Nov 27, 2019 | 4 min read

Conversation with Alfonso Velosa

Podcast #75: Toward Ubiquitous Digital Twins

Alfonso Velosa has been following the Industrial IoT market as an analyst for many years, and our conversation covered a wide range of topics. We discuss a number of the key use cases and best practices for success that he has seen, along with some of the key industries leading the way. We discuss the challenges involved with integrating business outcomes, technology and organizational culture, and some of the obstacles still commonly faced in the market. He shares his views on IoT platforms, AI and Machine Learning, Blockchain and the evolution of Digital Twins. Lastly, he shares his vision for the future where Digital Twins become integrative and anticipatory parts of business and daily life.   

Recommendations:

Mindset: The New Psychology of Success by Carol S. Dweck  

The Future of IoT: Leveraging the Shift to a Data Centric World - by Don DeLoach, Emil Berthelsen and Wael Elrifai  

 

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Good day everyone and welcome to another episode of the Momenta Edge Podcast, this is Ed Maguire Insights Partner at Momenta, and with us we have Al Velosa who is an industry analyst, industry expert for connected industry, IoT, Digital Industry. He’s got a long career with a lot of deep insights; we’ve had some really interesting conversations in the past, and Al it’s a pleasure to have you join us.

Totally my pleasure, so thank you very much for having me on Ed.

Great. Well I’d like to start first with a little bit of context and just get a little sense, tell us a little bit about your background and what has led you to the work you are doing in technology, I’d love to hear a bit of the influences, developments or inspirations that have led you to your current focus.

I would sort of structure it for you then in two perspectives, one is the actual work experience. I came to IoT from a mix of a semi-conductor/photovoltaic perspective, because that’s part of the industries I grew up in. So, that brought one sense of sensibility, the physical asset itself, an implementation of it in particular starting with smart cities but also fitness monitors and things like that. So, that came and eventually it really led to much more of a focus on the software, because right now how we’re implementing IoT really is about taking the data out of an asset and actually using it. So, for me it was sort of a journey on looking at how to connect to things, but then more particularly how to use the data there.

So that’s one part of it, but the other way that I would highlight it to you, the second path for me is sort of this battle I have internally, and that a lot of customers that I know have, which is the battle between the engineer in me and the MBA in me, because I, like you and like everybody else, fall in love with, ‘Oh, this cool technology, dude! Oh, it’s so cool!’ But there’s plenty of times when it’s also, ‘But why are we doing that, how is there a business outcome for that specific use of the technology?’ Or, alternatively, do we have a plan so that we can get our team, our culture, on board with that use of the technology? So, for me it’s that sort of ongoing balancing act between where the technology is going, and where the business is going.

Yeah, that’s always an interesting dynamic that gets played out, certainly within organizations. As you’ve watched the market evolve for, we’ll call it industrial IoT or connected industry, what are some of the significant developments that you’ve seen that really have marked progress toward what was now becoming much more established is this concept of connected industry, or even digital transformation? What’s changed since you first started working with semi-conductors and hardware, and started to connect the systems to data analysis?

I’d say there’s a couple of things, we went from basically, ‘Hey, there’s this cool technology, let’s play with it’, so a lot of it was exploratory, and we’ve gone through a variety of evolutions, but it really has sort of transitioned to nowadays I’m starting to really see a focus on business outcomes, and really leveraging this technology to support whatever that enterprise is doing, whether it’s a government agency supporting a citizen initiative, a medical environment trying to drive health, or an oil company looking to increase production whilst lowering its carbon footprint, it’s that real transition.

Along the way it also went from being a cool technology area with a lot of engineers, and in particular semi-firms, but also its now really shifted to where there’s a very significant set of players from across every single technology spectrum that I can see. The one challenge is, I still haven’t seen a real consolidation in terms of folks who can deliver consistent business values, so for me we’re not fully there, but I think I can see the light at the end of the tunnel.

Yeah, it’s been quite an evolution. One of the questions I always like to ask is really a pulse-check of the market, if you go back, it’s six years now since GE had come out with its trillion-dollar economic value-add calculations, and then Cisco has started talking about the Internet of Everything, but we did have a sense that vendors were over-selling how imminent the promise of the realization of some of these ideas would be. I’d love to get your sense, what happened with the overselling the vision as it were? And as you look at the market today, how far have we come recovering from I guess the trough of disillusionment as it were that followed?

I still think we’re heading into the trough, we haven’t fixed certain things in terms of the ecosystem, or lack of a structured one there, lack of standards, lack of really consistent business stories from the vendors that then drive implementation. So, if you will, for me part of the challenge I have with the IoT environment as a whole is, most vendors still are struggling to clearly layout their business value proposition and show how they can scale for their customers. It doesn’t matter what sector we’re in, whether its water, utility, hospital, retail establishment, this still remains a challenge. So, from my perspective that’s one thing.

The other thing though is if you look at the vendors, and you brought up Cisco and GE which let’s say they offer interesting lessons to the market. How do you make sure you set proper goals for a business unit? How do you set it up so that salespeople are trained and incentivized to sell a particular solution that aligns to the overall business, but also how do you make sure that your customers are ready for this set of capabilities here, bringing to the table? So, there’s a whole host of challenges that most of the technology and service providers in the IoT arena still lack, that I think will give us pause for at least another couple of years. That’s why I think we’re still heading a little bit more into the trough of disillusionment, even though I will also say in parallel, why we see more revenue for technology and service providers.

How much of these issues or these obstacle are business-related, or specific to a particular industry, versus being more of, as you described it, kind of a horizontal challenge where you have just a sort of a MorphOS goal, and lack of at least a standardized methodology to be able to harness data that comes from instrumented physical systems?

That’s a really good point Ed. Until about a year ago, so I’d say for the past 7’ish years, a lot of folks were trying to sell horizontal solutions without clearly understanding their customers specific business problem, and what they needed to scale that up. So, from that perspective that’s still I think a bit of a challenge for most vendors. The smart ones have started to really focus on vertical markets, at least from the IT side, so the traditional IT players are increasingly bringing their vertical market, whether it’s a manufacturing retail on oil and gas, a specific agriculture solution, so there’s quite a few folks moving on that path. They haven’t finished in my view their transformation towards that, so that’s what I would say is the area to watch if you’re watching a series of vendors; see how they are on that transition to vertical market expertise that delivers that business value using IoT enabled capabilities.

What are some of the industries if you look at industries or companies at the vanguard, are there some that you would see operating are well ahead of others, and others that are still wrestling with some of the basic concepts?

Well I would say once an enterpriser achieves a certain scale, especially multinationals, the left-hand’s not talking to the right-hand, so we often see cases where one part of the business is doing cool stuff, and other parts don’t even know how to spell security in IoT, so there’s only that challenge. What I would say to you is sector-wise there’s the heavy assets folks who are further along on the journey, and this would cover any of the extractive industry folks, oil and gas, mining, and those guys, they would cover electric utilities, water utilities, and they’ve been exploring this area for quite a while, plus they have their OT systems heritage, and particular skater systems, so manufacturing would be the third area.

Transportation is one of the areas where actually we do see some consistent solutions, particularly in fleet management. In fact, fleets in the telemetry for that is the only really crystal clear, multi-billion-dollar market that we can all point to, just to also emphasize that, but they’re not fully shifting over enough to the business side of that, on that. Then I’ll close that with retail and their focus on a bit of location-based service, but also trying to serve that customer a little bit better.

Retail’s been really interesting, because we saw certainly a lot of discussion about beacons, I think about four or five years ago and haven’t really seen a lot of innovations that have gone much past proof of concept stage at this point. But then of course in supply chain, the innovations, there’s been a lot of development there. I would love to get your sense of what are some of the characteristics of success for a project, we could just pick an industry at random, but as you look at starting small and getting bigger, it seems to be a pretty common approach, what are some of the factors that really do contribute to stay in success?

Let me give you a typical example, and sorry without naming names, just because for a lot of folks they consider some of their business outcomes proprietary.

So, this will be a supply chain example from a company that deals with blood and plasma. The success for them in part was driven in three different ways, the first part was the business, they had a clear problem and everybody agreed to that problem. In their particular case they would lose the piece of paper that recorded the temperature of the blood and plasma, and because of the law because they did not have it, they had to discard it. So, think about that! It’s not just that I’m losing millions of dollars every month, and they were, but they were also losing blood and plasma, that combined insults and injury all in one, it was one of those. So, having a clear business plan like that I think is one of the core indicators of success.

There are many ways you can define their business problem, but this is an example where it’s just hitting you in the face. For most other folks it would be maintenance, lowering cost, increasing output, avoiding unplanned downtime. But again, to this one, it was they were losing money every month, and it was money and blood, so that was number one.

Number two is the culture, how do you bring folks on the journey? And so, one of the things I like to tell people is, IoT is not about technology, IoT is a business process transformation using technology, and if you get into that mindset you’re really engaging your people on this. So for example, the blood supply chain example, they actually have a multiphase project, I think they’re on Phase 9 or so of this project, where they tested out the technology, yes they had to do that, they tested out the solution, but then they tested it with people at one location, then people in one city, and now it’s at the State level. So, how do you scale it out so folks can see it, folks can get used to it and incorporate it into their business process, but also have regular folks, not just the senior executives. These are ones saying, ‘Hey, you know now that we’ve been doing this, I think there’s a good idea that we could use that data for to do something else. So, for example, how do we lower our insurance cost, because if we know where the blood is and what the temperature and all this other stuff is, we definitely can lower the risk model for our insurance company, so they should be giving us a discount.’ That kind of thought process, but coming from a line worker or direct employee, not just the executive.

In parallel to that it needs to be sponsored by senior folks, and those senior folks need to communicate all the success that they’re having, really have to communicate that success whilst at the same time saying, ‘Oh hey, we had this failure but that’s okay we learn from it’, and nobody’s career was affected. So, that’s number two, the culture change, the aspects like that.

Then number three, that’s when you can really talk about the technology, and unfortunately most enterprises overly focus on the technology just because in part they still think its Internet of Things, not business transformation. But there’s still challenges in terms of how we implement, how do we extract data, the user experience and the user interface for both the technicians and the developers working on this, but also the business folks using it, all of those remain challenges, scaling up. So, it’s that transition that we see.

Yeah, you’ve hit a really important point which is how intrinsically important it is to focus on business outcomes. I would love to get your take on how what we call IoT or industrial IoT, compares to the business process re-engineering that we saw in the 1990’s that really gave rise to these more standardized ERP systems. How would you compare and contrast where we are today with connected industry or digital industry, with that earlier wave that ultimately resulted in some very standardized and quite efficient enterprise applications, that ultimately have become table stakes for most large enterprises?

I would say this is the logical sort of evolution of that kind of thinking, except where we came with that business process transformation is, they finally said, ‘Ah! We’ve seen these technology trend, so that means we could get information about our assets,’ so it’s very much aligned to that. So, when I’m talking to either business or technology leaders at a company, I’m like, ‘This is gonna be just like your re-engineering process or your ERP wars, how do you get all the folks in the room, marching towards the same area, with their different vested interests coming along.’ That’s actually part of the dialogue that I always encourage with our customers.

Yeah, it is really critical to start with the outcome in mind, but do you need a special skillset to be able to tie back the business outcome to the technology when you’re dealing with sensors? Or is this again like a continuum, is it really just an evolution of fairly well-established skills?

I think this is like the old story about the elephant and different people touching different parts of it, part of it depends on what industry you’re in, and all the cultural and other normative factors there. But it also depends on your specific enterprise and their comfort with technology, so I don’t think it’s necessarily one set of skills. But clearly people management and change management are absolutely fundamental here, almost more important than technology, because normally your technology and service provider will bring that part to the table. But what’s really needed from that end user enterprise, whether it’s a retailer or its somebody who’s managing a specific aspect of citizen service in a government agency, is how do we bring all the folks on the journey, how do we train them, how do we protect them from any of the missteps, let’s not call it failure but missteps we may have on this. So that’s I think the fundamental issue that’s usually missing from most enterprises.

Yeah, it’s clearly a challenge. But when you look at the technology itself, I would love to get your views on what have been some of the important innovations in technology, or enabling technologies that have given rise to the ability to get new business outcomes? I think the technology does still play a key role.

Oh, absolutely. If we’re not getting the data out of our things, we have to send somebody to go look at it, and we can’t make consistent coherent decisions about it, because a lot of stuff is lost in that manual translation from data from an asset into a centralised repository. I absolutely agree with you. So, provided the business and culture things are taken care of, from the technology side, part of it is the usual semiconductor revolution, faster, better, cheaper, and lower power chips on assets, where we can add some computing power. So, that would be one part of it, the semiconductors.

The second part for me is really thinking about an event-based architecture. Now, this goes hand-in-hand with the business; the business has to understand what’s the business value of the data. But in most cases most data’s not worth sending up either up to the cloud, or as a cellular environment; if I just have video of the highway and there’s no cars there, I don’t need to send that up to the central environment. So, really having an event-based architecture that’s another fundamental part of this, and so that sort of also goes a little bit hand-in-hand with say rules engines and CP or a complex processing set of capabilities, that would be another core area.  Security, I’m sure you have enough horror stories about security, I don’t need to emphasise that too much, but the continued investment and security as well as the continued rise of security-conscious culture, that’s another technology area.

Those are the things that are enabling. If you want, we could shift to some of the challenges and the inhibitors that I see from a technology perspective.

Yes, that would be great, I’d love to get your thoughts on where some of the bottlenecks are.

So, for me the number one bottleneck is standards. We’re at least half a decade, it’s not a full decade, away from standards and all the verticals that we work in here. And part of this is because it’s a vertical market by vertical market perspective, in other words, if you accept my thesis that IoT is about the business process change, that effectively means you’re dealing with the healthcare initiative, or an automotive initiative, or a  steel manufacturing initiative, and as such you have to be applying specific sets of standards in your vertical market. So, that’s one part of it.

But the other part is, in most environments we’re usually dealing with a legacy set of assets; most hotels are built, most manufacturing environments are built, so you have to go in and connect a whole series of environments, and integration is both a fundamental challenge technologically, because it’s such a complex issue at times, but it’s also the area where right now there’s the biggest skills gap for IoT. Having the people with the right skills to address that, that’s the core challenge, and the core opportunity for a variety of folks.

Then if I start to look at the longer term, right now we’re still at the phase of IoT where for most folks it’s about basic monitoring; how do I connect to the asset and start looking at the data? As I move forward and start thinking about a future in say five to ten years, then it’s going to be those analytics and those AI and ML sets of skills, that’s when that part is going to be the challenge and the opportunity.

So, then again today it’s about standards and connecting, second, it’s about integration, and I would even throw maybe security in there as a core fundamental challenge, but there’s a bit of overlap there. Then towards the future it’s the ML and AI.

I have a couple of follow-ups to that, but one of them that jumps out is the talent shortage. Earlier this year PTC was out saying that they couldn’t scale their business as fast as they wanted to, because they were having trouble finding enough qualified people. What are some of the constraints that are involved with the talent shortage? What sorts of skillsets and combinations of skillsets are needed that are currently not being addressed, and is there a way, whether change schooling or training, to address this shortage?

Part of this is like back when we were in the Y2K era, where all of a sudden, ‘Hey where are all those [s.l. COBAL 26:54] programmers?’ So, some of this is we’re dealing with legacy assets, and so part of the challenge is we need folks who are flexible enough to be using both modern protocols, and old-time green screen kinds of pre-cloud, pre-internet kinds of environments, so that flexibility to be able to think about, ‘How do I connect to this really weird unique vendors set of drivers that I basically have to figure out on the fly; that’s one part of this.

Another part would be a series of folks who have the ability to interface with both IT sets of folks, and business unit sets folks, and build technical solutions. We have different sets of mentalities on the IT and OT side, there’s that mix of standards versus it needs to work all the time etc. So, its bridging that cultural gap, and that puts stress on some of the folks that we need, but it’s also just core ‘I need more flexible programmers who can deal with that integration challenge, who can deal with having security across the layers and so-forth’. So, all of those laid out, and that leads us to a gap in architects, so we right now also have a gap on the architecture side of IoT and how to lay it all out.

That’s really interesting. I have noticed that there’s growing interest from engineering schools in developing the skillset, but what you’ve describe is not just a challenge of bridging both legacy operational technology and often fairly proprietary protocols, sometimes, with information technology which is rapidly moving and constantly changing. How does the challenge of bridging just the skillsets also interact with the cultural differences between… because as you mention, somebody who’s a COBOL programmer is not necessarily likely to be a Java programmer! I’d love to get your thoughts on some of the challenges involved with overcoming the cultural differences as well.

Yes, particularly now it sort of makes it, I bring you in and I need you to develop… for the sake of argument Ed, I need a really nice user experience for the technician, so that they can look on their iPhone or Samsung phone, look at their SAS, and by the way this asset is uninterruptable power supply, a UPC that has been in the field for 10 years or 15 years. So on the one side you’re pushing that person to have modern mobile app development that are capabilities, even low code, but still on the other side being connected to a legacy asset, so that’s part of that fundamental dichotomy here, so it’s a mix of you need new sets of protocols and old, and on top of that when you think about the technology in service provider ecosystem there is quite a few of those vendors where… I’m not saying they want you to code in machine language, but pretty close. So, it’s a mix of what’s out there, so that puts a strain on the resources out there.

It really is a multi-year process or undertaking to bridge those gaps. But related to the concept of integration that you alluded to, as well as this need to bridge different types of technologies, operational and information technology, I wanted to get to the subject of platforms, because it’s really been an interesting topic, and again if you go back five or six years ago you had a number of companies that were targeting the IoT platform market. I think at one point somebody had estimated… and I don’t know if it was you on that account, but somebody had talked about counting up somewhere close to 400 different platforms, and that’s clearly not a sustainable number of different platforms. I would love to get your perspective on the value of a platform, and also the dynamics of a market that are giving rise to so many platforms, and ultimately what has to happen for that to ultimately coalesce around a few leaders?

First of all, yes, I’ve been known to roll that number out, in fact I’ve bumped it up because sometimes in one week I’ll meet anywhere between 3 and 10 vendors that I’ve never seen before, some in Asia, some in a specific vertical market. So, the IoT platform ecosystem continues to evolve, is one thing that I will definitely emphasise. The good news is that the market continues to evolve, so far from the days about… only four years ago where we were still arguing what was in an IoT platform, we’ve seen a continued evolution where there’s query, device management, data management, integration, app enablement, security, analytics, so they’re all embedded in there, but more importantly folks are starting to roll them out as we said earlier on that vertical market basis.

So, whether you’re thinking about an Accenture with its CPASS, GE Predix, Microsoft Azure IoT, those are the big guys, there’s of course all the small guys like IO networks Relayr, Teezle, QIO, all these folks are really starting to come at it and serve their customers, but just to qualify to you, I still see it as the blue ocean for most of these companies. So, even though I actually think right now there’s anywhere between 600-700 of these companies, they rarely run into each other because there’s still so much opportunity driven by end-users, again; hotels, manufacturing companies, train companies, that they’re all still sucking that up and it’s still a very wide-open set of requirements.

Do you think there’s a viable path forward though for a horizontal platform? Ultimately, it’s a little bit of a semantic dance to call a platform that’s only supporting one app, really a platform. If you go back to the application server market, a lot of them just evolved into the applications that they were supporting. Do you see a similar dynamic happening here?

I do see that, although I would emphasise to you, I continue to see companies having vertical market capabilities. So, it’s definitely a space where anywhere between I’d say three to six vertical markets for most of the vendors that I look at is what they have. So, that definitely is the evolution of the market.

The flip to what you say is, we are seeing the rise of sort of pseudo-tier plays so it really aligns to their business, so some of the lighting companies really taking that same approach and going down there. So that’s one approach that we’ve seen where it’s very hyper-focused on their vertical. The other one is, where it’s very much a best of breeds/opensource set of companies, and again, either they’re coming very much from opensource, say SOFIA, or they’re leveraging a lot of best of breed opensource sort of capabilities from their partners and other communities.

Yes, I think that makes a lot of sense. One of the areas that’s been super-topical these days has been the impact of machine learning and AI, and again this has become the proverbial bright shiny object for investors and a lot of folks that were calling themselves cloud companies, who are now AI companies. But I would love to get your view on what do you think is important regards incremental technology innovations, and over time where do you think there could be some real transformative impact from these technologies?

I’m less optimistic about the near-term opportunity about AI and ML in IoT, in part because you need a volume of data to deal with this, but also in part because to go all business school on you, Clayton Christensen talks about what’s the job to be done, and today the number one job in IoT is actually just connecting to the asset and doing basic monitoring. So, for me AI and ML is more the opportunity in two to four years, that’s really when we’re going to see that take off in my humble opinion. Now, don’t get me wrong, I do see a few interesting areas where there’s enough data and other volumes of information to really leverage it, particularly for example in smart meters and other sectors like that. But for me, the job to be done today for most enterprises is connecting to the asset, so that’s what’s driving the business opportunity. The opportunity for AIML is really going to be in that, again not long-term but medium range future, so two to four years out.

Yeah, it is one of these classic technologies that’s a bit over-sold in the early stage, but certainly there’s a lot of potential. I would love to get your thoughts as well on blockchain, a year or two ago if we were having this conversation that probably would be the first question, but how do you see the practical pragmatic uses of blockchain now that we’ve seen the hype, the froth, and the silliness die down around the ICO craze and all that, and the crypto craze?

Right! The central and fundamental tower of the distributed ledger or blockchain-style technology, is also its challenge in IoT. If we’re going to distribute a lot of the information, mirror, and compute in a variety of environments, that limits where it can be used effectively in IoT. So one of the things when I’m talking to customers is, ‘What’s your set of requirements that would really enable you to take advantage of the power of this distributed ledger, versus what are your constraints?’ and again, the power, the compute, and the storage is one of the ones that usually drives folk to take a step back and look at this. So, I definitely see environments where they do need to replicate it, and they have that extra compute power, but for a lot of the mobile application in particular, that’s still a challenge.

Now, if I was to look a little bit further down the horizon as we continue to see the evolution of fleet management in particular, you could see the use of blockchain really coming up there, because it’s going to be part of that; the truck comes in and it already has an account that pays for whatever services it’s getting. So, there would be enough power and computing storage there to justify it, right, but at the same time there’s a specific business driver for that, that aligns it all together.

Yes, it is the classic chicken and the egg challenge with a new technology, there has to be a business justification.

Absolutely, and so again there’s quite a few of these, in particular as we see the potential evolution of things as customers, where there’s going to be a very strong driver, either for this or similar sort of technologies. But otherwise then it’s that balancing act.

Yes. So, as you look forward I’d love to get your view on what are you optimistic about, what makes you really excited, and what are some of the big concerns that you have, this is a big broad question but as you look at what people are doing, what are some of the opportunities out there, and as you look at big challenges and risks ahead, what are top of mind for you?

Well, the risks, obviously it’s about security. So, for me, have they really thought about the challenge they have here? So, that’s definitely one of the core problems I have is that folks pay lip-service to security, but then they don’t implement it appropriately, or they just do a fig leaf, ‘Hey, we have a CISO a Chief Information Security Officer, ah that takes care of everything!’ So, there’s quite a bit of challenges like that.  So, for me I really do worry quite a bit that there’s going to be a pushback on IoT in general, just because it will get a bad name from a few bad apples. The typical example, a baby monitor where they didn’t really put in too much security and they don’t update it, so it’s easier to hack into. Or, alternatively cars, we’ve seen enough cases where they’ve been hacked into, and so what’s the catch and update strategy that we see in the market, that’s still something in evolution.

So, those are some of my concerns, but what I would say is I still think of this as the way of the future, so I am excited about IoT in general because I see the business outcomes across sectors, whether its fleet management, oil and gas, retail, I’m seeing folks both lower costs, but also find new revenue opportunities. So, that’s one thing that I would say.

The second thing though, and what really gets me excited about this is that IoT and other digital trends in general have really pointed to the rise of digital twins, so for me digital twins that’s really the next wave. There’s so much potential here and we’re just now starting to explore what it means to us as companies, as a society. So, that’s the most exciting thing, how do we digitize and create digital representations of people, processes and things, so we can make better decisions about them? Dude, that is so exciting.

How would you define a digital twin? I’ve heard a number of different approaches, but what is special about the digital twin in your view?

There’s a couple of ways to think about the digital twin based on that question. The first thing what I would say is, digital twins aren’t new, NASA built them. So, it’s been 50-60 years since NASA would put a room full of PhDs and what they back then called super computers in a room, and then they would also build mock-ups of something. But that was 50-60 years ago, and like everything else gotten faster, better, cheaper, there’s been a whole ton of investment, the Department of Defence was looking at it for aircraft, Siemens, GE, and PTC have all been looking at it, a whole bunch of companies. Aviva right now is in the process of merging their 3D capabilities with some of the eco-structure capabilities to look at new use.

So, what’s happened over time is, it went from being this high-fidelity physics model, to an environment where you’re looking very specifically again, person, process or thing, to make a business decision. And to do that what you do is, you have a model or a template of the business decisions you want to make from that, you populate that model with data and with the unique identity of that thing, person, or process, and then you figure out a way to connect it, to monitor it. So, let me give you two examples.

The typical example most people will see of a digital twin today in their lives is either,

  • The Customer 360. It’s not a perfect digital twin but the Customer 360 is one approach where you think about how the retailer both online and real world is trying to send you coupons or influence your shopping behaviour based on the model, the data, your identity, and how they monitor your activity. So, that’s one example, how do they influence you using that model view.

 

  • Alternatively, my current favourite digital twin, although there’s many, but my favourite digital twin right now is the digital twin of my stereo. It tells me which stereo units are around me, what’s their battery status, what’s their volume, and if they are connected to my music collection then I can control them appropriately.

So, digital twin has gone from this high-fidelity physics thing that NASA built way back into the data, to now a variety of different approaches where you can either have one of a person, a thing, or a process, to drive a business decision. Hopefully that answers it.

Yeah, and what you’ve described is the technology and the concepts become much more tangible to regular folks, rather than people who were working in highly capitalized industrial businesses. How do you see some of these tools and technologies impacting daily life over the next five to ten years?

Well, as consumers obviously we’ll be able to touch a lot more of our IoT enabled assets, but from an enterprise perspective we’re going to be thinking about, we have all these assets, how do we optimize our management, build them, what’s their status? So, there’s going to be thinking about that. But where the next level of excitement gets is what we were just talking about, what we call a discrete digital twin. The next level is a composite, when you either look at for example a manufacturing line, or a floor in the hotel, or for example a series of cars for a car rental company at say an airport in San Francisco or in New York. Then you can start thinking about, well I go from a discrete asset where I have one set of business decisions, to a broader view when making a different set of business decisions. So, it’s going to be that consolidation view, but also thinking up and down in terms of what does this enable me as a business decisionmaker, or even a consumer decisionmaker, but what does this enable me to do that I couldn’t do before?

In particular in business Ed, the next thing is going to be how do we plan the ecosystem. For example, if I really understand what’s going on with my power generation equipment, how do I play in arbitrage markets? The level of opportunity and excitement that I think we’re going to see over the next five years is going to be just like in my view, well maybe not as much as the internet, but pretty darn close to when the internet came in. This is one of the next logical waves of both the internet, and the Internet of Things.

Yes, energy is, there’s so much potential transformative change at hand here, we had some conversations about that earlier. I’d love to get your sense just as we wind down here, are there any interesting either projects, technologies, companies, or even themes that you’re keeping your eye on, that you find is especially interesting over the next couple of years?

Well definitely the digital twin concept, because by the way, you can then think of a lot of different nuances on digital twins, there’s the Customer 360, the ASSET360, there’s the digital twin of the supply chain, digital twin of the organization, and so forth. So, that would be definitely one of the areas I think is exciting, and I’m tracking. The other thing though is, quite a large number of companies out there, so I mentioned Aviva right now, that’s an interesting company just because its merging a series of capabilities, GE Digital I think a lot of us are looking at it to see how it reinvents itself with the new management they have, and how they come back and reestablish itself and regain customer confidence. So, there’s definitely a very strong interest there.

I think all of us are looking at the cloud companies to see if they really are able to get from their approach up in the cloud, and actually get much more verticalized in downward discrete data. So, that’s definitely one of those. But then there’s also all these cool little companies, there’s companies like Tuya and Pepper that focus on consumer electronics, there’s companies like Particle that have a broad approach to only end products. Companies like QIO and IOTIC clouds for example that are working in aviation environments, or companies like Relayr who is part of Munich Reinsurance, so how do you combine IoT and finance models, that’s just like woah! That merits a whole other conversation!

Yes, it’s amazing too because the business models, the opportunities for these financial companies again to move downstream and create brand new businesses, it’s really pretty exciting. I think we’re very much in agreement of the potential there.

Well this has been a great conversation Al, and always it’s a pleasure to talk with you. I always like to ask one final question, which is whether you might have a book or resource which you might be able to share for our listeners that you find noteworthy?

A couple of things, first of all I would remiss if I didn’t mention and give a shout out to a colleague of mind, Emil Berthelsen, who with Don Deloach wrote The Future of IoT. Yes, it’s a little bit old, its from 2017, but I think a lot of the insights they hit on there are still extremely appropriate to anybody in IoT. But I think the broader point is a book called Mindset by Carol Dweck, just because it’s like how do you continue to be in a growth mindset? How do you continue to evolve as a person? I would suggest that is actually totally applicable to anybody whatever their interest is.

That’s a great recommendation, I’m going to make sure to have both of these in the show notes. Actually, we had interviewed Don a couple of years ago, even before we started doing the podcasts, but he’s super-knowledgeable and I’ve heard great things about Carol Dweck as well, so I’m looking forward to it.

It’s been a fascinating conversation, always a pleasure to talk to you. Again, we’ve been speaking with Al Velosa who is an industry analyst and expert on connected industry and IoT, and again this is Ed Maguire, insights partner at Momenta Partners, and I want to thank you again Al for taking the time.

My pleasure Ed, thank you very much.

 

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