Podcast #113: The IoT Paradigm Shift

Good day and welcome to our Digital Industry Leadership podcasts, produced by, for, and about digital industry leaders. Today I’m excited to feature a long-time leader and innovator in IoT, Joseph Biron, General Manager IoT products for PTC. Joseph is an experienced technology executive, with a passion for imagining and implementing technology solutions, for the grand challenges that businesses face. In his career he’s been a software engineer, technology consultant, chief architect, product strategist, and team leader. For the past decade he’s had the good fortune to be part of the Internet of Things revolution, particularly the industrial IoT, and he looks forward to the stunning paradigm shift that is happening now.

Joseph, welcome to our Digital Industry Leadership podcast.

Ken, thank you so much, I’ve been looking forward to this, it’s been way too long.

I fully agree, our paths have crossed many a time for almost the past decade, and so I’ve been looking forward to this for a while. Before we jump into this great paradigm shift conversation, let’s start a little bit with your professional journey. Tell us a little bit about your own background, and how it has informed your views of digital industry.

Well, in the litany of titles you rattled off there in my introduction, which was a very nice introduction, thank you very much. I think of myself first and foremost as a software engineer, its where my passion began as a teenager into college, a computer science background, spent a long time in the industry as a heads down software engineer and architect, and just love the craft and the engineering discipline of writing code and making software.

Making software that works, making software that works for customers to receive value, which led me to discover a company called Axeda in the mid-2000s, which was doing some really game-changing stuff at the time, and quite frankly, still today that product is changing the game for many of our customers. To help product manufacturers who had complex, high value, mission critical assets, that were deployed in their own customer’s environments, and everyone just needed to make sure that stuff kept working. So, we’re talking about industrial machinery, medical equipment that is delivering life-saving care and diagnoses in laboratories, just stuff that makes the planet go.

It really excited me to be part of that world, building software that helped connect to real machines, real atoms, not just bits and bytes, and actually doing something for those customers that quite frankly touches many parts of everyday lives. So, that really-really got me excited, and I’ve been on that IoT journey ever since, so going on over 13 years now. I just love it, I love the technology space, I love software, and I Iove feeling like I’ve got my hands on the steering-wheel, with a company that’s delivering value to our customers. And that sounds like platitudes, but I really feel that.

I love the fact that you refer to your time at Axeda as, ‘innovationeers’, and so first of all we’re big fans of Axeda and team, you know we’ve invested behind Dale Calder’s newest company appropriately called RevTwo, and for those of you who don’t know, Dale was one of the founders of Axeda. In fact, we featured Dale – I want to say way back when, it was one of our first podcasts I think, number 10 or something like that. What were some of your earliest wins at Axeda, and what were some of the earliest lessons learned, during leading the technology team there?

That’s a great one, and by the way Dale and I are still good friends. I hope you’re listening to this Dale; I love you buddy! Dale’s a great guy.

So, I think the early Axeda customers were as I mentioned, product manufacturers with mission-critical assets that needed to be monitored and proactively serviced. In those early days, it was pre-machine to machine as a buzzword, pre-IoT as a buzzword, certainly pre-IoT, because that phrase was coined in 2009 if I’m not mistaken. And very often this was machinery that was controlled via a PC, so there’s a Windows box right alongside it, it’s got a serial cable into the – maybe it’s a radiation therapy machine, and so the idea of remotely connecting to the machine was really about forging a remote connection that was friendly through institutional firewalls, to the PC, which then had a physical inter-connect to the machine.

That was great, it was easy to retrofit brownfield assets, but it depended on the presence of this pretty large hunking piece of machinery right beside it, which was a full-blown desktop computer. Now, fast-forward to 2009-2010, and we saw a convergence of hardware with small form factors, dense enough compute, and broadband connectivity as well as 3G and then 4G network connectivity, that gave an opportunity to retrofit yet more brownfield assets that maybe didn’t have the benefit of being controlled by a full-blown PC.

Moreover, the small form factors and microchip density with system on chip innovations, meant that product manufacturers began incorporating this connectivity into their products, so under the skin of the asset so to speak. You mentioned ‘innovationeers’, I haven’t actually heard that term in years, but at one point during this transitional phase from remote connectivity, through PCs, to using what would now be considered IoT-style devices, we saw an explosion in the numbers of use cases that were addressable with IoT network connectivity, and so forth. And so I formed a team that I call the innovationeers, taking a page from the Disney Imagineers playbook; software engineers that were really tuned into the customer use cases, and helped to develop ideas that were the art of the possible, working with hardware manufacturers and partners to try out the latest J19 bus interconnect, with the AT&T cellular network. What can we do with this thing?

It was really a primordial soup of testing the boundaries of the state of the art at the time, circa 2009-2010, and really helping us refine what’s going to move the needle on the business challenges of our customers. If I have one key takeaway from that primordial soup era with my innovationeer team, it was we could have been more discerning in what connectivity styles, and what use cases were going to really resonate for deep value, versus those that were just kind of cool and we wanted to try this new piece of appliance, and gee, wouldn’t it be interesting if we could try to do this. Many of those things we experimented with just didn’t have traction in the market, in retrospect, the value we should have been focusing on and we very much had been doing so at PTC is, what are the use cases that our customers, who by the way happen to be to a large extent product manufacturers, what are their challenges and how can the technology we have be directed towards solutions to their challenges?

Now, I’m a bottom-up and top-down kind of person, I love the bottoms-up, what can we do with this technology, but matching it more strongly with the top-down focus, is something that’s been really paying dividends for us here at PTC with our IoT business.

Yeah, and we used a term earlier, ‘Industrial IoT’, and we’ll talk in a few minutes I’m sure, around what IoT means to PTC. But it is that industrial side of it that I think we’ve always believed has the stronger fundamentals in it, and the consumer stuff is cool, we had the connected cows, connected health meters and things like that, but it is those industrial use cases where, as GE used to talk about the power of 1 and 2 percent, create immense value.

PTC acquired ThingWorx, one of our earlier clients/investments in late 2013, followed by Axeda, which I think included you about 9 months later; a veritable 1-2 punch that quickly positioned you guys as a leader in the Industrial IoT. Can you talk a bit about PTC prior to this, and I guess the strategy around these acquisitions?

Yeah absolutely, this is one of the things that really enamored me early-on to our visionary CEO, Jim Heppelmann.  Before the acquisition, I didn’t have CAD and product life-cycle management on my radar, but it turns out if you’re talking about the engineering design manufacturing service, and end of life, total life-cycle, of a product that gets put into useful production, that is product life-cycle management from beginning to end. From the design concept, the first steps drafting in CAD, managing bill of materials for engineering, managing bill of materials for the manufacturing operation, manufacturing recipes, service programs; so what PTC and Jim Heppelmann’s vision identified was, we’re not really helping our customers with half of this lifecycle. As soon as they’re done with their bill of materials design, we’re out of here.

We don’t help them with the manufacturing process itself, a process that’s just ripe for efficiency improvements, we don’t help them at all with the aftersales service. We don’t help them at all with tying the learnings from the manufacturing process, and that service lifecycle which by the way is most of the product’s lifespan, we don’t have a way to close that loop and bring those learning’s telemetry analytics off of that digital exhaust, back into the design process. So IoT really became the keystone to complete that product lifecycle closed loop, and we really feel like we hit that nail right on the head, with the acquisitions of ThingWorx and Axeda. By the way, if those were the 1-2 punches, maybe the 3 and 4 punches were the acquisitions we then made in analytics, with Coldelite which now manifests as our analytics component of the ThingWorx product family, and Kepware which is just a deep and broad library of industrial protocol drivers.

This is something that we really wouldn’t have any traction in manufacturing efficiency today, if we didn’t have this powerful capability from Kepware, which lets us tap into the in situ Brownfield machinery and controllers that are part of every manufacturing operation today. So that closed loop and really fixing or solving the complete problem for the set of manufacturing engineering and service challenges, that our product manufacturing customers have, that’s really the role that IoT has played, and was in fact the vision, a priority that Jim had.

You and I certainly share a strong respect for Jim’s vision, and for PTC’s strategy in that regard. I used to refer to it this way as, if you had ALM, SLM and PLM, you put the word ‘connected’ in front of all of those, you had the ability to move from design to delivery, i.e. the finished good is shipped from the dock if you will; from that to design, to disassembly. You mentioned half, the stats I had looked at, at the time said that was somewhere between 7 to 10 times the lifecycle value of just the design to delivery element of it, because as you said, you’re going post-sales service and warranty, and then post-warranty through the end of the life of the product. Brilliant, an absolutely brilliant move, and I fully agree this idea of close loop or round-trip engineering is brilliant in there.

You’ve consistently led the IoT practice product-line if you will at PTC, from role as SVP to CTO, to General Manager overall now. What does IoT mean to PTC, and how has it really transformed the company?

Well, certainly for our solutions that we bring to the manufacturing process, we wouldn’t have the solutions that we have today without IoT connectivity, and for service I think remote monitoring continues to be the killer app for IoT. So, we’re careful here to distinguish IoT as a business, and it is to be sure, we’re organized that way, but IoT for me as a technologist is a technology paradigm; not much different in its relevance than… or arguably even more greater in relevance than relational database. So, relational databases, that’s a paradigm for how to store, organize, and access information. IoT on a similar plane is a paradigm for accessing data from machinery so that you can do something with it.

Now, if we only had IoT connectivity we wouldn’t know what to do with the data, so it’s the domain understanding of what are the challenges in manufacturing, what are the challenges in service, what are the challenges for product manufacturers who want to provide a servitized version of their product offering, what are the challenges there? How does IoT technology proper, meaning machine connectivity in analytics, how does that fill gaps in an overall solution, but importantly it’s not just the IoT and analytics technology, its building the application workflows, the business logic which is just permeated by that domain expertise, that brings a solution to market. So we are very focused now on taking the wonderful technology advancements that we acquired, and have organically developed and evolved since acquisition, and directing that towards the grand challenges that our customers face in their businesses.

So that’s what IoT means to me at PTC, it was an unlock to a world of opportunities that we’re now capitalizing on, with the full suite of our portfolio. IoT unlocked it, but IoT alone isn’t the full solution, and it sounds weird hearing a CTO of IoT saying IoT’s not everything, but I really believe that. Just like again, the relational database paradigm knows and thinks that having a bunch of tables that I can run sequel queries against is a business solution, but wow, how many business solutions have been powered by that technology?

Yeah, well said. We like to think of IoT in some sense as connect, collect, and correct, right? Pulling in the data, being able to process that, and to make intelligent decisions based on it, develop insights per se. So, you referred to the stunning paradigm shift that is happening now, I love the phrase, referring to the Industrial IoT. So, what is this paradigm shift, and how is it creating value for your customers?

It’s sort of like the paradigm shift started years ago, but it’s my belief, or my observation I should say, that in the operational technology world, first of all the operational technology folks said, when IoT became a thing, ‘Yeah okay we’ve got connectivity through our automation, we’ve got HMI in SCADA’, we see this data today. What we know for sure, after thousands of customer directions and deeply understanding how they’re operating their manufacturing plants, the data is silent. Yes its available for this controller and this HMI screen, and maybe there’s a feed that gets pulled back into some MES system or ERP system weeks later, but putting that data to use in real-time to make changes on the plant floor, to adapt to environmental changes, to staffing issues, to configuration of automation workloads, putting it to use in real-time  is the paradigm shift that we thing our industrial customers are just in probably the last couple of years, really starting to realize.

Much has been made in the media in the analyst world, on the so-called IT/OT convergence, so I want to confirm that this is a real thing. The IT/OT divide was real, where enterprise information technology became its own sort of governance within an enterprise. In the OT side of the equation was these folks in the plants, and they’ve got their servers, that’s nice, and they’ve got their automation. With IoT it forces the function for IT in OT, and I guess it’s no surprise this is a goofy pun but IT/OT/IoT just kind of accidental I guess, I’m not the first one to point that out.

Well said, yeah.

But the rigor and discipline and best practices from IT is now translating to OT, and those organizations are talking to each other, they’re seeing the opportunities for working together, applying advanced new technology like IoT connectivity, deep analytics and so forth, applying that to their businesses, and that’s what’s really unlocked the opportunity for PTC in the last two or three years, is that convergence of IT/OT, and having advanced technology, that by the way we have focused on the business challenges and application use cases we see in our customers. So, maybe it’s not a stunning paradigm shift, I do tend to hyperbolize sometimes in those sound bites, but that’s what we’ve actually been seeing happen.

For anybody who’s been around OT or heavy enterprise IT for a while, that has always been a bit of a gap per se, a divide as you said, and so there is a stunning aspect to it. I remember working at some very large industrials in my formative years, where I was usually the OT guy that was designated to go work with IT, and it was never a pretty thing! [Laughter] So if truly they’re getting along, and I agree with you that they are, it is pretty stunning.

That does bring up a good point in our Exec. Search practice, we’re seeing a shift of hiring from the traditional OT players, thinking of Schneider or ABB etc. to, I’ll call it the enterprise IT cloud players, particularly Amazon and Microsoft with Azure; are you seeing the same, and what do you think this portends for the future of OT, or this IT/OT convergence as you say?

Well for one thing, I think it’s fait accompli and it’s happening, and that is the opening up of the factory to the cloud. So, acknowledging that the so-called airgap in a factory network was probably not reality, that there are in fact workloads that are accessing off-site networks today in the factory, and you know what, your machine telemetry from your controllers probably isn’t a trade secret. All that being said, who else could do scalable secure transmit from any location on planet earth to a secure datacenter, better than the cloud providers? Certainly not an enterprise of any size, unless your name begins with Microsoft, Amazon, or Google.

So, I think the warming-up to the benefits of the cloud, and importantly a rationalization, practical rationalization of what workloads make sense to be at the edge, close to the machinery, close to where the operation is occurring, what workloads make the most sense to be in the cloud to access the elasticity and scale of the cloud in uniform access. So that reconciliation, I’m proud to believe that PTC has really helped articulate what a hybrid architecture for digital transformation looks like, we’ve done that in very close collaboration with Microsoft and Rockwell Automation, and that conversation between IT and OT centered around, how are you going to utilize cloud technology to solve these business problems, perhaps that was a force in function to drive that convergence.

You guys are perfectly positioned between, I’d say, the traditional OT players, and the enterprise IT players in that regard, especially where you operate even now with regard to the factory floor operations. You guys have continued your innovation in leadership, most recently with the acquisition of ioxp, and I hope I’m pronouncing it correctly, a video-based AI platform providing cognitive AR knowledge management and QA solutions for industrial applications. What are the key themes for your acquisitions, and what problems are these helping your client solve?

I think our acquisition history clearly represents… I should probably have Jim Heppelmann write a book on this someday! But the progression of a software company moving up the capability stack, from more fundamentally enabling technologies like IoT connectivity, machine learning analytics, augmented reality – which at its core is computer vision; getting really good at those fundamentals and then very quickly over the period of just a couple of years, learning how to apply those fundamental technologies towards the use cases of a market. So, the ioxp acquisition represents our acknowledgement that we’ve got the boxes checked on augmented reality fundamentals and computer vision, thank you very much.

What we’re onto now is, how do we help our customers who we hear loud and clear, a challenge is the aging workforce, the need to rapidly onboard new operational staff at work cells, at assembly operations, and how can we use augmented reality to capture the steps taken by an expert, and then guide a trainee using an augmented reality version of the expert trainer, even if the expert trainer doesn’t happen to be co-resident in that part of the planet, which is very relevant for our customers given the situation this year that we’re all faced with COVID-19.

So, ioxp is a way to make some automated determinations of what the computer vision sees, and how does that actually translate into a human function, so that we can more rapidly describe for this workforce training type of solution. So, it’s a moving up the stack 101, we get the computer vision covered, we’re really good at that, we’re proud about that, but we want to take the next step and make a complete solution that is really innovative and game-changing, and exactly hits the mark for what our customers are telling us is their green challenge today.

Many have opined that IoT is really an ecosystem, i.e. there’s no winner take all when it comes to the type of players, geographies, the companies that really makeup the OT side of it, and you guys have been particularly brilliant at I think cultivating that ecosystem; I think of your LiveWorx events as an example. What are some key partnerships for PTC, and what has made these successful in the market?

Well one partnership that’s been very near and dear to my heart, is our partnership with Microsoft. As a technologist I appreciated the advancement Microsoft made with Azure IoT, having worked on that part of the IoT stack myself and seeing how challenging it is, I accept and respect Microsoft’s contribution to our stack there. We are happy to adopt Azure IoT because adopting that best of breed fundamental enabling technology, helps us move up the stack towards the solution areas that our customers expect from us, as I’ve been talking about.

That said, there’s a lot of surface area to cover, and so Microsoft helps us fill those gaps, and we get to influence Microsoft’s roadmap, and we have a great relationship with the product management team with Microsoft, as well as Rockwell automation who also help us strengthen our combined story for what happens on the manufacturing shopfloor; understanding how to do contextualization of tag data acquired through a controller, and put that into a proper context for the machine the controller happens to be controlling, and the best way to analyze that machine data given Rockwell’s decades of experience doing so. So, these partnerships to me are much more than our logos appearing on each other’s websites, and much more than high-fives in the hallway as we go to industry conferences, which someday hopefully we’ll be going to industry conferences in person again someday.

Well said, yes!

But what really makes these meaningful to me, is when our product teams are collaborating on a regular basis. So, when we had the opportunity to do in-person workshops we were travelling to each other’s offices, spending time with our sleeves rolled up at the whiteboard, talking about roadmaps, here’s what you guys could do, here’s what we could do, aligning on go to market, how do we talk about our message together. What parts of our product portfolios do we bundle, and then give a more complete solution to our customers, that’s real partnership in action, not just logos and high-fives.

And speaking of ecosystems, we’re digital industry investors, and so we always like to know which startups you see as the ones to watch, of course ioxp no longer being available! [Laughter]

[Laughter] I’m going to take a page out of the Geoffrey Moore playbook here; we’re excited to find startups like ioxp, that solve a complete problem. Given the nature of a startup, the complete problem isn’t going to be PLM, right? [Laughs], that’s a pretty big complete problem. But solving the complete problem of how do I capture work instructions, regardless of the technology; okay it happens to use computer vision and they are fantastic, that makes a ton of sense, but it’s a complete business problem no matter how narrow. Those are acquisitions that add immediate value to our portfolio, like PTC’s, and of course importantly add unique value to a customer, even of that narrow solution.

The fundamental enabling technology stuff I think we’re all waiting for, is the next technology paradigm shift. I’m always looking for it as a technologist, but I think if it’s another way the story time series data came in, I think we got that already. If it’s another way to do computer vision that’s game-changing, wow, I think we’re pretty good there. What we really need to do is to apply it to business problems, and there’s a lot of rich problems still remaining to be solved there. So, for me that’s the recipe for an interesting startup is the ones that solve a complete problem, it doesn’t matter how narrow it is, but it needs to be complete.

I’ve got this great little company called RevTwo, I think its local, and I think you and I both know the Co-founder of it, so it’s one you should take a look at relative to work instructions, ha-ha! So, in closing, when you’re not opining on IoT and the great paradigm shifts if you will, what are you reading, or what are you viewing to really inspire you?

One thing I’ve always liked doing, I like to read and apply science and technology towards business, I just kind of get a charge out of that. I do read the business books du jour, I mentioned Geoffrey Moore, he’s a great guy, written great stuff, everyone reads that. But there’s a book on my bookshelf I’m looking at it right now, and I’ve had it since college, it’s the Gang of Four book, it’s the object-oriented design patterns. That’s ostensively about software engineers thinking about how to design their code. When I take lessons from that book, which by the way was based on lessons from A Pattern Language, by Christopher Alexander, an architect, a physical architect, not a software architect, about applying reusable ideas in so-called patterns, in ways that make the problem you’re solving more consistent, easier to understand the solution, and just better, stronger, and more robust overall. So, that’s just an example.

I like looking at the classics from an engineering perspective, and how can I apply lessons learned from disciplines like physics, engineering. I’ll sometimes reference the law of thermodynamics in a budgeting conversation, because I didn’t go to Business School but I went to Engineering School, and I don’t want to let all those engineering lessons die on the vine just because I’m a business leader now, I want to apply what engineers know, to business. So far, I’m not sure how well it’s working out for me personally, but it’s fun!

I would say there’s a whole other podcast on this, given you’ve moved from a technology leadership role, to the overall business leadership role in your most recent move, and the idea that you’re applying design principles, object-oriented design principles nonetheless, over to how to run a business, I think is absolutely brilliant. I would love to dive deeper on that conversation, but unfortunately, we are out of time. So, Joseph thank you for taking the time to join us for this insightful interview.

Ken, it’s my pleasure. I’ve always thought of myself as a friend of Momenta, and hopefully that continues.

Absolutely, and bidirectionally of course. This has been Joseph Biron, General Manager IoT Products for PTC, and you won’t mind me saying, a lifelong innovationeer in IoT.

Thank you for listening, and please join us next week for the next episode of our Digital Industry Leadership podcast series, produced by, for, and about digital industry leaders. Thank you and have a great day.

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