The manufacturing CIO has long been associated with managing new technology implementation, strategic IT planning and keeping tabs on the latest solutions that could boost productivity. These days, however, the role of the CIO also encompasses data management and analytics, which opens up a bevy of new benefits and challenges. Jim Kilmer, group vice president of Verizon Enterprise Solution’s manufacturing vertical, explains what today’s CIOs are doing to stay ahead of the competition.
How do you see the role of the manufacturing CIO evolving?
Jim Kilmer: There are a number of trends occurring in the industry right now that are directly impacting CIOs. From a strictly business standpoint, we are seeing a lot of companies looking to monetize information that they’ve had for years in an effort to learn more about what they manufacture or about the use of the things that they manufacture. Companies that make large products or systems — like aircraft or locomotive manufacturers — have a lot of data, but in the past they’ve just used it internally or talked to their clients about it. Now they are looking to monetize that data. The ability to create systems to become revenue streams has really changed the way some CIOs do business.
Also, literally every element of a plant, business process or system is being connected to the network (or made IP-aware). The Internet of Things is really heading towards a tipping point and CIOs are faced with a lot of plusses and minuses. The good news is that these systems are aware and help make businesses much more efficient in how they allocate resources, manufacture products and deploy individuals. By the same token, that tsunami of data is really overwhelming their ability to gain analytics and insights. They’re going to need a good strategic plan for how to capitalize and monetize this emerging trend.
You mentioned monetizing the data, how do they go about doing that?
Jim Kilmer: Imagine that you are a farm equipment manufacturer. For the past couple of years, the ability to monitor the performance of the physical equipment, the ability to track from a geospatial environment — where the equipment is and how it is being deployed — has become a very critical element for purchasing decisions. If you are a big agricultural firm, you have very important questions related to keeping your costs in line, and maximizing the productivity of the agricultural process that you are trying to run. For example: How much fertilizer and pesticide do you need? Where do you deploy it? A lot of agriculture equipment manufacturers are now making their entire environment IP-aware so that they can sell data to the big agricultural firms that are looking to use it.
Another example, in the aircraft business, is telemetry on engine performance and maintenance associated with the aircraft. Manufacturers are looking to monetize that data to the end purchaser because it really changes their operating cost model. In the past you’ve made something, you’ve sold it, you’ve serviced it and you’ve moved on to a new client. Now, the information on how you operate it is as important as what you are making.
What other business challenges are impacting the CIO in manufacturing?
Jim Kilmer: All manufacturers are under pressure to be agile and be a low-cost provider, which sounds like dissimilar functions. A lot of business processes end up being governed by whether or not applications — or access to applications — can support an initiative. Manufacturers must be able to build those applications, make them agile, deploy them globally and make them available securely to the end users. Separately, no one has an unlimited budget, especially after 2008, to build data centers and drop capital into them. They are being challenged with how to do this with a much more efficient financial methodology. I think that drives not only application efficiency and security, but also infrastructure security and efficiency. That’s a big change that CIOs have been struggling with, but that they are working to solve.
Does it differ by manufacturer or industry? How are you seeing the transition to new technology?
Jim Kilmer: It depends on a couple of areas. First, does a company have a culture of innovation? We work with one of the largest manufacturers in the world and they are aggressively attacking the challenge of agility and cost savings head on. I think you are seeing similar attempts with very significantly sized companies, because they realize the agility benefit as well as the financial savings. The other piece of the puzzle is the culture and history of control and whether or not companies are predisposed to spend capital versus trying to change a business model. I do think that manufacturers — given the pressures they constantly face from a global dispersion of competitors and capabilities — are pushing faster into this space then they have in the past.
Can you give me examples of technologies that help manufacturers increase efficiencies and save on costs?
Jim Kilmer: CIOs are looking closely at cloud environments that have security built into them, so they can control and segregate where their data is, but also make sure that it’s agile. Then you have an enormous focus on mobility where you have the ability to take that data, once you’ve analyzed it, and get it into the hands of an individual that can action it. On the application side, you are seeing applications written and purpose-built for this type of agile cloud environment that allows data to be collected quickly and disseminated on a mobile basis.
Do you see a trickle-down effect of IoT going from the enterprise to smaller businesses?
Jim Kilmer: To be competitive, you have to be able to gain efficiencies at all layers — I don’t think scale and size really matters. A lot of this technology is off the shelf and has become readily available. What is new is the ability to apply it quickly and efficiently at all scales and versions. On a global basis, I think the biggest inhibitor is access to a quality wireless network, similar to what people are used to in first-world countries. I think that access is occurring, but it is not necessarily occurring in places where the labor costs of manufacturing are attractive.
Securing data is a huge deal, especially when we are talking about manufacturing data. Are manufacturers aware of the imperative need to secure all this new data?
Jim Kilmer: Manufacturers currently fall into two buckets. There are those that recognize that there are bad actors out there that could impact their intellectual property, the safety of their workers and business continuity. Then there are those that think that everyone’s intellectual property has already been stolen and they don’t worry about it. It’s the latter folks that candidly keep me awake at night, because I think they are going to be impacted very soon. The security element has really caught manufacturers by surprise. While it’s hard to obtain dollars for new security services, if there’s a breach that either involves personal safety, business interruption or intellectual property loss, there could be huge repercussions.