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November 18, 2015

Big firms like Oracle need to embrace IoT to remain leaders

C-level briefing: Jim Heppelmann talks need to think big and how automation might bring back manufacturing equality to the West.

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The sense that IoT is now a real ‘thing’ is very much in the air as a gathering of industry leaders in Stuttgart, Germany, for PTC‘s Live Worx Europe 2015 has showcased that being smart is crucial to be a winner, and time is running out.

"IoT is a huge opportunity. I think companies need to think big. We are thinking big and we are taking a different approach. The biggest ecosystem will win, so let’s all create a big ecosystem and be inclusive rather than exclusive," Jim Heppelmann, President and CEO of PTC, told CBR.

He said that there are a lot of companies out there, including big companies, whose software needs to change dramatically because of IoT.

"But these companies are too late to be a leader in IoT, and there are some big ones I would put on that list. [For example,] Oracle does not really have much of an IoT strategy, it is not a strong strategy.

"Their enterprise resource planning (ERP) system should change dramatically to take advantage of several things like new forms of logistics."

With businesses facing a transformative wave of technology, Heppelmann has also answered to the digital needs of PTC and re-organised the company into two branches: a technology branch and a solution branch.

"Conceptionally, it is like the Oracle of ten years ago when they had a database business and an ERP business. The reason to separate those like that is because you could be a partner of the Oracle database even if you competed with the Oracle ERP. SAP, for example, sold more Oracle databases than did Oracle ERP.

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"We separated it that way, not purely for competition reasons, but because the focus of the two businesses should be different."

He said that the technology group is trying to build an ecosystem of solution creators, while the solution business is building solutions to be deployed on the customer side.

"That allows us to have one approach to recruit in-customers, like Airbus, and to recruit partners like ServiceMax."

Building upon the growing prominence of IoT, Heppelmann said this technology will change the work of companies and therefore it will even make them reconsider the organisation of their business.

"That is very powerful and strategic, but then it requires discussion, planning, analysis and so on. Even when people are not afraid of the technology, they have to say how do we use it? Are we trying to bring old technology into new processes or should we reconsider our processes?

"And yes, they should reconsider their processes. It is a big strategic change that does not happen overnight."

Rebuilding the Western manufacturing powerhouse

As many applications and impacts as IoT can possibly have, the smart era has assumed an historical importance as it could restore the Western manufacturing industry, according to Heppelmann.

He said: "The reason why much manufacturing moved to China is because it is labour based, but as things become automated and labour is less important, then you bring it back to oversee it better because it does not matter where it is.

"I think automation is the great equaliser for Western Companies."

But how can businesses tap into the future of manufacturing? The CEO has an idea and it involves layering products. He said: "I think that the idea of layering an IoT platform on manufacturing execution systems (MES) is a good new idea.

"GE for example, they have 400 factories, the 400 factories have different processes, therefore different automation equipment, lines, MES systems and so on. How would you optimise 400 factories that are all different from each other?

"You bring in technology that integrates data across things and systems and we do that all together with our ‘umbrella’ control system that works at a level above MESs and so forward. You can also then add a massive amount of new instrumentation."

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