Spurred on by big data and IoT, IT/OT convergence is creating new opportunities to optimize internal operations, generate profits, and give companies a competitive edge.
As any good business leader knows, optimizing internal operations can increase profit margins and help build a competitive advantage. This is especially true for industries that rely on heavy equipment and machinery, such as manufacturing, energy, and oil and gas.
The digital age has placed immense amounts of data at our fingertips and, in doing so, has opened new possibilities for strategizing and carrying out internal process optimization. This means that companies reliant upon operational technology have immense opportunities to harness this data to improve operations.
In short, a paradigm shift is underway. As the operational technology market is projected to expand by more than $40 billion over the next three years, companies that continue to fall back on traditional methods will fall behind, while those that embrace next-generation digital solutions will have a leg up. Properly taking advantage of these digital solutions will require normalizing collaboration between information technology (IT) and operational technology (OT).
Defining IT and OT
In order to understand what such collaboration looks like in practice, we first have to understand what we mean by IT and OT.
IT refers to the application of network, storage, and computing resources toward managing data within and between organizations. IT teams and their devices (computers, software, hardware, and other telecommunication devices) tend to be located in offices, server rooms, and data centers. IT infrastructures and functions evolve to fit changing networks, applications, and user needs.
By contrast, OT is the technology that comprises the industrial systems associated with physical processes such as manufacturing and transportation. OT functions are designed to perform physical operations in the field — for example, controlling the heat in a building or the flow of fuel in a power plant. OT often operates solely in real-time or near real-time environments.
The Growing Overlap of IT and OT
Across sectors, IT and OT have traditionally operated in their respective silos to fulfill their individual priorities as determined by company needs. Therefore, IT/OT collaboration up until this point has been rare — typically the result of problems requiring integrative solutions rather than bottom-up synergistic initiatives. However, this state of affairs is beginning to change owing to the influence of both big data and the Internet of Things (IoT).
As the use of data analytics has continued to grow, so too has the IT/OT relationship. Executives of companies that are heavily reliant on OT have grown increasingly aware of how data can — and should — drive decision-making. They have also looked to data to better align OT with business systems and enterprise resource planning.
Meanwhile, developments in IoT technology have enabled growing overlaps between physical machinery and the virtual world in unprecedented ways. Increasingly, OT must work with complex systems and networks that historically were the domain of IT. IoT sensors and devices have generated immense amounts of data that can now help executives visualize OT operations and locate areas of improvement.
The Benefits of Convergence
The range of benefits that IT/OT convergence can provide includes increased performance, productivity, and agility, enhanced visibility across the supply chain, and key insights into the status of OT — allowing managers to develop new and substantial efficiencies. Whereas IT can help OT align itself with business models and drive the design of management systems, OT can draw on its knowledge of physical processes and machinery to help IT perfect its design and vision.
Equally important, IT/OT convergence can produce significant cost savings, reducing production expenses and allowing businesses to easily adjust inventory to changing customer needs. But reaping these collective benefits means accepting the challenges that come with IT/OT convergence. Departments that have long worked in silos may be reluctant — even resistant — to working together, and such collaboration may encounter pushback at the organizational level. In addition to the broad acceptance of IT/OT collaboration, enacting convergence requires a clear vision and open channels of communication.
Models of successful convergence can help, and key industries are paving the way for future businesses to see the benefits of IT/OT collaboration. For a better understanding of the advantages that come with IT/OT convergence through these industry models, download our latest white paper here.