- By Matthew Littlefield
- March 31, 2020
- Smart Manufacturing (Industry 4.0)
- Industrial companies need to know how to choose a cloud provider for industrial operations.
- AWS has had tremendous success partnering with SaaS providers in the industrial space.
- Microsoft did an admirable job of extending its many existing partners to Azure.
Understanding commercial cloud providers is crucial. Start with Microsoft Azure, Amazon AWS, and HPE
By Matthew Littlefield
Given the ease of installation and updates, single version of the truth, multisite scalability, and other benefits of cloud computing and software as a service (SaaS) applications, industrial operations are finally embracing industrial transformation (what we call “IX”) in a big way. Discussions have changed from “Will we do cloud computing or make use of Industrial Internet of Things technology?” to “How will we implement cloud computing and IIoT?”
On-premises installations of cloud-computing servers give industrial operations directors more control, but also a lot of do-it-yourself responsibility. Off-prem cloud service providers have sprung up to help, but while five years ago there were still 10 or more vendors that had a credible chance of becoming the cloud leader for industrial operations, the race has come down to two front-runners: Microsoft Azure and Amazon Web Services (AWS). Here is a look at how the environment for industrial operations has evolved and what the front-runners have to offer.
Industrial transformation relies on the digitalization of processes and a variety of Industry 4.0 technologies, including cloud computing. Last year we were already seeing clear signs that 2020 will be the biggest year yet for IX. The Hannover Messe 2019 tradeshow in Germany revealed five big IX trends that got us where we are today.
- Industry embraces hyper-scale clouds. Both BMW (with Microsoft) and Volkswagen (VW) (with Amazon Web Services and Siemens MindSphere) announced enterprise commitments to the cloud and IIoT for industrial operations at Hannover. The goals and expected benefits for each were driving a single version of the truth, flexibility, and improved performance. In the case of VW, its cloud/IIoT commitment encompassed 122 manufacturing sites and about 1,500 suppliers.
- IIoT platforms consolidate. The world does not need 600 IIoT platforms—it does not even need 10—and last year we saw the market consolidate to a few focused on specific ecosystems or industries. The companies that had momentum include Siemens MindSphere, PTC ThingWorx with Rockwell Automation, ABB Ability, and Schneider Electric EcoStruxure. All have deep experience and credibility in operational technology (OT).
- Edge computing momentum continues. Even now in the industrial sector, we are still a long way from the “cloud first” mentality that the cloud hyper-scalers would all like us to adopt. For this, and many other reasons, the focus on edge computing has grown among many industrial companies. HP Enterprise (HPE) showcased new hardware and software in 2019 with the HPE Edgeline OT Link (see sidebar), which promised scalable industrial compute capabilities coupled with industrial edge data management and intelligence. Cisco, no longer being distracted with analytics or IoT platforms, had a much more focused message about edge data management, industrial networking, industrial edge computing, and industrial cybersecurity.
- Companies shift to solutions and multivendor environments. As cloud and IIoT platform consolidation continues, many industrial software vendors are showcasing their ability to orchestrate end-to-end solutions and help customers avoid platform vendor lock-in. SAP and IBM, for example, have long been the market-share leaders for enterprise asset management, but they now compete in this full solution area that we refer to as APM 4.0. This includes condition-based maintenance, reliability-centered maintenance, asset life-cycle management, and predictive analytics. Providers here include Uptake, C3AI, GE Digital, and AspenTech, among many others.
SAP has done an admirable job of bringing operationally focused solutions, with 3D visualizations and machine integrations, out of the back office and down to the shop floor, extending across product engineering, manufacturing, and the supply chain. The combination of financial, business process, and operations is powerful. Although IBM continues to lead with IBM Cloud and IBM IoT in other industries and use cases, it is clear IBM is moving toward a solutions-based approach for industrial applications. In 2019, hardly a product was mentioned in the IBM booth, with the highlight being solutions focused on delivering value to customers quickly by improving the performance of manufacturing and assets. Behind the scenes, these solutions are delivered by taking a modular and micro-services-based approach.
Over the past five years, Oracle also has invested heavily in cloud computing services and is rebuilding value chain applications like enterprise quality management software, product life-cycle management (PLM), manufacturing operations management (MOM), and supply chain management (SCM). More recently, the company has been investing in manufacturing-specific solutions, including the launch of five IoT applications focused on areas like productivity, asset performance, workers, and fleet. Coupled with their investments in IoT and artificial intelligence (AI) embedded in enterprise software, the end-to-end solutions showcased by Oracle in 2019 were compelling.
- Partner ecosystems for digital twins emerge. Originally a concept pushed by the PLM and computer-aided design communities to describe 3D virtual models of products, digital twins have been extended to include connections to the physical world and opportunities for virtually commissioning machines. As companies outside complex discrete manufacturing embrace this extended definition of digital twin, it is becoming clear that individual vendors cannot deliver the full solution. So partnerships are emerging. Siemens announced a partnership and investment in Bentley Systems in 2018 and gave a compelling demo of a process industry digital twin in the Siemens booth. The year 2018 also saw the announcement of the PTC-Rockwell partnership and investment, which was featured prominently in the PTC booth. And partnerships continued in 2019, with ABB and Dassault Systems announcing one as well. Finally, the Schneider Electric and Aveva partnership was on full display, with a number of the Aveva product offerings and solutions well integrated into the Schneider Electric booth.
A two-horse race: Azure v. AWS
The 10 or more vendors vying to become the cloud leader for industrial operations 10 years ago have been winnowed down. Either executives chartered with the endeavor moved on (GE, Google) or the strategy has moved to partnerships and enabling multicloud environments (IBM, SAP). Some are still trying—but with little success inside the factory (Oracle). But both Microsoft Azure and Amazon AWS now have a degree of accumulated advantage that makes it very unlikely any other vendor can catch back up.
It was already apparent last year that Azure and AWS had become the two market leaders when it comes to infrastructure as a service (IaaS) cloud and platform as a service (PaaS) IoT providers for the IIoT. Microsoft has a deep history in the industrial space and has done an admirable job of converting its multidecade long SQL and OS partnerships with OT vendors into being the preferred choice for recently launched IIoT platforms from these same companies. However, last year AWS was increasingly seen as a viable alternative, beyond its traditional success with independent software vendors offering a SaaS to industrial companies. Alibaba continues to be a significant player when deploying cloud on the ground in China.
As a core information technology (IT) provider, Microsoft has had a leadership position in industrial operations for decades, starting with the operating system that automation vendors switched to in the 1990s. And then it was the database that was switched to for both homegrown systems and many manufacturing execution system (MES) vendors. Not to mention, at many industrial companies, “MES” stands for “Microsoft Excel spreadsheet.”
In 2016 General Electric and Microsoft Corporation developed a partnership to unite each of the companies’ cloud technologies. The two organizations hoped to increase their IIoT strength by combining GE’s Predix Platform and Microsoft Azure. Running GE Predix technology on an Azure platform was a natural step, and GE hoped that by partnering with Microsoft its customers would find value in artificial intelligence, data visualization, and natural language technology. More recently, Microsoft did an admirable job of extending its many existing partners to Azure, including Rockwell Automation and Schneider Electric.
In December 2019, 60,000 attendees descended upon Las Vegas for AWS re:Invent. Just like Amazon Web Services generally, the re:Invent conference is fast-growing and overwhelms with its sheer breadth of content. AWS CEO Andy Jassy clearly took pleasure in the success of AWS: after just 13 years, the division has grown to $36B in revenue, and is still growing at 35 percent compound annual growth rate. At the event, there were several key announcements:
- Enabling machine learning (ML) at scale with SageMaker. This essentially launches an integrated development environment for ML to speed developing, debugging, deploying, training, and maintaining new algorithms.
- Outposts, the cloud-native managed service run at the edge to enable hybrid architectures, has moved from preview to general availability.
- The continuation of AWS’s strategic move to enter smart factory.
AWS demonstrates a clear leadership role among Silicon Valley disruptors such as Uber, Netflix, and Airbnb. But in our industry, AWS is coming from behind and playing the role of disruptor. AWS has, however, had tremendous success partnering with SaaS providers in the industrial space. For example, both Infor and Siemens have chosen AWS as their cloud providers.
As LNS continues to advise many clients, the path forward for AWS is still emerging. There is both significant momentum to capitalize on now and significant headwinds to overcome in the future. Industrials including Georgia-Pacific and Volkswagen for its Industry 4.0 initiative are starting to make enterprise commitments to AWS. The AWS ecosystem is starting to grow. Siemens—the world’s largest automation vendor that also has PLM, MOM/MES, and an IIoT platform in its $4B software portfolio—has chosen AWS as its preferred partner. AWS also continues to make significant investments in industry-specific hiring and providing coinvestment for customers and partners.
Data science and machine learning skills at industrial companies will continue to lag Silicon Valley companies for the foreseeable future. The vision for democratizing ML for all is one that will resonate with the industrial space. With the release of SageMaker Studio, Experiments and Debugger, AWS is making ML easier. Also, managed services like Amazon Forecast, which uses machine learning for highly accurate forecasting, is making ML more accessible. But there is still a skill gap for a process or manufacturing engineer to directly jump in and begin building.
Lastly, the AWS Outposts Hybrid offering is a step in the right direction, but it does not yet address all offline use cases needed for some remote operations.
How to choose a cloud provider
Industrial companies need to know how to choose a cloud provider for industrial operations. Other than specific geographic and regulatory requirements (China and Alibaba Cloud), there are very few compelling reasons to look beyond AWS and Azure for cloud capabilities in industrial operations. This mainly leaves architectural and risk considerations to address.
- Should I go with a single-cloud versus multicloud strategy? Answering this question requires balancing vendor lock-in concerns with loss of some cloud-native capabilities, scale, and the added cost of managing a multicloud environment.
- How do I implement a multicloud strategy? Should we split by areas of the value chain (connected cars versus connected factories), regions, or business units, for example?
- What is the balance of IaaS versus PaaS versus SaaS? Should I build directly on top of AWS and directly consume AI and IoT services? Should I build on top of an IIoT platform like MindSphere and consume more purpose-built applications? Should I just buy relevant SaaS offerings like Seeq, which is an advanced industrial analytics vendor that was prominently showcased at re:Invent?
- Some reasons to lean toward AWS as opposed to Azure are: cost as a top decision criterion; being unconcerned with “co-opetition” issues with Amazon; having a dedicated digital or data science team that wants to quickly build new applications or advanced analytics algorithms; or the organization’s SaaS or PaaS providers are moving toward AWS as a preferred provider. AWS is already the clear leader for partnering independent software vendors (ISVs) providing SaaS or PaaS.
AWS is making significant investments both internally and externally with codevelopment dollars, quickly making them a meaningful partner in the industrial operations space. For most traditional automation vendors and ISVs, this will likely mean a two-cloud strategy tied to either AWS or Azure is optimal. It also means if customers want a third provider, the burden goes to them, and it would likely be IBM with Red Hat.
Hewlett Packard: Back in the manufacturing game
LNS Research views HPE as making lots of strategic moves to win the manufacturing IT world and to accelerate the convergence of OT and IT. We believe industrial companies should actively consider it as part of the mix for industrial transformation
According to Tom Comstock, analyst with LNS Research, there is good news for industrials with IT/OT convergence plans: Hewlett Packard Enterprise is all-in on SaaS applications. Comstock attended the HPE Discover 2019 event in Las Vegas because HPE is focused on edge and hybrid cloud computing and on intelligent data. The event, and especially president and CEO Antonio Neri’s keynote, were filled with major announcements. The biggest overall message: HPE’s commitment to “as a service.”
The company announced that it will offer all its products and services in a consumption model by 2022. Announcements continued to flow, with major ones around a new line of mission-critical storage systems, HPE Primera, that the vendor positioned as needing only six cables, five clicks, and 30 minutes to bring online. In addition, HPE rolled out a series of enhancements to HPE GreenLake (its offering that provides public-like cloud services—consumption-based pricing, fully managed by HPE—for systems and software on premise). In particular, HPE is now offering HPE GreenLake for the midmarket.
Comstock said, “I’m old enough to remember when HP and Digital Equipment (acquired by HP) were major players in manufacturing, delivering products, solutions, and services to manufacturers worldwide. HP offered solutions to the OT world leveraging manufacturing ISVs’ solutions wrapped with HP services and technology.” The company has, of course, gone through a significant transition, including the formation and spinoff of HPE in 2015, and later HPE’s spinoff of the bulk of its service business in 2017. HPE Discover 2019 was “back to the future” with a focus on manufacturing and OT as highlighted by its “accelerating productivity” demonstration, which had center stage in the transformation showcase.
HPE clearly signaled its intent to deliver solutions for manufacturing again. The company announced integrations and turnkey edge-to-cloud solutions with partners ABB, Microsoft, and PTC, for real-time intelligence and control in industrial environments. HPE Fast Start Conditioning Monitoring is the first of these manufacturing-specific solutions to be made available and envisions HPE helping industrials define use cases to connect and monitor manufacturing equipment. It includes HPE Pointnext services to wrap around its edge systems, the company’s HPE Edgeline OT Link platform, and ISVs’ product offerings.
In this case, HPE Fast Start Conditioning Monitoring uses PTC’s ThingWorx IIoT platform. It provides connectivity to a wide range of data sources and workflows for real-time insight into operational equipment. Users can add artificial intelligence with HPE AI in later stages of implementation; the demo in the showcase was exactly such a scenario.
Other manufacturing-focused announcements included solutions for edge appliances for the Microsoft Azure stack leveraging ABB, Microsoft, and Rittal as ISVs, and wireless connectivity solutions for OT using ABB Ability smart sensor technology.
It is quite clear that HPE wants to be a major provider of systems, infrastructure, solutions, and “business outcomes and experiences” for the OT world. In addition, HPE GreenLake has significant potential where manufacturers continue to be reluctant to trust operations to anything that depends on Internet connectivity (i.e., the cloud), but often do not have the IT resources required to handle the complexity of IT systems. HPE GreenLake offers an attractive alternative: fully managed systems, priced “as a service,” installed on-premise, with full connectivity to the cloud of choice.
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