EP027c: A practical use case of focusing on service in an IoT solution to increase customer stickiness – an interview with Peter Bourne of BrightWolf
|Feb 23, 2018|
Peter tells us about a rollercoaster case of an IoT implementation gone wrong with a happy ending for a manufacturing firm. We also discuss the penalty of innovation, and the future of the cloud vs. edge relationship.
Erik: Welcome to the Industrial IoT Spotlight, your number one spot for insight from industrial IoT thought leaders who are transforming businesses today with your host, Erik Walenza.
Welcome back to the Industrial IoT Spotlight. I'm joined today by Peter Bourne. Peter is the CEO of Bright Wolf. And Bright Wolf is an interesting company. They're an enterprise software company that also does very deep system integration support for their customers. And so they get very involved in in the business, not just the technology side of deploying IoT solutions or building and deploying IoT solutions.
Peter has a very interesting background. So Peter is also the strategic advisor for ProAxion Incorporated as well as an entrepreneur in residence for Blackstone Entrepreneurs Network. And then Peter, you have a really deep background in a range of technology company. So number one, Peter, thanks so much for taking the time to speak with us today.
Peter: Thank you. It's great to be here.
Erik: Are there a couple that come to mind that you can go into a bit of detail operationally, how you work with the company, what you built, and then what the results were?
Peter: I like the people side of the business. And our goal, I touched on earlier on, is to impact not just our customers but to create things with our customers that help them impact their customers. Generically speaking, in a manufacturing facility, those folks that are operating the facility never really wanted to own a pump or filter or motor in the first place; they just want to produce whatever it is they're producing, whether it's discrete or process manufacturing.
And so, some of our customers have left to the front of that. There's a great whole another podcast on how whether the current industrial giants are going to disrupt themselves or be disrupted by people who are selling, not pumps, but pumping, and that filters but filtering, as a service. Some of our customers have already leapt to the front of that where they don't actually sell equipment to their customers, they install it for them and they operate it for them remotely and deliver outcomes.
Going back to more specific case studies, and I'll leave the customer name out here. But we had a great adventure that rang all of the bells f for an IoT journey. Our customer makes equipment that goes into agricultural production facilities. Their relationship with their customers has been for 75 or 100 years by discrete transactional equipment sale. They had the vision that they wanted to be more impactful, be more meaningful, therefore also be more sticky and compete less on pricing and functionality and more on providing an outcome for their customers. So they turned one of their products into a connected product system provided to the customer with dashboards and sort of an operator panel, if you will.
The initial result of that was quite unsettling and not expected and not good. It turned out that their equipment was not performing as well as their competitor’s equipment. And the dashboard highlighted that to their customer. Their customer proceeded to rip all of their stuff out. And for several months, we're all looking at each other like that's not how it's supposed to go: this is terrible and we're having audits with the GM of the business unit and the CEO of this $4 billion equipment companies say what the hell have you people done?
Several months later, right when they were tearing out their equipment, they said, but we love your operator panel. And so what we're going to do is we're going to force your competitors to integrate their equipment with your system. But revenue definitely went down, that customer for that period of time.
Two or three months in, it turns out that the competitor’s equipment was actually performing even worse than the stuff they just ripped out. So happy ending there, it turned out that put their all of their stuff back in, which was great. But more importantly than that, not the hardware, but the system that operated the hardware became part of the agricultural companies standard operating procedure part of their workflow. And so if you look now at the production companies operating procedure manuals that they hand out to all of their remote distributed production facilities for these agricultural products they're making, in that standard operating procedure is checked the vendor XYZ system and it's in there three times in the workflow. So now they're part of the process. They're part of how the plant is operated and that makes them far, far, far more important to the end customer.
Erik: So this is a very sticky strategic connection. On the revenue side, is this also a significant revenue mover for them, the new solution?
Peter: It is. We're talking about a $4 billion company, so it is nowhere near yet starting to move aside some of their hardware business. But we're 12, maybe it's 18 now months in and the revenue from the system itself is in the multiple tens of millions.
Erik: But typically, you don't really have that visibility into the solution. So this is a bit of a risk factor for a company. Were they able to take to use the visibility that they created to improve their products? Was that a part of the thought process?
Peter: Yeah, it absolutely is. We focus on that quite a bit when we work with our customers. The way we manage the data allows it to be access controlled and permission controlled across a wide range of user types. So for instance, we've got as the equipment maker, your own product group, who's going to want access to pretty much absolutely everything. You then got the plant operator who you're going to want to give some control and access to, but not all of the data from every facility from every customer everywhere, only to their particular plant and certainly not to one of their competitor’s plants.
Many of our customers were in oil and gas, were in transportation, were in health care, have regulatory oversight and need to be able to provide very clearly defined subsets of the data and access to the system for the regulator. And so because we're able to do this sort of attribute based access control in the data management layer, we're able to enable a different set of outcomes for each of the different constituents to be able to have that visibility and manage it appropriately.
And so, going back to your question, that product organization is always looking at the data and either today to your candidate story; handing it to a person to do the analysis on, but in the future increasingly handing that to a set of compute resources to do the analysis and the tracking on for product improvements. Hopefully, not a lot of people have situations where their product isn't actually meeting their datasheet. I think that was an unfortunate surprise that nobody expected but it does catch those things.
Erik: If we've got a few more minutes, we'd be good to dive into another case.
Peter: I talked about the aging workforce side of things, we see that as a clear application. One thing that many of our customers are experiencing is this is more about how you get it done that or what happens after it's done story, which is largely where IoT is today. There are people who have great successes. The vast majority of people are in the business of getting it done right now.
A large number of our customers went directly to the public cloud providers and applied somewhere between a handful and several handfuls of engineers to that tool set and attempted to build their own system from the ground up. What they found in that journey is that I mentioned incredible disruptive force that is AWS and Microsoft Azure, both cloud technology as a collective.
The software mindset move fast and break things. The equipment manufacturer mindset move slowly, don't break anything. And these things get deployed for 20 years. 20 years is longer than the clouds existed, longer than AWS has even had a business. And so the penalty for innovation is stability, and that stability byproduct of innovation is not desired. And so all of our customers are struggling with how they manage that gap. They want the new services. They want interesting things to happen. But they needed stable and they needed reliable.
And so every journey that we've been on has been one of providing a buffer between the innovation in the managed service side and the stability of the resulting product for our customers. It's a human story, and you got half a dozen engineers who are spinning their wheels trying to keep up with the latest releases, while being distracted from providing actual business value to their end customers because they're focused on infrastructure management.
And so it doesn't really fit that sort of case study for production IoT system. But these adventures take years literally if you start building from scratch today in IoT system, as a development project, it's going to take you quite a while even with all the wonderful tools at your disposal now because it's still an architecture problem.
And so, to me, making that not a case study, in other words, making that problem disappear is required for more broad IoT success in the industry.
Erik: That brings to mind a conversation I had with a friend from Siemens, he's working with Siemens Steel business serving steel customers in China. So he's on the system integrator side building solutions is a lot of the equipment that they have is integrated equipment, the user interface, the intelligence is all integrated into the equipment that's actually providing the physical service in the facility.
He's looking at, to what extent can this be separated out where you have the hardware performs one very specific core function and then all of the software is kind of extracted and developed separately. And so the hardware it's going to be in there for 20 years. It's probably not going to be moving too quickly in terms of innovation. But the software, then you can be much more flexible and dynamic. Are you seeing a lot of companies embracing the segregation of hardware and software in systems, which previously were more of embedded integrated solution, so that they have more of an opportunity?
Peter: Yeah, we absolutely are. And it's interesting this comes at a time that compute industry, goes through these giant cycles of ebb and flow between centralization and decentralization, and the cloud was really just the latest and the largest by far centralization of compute. And then based on well published metrics about network speed and price of compute power and memory, and all this stuff and Moore's law applied, we only call it the edge because we've been so focused on the cloud for a decade that everything else looks like it's somewhere else.
But in fact, so we're pushing back out, fog, if you want to call it or edge or whatever, that compute resource, and that sits now locally in the form usually have something called a gateway at the plant. And those gateways are getting increasingly cost effective, like sub $1,000 with full industrial Modbus, and Cambus and real industrial interfaces on them and class one div, two specs, and all the kinds of things you need to operate in these hardened environments and with increased compute power on them.
And that combined with the innovations in cellular technology, there are people now making software based Sims. But they're configurable between providers, so you don't have to choose your provider, and then deploy your gateways and get locked in. All of that many other things are making it so that as a company to put increased intelligence at the edge, either next to or near the machine in the form of a gateway, use the industrial interfaces on the appropriate gateway to take the data off the machines and using some of our runtimes and tools that I mentioned earlier and then apply some kind of decision making authority and/or data collection capability right there in the facility, which is seems obvious, but it takes quite a bit to get that done, and to get it done right.
I mentioned what it takes to actually build the data infrastructure and those kinds of things that all happens largely in the cloud. There's a parallel journey at the edge that the continued to increase maturity there is also a gating factor for getting scaled IoT deployments done. And there's a really neat actually separation clean line that happens there where you extracted or abstracted the data out of the machines and then start to do something just with the data of it, maybe with some like control of the machine as well. But the operator still prefer to go to the HMI, Human Machine Interface on the machine itself in most cases. But as it relates to the data, you can get that off now and run that through out of band. You don't have to change the PLC or the embedded PC in the machine itself. You can pull the data off and do something with it on a more capable platform at a low enough cost.
Erik: How can people get in touch with you? How can they get in touch with your team? And then which type of organization would it make sense to reach out to you? And when would it make sense for them to reach out to you?
Peter: We love what we do. And we love talking with people about it. So we have a large number of conversations going at all points in time where we're delivering value to the customer, just sort of as part of the sales process. There's no actual official engagement. There's no statement of work or contract or anything. We're just having discussions. And we thoroughly enjoyed that. So at any time.
We talked to people who are using ThingWorx today that, or have built our own, and we'd like to hear the stories and we'd like to understand better how the industry is moving. So, my email is Peter@brightwolf.com. There's a forum on our web page, obviously, you can reach out that way. You can find me on LinkedIn. We're happy to have conversations any number of ways.
The kinds of companies that we are most valuable to are large industrial makers of products. And that can be across any industry sectors. I mentioned, we've got deployed projects and products in oil and gas, in fluid management, so the Pumps and filters and those kinds of things, those in turn go into agriculture. We've got clients in healthcare, just cold chain transportation. We have probably 10,000 tractor trailers with refrigerated units on them that we're managing around the country, all kinds of different industries and sectors. If it's a high value asset and it's currently either being attempted to be connected or not connected, then we can help.
Erik: We'll put all that into the show notes. Peter, thanks so much for taking the time to talk to us today; for me, really interesting conversation.
Peter: Yeah, it’s been great. Thank you very much.
Erik: Thanks for tuning in to another edition of the Industrial IoT Spotlight. Don't forget to follow us on Twitter at IoTONEHQ, and to check out our database of case studies on IoTone.com. If you have unique insight or a project deployment story to share, we'd love to feature you on a future edition. Write us at erik.walenza@IoTone.com.