Siloed IT and OT in technical and organizational terms is often a chief reason for impeded or slowed digital transformation in the manufacturing industry. To set the scene for a sustainable digital journey BCG Platinion supports in assessing the fractures between IT and OT and offers a structured approach to overcome existing limitations.
IT/OT silos an obstacle to digitization in manufacturing
According to a recent BCG factory of the future study, 70% of manufacturers consider digital technologies on the shop floor as critical success factor for the coming years. They have already started or at least plan to start investing in digital, such as smart sensors, collaborative robots, and augmented reality. All investments are pointed in a single direction: to build a digital twin for manufacturing processes. But how can these goals toward a factory of the future be achieved?
An established approach on the digital journey is piloting digital use cases with the intention of leveraging and combining data from several places along the value chain in order to generate new insights into the manufacturing process. Despite many manufacturers applying the use case approach, they often fail.
While a general tendency can be observed toward exploiting the potential of commodity infrastructure, we at BCG Platinion often identify a gap between information technology (IT) and operational technology (OT) as an impediment for an evolving digital transformation in the manufacturing industry. Traditionally, IT and OT serve different purposes: IT is used to record transactions and business processes, whereas OT enables operation and monitoring of shop-floor processes. In more detail, the differences between traditional IT and OT can be outlined by analyzing several dimensions like organization and skills, network security, or data and systems. Considering the latter, we can imagine the following example:
Typically, the manufacturing IT organization is built along the hierarchy of industry standards such as ISA-95. As a result, information domains across IT and OT are separated. Data architecture and organization are shaped by clear boundaries forming disconnected silos.
For employees in production-related planning, this results in a lack of insights into plant data, causing increased effort and time inefficiencies for maintenance downtime and start-up.
However, the situation described in this typical example is diametrically opposed to some requirements of digitized manufacturing.
„IT/OT integration enables the true value of IoT use cases for a wide target area“"
In general, many components of a modern production plant, such as digital twins or remote monitoring, rely on data being ubiquitously available throughout the value chain, in other words, in engineering, logistics and manufacturing. To close the gap between the domains of IT and OT, missing data on OT level is often an impediment.
Following our example, this could mean that without a fully integrated and connected IT/OT stack, a vibration pattern would only be a vibration pattern. It cannot be turned into value, such as by feeding it into an AI to predict machine failure.
Worst case, this minor missing data point can cause disruptions to overall equipment efficiency (OEE) or even supply chains. By merging plant and business data through visual interfaces, efficiency in production processes can be increased. IT/OT integration enables the true value of IoT use cases—not only for the restricted use case environment, but for a wider target area such as different production lines, the whole shop floor or along the whole internal value chain.
Technical and organizational difference between IT and OT
For most manufacturers, it is still a big challenge to transition from siloed IT and OT architectures to a highly integrated digital and data platform (DDP). This approach separates the data from the application layer, which enables holistic data consumption by any end-to-end use case. With this approach, we recently supported a tier-one supplier in transforming its manufacturing processes.
Frequent machine breakdowns affected its reliability for key customers. While most machines were equipped with sensors, data was not leveraged to predict maintenance requirements. Our DDP approach combined this data with planning data from ERP in a central repository. Consequently, with the additional application of machine learning algorithms, production loads were balanced and allowed for overhaul time slots that did not impact manufacturing operations any longer.
But even if data silos are torn down, organizational limitations often persist. While applications, such as manufacturing execution systems (MES) or advanced planning and scheduling tools are in the domain of IT, machinery with its programmable logic controllers (PLCs) or sensors is the core domain of the OT team.
Hence, a holistic journey to IT/OT convergence also requires a multidimensional approach. After a tech convergence is achieved, meaning aligning technology used in corporate IT and operational technology, a consecutive process alignment and integration of teams need to be achieved. An alignment of processes, standards, and technology between IT and OT will create compatibility between these two worlds. A combined IT/OT operating model will then foster and leverage integrated systems and technologies.
Where does this leave us in the end? A thorough outside-in assessment of the technical status quo of IT and OT is key. It should never be driven by the promotion of a specific vendor interest.
This comprehensive technical assessment also needs to be accompanied by close collaboration of business and IT resources and to be complemented by an organizational assessment.
By leveraging the BCG network for evaluating potential organizational limitations, BCG Platinion provides the necessary guidance to overcome daily challenges in establishing a hybrid network architecture in engineering, logistics and manufacturing.
By focusing on defining and implementing a structured approach to an IT/OT integration, BCG Platinion sets the scene for best-in-class manufacturers to embark on a value-adding and efficient digital journey.
About the Authors
Dr. Nicolas GoetzSenior Consultant
Nicolas is an expert in digital transformation initiatives and agile project management. By combining his expertise in production management and emerging technologies, he has delivered digital roadmaps, optimization and digitization of processes, IT cost efficiency programs, and agile ways of working for various industry sectors. Nicolas is member of the BCG Platinion Enterprise Solutions chapter.
Johannes is an expert for Engineering and Manufacturing IT. He advises Automotive OEMs and Tier1 suppliers on challenges at the verge between IT and OT, incl. Digital Twin and IIoT transformations as well as IT strategy design. He is a core member of BCG Platinion’s Industrial Goods Practice Area.
Florian HasibetherAssociate Director
Florian leads our regional Engineering & Manufacturing IT team in Europe. He supports clients on IT strategy definition and manages IT Architecture reviews in the Engineering and Manufacturing domain, enabling digital transformations. Florian is also a member of the leadership group of the Industrial Goods Practice Area.
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