Well, good afternoon, ladies and gentlemen, and thank you very much for coming to this track session on industry four dot O I'm Mike Small. I'm an Analyst with KuppingerCole and I'm going to moderate this track. And my colleague Graham Williamson is going to make sure that you pay attention.
Okay? So we've got a, a great line of speakers this afternoon, but I'm going to start off by putting what is the problem. And the problem is that industry 4.0 is a great idea. We've got lots of great ideas in the information technology industry.
The problem is that those great ideas are not always supported by really good, strong security. And what happens when we connect these industrial systems that were designed to run with an air gap around them can have rather unintended consequences.
And there are two specific examples I'm going to quickly go through, which is the Ukrainian power grid attack, which in fact, I believe forge rock tweeted about earlier this morning, but in effect, what happened here was that the attack commenced with a regular spear fishing attack on the appropriate people inside the Ukrainian power control centers, which ultimately led to them getting access to the regular internal intranet, which was connected to the land or to the Scarda systems, which controlled things.
And the malicious attackers were so clever that they were able to mute the actual control screens and the telephone systems so that when they brought the power grid down, the major control room displays said that everything was all right, and nobody could get through on the telephone to complain to the people that it wasn't working properly. And indeed it turned out that the only saving grace of this was that the switches still were manually operable. And so they could send people out in vans and lorries to go and switch things back on.
So that's the kind of problem when you connect unsecured undesigned for security systems to the hostile internet, with all the malicious people on it. And a similar story applies to the famous meltdown of the, of, of, of the Blu furnace in Germany a few years ago. So there are more than one incident of this kind of thing.
So security is going to be the difference between life and death in an industrial control system.
So the security challenges of this are that, you know, the operational system, the operational security systems for things like scar and so forth are really designed for a much more benign era than we have at the moment. And we need to take a much stronger approach to the adoption of the way we design these things from the ground upwards.
And that, that is even further challenged by the fact that when you buy a machine tool, it may last for a century, whereas you throw your phone away after 18 months and that timescale is quite significant in the it industry in security terms. So with that, I'm now going to hand over to the, the speakers and the first speaker is Luigi Dini, who I'd like you all to welcome. Who's going to talk about the whole subject.
Thank you, Luigi.
Thank you, Mike. Is the mic okay? Yeah.
Okay, perfect. So
My name is RJA Bundini. I'm an electrical engineer. I'm Italian. I work since 1991 in the field of it for manufacturing. And since 20 years, I'm the CEO of outwear, which is an Italian system integration company. We provide software for manufacturing, improving the performances of the plans and all that kind of stuff. I'm on the EMEA board of MEA, which is the manufacturing enterprise solution association. It's a worldwide association that promotes the culture and the knowledge and the standards in terms of manufacturing solutions.
And I'm even part since one year, half of the smart manufacturing war group, but that just publish it in January, the first world white paper, which was called smart manufacturing, demystified, trying to explain what is smart manufacturing saying that why are we here today? Well, basically, and not only in this session, but I believe almost all the conference we are here because the technology has become really cheap, cheap, cheap, and cheap every day.
So these are small devices. This wristband that has a Nater to count your steps, have NABE monitor and monitor.
Even your sleeping cost, just $15, which is about nothing today in terms of technology. And this is happening because of these devices. So in 20 or seven, the iPhone or the smartphones started to appear and they changed the dramatically, the behavior of our lives, the way we interact, the way we communicate, the way we work and they change it dramatically. The technology in one of these devices that are about 17, 16, 17 sensors, there are two cameras, one front and one back camera. There's a proximity switch.
There's a, an ambient light sensor. There's a touchscreen on the new one. There's a pressure sensor on the touchscreen. There's a temperature sensor. There's a moisture sensor, does a fingerprint sensor. There's a GPS, a geoscope and a accelerometer, a rotation, a gravity barometer, all in this small device.
So think about 10 years ago, the space and the cost of having all those sensor in one single device. It's unbelievable how things change it. And having this amount of sensors causes the fact that we are having a huge increase in the amount of data sources that we needed to manage.
So the estimate says that in 2010, we had about 1 billion of data sources in 2020, the forecast 20, 20, sorry. The forecast is 50 billions of data sources. And in 2013, it's 1000 billion of data sources, but what can we do with this data? Basically nothing. If we do not transform them, them in informations. So in parallel, there's a, a forecast of a great growth of applications. So in 2020, the estimate is that there will be five millions applications to manage those datas.
And in 20 13, 500 millions of applications, you understand how the technology on one side and the application and the business level on the other side as growing are going dramatically and very, very fast
At the same time. Connectivity is growing is increasing the availability of connection of possibility to exchange and communicate the data we are used to 4g. It was introduced in 20 10, 20 15, it was introduced the LT advanced, and we are expecting on 2020, the 5g and 5g has nothing to do basically with transporting voice. It's not designed on voice, it's designed on data transportation.
So there's a specific chapter of 5g that is explicitly related to IOT, internet of things it's designed to connect a huge amount of small devices, spread all around the world and make them communicate together and with other entities. So it's based on providing connectivity for cheap mode, modern with a very, very low data rate to connect the devices that do not need to transfer a huge amount of data, but they can just transmit a few data sometime
Long lasting batteries.
Because if we spread around the world, millions of devices, we do not want to go and change the battery every year of every device. That would be impossible. So it's designed to have lower rate communication in order to save energy and guarantee that the battery will last at least 10 years extended coverage. The communication, the network sales will be much bigger than the Atwell wants. And the speed of communication, the available the available bandwidth will be much, much higher than now.
The design says that on the extreme border of the cell, the connection will guarantee 100 megabits per second, bandwidth, which is much higher than the normal one that we have close to the cell to the center of this seller right now, and of course, congestion control, but there are many other things that will be managed and provided by the 5g. It will provide traveling at the speed of a 500 kilometers per hour with many problems of keeping them connected and communicating at that speed.
So it's all designed to enable the connection, a huge amount of devices and has a collateral effect, even voice. So 5g is about connecting everything. 5g is designed to provide a connectivity to cars, to traffic controls, healthcare systems, water, and wastewater systems. People grids, everything that will interact with us that will be available in our world will be probably connected. That's the estimate, that's the design.
And at the same time, this is impacting all the industries.
Any industry is impacted by this change, the industrial machinery industries, we will have a reduced, an increased availability or reduced downtime due to the possibility to monitor from remote the devices, the consumer products, better segmentation of clients, customized services, based on the information that they will collect from the devices that you will use. Vending machines guarantee that they are always on stock, no product out of stocks and optimize the service consumer electronics contents deliver on demand a medical equipment.
This is a big, big sector because the, our life expectation is going. And this is a good news. The bad news is that we will live for more time with some kind of forgetting the English word, sorry, sometime of perpetual sick.
I mean, so in the last part of our life, we will probably need to face sometime of disease. And this that typically today is managing with hospitalization, but this would decrease our quality of life and increase dramatically. The social security cost.
So managing this and pro finding a way to provide assistance in-house to patients is a big, big topic on which all the government are working on because it's, it has a big, big impact on their, on their cost
Software updates for healthcare machinery, traffic reduction, as Martin managing the traffic self-driving cars, customized insurance cost based on the usage and on the behavior of the driver automatic update of the so car software, few months ago, Tesla released the new version of their operating systems and the Tesla owners just entered the garage in the morning, switch it on the car.
They found a new software that provided self guide features. Think how old it looks like the user interface of your card. If it's only four or five years old. And how unnatural is today, not to be able to update it or to receive updates of the application or, or of the HMI it's. We are not used to that anymore.
Appliances, industrial equipments. So basically every kind of industry is impact by this big change in terms of technology and technological availability.
But at the same time, even the business scenario is changing and this changing fast and dramatically, we talk more about personalization and less about mass production. People want the products customized based on their desire. Think to Nike, you can go on their website, you can choose the color size form decoration of the shoes, and they produce them exactly as you want and deliver at your home.
So you, you do not choose between one of the models you design your own model. And at the same time, they are guaranteeing volume production,
More usage and less ownership. People are less interested in owning something. They are interested in the usage and the benefit that that usage brings them. People are less interested in owning a car. They're more interested in moving from point a to point B and they pay for the service. They do not pay for. They're not interested in paying for the car and that's happening in any kind of industry and more service and less product.
Think just to Microsoft with office 365, they basically, in a few years, they change it totally the business model from selling a product to selling just a service. And this is not only in the software industry, G is selling as a service, the plain engines and companies pay based on usage.
So all these changes from the technical side and from the business side are impacting the manufacturing industries that needs to be to survive in some way, each, each company needs to improve the efficiency, improve the usage deficiency in using energy in using resources and create a competitive advantage on the efficiency that can create in that usage, but use the time to market because the cycle between product design and product availability on the market has to be shortening.
The market is demanding much, much short time and more frequent changes and updates of products and flexibility
With a personalized mass production companies need to be flexible, need to be ready to adapt to the customer needs and request. This happened already several years ago in the fashion industry. Typically the fashion industry manages couple of campaign fall and spring Zara changes drastically the model, and they have a campaign every month, which is designed and adapted, basing on the feedback that they receive from the stores in every geographical area.
So they are going, they are doing mass production based on the specific request of the clients and this not do not apply. So just to the single plants or single companies, this applies to the full supply chains because today competition in the market is not between companies, company against company is supply chain against supply chain. Only the supply chain wings, not the single chain of the supply, the single ring of the supply chain, sorry. And there's a big change in the supply chains. And the change is the customers.
The customers are becoming part of the supply chain with the information you provide using the product you bought to the designers of the product. You are going to be totally part of the supply chain. And this is a big, big change in the paradigm.
This is happening because there's a, a technological convergence of technology.
Availability does communication, as we said, does big, does big availability of connection, big bandwidth that enables cloud storage and cloud computing does mobile connectivity does availability of a big storages that enables big data, power, computational power of computers that enables to use complex algorithms to transform data into information with all the analytics. And of course the most famous is probably today IOT, which is a very, very strong buzzword in marketing, but it's something that is really happening.
So for this reason, for this convergence, for these fast change of the market needs and of the technology that is applied, we are talking about the fourth industrial revolution after the introduction of the mechanical loom in the late ING century, the industrial, the production line at the beginning of the 20th century, the usage of electronics applied to mechanics in the beginning of the seventies, we are now talking about super physical systems, which is the combination between mechanical, electronic, and software to create a device that can coordinate and communicate together and act autonomously.
And this is recognize as the fourth industrial revolution. So in this scenario, two different consortium started and were created. One is the industry four zero for Dodo platform, which is the German initiative. And the other one is the industrial internet consortium, which is, which was started in us. They are very different. They are different in scope. They are different goals. They are different in the approach. Let's go and see, which are the main differences industry. Four is German institutional initiative.
The statement, the manifesto states that the ultimate aim of industry 4.0 is to safeguard a sustainable competitive advantage for the German manufacturing base. On one hand, we have to train the German industry to build in the install CPS and on the other, allow them to remain globally competitive.
I read it because in this simple statement, there's basically all the explanation of the, the reasons for industry 4.0
It's to safeguard a sustainable competitive advantage, which is absolutely business related for the German manufacturing base, which means it's local, it's related to Germany and it's related to manufacturing. And it uses super physical systems, hardware system with embedded software to guarantee competitiveness.
So it's a, a, it's an initiative supported by the government, by the academic institutions and by business association. On the other side of the ocean, the industrial internet consulting is a nonprofit organization that aims to provide the resources, ideas, projects about IOT technologies. And the purpose is to catalyze and coordinate priorities and enabling technologies in industry academia and governments around industrial internet. So you see immediately, there's no geographical scope. They do not talk about manufacturing. They talk about industry and they talk about technology.
It was founded by five main members and now counts about 200 members in 12 different countries. And the founding members were Intel, Cisco G at and T and IBM. So some of the, of the big guys, so which are the main differences, I will say, industry 4.0 is local industrial internet consortium is global. The first one is institution driven. The other one is business driven.
The first one is focused on maintaining a competitive advantage. So it's business focused. The other one is focused on accelerating technological diffusion. The first one is just manufacturing oriented.
The other one is industrial IOT oriented, and this covers any kind of industry, healthcare, manufacturing, consumer devices, anything. The first one is standardization oriented. The goal is to define the standards to manage the innovation. The other one is realization oriented to prove what can be done. And then based on what can be done, define the standards that need to be define in some way. So we are in a very, very difficult situation because we have basically two different standards, two different consortiums that have similar goals, but are acting totally independently.
Each one wants a standard. And having the standard is absolutely necessary because lacking of standards in a global initiative like IOT or in a global changing technology like IOT can be totally disruptive. IOT is based on having devices that communicates each other, any kind of devices, global connectivity of anything anywhere, and having not having a standard that enables this is a big, big problem. And so having two separate initiatives that try to define the market to change in the market or to define the technology is in my opinion, totally absurd.
Even because the transformation that we are seeing is really terribly fast. It's happening with a pace that is really difficult to maintain and that trying to define and standardize the technology. So the technology approach, which is such such fast changing landscape is basically in my opinion, impossible because things and technologies changes before you can define the standard. So the good thing is that in February, this year, so just a few months ago, the two consortiums decided that probably didn't make sense to work separately.
And so they are trying to align
Platform industry 4.0 and the, the industrial internet consortium met. And they find that, that they, they already started to look at their respective architectural model. They are a I for zero and they, I, I, or a and discover that they are not so different, of course, having different scopes, they have some differences, but there are many terms that are the same, many layers that can be map one on the other and still some differences.
So they recognized the similarities and decided to work on the differences, but keep the initiative aligned in order to provide a common or try to define a common infrastructure. And this is, this is absolutely a good news. The effort was sponsored by SAP and Bosch, which are on the steering committees of both the consortium.
So it's, it was driven basically by Germany, but having now a common approach should be able to really make things moving even faster. So how this will reflect in our companies, we will need to discover. It'll be interesting, and it'll not take so much time because things are happening so fast that we will discover it very, very soon.
The question will is will all this changes really transform all thes in reality, or it will happen like the web bubble, the beginning, the end in the middle 90, that suddenly will explode and remain nothing or, or just a few things.
Well, we will see, we will see very fast for sure what's happening now is something big that will change in the next year. We will see a lot of changes, probably many companies that many startups that just were created in the last month will disappear in the next one. So there will be many aggregations. The landscape will not be the same that we are seeing today, but for sure something will remain and something, and that will impact dramatically our business. And in general, the industry last port for a guy that what personally, I like he said that that innovation is the only way to win.
And I believe that today, this is two more than in the past, and it can be applied at 20 aspect of our business. If not, if not life, that is what I had to talk you about. If you have any question, of course, I'm available here. I will be here for a while after this session.
And in, in case you have my contacts I'm available for any further discussion. So
Thank you very much.
