Industrial Clouds: A Blueprint for Sharing Data?

What do companies want from technology?

Money.

Research firm IDC recently polled its extensive customer base about the Industrial Internet of Things market. Some of the findings:

  • 33% of CEOs today have a tech background. 
  • 40% of operational processes will be self-healing by 2020 (i.e. linked to preventative maintenance apps.)
  • And the clincher--100% of them want to see revenue from their information products.

“We are moving toward data as a saleable product,” said Scott Lundstrom, group vice president of IDC at the firm's recent Directions conference.

So what does this mean for process industries and manufacturers? Increasingly, you're going to be software companies. Utilities won't just sell water, gas and/or electricity. They will analyze the own data generated by their own systems and provide insights--with the appropriate security and privacy safeguards--to third party solar companies, service companies and companies selling cloud-based analytics services so they can do their jobs better. New York, among other states, is already contemplating allowing utilities to include cloud investments into their “rate-based” capital budgets typically reserved for revenue-generating expenses.

Pharmaceutical companies with optimized processes for producing “golden batches” of small amounts of materials might make more from selling their platform or performing tasks for other pharma companies than developing breakthrough cures.

Digital communities will play a big part in this evolution because they provide a channel for fine-tuning and ultimately commercializing these services. What starts as a convenient way to streamline information sharing becomes a business.

Lundstrom, in fact, says that these “industry clouds” where competitors and vendors share data are already springing up. Approximately 150 industry clouds like this already exist.  By 2018 there will be 450. Sage Insights, a company incubated by John Deere to link farmers and vendors, is an early example. Granted, Sage has created tensions with some farmers, but it's growing. Power Share Network, meanwhile, lets doctors use each other's clinical information. A wider, deeper pool of data helps all of them improve their diagnoses.

NITL was created by the Federal government to provide federal agencies with IT services and consulting, the sort of work that used to be conducted by systems integrators.

“If your customer goes into NITC, they are no longer your customer,” he said.

Then there is Clarient, a fast-growing company created by large banks to solve one of their chronic problems: how to determine whether a shell corporation is legitimate or a front for criminal activities. Acting alone, the banks weren't making rapid progress. But by pooling their data and resources (and putting in the appropriate security and privacy protocols) they were able to develop a cloud-based service that does the job. The system has smoked out shell corporations owned by the Medellin  Cartel, he noted. 

Internet of Things

 

Different types of industry clouds will exist. Some will grow out of vendors or result from a merger between a technology company and an end-user with deep experience in analyzing its own data. (IBM bought the Weather Company.) . Innovation, he said, is really technology combined with data.

You'll also see collaborative ventures that bring competitors together. Think of pharmaceutical. Regulatory compliance is a significant, but unavoidable, cost. What if leading companies formed a joint venture to pool resources and manage regulation. Or if food and beverage manufacturers developed a cloud service for tracking supply chain integrity. Together, these customers could become their own vendors.

For power utilities, service providers like Strategic Power Systems (SPS), an OSIsoft Connected Services partner, are early movers who show the power (pardon the pun) of industry-wide data sets to improve asset benchmarking, reliability, availability, and maintenance. Their ORAP system is one of the world's most comprehensive utility data sets, capable of providing new levels of insight, new gains in efficiency, and a new service-based utility business. 

Some of this might seem farfetched, but think back about seven years. How many people predicted Amazon would be the leader in one of the biggest IT markets? Amazon was a consumer of IT products and services, the account every software and hardware vendor pursued, not a vendor.  But when it looked around, Amazon concluded that it probably knew as much, if not more, than anyone about cloud architectures so it turned experience into revenue.

A lot of you will likely do the same.