Over the past few years there has been a growing realisation that traditional IT (Information Technology) and OT (Operations Technology) must work very closely together in order to unlock new value. Digitisation projects, spurred on by Industry 4.0 and technological advances, have opened up many possibilities to create new value. The nature of digitisation projects in manufacturing is forcing the blurring of the lines between the IT and OT silos, and this will often require reorganisation and create new roles in the business.
First, some definitions
IT: Information Technology is a relatively well understood concept – it relates to the software and hardware used to process and manage information in a business. Business information can either be transactional and structured in nature (for example financial and accounting systems); or it can be unstructured in nature (for example documents and e-mail). Enterprise software can be a fast changing environment with the life-cycle of an information management system being as little as three years before an upgrade is required.
OT: Operations Technology, on the other hand, is the software and hardware used to directly monitor and control physical devices. This includes process automation and control systems. While this area is not immune to the increasing rate of technological change, when compared to the world of IT these systems are relatively stable. DCS and PLCs can have an expected life span of several decades before requiring an upgrade.
Merging IT and OT
The forced merger of IT and OT is in part brought about by the greater connectivity provided by the industrial Internet. This allows, for example, an IIoT device to connect to a cloud service, which then provides information about events that alter business processes. Another example is a smart sensor that connects using standard TCP/IP protocols to the plant network and which is read from the Internet using standard web browser technology.
Most of the companies I have worked with in the past few years understand the importance of integrating IT and OT. Some have taken proactive steps to merge the IT and engineering departments into a single team reporting to a single manager. But merging of teams is only the first step in the process. What is often needed is a fundamental realignment of the way these teams think about their role in the organisation. Cultural barriers need to be dismantled and many historical assumptions challenged. The best practices from each of the two domains need to be adapted and applied to the new combined entity. This change process will require strong and experienced leadership.
The manufacturing CIO perspective
From the CIO perspective, this merging of functions can be a daunting challenge. CIOs typically have a clear set of responsibilities:
• Develop and execute IT strategy.
• Manage risk.
• Ensure IT governance and compliance is being managed.
• Striving for operational excellence across the business.
• Digitisation programmes that automate and enhance business processes.
When you overlay the requirements of managing OT to a CIO portfolio it becomes clear that while the overall principles might remain the same, some changes will be needed.
Taking each of these areas of responsibility in turn:
IT strategy needs to now incorporate operational technologies. Strategy always needs to be business driven. The combined use of industrial Internet and traditional IT systems is an enabler that could allow the business to exploit new opportunities in the market. The technology platforms chosen for IT and OT therefore need to be strategically selected for integration going forward. Systems should allow for rapid re-configuration as the business becomes more agile and responsive to changing market requirements.
IT risk is a board level concern. The risk of cyber-attacks remains prevalent and the complexity of the necessary control measures is increasing. When IT systems are connected directly to OT systems, the ‘surface-area’ for a cyber-attack is significantly increased. In addition, the consequences of an attack are higher when systems are integrated, directly threatening the integrity of processes and the safety of people in the plant. Enterprise risk is typically managed by developing a risk register which identifies specific threats and ensures that control measures are effective and are being managed. Risks are often associated with opportunities, and the risk management process should also identify new opportunities where technology can be used for competitive advantage.
IT governance and compliance ensures that all the activities in the business comply with applicable legislation and with industry standards (such as ISO) as well as with internal standards (such as standard operating procedures etc). IT governance and compliance involves putting in place the required policies and standards, and then actively managing these through a process of auditing and corrective measures where necessary. The principles of governance and compliance apply to IT and OT equally. Compliance should therefore be managed together in a common process, and not in IT/OT silos as might have been the case previously.
From a traditional CIO perspective, IT operational excellence implies efficient business processes that are supported by appropriate, cost effective IT/business systems. In manufacturing plants, significant reliance is placed on OT to optimise and run the manufacturing process, and in this area small changes of even a few percent can translate to large cost savings (or additions). When considering the system as a whole, the CIO will most likely need to reprioritise deployment of scarce skills and resources in order to achieve the biggest impact for the business. This reprioritisation may require abandoning lower value IT projects in favour of projects that optimise the core manufacturing process as part of the total value chain.
Finally, the modern CIO might also be tasked with digitisation in the business. Here the opportunity for new value often results from out of the box thinking about automation and exploiting enhanced services provided by the internet. When IT and OT platforms are seen as a combined whole and the data is combined, many new digitisation opportunities suddenly become possible. Without this combined perspective digitisation projects will be tactical at best, continue to operate in silos and are unlikely to be sustainable.
Concluding remarks
The role of the CIO therefore becomes more strategic and more impactful in a manufacturing company when OT is included with the traditional IT role. Success here will require a new set of skills. Despite the challenges of changing any organisation, the foundations of good IT management will still apply going forward. Ultimately the new CIO role becomes more of a leadership role, responsible for propelling the organisation along its digitisation project to achieve success in the market.
Gavin Halse
Gavin Halse is a chemical process engineer who has been involved in the manufacturing sector since mid-1980. He founded a software business in 1999 which grew to develop specialised applications for mining, energy and process manufacturing in several countries. Gavin is most interested in the effective use of IT in industrial environments and now consults part time to manufacturing and software companies around the effective use of IT to achieve business results.
For more information contact Gavin Halse, Absolute Perspectives, +27 83 274 7180, gavin@gavinhalse.com, www.absoluteperspectives.com
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