone make the time available to be allocated to different plans because I've had four different the change process, and managers that view the initiative very • The financial focus on lean led to an emphasis on short-term ROI that differently. Changing a plan slows you down made it difficult to get capital expenditure approved for the long-term ROI of transformation. even after we have the buy-in.” So how did companies navigate these obstacles to grow capacity? PRINCIPAL MANUFACTURING ANALYST,

END MANUFACTURER Finished Product Being Moved from Factory Floor tofromWarehouse Floor Factory Moved Being Product Finished 37 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Material Storage Warehouse, Food & Beverage Sector Capacity for Futureproofing

“Must assess the pace at which we implement change - do it at a pace that you're not walking so far that you fall flat on your face, gauge and assess the pace at which an organization has a good propensity to sustain that change and transform.” PARTNER AND GENERAL MANAGER, CONSUTANCY Assess

Those companies that participants believed most successful at big change were also often the most mindful when it came to the extent of change they undertook. They understood they did not have unlimited resources to support their changes, and focused on aligning their change efforts with the bandwidth that they had available. But even the most mindful companies often found their efforts undercut by their uncertainty around exactly how Capacity Today much time and resources would be needed to achieve their goals. As a results their efforts to assess their change capacity often lacked the rigor with which they assessed operational capacity. Allergan Codes to Prevent Cross-contamination in Warehouse, Food & Beverage Sector

38 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Machine Changeover, Pharmaceutical Sector Not Once and Done THE UNCERTAIN NATURE OF ASSESSMENT Change capacity is a fluid thing with unforeseen internal and external changes likely to impact it, making assessment an ongoing process, not once and done. Even who is involved in the assessment may change outcomes. The Fluidity of Capacity Participants with management responsibilities are more likely to consider their company capable of handling big change than those participants without management responsibilities– suggesting that a robust capacity assessment should include all levels of the organization, not just the leaders. A few participants mentioned their company had “If you stop updating, if you stop innovating engaged with external groups to assess their you die. Literally. Like, your service will change capacity but lamented the expense and become still, and requirements will change. looked for a more self-serve way to assess their Customers will move on. So, you have to keep readiness for Industry 4.0 level change – and changing in order to survive. But then again, while some are available in the ecosystem, their existence did not seem to be widely known or this change that you need to survive can also other obstacles hinder adoption. Still other kill you. So, you know, what do you do?” companies are trying to compensate for the uncertainty around the change capacity needed SOFTWARE ENGINEER, for smart by establishing communities to share INDEPENDENT SOFTWARE VENDOR learnings and better understand what would be needed for IoT projects.

39 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Processing Antibiotics, Pharmaceutical Sector Capacity for Futureproofing

“Don’t commit to too much. Delight everyone by overachieving.” INDUSTRIAL ENGINEER, END MANUFACTURER Prioritize

Participant technologists often commented on the shifting priorities or ad hoc organizational requests that impacted their projects – many expressed frustration at being asked to do too much, in too short of time, with too few resources. They described planning (and prioritization) processes of variable maturity, with those at the lower end of digital intensity planning infrequently or on an annual basis and those at the higher end having more established, ongoing, continuous processes. They also frequently expressed frustration, Decisions Needed especially in relationship to IT or larger corporate entities, with bureaucratic processes that kept them from what they perceived as the priority work of change – namely, the technical doing.

Lab Equipment for Weighting Samples, Pharmaceutical Sector

40 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Parts Inspection in Kitting and Inventory Stock Locations, Industrial and Commercial Machinery Sector Making a Choice

WHAT TO DO, WHAT NOT TO DO Some participants advocated for (but too rarely got) a more holistic approach to prioritization – one that looked beyond the immediate project and took into account the larger pipeline of Freeing Up Capacity smart possibilities for the company. Project managers, in particular, believed that a capacity discussion should be an explicit part of the go/no-go decision before a project began. How participants and their larger organization prioritized initiatives varied, but doing it “We said, ‘If you have the budget to do so, successfully always involved a core set of outcomes: deciding not to do some projects, how would you prioritize that 10-year putting projects temporarily on-hold, out- roadmap, and what would be the things that sourcing some work instead of doing in-house, you would want to do in the next three years? and even extending the project schedule in Then put that list together and prioritize it.’ some cases to adjust for available capacity. Then, from there, we started to put some Those that were successful understood that ROI's and business cases behind some of capacity was finite and choices had to be made in order to successfully execute on both their those items, documented the business plan smart ambitions and operational commitments. and we're starting to execute them also.” They understood that everyone from leaders to the factory floor had to have the capacity to DIRECTOR OF FINANCE, CONTRACT OR CUSTOM MANUFACTURER deal with the planned changes while still getting their other work done for them to be valuable.

12.2 Leap Forward with Culture and Mindset For both those in the ecosystem and in the factory, corporate culture and employee mindsets were considered key to long-term sustainability of their smart initiatives and successful execution on their smart ambitions. So much so, that 78% of participants called out “So the thing about digital transformation and shifting its importance. Some went so far as to suggest that cultural shifts should be made to traditional manufacturing companies before the business culture is it takes a long time. That it is not for the organizations even attempted digital transformation – for the shift to faint of heart. So that tends to be a journey. It's not a autonomous changes not only the technology people use, it also destination.” changes how they work together. By fostering the “right” cultural traits, organizations were can more quickly realize the benefits of GENERAL MANAGER OF GLOBAL ALLIANCES,

INDEPENDENT SOFTWARE VENDOR autonomous. Returns Sorter. Paper & Printing Sector Printing & Paper ReturnsSorter. 42 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Key Traits for Organizations and Individuals But what exactly are the “right” traits? Below are the organizational and individual traits that participants believed matter most for achieving and futureproofing smart initiatives. Each trait listed below was provided by at least 20% of technologists, with traits ordered from most frequently mentioned to least.

ORGANIZATIONAL TRAITS INDIVIDUAL TRAITS What organizational traits matter most What individual traits matter most ACCELERATERS 1. Discipline and accountability 1. Life-long learner What to cultivate 2. Agility, flexibility, adaptability 2. Networker and collaborator 3. Forward looking innovation 3. Risk taker willing to channel inner maverick 4. Customer focus 4. Persistent and patient 5. Risk taking 5. Creative and innovative 6. Learning culture 6. Systems thinker 7. Trust and empowerment of employees 7. Agile and flexible 8. Data-driven 8. Responsible and hardworking 9. Proactive 9. Passionate 10. Collaborative 10. Improvement mindset DEACCELERATERS 1. Not agile or flexible 1. Complacency What to minimize 2. No real discipline or accountability here 2. Not Collaborative 3. Risk intolerant 3. Lack of confidence 4. Hierarchical and authoritative 4. Fearful of failure 5. Culture of blame 5. Not disciplined 6. Not data-driven 6. Not a systems thinker

FUTUREPROOFING TRAITS FUTUREPROOFING 7. Reinvent the wheel not re-use 8. Not innovative (Remaining traits did not meet the threshold test 9. Not customer-focused of at least 20% of participants providing)

10. Not open and transparent Vehicle Service in Laptop Ruggedized

43 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Manually Verifying Measurements, Metal Fabrication Sector Capacity for Futureproofing

“Whether it's like a leader, a thought leader. or somebody who's just leading their team or something, you kind of have to be okay with getting over one hump, and then knowing there's going to be five more and you're not going to know everything at any point, and it's just continuous.”

INDUSTRY TECHNICAL SPECIALIST, ORIGINAL EQUIPMENT MANUFACTURER Leadership

For many participants, leadership, or lack of it, determined an organization’s ability to deal with the challenges that came as they inched closer to autonomous, especially the cultural ones. These challenges are complex and require learning and recalibrating as the organization is “in-flight” to its digital destination. To keep this journey on track, leaders must establish an environment where this Lead Forward learning loop could occur without repercussions or fear in their organizations. They had to leave space for learning and adapting. Informal or formal, they lead the way. Cleaning Machinery, Food & Beverage Sector

44 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Adjusting Torque Head During Changeover, Pharmaceutical Sector Open and Transparent

THE DIFFICULT CONVERSATIONS Participants had a range of suggestions for how to ameliorate the perceived short- comings of leadership in their spaces. They ranged from replacing them with more digitally savvy versions – yes, they Lead Forward admitted that was perhaps a bit extreme even though at least one company apparently went that route – to educating them to building relationships. As you might expect, some technologists yearned for more technically savvy leaders, but they also wanted ones that would have “From a leadership perspective you have open conversations that could help them to continue to inspire the whole team and overcome one of their most perplexing and we work for 7000 person companies and persistent problems – adoption of their you've got to get everybody on board. It's technology in the factory. Whether external not an easy message to deliver but you got providers or internal technologists, they wanted leaders that would have the at to inspire people to say – this is where our times difficult conversations about the company is going, do you want to get on impact of these technologies on the bus or you not?” employees, to be upfront about work changes, and to connect solutions to their DIRECTOR OF SALES, larger business value. INDEPENDENT SOFTWARE VENDOR

12.3 New Skills for the Future Ready Workforce “I think finding people with the right mix of tactical chops and practical, pragmatic Much like the underlying technology, the skills need to transform the business application experience who can potential of AI and IoT into reality are evolving rapidly. Manufacturers and ecosystem providers alike say they can't depend on having the help make the new technology into solutions skills needed to realize their digital dreams in-house. Fully 69% of that actually have value to organizations is participants called out skill availability as a limiting factor when it most challenging. People tend to skew to one comes to realizing their digital visions – and it is expected to get worse side or the other of the skills spectrum.” in the future. Participants also expressed concerns about the sustainability of their own digital skills. Given all that is it any wonder IT CONSULTANT, that 64% thought the most important individual trait for success was

CONSUTANCY being a life long learner? Customer Support Area, Outside the Factory the Outside Area, CustomerSupport 46 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Today Skills May Not be Future Skills But what exactly are the skills needed? Part of the challenge is no one is really sure what the future will bring. Below are the skills that participants felt added the most value today starting out and those they needed to grow or strengthen to be better prepared for the future. Each skill listed below was provided by at least 20% of technologists, with items ordered from most frequently mentioned to least.

SKILLS TODAY SKILLS FUTURE What adds the most value now What to grow or strengthen for the future

1. Basics of modern programming or software engineering 1. Deep understanding of modern programming or software 2. Manufacturing engineering techniques 3. Great communication skills 2. Digital dexterity, or the ability to leverage existing and emerging technologies for practical business outcomes 4. Innovation skills (e.g. brainstorming, design thinking) 3. Data science 5. Traditional IT skills 4. Connectivity 6. Data science 5. Cybersecurity 7. Systems thinking 6. Manufacturing skills 8. Analytical and problem solving skills 7. Hardware skills including development 9. Hardware skills including development 8. AI and machine learning 10. Influencing skills 9. Collaboration and communication skills 11. Business skills 10. Integration skills 12. Digital experience skills (e.g. user experience) MOST MENTIONED SKILLS MENTIONED MOST 11. Influencing and stakeholder management skills 13. Ability to work on a multi-disciplinary team 12. Data management skills 14. Project or program management

15. AI and machine learning Workstation Safety FactoryforTracking Safety Workstation

47 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. HPLC Machine Used to QA Product Sample, Capacity for Futureproofing Industrial Chemical Sector “Upskill those folks. Then, just talk about, ‘Hey, there's going to be opportunities provided for people that have that level of interest and are willing to go through the training to either be an automation technician, to work on robotics, work on programming. Beginning with the machine learning and the data aspect of it, there will be opportunities there.’ We've got a little phrase we use. We're going to stop hiring strong bodies and start hiring strong minds as we move forward.” DIRECTOR OF FINANCE, CONTRACT OR CUSTOM MANUFACTURER Upskilling

Hiring the latest skills is also problematic with companies facing stiff competition and factory stereotypes make hiring even more difficult. Upskilling today’s workers makes practical sense. Participants felt strongly that upskilling was also needed by the larger factory workforce – especially those that one person referred to as “digital Career Refresh dinosaurs” who lacked even basic computer skills in the factory. However, some do not have the desire to upskill and participants stressed that there are likely still roles for them in the factory and emphasized the value of their in- Bread Production Line, Food & Beverage Sector depth understanding of the operational why behind today.

48 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Equipment Used for Running Chemical Baths, Computer & Electronics Sector Utilized = Valued

Upskilling Should Not Be SUPPORT TO ACCEELERATE Solely Do-It-By-Yourself Many participants talked of the struggles of upskilling without company support and having to do it around their day job. It takes longer, its harder, and its does not breed the same loyalty to the company that was evident among those who felt their efforts “The biggest challenge in managing smart were supported. Support takes many forms work is keeping others motivated to constantly from a boss who makes sure assignments utilize new skills to making space in the keep learning about new technologies and workday for learning to formal training. But even doing some short courses to improve whatever the form, it pays off in terms of their knowledge. It slows us down because acceleration. sometimes employees are not willing to The loyalty support breeds may also benefit sacrifice so much time or have too many the company in the form of increased things to do to spend time learning new retention. Many participants reported that technologies, so we cannot implement it as their company often had trouble retaining quickly. We are overcoming this by hiring a the latest skillsets. People with the latest few new workers to ease the workload and skills have many options, and participants emphasized the importance increasing give people time to be able to learn new retention by ensuring there was a technologies so we can use them quicker.” sufficiently deep pipeline of smart projects SENIOR DATA ANALYST, to keep technologists engaged and their CONSULTANCY skills utilized.

Shock Absorbers for Change

Besides needing both space and the capacity for change, technologists – inside and outside the factory – described the need for safeguards or a safety net that would help them better deal with changes coming in the next 3-5 years.. Often, safeguards related to extending the practical life of their technology investments or ensuring that the decisions made today did not lock them into a

specific provider or constrain their future options. BufferingChange Providers and the larger ecosystem were seen as having the greatest influence when it came to futureproofing safeguards with the majority of participants highlighting tactics requiring them to act.

12.4 Move Past the

“ keeps sticking roboticists with their . Robotics want to be able to use it but they keep thinking, well, the camera doesn’t really do everything that they want it to do and they’re afraid Leave It’ Mentality is just going to pull the product at any time. Looking 3-5 years down the road, many participants, especially those So that’s the word on the street. needs to working in manufacturing, were concerned whether today’s advanced support their Vision products a hundred percent, the systems would continue to be serviced and supported either in-house same way end-customers expect start-ups to. Because if or by external providers. Too often, they had experienced situations a start-up delivers a robot using their camera and then where the implementers’ concern ended when a product was sold and deployed with little or no support available afterwards. Some they can’t buy it anymore, well, they’re screwed.” committed to a product, only to have providers unexpectedly drop START-UP ROBOTICIST, from product roadmaps and leave them to deal with the fallout of the

INDEPENDENT SOFTWARE VENDOR unexpected decision. Caged Automated Pallet Mover. Food and Beverage Sector Beverage and Mover. Food Pallet Automated Caged 51 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Copper Spool Storage, Electrical Components Sector Safeguards for Futureproofing

“We're providing a service that’s very high margin. We’re adding sales in the services but it’s very high margin because it leverages technology and robotics and big data analytics. So, if you can add a service component, you're really increasing the likelihood that you'll add more customers.” BUSINESS INTELLIGENCE DIRECTOR, OPERATIONAL TECHNOLOGY MANUFACTURER Services

Some providers are investing in new services and responding to the increased demand for post- deployment servicing on the part of their customers. They recognize that the nature of these new, advanced technologies requires increased support around retrofitting, updating (especially in relation to security), and connectivity among other services. However, there are still Extending Lifetime many providers, and system integrators especially, that are still operating in the old model of ‘sell it, set it, and leave it’ despite the fact that new technologies are increasingly complex and difficult

Hinge Machining, Metal Fabrication Sector to support entirely in-house.

52 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Install Molds into Injection Press Machine, Rubber & Plastics Sector Local Valued

THE REASSURANCE OF GEOGRAPHY The Value of Near A surprising number of technologists – especially those in manufacturing – called “This company was trying to sell into the out the value of physical proximity when it American market. Totally failing at it. While came to sourcing their AI and IoT needs. they did have the best tech on the market, Their reason was that a provider with a they did not have an on the ground presence local presence can more easily help when there are problems, connect smaller for servicing and a local phone number. So, companies with other like-minded ones, literally the buy decision was based on be on-site at critical points (e.g. someone looking at the phone number and deployment) to ensure things went saying, ‘That is not from this country.’ That smoothly, potentially help them become sounds like a tiny detail but in the magical more future ready by bringing an outside little moment the decision is getting made perspective, and in general be more responsive to their business. someone is thinking: I'm going to be servicing this thing for ten years. How do I For the manufacturers, the proximity of providers could also make the difference talk to somebody who may or may not speak between a smart capability being cost my language, is definitely not in my time effective or not because as one zone and it would probably take them three participant put it, “if when my machine is days to fly somebody over here?” down, and I have to wait for six days every time it goes down for someone to HEAD OF PRODUCT, come, I can't do that.” INDEPENDENT SOFTWARE VENDOR

12.5 Get Past the

“I would tell the market to focus on interoperability. Bringing proprietary anything – whether a platform, or sensor or Proprietary, Wild communication – that is painful. It is difficult. It is not scalable. I am driving for bringing solutions that are only interoperable and scalable, so I get really pissed when a West Mentality company comes to me and shows me something, and then Regulations in the form of standards for interoperability could I see I can't connect to something else, and I can't buy accelerate the development and deployment of smart solutions. 10,000 of them. If I have to put in 10 siloed solutions, that is Participants saw them as a key element of ensuring future readiness much more expensive, whereas if we can put in one of capabilities and keeping them out of what one participant referred to standard, scalable, or even plug-and-play, that lowers our as “proprietary jail.” However, time and time again, both in-house and overall infrastructure cost, and allows us to do more things.” ecosystem technologists almost universally decried the lack of such standards and a plethora of non-interoperable components and technologies in the industrial space. Further the lack of enough PRINCIPAL ENGINEER,

INDEPENDENT SOFTWARE VENDOR regulation also made defining objectives unnecessarily complex. Brewery Pumps. Food and Beverage Sector Beverage and Food Brewery Pumps. 54 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Energy Substation, Outside Factory Safeguards for Futureproofing

“Standards are your friend because they speed things up. When everything looks pretty much the same – follows the same patterns, it is harder to make mistakes. It is harder to break the system. Standardization is good because if every operation is a custom snowflake, when your phone is going to ring at 3 AM, you will probably not remember everything.” SOFTWARE ENGINEER, INDEPENDENT SOFTWARE VENDOR Standards

Participants were particularly concerned about the lack of interoperability on connectivity and cybersecurity, and other fundamentals for the long-term sustainability of AI and IoT solutions. They are looking for leadership in establishing Shared Expectations standards for interoperability. Even in the absence of industry-wide standards, there is a lot of potential for traction with just partnerships for interoperability. Facility Upgrade, Factory Floor

“There's massive gaps in technology when it moves from an ordinary location to hazardous The Challenges of Compliance location and it's typically created by standards. For manufacturers and ecosystem partners in highly regulated manufacturing So, you’ve got to read the rules and regulations sectors (e.g. pharma, biotech, energy, petrochemical) regulations can slow when you have to apply them as an engineer. adoption of smart solutions. For some, regulations slow because of the time and There's always a disconnect there if the rules say resources it takes to ensure new solutions are compliant. For others, being part of a highly regulated sector may limit the opportunities for innovation without this, but the mechanical engineer reads the potentially long and difficult legal battles for approval with regulators. rules differently than they should. So, you really have to look at it as an attorney and then go to Even less regulated manufacturing sectors are still more heavily regulated than many start-ups or technology companies know what to do with, a mismatch that the engineering side. There's also a lot of gray can make it very difficult to bring new promising technologies into contexts areas where they make up rules, or engineers where failure can be a matter of life, death, or injury. will make up rules as they go and say, industry Some ecosystem participants report their company has found a silver lining in standard practice and this and that, and you regulatory constraints either by becoming a successful provider of high value have to cut through all that and get all that out solutions for a particular highly regulated manufacturing market, advising others and open before you give them any money.” on the specifics, or by identifying new ways to innovate in their sector. Collecting and distributing use cases from participants like these could be highly useful for CEO AND FOUNDER, others trying to navigate Industry 4.0 in similar sectors of manufacturing.

SYSTEM INTEGRATOR Quality Assurance Lab, Pharma Sector PharmaLab, Assurance Quality 56 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Packaging Area, Paper Print Products Sector Safeguards for Futureproofing

“Any time that you take in any tool that is not open source even if you need them – your system is that much harder to maintain. You are now entering a relationship that will impact your systems years down the road. And then, the last thing is talent. It is so difficult when you are dealing with non-open source to find someone coming out of school who is an expert or is even interested in maintaining that expertise.”

SR DIRECTOR DATA SCIENCE AND DATA ENGINEERING, CONSULTANCY Open Source

Almost universally participants extolled the value of open source – whether the community forums that were vendor agnostic, the tools that made their work easier, the underlying transparency of Capability Differentiator code, or the capabilities that simplified integration and make their end product or service more future ready. For the people hands on with AI and IoT capabilities, open source accelerated their work. Parts Sorter, Metal Fabrication & Machinery Sector

57 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Cleaning CNC Machine, Metal Fabrication for Aerospace Sector Operational Angst

THE LURE OF OPEN-SOURCE 80% of the participants stated it was important for external capability providers to offer open- source options for their smart projects – despite 31% having no direct personal experience with Value for Providers and it and only 27% having used it for at least 1 Customers project. 57% thought IIoT consortiums and conferences had an important role to play, but little agreement as to which ones to watch. However, those in favor dropped to 46% when only considering participants whose expertise was primarily manufacturing, with ones who had “Given the forecast of market size for IoT operational responsibilities in the factory the and related technologies, like real time most conservative – most of their angst streaming, my advice is to develop centered around open platforms being a security risk due to their method transparency something that can be easily both which bad actors could potentially leverage. In adopted and customized, to become a part, their perspective may be driven by lack of standard in the market. Always leave a exposure with 53% claiming no direct door open for open source technologies. experience with open source. However, Closed environments are a risky bet!” experience did not eliminate security concerns. So while open-source has potential value for BUSINESS ANALYST, the factory, providers must address these CONSULTANCY concerns to realize its full promise.

58 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Programming the CNC Machine, Metal Working Sector Protecting What Matters

Building the plane while flying only works if you have a viable plane every step of the way – or in the case of our participants, futureproofing only matters so long as you have a viable business. For participants, central to having a viable business was the concept of integrity – integrity in data and integrity in reputation. Underlying both were fears around whether or not the capabilities that they invested in today would remain secure in the future with both their data and their reputation expected to

be tarnished by any failure. While loss of reputation Data Data Reputation & could conceivably put their business at risk, loss of data integrity could impact both their reputation and put at risk any possibility of getting real value out of their smart investments. But the reality is that it is particularly hard to prevent and predict threats to new technologies in unknown future contexts.

59 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Increased Transparency = New Possibilities & Vulnerabilities Participants report that as the factory becomes increasingly inter-connected, data sharing is on the rise and is breaking down some of the traditional silos of the “No one's really leveraging data to make our whole ecosystem more factory. But for many the data is still largely siloed within the factory either virtually in closed networks or physically on-site. While technologists often worried about effective in my mind. So if we look at it as one big service and then the unplanned data sharing precipitated by bad actors in the larger world, new optimize everything that we're doing to just identify how we can better smart solutions and services are being invited into the factory because of the new service those assets is my thought. I'm not trying to nickel and dime value they bring (e.g. remote servicing of systems by providers, real-time them to make profit in the short term, I'm looking to provide a long connections with the supply chain) and are gradually eroding traditional boundaries term service where we're all going to profit from it, right? So that's as digital intensity increased. Futureproofing will require positioning oneself to take where I think we need to get to in five years – it's much more service advantage of these new changing possibilities despite the risks. Data governance and policies around data sharing need to be developed and/or refined along with oriented, rather than just providing a product.” maturing cybersecurity protections. BUSINESS INTELLIGENCE DIRECTOR, OPERATIONAL TECHNOLOGY MANUFACTURER

Production Fiber Cement Plaques Stocking & Sorting Parts, Assembly Area Welding Booth, Machine Shop

60 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. A Dampener to Acceleration The real value of the intelligent factory lies in the multitude of data streams from devices, equipment, systems, sites, organizations, and potentially even ecosystem companies that come together to solve a multitude of business challenges. Data is the accelerator of business value, but data sharing is required to reap it. A SHARING DIVIDE The differences between manufacturers and their ecosystem counterparts was stark when it came to their openness to data sharing – fully 46% of participants who worked at a manufacturer indicated that their company would NOT BE WILLING to share data outside the company in the coming years, while only 20% of ecosystem technologists thought this was true. Of those whose smart efforts were “If there was any improvement to make, it would be in our exclusively in-house, fully 75% indicated that willingness to share data without fear of it impacting our their companies would be unwilling to share data externally. Bridging this sharing divide will business just because it will further our business. It's just be key to accelerating towards a more people kinda get a little bit short sighted I think, thinking autonomous future. that short term, it's gonna impact your bottom line, but I Participants believed their company would be don't think they're realizing the long-term benefits.” most amenable to sharing data externally with key partners, but even then only 33% indicated TECHNOLOGY MANAGER, OPERATIONAL TECHNOLOGY MANUFACTURER

their company would be willing to do so. So Seldom Enough Warehouse Storage, Consumer Goods Sector ConsumerGoods Storage, Warehouse Enough Seldom So

61 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Magnetically Powered Battery Cart in the Factory Extreme Caution Key Partner But Not Necessarily Willing to Share Data “Vendors are a big security pain point PROTECTING THE “SECRET SAUCE” because you can’t control them, they’re not Tied to data sharing is partner trust, with your employees, and yet they are going to companies unsure whether external have access to your data crown jewels. So, providers will keep their products secure and insuring things like secure remote access updated or whether that will be entirely the customers’ responsibility. Some technologists for vendors is incredibly important. And at reported that their companies were so the same time, not easy. And so, how concerned that they literally paid for external people vet their vendors, how they manage vendors and capabilities, only not to get full security is something that comes up in all value due to their company’s unwillingness to these meetings and all these share their “secret sauce” and instead only conversations. And having worked for a giving external companies access to pseudo data sets to shake out the solution. This large industrial company, it was something mindset was most frequent among that we would have to get in front of. Before manufacturers, with AI or analytic capability you could talk to them about your digital providers recounting their frustrations about transformation tech or initiative, they being unable to build a high quality model wanted to know how you were going to do due to their inability to access the real data. the stuff you were already doing more Technologists who focused in house encountered the problem less frequently, but securely. That’s just a real pain point.” when they did it was the result of internal SR DIRECTOR STRATEGIC INITIATIVES, silos that inhibited the free-flow of data. INDEPENDENT SOFTWARE VENDOR

12.6 Get Past the Uncertainty of

“The interesting thing is that the medical space actually is the place where we’re seeing some improvement. The Securing the Unknown FDA setting policy, finally that certification of a product of While security may not have been on the top of the list as to what is a medical device does not lock it to a specific patch level likely to derail their company’s future plans, it was repeatedly a major and in fact requires patching, is a huge step forward. And stumbling block for participants. They wonder: will today’s adoptions be having something similar for industrial IOT would be secure tomorrow? How do you plan for what you don’t plan? probably a critical piece. The statement of your 40% raised concerns about the new security risks that come with these embedded device must be able to be patched. And must smart things. For some, the lack of consensus on what security for be patched on a regular basis. And you must provide Industry 4.0 should look like is a major stumbling block, with different patching for not just the length of time, I don't know. But, manufacturers and technology providers making up their own rules. For that would be a place to start.” others, the lack of data-sharing on shared threats and risks means that everyone has to reinvent the wheel on protecting their in-house equipment. Some are really scared about security risks while others DIRECTOR OF DATA SCIENCE, think they may be overblown.

bot Undergoing Testing. Lab environment Lab Testing. Undergoing bot CONSULTANCY

- Co 63 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. So Many Perspectives, So Little Agreement Technologists and manufacturers alike are having a hard time staying up on the cybersecurity threats and requirements. Looking down the road, many are worried “A lot of the cost of security is the fact that there is no really about how to manage threats and whether or not they can look externally for industry-wide standardization. There's some things and a few assistance for this. This is not helped by the way that security becomes another aspect algorithms, but what I would love to see is agreement on what to today’s too frequent divide between IT and OT. Further hampering efforts are are the key technologies for accelerating encryption, decryption regulatory inhibitors to updates or upgrades of high-risk solutions. at an IT and OT level and stop having that be something they Overall, there were large divergences on the nature of the threat, from manufacturing think is a differentiator because that creates fragmentation. I get engineers hoping they will be safe on-prem, cybersecurity experts claiming there is no it from pure dollars and cents why someone wants to differentiate way for IIoT to be secured, and sales professionals arguing that the threats are overblown. While the hope to shift cybersecurity models from reactive to preventative is that, but there's so many other places to differentiate yourself. present, there are doubts as to when it will become standard practice especially without Let's stop screwing around with the security.” the emergence of a clear authoritative voice to cut through the divergent opinions. PRINCIPAL ENGINEER, END MANUFACTURER

Food Coming Out of Frozen Blaster, Food Sector Chemical Station, Brewery Optical Profiler System

64 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Control Panel with Sticky Labels to Minimize Mistakes Safeguards for Futureproofing

“The bottom line is that data security is sort of like the key enabler for getting all this stuff right and so security has got to be a partner of all this digital transformation. They should be in the room and it should be top of mind for all that's done, right? It shouldn't be an afterthought.” SR DIRECTOR DATA SCIENCE AND DATA ENGINEERING, CONSULTANCY DATA DISCIPLINE

Data is the lifeblood of value in IoT. The integrity and confidentiality of this data is central to smart value propositions. Concerns over how best to manage data are an emerging pain point for manufacturers on the journey to Industry 4.0. There are still too many data unknowns and not enough guidance or Guidance Needed agreed upon parameters for data management. In the absence of clear guidance, participants advised a disciplined approach and resisting the siren song of scaling until teams have carefully verified data flows from format to reliability to unexpected lagging Production Scoreboard in Plant data, with continued vetting on an ongoing basis.

DISCIPLINE IN MORE THAN MANAGEMENT Validity of Decisions Not Just Data For participants working with data, being disciplined extended past the mechanics of “The types of data you have, and how you data management to also include what store it where it comes from – how you might better be described as being mindful bring it together, how people use it. The with their data. From their perspective, validity of the data – so on, and so forth. being mindful included ongoing monitoring It is foundational for what we do as an and curating of data to ensure optimal use, only gathering or storing data that could be organization to have good, solid data and acted on and had business value, be able to get to it quickly, and be able to organizing data in a way that supported provide information that we can make valid sense-making, and most importantly decisions for. It is an absolute. It is a understanding the responsibility that comes requirement. If we want to be successful with data – to respect the fact that what is at all moving forward, and we need to be done with data could make or break a company’s success. Being mindful required able to obtain that information. both organizations and data practitioners to , you will always be second- regularly make time to think and reflect on guessing , so it’s the true meaning of the data not just crank foundational, that the data side of it has to out analyses. It also included actively be solid.” working to mature the data processes within CHIEF OPERATIIONS OFFICER, their organizations, with data and decision- CONTRACT OR CUSTOM MANUFACTURER making quality their metric of success.

66 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Downtime Tracker, Automotive Sector Safeguards for Futureproofing

“All of these technologies, people are very skittish because they're worried about privacy. They're worried about all the different places their data is going to the side. They're worried about judgments and biases that these new technologies are going to bring in. They're worried about automation. They're worried about their livelihood.” ENTERPRISE SALES DIRECTOR, CONSULTANCY DATA PRIVACY

If data is the value bringer in IoT, privacy along with the many regulations and societal conventions governing data use are the drivers of reputation. Due to utilization in both manufacturing and end products, technologists are collecting more data than ever before. That does Not Just Consumers not mean that they are always clear on how to make sure that what they need from data aligns with what and how they are collecting it. As data needs and possibilities often evolve with solution use, they often admitted collecting everything just in case it was Interface for Chemical Component Measuring Tool needed in the future, rather just than the minimum needed today which could potentially put privacy at risk.

67 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Control Panel for Robot on the Factory Floor Privacy by Design

EVOLVING REGULATIONS AND EXPECTATIONS Technologists related feeling overwhelmed by the new data risks that come with these smart things -- from new privacy to transparency regulations to a lack of standards for data integrity and quality. Given the differences by geography, country, and Good Intent But Struggling even sometimes locality, staying compliant is increasingly challenging – and the speed at which “I've got the coolest product. It does this X, regulations and conventions are evolving makes it Y, and Z, better than any other product and even harder. we went through the design thinking we Within the factory, technologists report went through the customer journey mapping encountering increasing concerns about data and then you find out okay, you just messed collection and use as outside smart use and up completely on privacy. How did you do increasingly frequent news coverage are making that? How do you miss privacy? Right? And workers more aware of the potential risks. As a now they're starting to realize privacy by result solution designers are having to apply privacy principles within the enterprise to minimize design, security by design, everything by adoption resistance. design, is not something any one group of people or one company can do it. So I think Some consultancies and system integrators see opportunities to take on a more multi-disciplinary it's these types of fields that are also starting role in the space spanning from design to to merge into one and I mean literally they're localization but admit that not enough attention has colliding into one another.” been paid to it in the past. A few also pointed to these regulation as inhibiting their ability to VICE PRESIDENT PRODUCT MANAGEMENT, SYSTEM INTEGRATOR leverage cross-customer data streams and generate new value with data mining.

Both leaders and technologists struggle to identify best practices to futureproof their organization – how to keep their companies and themselves at the forefront of digital transformation. What our work suggests is that a one-size- fits-all approach doesn’t take into account the unique context in which change occurs. The key futureproofing takeaways are designed to help key audiences take the insights provided in this study and quickly get to action – to take the “right” approach or at least the one backed by data. In particular, the takeaways focus on • What Manufacturing Leaders need to do to futureproof their company as they chart their company’s path to the future, • What Ecosystem Providers need to do futureproof their own solutions and support their customers who are trying to become future ready, • What both manufacturing and ecosystem Technologists need to do to futureproof their own careers and help ensure

the systems that they work on future ready.

making and Processing Operations, FoodSectorOperations, Processingand making

First and foremost, leaders need to ensure their company has a holistic strategy for the future. In particular, leaders need to • Focus on infrastructure needs for smart solutions, including a solid cybersecurity foundation “Leadership is integral to good • Identify and track technical and non-technical challenges, factory performance - it cannot be metrics and lessons learned done on a distance. Of course • Stand up governance policies that balance ‘quick to deploy’ lack of certain technology is a solutions and ‘able to scale’ practices show stopper but I tend to think They must also build their internal workforce capabilities. In that virtually all technology particular, they need to problems are solvable with good • Balance external experts and internal staff for smart projects people/team, budget and time." • Create training programs that blend instruction and hands-on CHIEF TECHNOLOGY OFFICER, learning END MANUFACTURER Outside the Factory Where So Many WhereOccur Decisions Many Factory So the Outside • Emphasize company-wide support for learning

They also need to manage supply chain vendors to maximize value. In particular they need to • Identify key suppliers and build relationships that go beyond MANUFACTURING individual transactions • Develop governance policies and standards to share data LEADERS Futureproofing their Factories What to Do Now!

“Industry-leading providers are Providers must remember that they are part of the solution and collaborative in their approach. must work with others. In particular they must So, they take the time to • Understand their customer’s pain points and future ambitions understand the organization, the • Develop cross-vendor relationships needed to build end-to- application with the understanding end solutions that if, in the end, we don't gain • Focus on modularity, interoperability and standards competitive advantage – whatever that might mean – that it is for They must also understand faster is not always better naught. So they are not just trying • Manage updates and new introductions to correspond to to sell us something. They are manufacturing needs – don’t outpace the market actually trying to help us put a • Preview upcoming features so that manufacturers can better integrate these into planning solution in place."

CHIEF OPERATIONS OFFICER, They must anticipate deployment and trouble-shooting support END MANUFACTURER Photo Shared to Illustrate the Importance of Customersof Importance the Illustrate to Shared Photo • Augment technical solutions with easy-to-use development kits and support toolsets • Consider service support for deployment and ongoing customer support for capabilities as a cost of doing business • Think ahead to help your manufacturers anticipate new uses ECOSYSTEM for your solution; suggest how best to scale PROVIDERS Futureproofing their Capabilities What to Do Now!

Both ecosystem and manufacturing technologists must identify “Having the network guy that what they will need for tomorrow. In particular, they must you go to, having the hardware • Balance external expertise and internal know-how guy that you go to, having an • Grow your internal capabilities with hands-on activities electrical engineer that you go • Seek hands-on training at your workplace to. Having a process control expert who can tell you what They must also think outside the boundaries of their company. the current state of process In particular, they should control software is. I think • Not wait for their workplace or their customers to highlight future needs but instead proactively seek to discover building and maintaining those networks inside the company is • Develop professional connections to keep up to date with trends certainly useful." • Grow a deeper knowledge about infrastructure aspects of IT INNOVATION TECHNICAL LEAD, smart technologies

END MANUFACTURER Key Factory TrackingUsedSystem in Material Enterprise Key While every technologist is the master of at least one domain, a fully formed advanced technology solution will require other skills. So they must • Develop linkages within their organization and outside their company to critical support skills • Seek opportunities to participate in strategy and requirements TECHNOLOGISTS definition when working with vendors and customers. Futureproofing their Careers What to Do Now!

72 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. Intel Corporation Intel Corporation Internet-of-Things Group Internet-of-Things Group Chandler, Arizona Hillsboro, Oregon 480-205-6211 direct 503-806-4615 direct

[email protected] Irene Petrick, Ph.D. [email protected] Faith McCreary, Ph.D. Senior Director of Principal Engineer Industrial Innovation

73 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved. 74 Faith McCreary & Irene Petrick | ACCELERATE – AI, IOT, and a New Beat for the Factory I © 2019 Intel Corporation I All rights reserved.