Podcast #155 Industrial AI

Ken: Good day, and welcome to episode 155 of our Momentum Digital Thread Podcast series. Today, it is my distinct honor to welcome Cyril Perducat, Senior Vice President and Chief Technology Officer at Rockwell Automation. Cyril joined Rockwell following a 25-year career with Schneider Electric, where he most recently served as Executive Vice President, Internet of Things and Digital offers. He has an extensive career as a technology strategist, particularly for systems software network and solutions businesses. He brings a passion for innovating and building teams and the drive to implement successful outcomes based on effective change management.

Cyril, welcome to our digital thread podcast today.

[00:01:24]

Cyril: Hello Ken, and thanks for having me today. It's a great pleasure to be on this podcast.

[00:01:29]

Ken: It's a great pleasure to have you too. I know we've a long history between us, and I was so excited to hear about you coming into this role and looking forward to this podcast. I know our listeners are as well. So let's rewind for a moment. I always like to ask this question about the digital thread, the thematic threads that define your digital industry journey. What would you consider to be your digital thread?

[00:01:54]

Cyril: My experiences in this industry might be a bit different from what a traditional CTO will have because I'm an engineer by training. I majored in innovation when I was in engineering school. I started my career, probably the first ten years, in sales and marketing. And not only in sales and marketing but in sales and marketing and business development and strategy, mostly in China. So this has had much influence on being rooted in real customer needs, understanding what is happening on the ground, connecting with the sales team, and understanding the diversity of the business landscape. Because I was in the geography with China that is probably quite different, and was very different at the time, from the Western world and the situation of industrial automation an emerging industry in an emerging or more than emerged country in China was extremely exciting to be at this time, at this place.

And I did depart, going from pure sales and marketing to strategic developments, working on the strategy of different businesses in China before I became a CTO. When I became a CTO, as a reason, I think it was back in 2007 when I became a CTO; I became a CTO because the leaders who recruited me wanted to have somebody who understands technology but understands the business as well. And I joined this role at a time, industrial automation of industries, where we were looking at bringing IT technologies to the factory floor. This was the acceleration of this trend, enabling synergies between traditional industrial automation and information technology. Thereby reinventing the value proposition from a business that has been historically defined by hardware to a business defined by hardware and connectivity. Then, it gradually augmented very significantly with software coming from the IT space and services and driving the transformation of this industry with organic innovation that supports this process.

But also, we were looking at bringing the best of IT technologies, and IT approaches to using those technologies. We were working on reinventing many aspects of how you define organic innovation and bringing outside-in innovation, starting to work with startups, acquiring companies, integrating those companies that have a very different type of profile. After I did the cycle of transforming an industrial automation portfolio for one of the players in the industry, I moved into the world of digital transformation. The last seven or eight years before I joined Rockwell Automation, I have been about moving to the next step of this journey: looking at the cloud, looking at AI, and looking at IT connectivity and wireless connectivity. Looking at many truly developing technologies and defining how we can reinvent the customer experience, reinvent value proposal with that and create a new, different type of value for customers.

So that has been the three-step of my journey: sales/marketing strategy/business development, CTO in the traditional sense, and a strong focus on digital transformation for portfolios that were much broader than industrial automation. It’s been about learning from the different types of businesses and what specifically digital transformation means for all of those different businesses because they mean different things and represent different opportunities.

[00:05:23]

Ken: That's a great story. Usually, we like to talk about many of our speakers as being full-stack. They start with that engineering experience, maybe at the hardware, and work their way up. What I love about your background and your thread, you've got a breadth of perspectives across, as you say, sales and marketing, strategy, business development, chief technology officer, and that gives you an exciting platform to develop perspectives.

You mentioned digital transformation, but I want to go a little bit deeper on that because of your great OT background. What does digital transformation truly mean to you, and what do you think it means to your customers?

[00:06:02]

Cyril: I will answer by saying what it means and what it doesn't mean to me. It's about creating value. There is a tendency, because there are many buzz words and much hype about different technology, to sometimes focus on creating fancy tools with cool technologies. And think this is not what digital transformation should be. It should not be moving from one buzzword to another and creating better presentations that illustrate what those buzz words are about. It's for me about creating value, having the opportunity with digital transformation, to permanently reinvent the business you are in.

I have always told my teams related to digital transformation that let's use a simple mental model. If we were reinventing business from scratch today, let's forget any legacy and history, but let's say we start today with the available technology stacks. How will our business look like? How will we build it differently? Will our business model be different? And if there is an answer to that question that is fundamentally different from what we do today, let's do it before anybody else does it, before anyone else catches up on the opportunity to create new value for customers. We should be the one in any given industry to leverage digital transformation, to reinvent our business for the sake of creating new, better value for our customers. And as a consequence of this, I don't think that digital transformation is just about technology innovation. For me, it's one of those three pillars.

One, there shouldn't be to succeed in digital transformation, simultaneous innovations in technology, of course, leveraging the right things, consuming the right technology in the proper context of your business.

Secondly, innovation in user experience creates a different type of user experience in the way people do things. We create solutions. We develop tools in industries that are an essential part of all user workflow. We will not promote the solutions that make them have a disruptive workflow to the best practice in a given industry. So, how do we create those user experiences that are simultaneously transformational to the value created without being disruptive in what people know how to do best.

And the third pillar of this element of innovation in business models. As we create new values, sometimes traditional business models would work; sometimes, you need to invent new business models. I think it's precisely in that context that we are moving more and more to an 'as a service business model' in many dimensions.

It doesn't mean only software to me, but how do we move to a subscription business model? How do we move to annual recurring revenues for companies like ours? Because it's the nature of the value that is created. It's not just created at one point in time like it’s encapsulated into a product. It's created over time because we speak about the service, the subscription, and the software delivered as a service. And ultimately, not because we want to change the business model, but because the value is created over time, and the value should improve over time. So that's for me, what triggers the emergence and robust development of those types of business models.

[00:09:23]

Ken: And you have found yourself at another great platform in life. I'd say your most ambitious role yet, as a senior vice president and Chief Technology Officer for Rockwell Automation. So tell us a bit about the company and what attracted you to this role.

[00:09:39]

Cyril: When I look at all the different players in industrial automation, first of all, in my 25 years career, a considerable part of this has been around industrial automation and working with industrial customers across the discrete, hybrid, and process industries altogether. When I look at Rockwell Automation, there are a set number of key things that attracted me to that company.

I will start by its focus; there is no better company focused on industrial automation and information technologies. And for me, that's important. Every senior executive at Rockwell Automation wakes up every morning thinking about industrial automation and information technology, reinventing that space, and creating value for customers.

I will say the second value is leadership. Rockwell Automation is known and recognized as a leader. Rockwell Automation has pioneered many innovations in these industries. Many years ago, Rockwell Automation created the integrated architecture and then ultimately the connected enterprise. This leadership over the years of Rockwell Automation attracted me and the ability to be one of the companies that can reinvent the industry. I think Rockwell Automation is in a unique position for this.

And then ultimately, it's a matter of people. I met Blake Moret. I met a certain number of leaders of Rockwell Automation, some of them whom I've known over the years. I met in different contexts and connected. I love the leadership, and I love the team. And I thought it was an excellent opportunity for me to continue that journey in this industry and help transform industrial automation and information technology for the benefit of our customers.

[00:11:28]

Ken: Let's drill down on transforming industrial automation. Many of us from the industry who know this space certainly know Rockwell has a deep heritage in it but know this traditional kind of five-layer pyramid, right. Field, control, supervisory, planning, and management levels traditionally.

How has this view of automation changed with industry 4.0? And we're also hearing about 5.0 now at this point or digital thread, and generally, people tend to think of the industrial IoT as the virtualization of OT as we call it. How is the industry changing with these concepts, and how is this five-step pyramid changing in your mind?

[00:12:05]

Cyril: So maybe before we go to the pyramid and how we ended up with this pyramid, let me replay some of the previous episodes. How we got where we are today, and what is prepared as the next step? I mentioned this idea of bringing IT technologies to the factory of the process, enabling synergies and value creation between traditional historical industrial digital automation, control, and information technology. This is what Rockwell Automation did with the connected enterprise. This helped to move one step further, to go beyond pure information to insights. Not just informing, giving more data to people, but the information in context - insights – providing capabilities to customers that help them make informed decisions and reach their business goals. We'll certainly come back on those business goals because they also evolve.

I think those insights that started as very descriptive gradually moved to be more predictive; to leverage more modern technology such as analytics. Some years ago, at the beginning of machine learning, I was trying to predict what would happen. Right now, what I think is happening and where I see the transformation of the value proposition is to move to be prescriptive. And this is where I see the cornerstone or the turning points of the emergence and the role of industrial AI all together in our industry.

Ultimately, what I believe is what we have called automated in the past, so the idea of automation will gradually move us to autonomy—being able to put some of the elements of a factory, of a process, or improving performance more autonomously, like an autonomous system. It doesn't mean that we are looking at replacing human beings in those processes and those factories. It’s really about creating better partnerships between the machine and the people, which I think is a core tenet of industry 5.0 as it starts to emerge. This partnership between people and machines is essential. And when you think about one of the taglines of Rockwell Automation, expanding human possibilities, I think this is significantly related to that. How do we create an industrial automation value proposal and capabilities stack about partnering with people to create value?

So now, let me get back to the pyramid and the five layers. Many of those five layers, which are seen as very relevant today, locate the different types of solutions at different layers. Historically, they also tend to describe different types of players. This has flattened a lot because most of the significant players in the industry are not just operating as one of the layers. They are operating as multiple levels of all those layers at the same time. What I think is critical is how you unify and connect those different layers with the right information model? Are you able to get data and information flow across all systems so that you can develop the actual scenario I was referring to in industrial AI?

So a powerful pillar of the ability to move to deliver the best industrial AI-based solutions to customers is not to look at industry AI as something happening in one of the layers. And some people will even think that it could be at one of the more software cloud layers. But how does this propagate across all the different layers of the architecture? It's AI, the level of the devices, the lowest layer of the stack. It’s AI at a level of control at the edge. What's the fundamental difference between control and edge, by the way? Of course, it’s AI in software as a service offering in the cloud, but how does this unify all those layers around the information model? Not as independent layers of solutions that maybe connect sometimes sends to open standard hopefully, but how information flows across those layers so that you can develop the most impactful scenario leveraging industrial AI.

[00:16:26]

Ken: So several keywords in there. I like this idea of unification to move from descriptive to prescriptive or from automation to autonomy. It's what one might call a closed operation in a sense. You've opened a lot of good topics during that last question. Let me take one that kind of, for many people will feel like, I'm wondering what's going on, right. We see the so-called hyper-scalers, so thinking, you know, AWS, Azure, Google Cloud, hiring many deep domain leaders and building out what they're calling edge capabilities to extend their cloud reach. Some are launching things called manufacturing clouds, as an example.

How does the role of these traditional OT solution leaders, or I guess another way, as they're emerging, change the role of traditional OT solution leaders like Rockwell?

[00:17:17]

Cyril: So this is a question I get often, and this is, of course, also the topic of many debates. If I summarize the relationship between a company like Rockwell Automation and those hyper-scalers, companies are sometimes in competition, but mostly partners. I think the opportunity for a company like Rockwell Automation to partner, for example, we partner with Microsoft and leverage all the Azure stack in their solutions, are packaging solutions without being negative. In a certain way, they are commoditizing some software elements so that it's easier to consume and easier to use, giving access to technologies that otherwise will be difficult to access. They packaged solutions that are easier to use, deliver, and manage as a service. By Partnering with those companies in the right way, you integrate those digital building blocks and create better solutions. And the context of Rockwell Automation, I think Rockwell Automation is known to be best in class in its approach to relationship with the ecosystem, leveraging an ecosystem of partners of different sizes and scales over the years. The partnership between Rockwell Automation and Cisco, for example, is well known in the industry and has been running over the years, creating a lot of shared value for all those companies. So, the story with Microsoft for me is the same.

So yes, and that's probably the nature of the digital environment. We speak a lot about cooperation. So boundaries between partnership and competition sometimes are blurry. There are partnership opportunities, and there is a strong relevance for a company like Rockwell Automation to deliver solutions to industrial players is because we understand the space. We understand the personas, the users, at the shop floor level, we know what they do every day. What is a service engineer doing? What is the maintenance manager struggling with? And we have this proximity to those people and those users because of the extent of our ecosystems. We have a relationship with system integrators. Proximity to the shop floor or the process is a vital attribute of Rockwell Automation's customer values. We understand what those people need, and by doing this and reinventing your business and your value proposal, at the same time, we remain. We will remain very relevant in this industry while at the same time partnering with those hyper-scalers I was referring to.

[00:19:41]

Ken: In some ways, it's indicative of the convergence of IT and OT. You said earlier, you know, IT and industrial automation, and certainly, for decades this area has been converging, but with a lot of the digital technologies and capabilities coming from the top floor, the shop floor element has indeed transformed as well. So you guys are positioned in that spectrum. Speaking of partnering, you guys partnered with PTC back in 2018 and most recently acquired Plex, which we find an interesting deal. So how are these moves positioning you to, quote-unquote as you guys like to say, enable the next generation of smart manufacturing?

[00:20:21]

Cyril: So I think those moves and those partnerships that we have in the space are the intersections of two important things.

One element, which I will call being careful of the buzz word, digital twins. So how do you bridge design, operate, and maintain all together back to this information model? The information model is not just vertical, that is, going from the sensors up to ERP, but it's also horizontal because it interconnects design systems to operating systems to maintenance systems. So that's one element that implies a lot of software integration and being in that space and being extremely knowledgeable about that space in all of its dimensions.

The other element is also creating new, modern, smart manufacturing solutions. What is unique with Plex is that it's the first in the industry: cloud-native MES, a cloud-native manufacturing platform. This idea of reinvention that I mentioned earlier and the history of Plex, how they got there is extremely interesting. I was speaking with the CTO of Plex last week about that. It's taking a space, a certain type of customer, a certain type of industry, and thinking, how can we leverage the cloud to bring a different type of solution, a different kind of MES or smart manufacturing platform to those customers? How do we create those new cloud-native capabilities and delivering these with the real true native software as a service business model, as a subscription? As I said, the value gets better over time, and because it gets better over time, the customers are happy to continue their subscription. Hence, suppliers like us continue to be relevant and permanently deliver more value. So this is where I see those different moves, particularly Plex, and that is the context where we see it.

And the dealing process with Plex is the acceleration of Rockwell Automation in that direction. It's not just bringing solution software or cloud capabilities but also bringing together the people, the knowledge, and the experience reinforcing, as a consequence, the Rockwell Automation team.

[00:22:32]

Ken: I was lucky enough to be part of the teamwork. So we had invested in them at the time PTC acquired them. And I saw the complete change in PTC from its traditional CAD Cam PLM, SLMA LM business to one that became much more, I'll call it as a service subscription. And well-published in terms of the transformation that went on there in that organization. I can only imagine what that's going to do to a company with as deep roots as Rockwell, and indeed a positive thing in that regard. I was intrigued by one of the things you said earlier as you introduced this idea of industrial AI. And I believe you said control is edge or the other way around.

Let's talk a little bit about the role of edge computing because many people talk about that, and usually, it's in the idea of OT. Arguably OT has always been an edge business, like I cut my teeth on an Allen-Bradley PLC, right, the ultimate edge, if you will. How does this new edge focus compliment this kind of, I'll call it, heritage systems of industrial OT edge?

[00:23:35]

Cyril: When we speak about the edge, it's always a little bit weird because where is the edge exactly? IT players will probably see this as the edge of the network, or maybe they will see this as where their influence stops and the influence of others start. The edge is everywhere. If you have a drive in an application, the drive itself is the edge in some way. For me, control is the edge. I don't see a fundamental difference between the edge and controls. And the edge is certainly not a gateway. There are applications where you need to create maybe smart gateways to integrate lower layers in the solution. But for me, control is the edge; that’s the fundamental idea.

And as a consequence, we have the opportunity in the context of a company like Rockwell Automation to reinvent control at the edge, to reinvent this part of the value proposition. Rockwell Automation has developed interesting offers in that regard. Several years ago, I was intrigued by the Logix AI that Rockwell Automation developed. It was one of the first solutions visible on the market to bring industrial AI in control and at the edge, and I think this will continue. And when I was mentioning this evolution from automated to autonomous, where is a better place to do this than in control, and as a consequence, at the edge? Like in autonomous vehicles, where AI is happening to drive, the vehicle's autonomy is as the edge processor as this unit inside the car. It's not happening in the cloud; it's happening at the edge.

When I was mentioning the importance of industrial AI and how it is transformative for the industry in terms of the ability to create new value for customers, the control and the edge for me is another critical element to succeed at this, not just in the cloud. Reinventing control, and I think Rockwell Automation's robust legitimacy in that space and its ability to have the best-in-class control architecture and solution with Logix, is where this transformation is happening. And this is where for me, a very big pillar of this movement from automated to autonomous is going to happen.

[00:25:50]

Ken: We participated in an edge orchestration event not too long ago. In the panel discussion, somebody referred to a full-stack edge system as an edge continuum. The idea that you will have to start with the collection of data at the edge, move up to processing that data, make some decisions based on it, based on probably heuristics you might've developed in a cloud application, and then ultimately pass down either the programming or the result of that back down to the edge processor in some sense. And this idea that all of that could be amorphous, i.e., those algorithms stay, in the end, they're influenced by what you have in the cloud, or for larger algorithms like pattern matching, you might do that somewhere in the middle to the cloud. It's interesting, you mentioned unified and this idea of this kind of pyramid model; if you lay that unification over that pyramid model, you effectively bring up this idea of the edge continuum, which I think is very fitting to what you've just described and being able to deploy intelligence to the edge.

Probably maybe a little bit of an orthogonal question. I would love to go deeper on this edge topic, but I want to give you a chance to talk a little more broadly about your platform. You said earlier outside-in innovation. And so, how do you leverage the innovation ecosystem, both inside Rockwell, but also outside your organization. So, like venturing, investments, M&A.

[00:27:14]

Cyril: When I mentioned my journey at the beginning of this discussion, I have been associated with many activities over my career, acquiring companies, integrating companies. Balancing organic innovations with inorganic activities, partnering with startups. I love partnering with a startup. Not partnering with a startup is a sense of preparing the acquisition of those startups but working with people exclusively focused on reinventing one segment of an industry. This is what a startup is doing: focusing on some specific area and driving this reinvention.

Rockwell Automation has a strong history of working with an ecosystem, not trying to do everything alone; extending this, I think this applies very well to Rockwell Automation.

Rockwell Automation is willing to partner with startups. What I think is, those conversations with startups in different types of partnering activities and the investments that we have done over the years are a lot about reinforcing our value proposal and solutions with innovative solutions and technology coming from those startups. It's learning from those conversations. It goes both ways; the startups are learning, and Rockwell Automation is also learning. And also, something that is very interesting and that we need to acknowledge is that those startups are also speaking with our customers. And I love to understand what are they speaking about with our customers and what can we learn from those conversations to drive our own innovation capabilities? So that's for me, the spectrum of interest is in partnering with the startup ecosystem, which is fundamental to drive a successful innovation strategy.

[00:28:47]

Ken: Yeah, we would fully agree, which is why one part of our business focuses on large companies like Rockwell and helping them accelerate both the people and their services. The other side is investing in young companies. It's almost like one foot, if you will, in that disruption and one foot in, in the market scale, right. So, it's an exciting place to be in, and I know why you've enjoyed that so well.

In closing, I always like to ask Cyril, where do you find your inspiration?

[00:29:15]

Cyril: That's an interesting question. I read a lot. I'm curious about learning new things continuously, even in areas that are very different from what I do traditionally. About two years ago, I was inquisitive about the financial sector's evolution as there were more and more things on the markets; discussions on the FinTech sector. I tend to learn by taking classes on the topics I like to explore further. I took a course at Oxford on FinTech Innovation to learn more about this topic and understand the future of payments, currencies, and new things.

I read a lot. I read things about my industry. I also like to read things beyond my own business and bring back this knowledge. And let's categorize, I read three types of books. I read books about history. I like to learn from history; how did we get there? In whatever the context, not just industry. I love to read books about people, unique stories of unique individuals that significantly impact an industry. And I have always been an avid reader of science fiction books because it's about defining another possible. Things that were in science fiction books 50 years ago are more of a reality today.

So those are my source of inspiration, but for me, it's about being curious. When I converse with somebody who was already inside Rockwell Automation or outside, and they speak about some things that are unclear to me, I ask more questions because I also learn from people. I love to spend time in R&D labs, so engineers can explain to me in detail about the solutions they are currently developing. I don't hesitate to ask questions, sometimes acknowledging my lack of knowledge or even ignorance and learning from the expert on the topic.

[00:31:06]

Ken: It has often been said that innovation happens in the Venn as an example. The Venn diagram, right, is the intersection of disciplines, sectors, and cultures. I think you've just demonstrated very well the value and the power of observing patterns in other domains and applying them. And Cyril, thank you for sharing these great insights with us today.

[00:31:26]

Cyril: Thank you, Ken. Thanks very much for having me today. I'm looking forward to continuing this conversation in one form or another.

[00:31:32]

Ken: Oh, fully agreed. You left us with so many great hooks. After a little time, I would love to check in to understand how you're moving the company forward, especially around this edge. So this has been Cyril Perducat, Senior Vice President and Chief Technology Officer of Rockwell Automation and a lifelong digital industry transformation leader. Thank you for listening, and please join us next week for our next Momenta Digital Thread Podcast.

Thank you, and have a great day.

[The End]