Internet of Things

Full transcript below:

Jill Jusko:

Hello and welcome to today’s presentation, “Internet of Things: The Impact on Innovation.” My name is Jill Jusko and I’m a Senior Editor for IndustryWeek, which is hosting this event. This event is sponsored by Arena. IoT [Internet of Things] functionality is increasingly being included in products today, which promises both a lot of exciting advances as well as its share of challenges. In this webinar you will hear how the IoT is impacting products, our lives, and the way we innovate.

At IndustryWeek, our mission is to advance the business of manufacturing. The IndustryWeek staff is dedicated to working with you to identify and share the trends, the strategies, the technologies, and the best practices that will help you build more innovative, more competitive, and more profitable businesses. We consider companies like Arena to be kindred spirits in this effort.

Now with that, let me introduce today’s presenters. Joining us today is Oleg Shilovitsky. He is an entrepreneur and blogger at Beyond PLM, a leading source for information and commentary on engineering and manufacturing software. Mr. Shilovitsky has been building software products for data management, engineering, and manufacturing for the last 20 years. In the past, he was developing PDM, PLM software and worked for companies such as SmartTeam, Dassault, Inforbix, and Autodesk.

Joining him this afternoon, we have Scott Reedy, who is Director of Product Marketing for Arena. Mr. Reedy has held consulting, sales, and marketing positions in the PLM industry for more than 15 years, excuse, more than 18 years, and was instrumental in helping launch software-as-a-service solutions at his last two companies. Prior to working in PLM, Scott spent a decade managing engineering services for a global manufacturing company. With that, Oleg, please take it away.

Oleg Shilovitsky:

Thank you very much, and good afternoon. In my today presentation, I will talk about manufacturing trends and share information that related how Internet of Things and product lifecycle management are changing these days, and how it comes to engineering and manufacturing of new products.

If you think about existing products before internet era, before new product era come in, the products were basically mechanical. And if you think about old bicycle, it’s a mechanical product that’s collected of the mechanical components connected together. And it’s the old-school manufacturing. There’s nothing wrong with this. But these are, these things are changing today. So if you think about new bike, you can see a completely different product. This is sort of bike circa 2010. And it’s collection of the same mechanical parts, but now we see many other components. We see electronic components on the bike. We see embedded software. And a few other software that’s not only running on the bike, but also running in the Cloud, which helps us to operate and communicate with bike.

So if you think about software and component inside of modern manufacturing product, and let’s go with the bike example. We can see a lot of new stuff, like sensors. We can see PCB boards. We can see batteries, electronic clocks, counters. All this stuff is embedded inside of bike. And all these components are helping us to communicate and operate the same bike. So, if you think about your mobile phone, and you can think about interaction, about what might happen during the time you’re driving your bike. So imagine this event happening, the software can detect the accident, can report to particular services, can call for help, and doing a lot of communication things.

So think about smart connected products. The way these products are operating and their functionality these products are giving us. It’s actually changing the way we live, manufacture, and exist. So if you think about our living space, we are coming to a place with smart homes with many new elements of the smart homes, like refrigerators, stoves, smart sinks, thermostats. Everything is connected in this house. And it gives us plenty of new possibilities how this operated house, how to live in this house.

If you think about manufacturing environment, the manufacturing environment is changing as well. Manufacturing is automated with a lot of sensors and a lot of smart devices that are connected together, operating together, and helping to improve product development and manufacturing practices. So, we can see a lot of sensors that can operate with the delivery, presence sensors, remote monitoring. It turns out the environment is completely different from what we’ve probably seen at the manufacturing shop floor 15, 20 years ago.

And if you think about ourselves, how we live. This is also changing because of the adoption of sensors and availability of sensors. We are living with a lot of sensors around us. So we might have breathing sensor. We might have a heart rate sensor. We might have smart shoes that are tracking our location and our steps. So with a few other sensors we’ll be getting smarter because we can learn a lot of things about ourselves that we’ve never been able to do before.

Let’s think about Internet of Things lifecycle and how a typical connected product behaves and helps us to change our behavior in everyday life. So the typical lifecycle is combined of four steps you can think about. One of them is “Collect,” which is collection of information that is coming from devices, centers, and other places. The next step in this lifecycle is “Communication.” Because products are getting smarter, they can communicate with each other. It’s not only the products communicating to us like humans. They also see a lot of machine-to-machine interaction. And services can be interacting and automating their behavior.

Then the next interesting step is “Analyze.” The analysis of information is the gold mine of today’s environment, in everything we are collecting information about everything that happens around us, about everything that happens to products, everything in the way we use this product. And the collection of information allowing us to make predictive analytics can help us generalize trends and patterns in our own behavior. It can help us to drive smarter. It can help us to use products smarter. And it actually impacts our next event in this lifecycle—how basically we are making decisions and how we are operating in everyday life with the products and environment. So, we are getting smarter because of these connected products.

Now think about products, the big change that’s coming to our products is what we call connection between physical and virtual product. And you can think about virtual products we’ve been designing in the past. So, that’s what we’ve been doing before we design, manufacturing, planning. Everything before product went to customer and shipped to customers. But today, the physical environment is actually added to the product lifecycle. And this is already not the virtual product, these are not designed. They’re not actually the real product, the sensors, trackers. This product is capable to inform us about the activities, while the internet collects information and operates smarter. So this connection is very intriguing because this connection is allowing us to open many additional opportunities that we never had before, like becoming smarter in the real product life and also provide information back from the real product, from the physical product to the virtual environment. By doing this, we will be able to improve future designs or actually fix problems that are happening to the current product.

If you think about the manufacturing and operation environment, new smart products are unlocking a tremendous opportunity in the service business. For environments with a lot of equipment and a lot of facilities that require services, connected products are allowing us to serve those products better, which opens a lot of opportunity for optimizing services and improving the way manufacturers are serving products in the real life.

Another aspect of changes that are coming to manufacturing and smart products is actually software itself. If you think about software today, it’s everywhere. And hardware, you can think about hardware in manufacturing products as a Trojan horse for software, because these products are actually delivering through the software functionalities that you have. You can think about the functionality of products that becomes available because of software. And you actually don’t even need to buy new products, like the latest example of Tesla car, their automated navigation system was delivered to the car as a software patch. So it’s in the same product with a new functionality enabled by software. It also changed the way manufacturing companies are thinking about their business. So these are examples of hardware-enabled cloud software services. So a security camera or a systems device or frame, those are products but the business-wide, what brings money to the manufacturing companies, is the software subscription with the high value proposition for customers. And there are many examples like this.

Another way to think about the way smart products are changing their business is where software subscriptions are delivered together with products, manufacturing products that are actually free, so the customer is not even buying those products. So this manufacturing product delivery to customers and the revenue stream is enabled by software subscription plans. So, as you can see, these are absolutely different ways to think about the business of hardware and connected products.

So coming back to the product lifecycle, and this is the topic on the table today for the webinar, how connected products, and how smart products are changing product lifecycle management. What actually happens, and you can see it on the left side of the slide, is that the original environment is a virtual environment combined from the information about how product is designed and how product is manufactured. With the new connected products, we are expanding this product lifecycle into physical reality, what we see is as built and as maintained information is coming through the old connected product enablement. So these two stages, two spaces, virtual and physical spaces, are connecting together and allowing us to close the physical to the virtual loop. And the ability to close this loop becomes very, very important because by connecting information in virtual space and connecting information in physical space, we can change a lot and we can change the way we operate and build product.

So, the changes are helping us to reimagine different industry models that we had before connected products came to our space. We can unlock a tremendous opportunity of the data and value of data that’s collected from products helping us to improve existing products, fix problems, and think about how to optimize product lifecycle. And last but not least, the future of how we work is going to change as well, as a result of connected products coming into our life.

So for conclusion, we had virtual products before and connected products are expanding. And Internet of Things is expanding the realm of virtual products in the physical space. So, thinking about products in the 21st century, we are not only thinking about how product is designed and manufactured. But we are also thinking about how real products operating in the real life and the collecting of information and acting as a result of collecting of this information can improve everything we do in product engineering and manufacturing these days.

Scott Reedy:

All right, thanks. Oleg, that was great.

Scott Reedy:

Now I’d like to continue our discussion on how IoT is impacting parts innovation and share some insights based on our experience serving the IoT market. So we see a modern-day gold rush for IoT, and it seems like everyone is racing to develop connected devices. IoT is connecting people, data, devices like never before. And this includes smartphones and homes and buildings and manufacturing equipment, as Oleg talked about. And small start-ups as well as large global companies like GE, Samsung, IBM, and Google, they’re all embracing IoT and they’re finding new, creative ways to leverage this connected environment.

So, I’d like to talk about an experience when I was young, and this might be dating myself a bit, but when I was young I watched this cartoon called “The Jetsons.” And this was about a futuristic society with talking robots and smartphones and flying cars. And I remember dreaming about the day when I could fly my own car. And while we don’t yet have flying cars, we are seeing some of these other smart solutions become a reality today. Today we can connect just about anywhere and anytime. From our homes, our workplaces, when we’re traveling on planes or boats. But I have to wonder, is this connectedness really providing real value? As an example, let me share an experience I had recently.

I bought a smart refrigerator and I was excited to learn that it could connect to my phone. And I quickly set up the application. But as I started looking at what I could do, I found that I could do things like figure out how many times a day my refrigerator was opening and closing. I could understand energy consumption. I could set the temperature. But there were some other cool things that I found out I could do like identifying expired foods and deciding when I needed to shop for more groceries. But the more I looked into controlling those types of functions, I found it was going to require a lot more input than I was going to invest in. So, I found it was just easier to open the refrigerator, take a quick inventory, and do shopping the old-fashioned way.

So, for me, these smart features didn’t resonate enough for me to embrace it. But I am excited about what the future of IoT holds. And there’s a few areas I’ll touch on. The first one is that in the western U.S., we’re dealing with a drought and the promise of having smart landscaping or smart sprinklers and irrigation systems for not just our own personal lives, but for businesses and farms, I think is one of the exciting areas that can really help our economy and conserve water.

The other one is in the area of health and medicine. We might have smart insulin pumps and other devices for warning us about heart problems or allergic reactions with patients. And these can be connected to doctors, they can be connected to our loved ones, so that if you have children that are dealing with these situations, you can be warned if there’s a problem.

 Now in preparing for this webinar today, I did some research and I found that just a few short years ago Barcelona, Spain, was dealing with a pretty bad situation. They had a huge rate of unemployment. They were on the verge of bankruptcy. And the mayor got together with some local leaders and really tried to figure out what could they do to change their economy. And what they conceived was something called the Smart City project. And they decided that they wanted to try and monitor different things like water, lighting, energy consumption. And one of the first things they introduced was smart bus stations. So they were able to create, basically, digital bus billboards electronically that would tell people, both tourists and the locals, whether or not buses were on schedule. And the exciting thing about that is that it allowed people to make better decisions and say, okay, if I’m running late or the bus is running late, I can also connect to the local restaurants or cafes and I can order a coffee or grab some food. So it ended up being a win-win situation for everyone.

Then they introduced smart parking. And you might be interested to know that 30 to 40% of traffic congestion is caused by looking for parking spaces. So through an app they could tell if it was green they could park, if it was red they would move on and not cause more congestion. And then finally in the area of garbage, they had an issue with garbage cans overflowing, smelly garbage, and they really wanted to turn that around so it wouldn’t hamper their tourism. And so they attached sensors to all their garbage cans throughout the city, and they were able to deploy trucks to empty the garbage only when needed, when the garbage cans were full. And this helped them to be much more efficient in their garbage and waste management.

But when you think about the results they saw immediately, it’s pretty impressive. And they were able to save $58 million a year in smart water management alone. And they were able to generate $50 million in smart parking revenues. And most impressively in my view was creating many, many jobs. Over 47,000 jobs were created through these IoT projects.

So there’s been a number of studies and projections surrounding the IoT market. And BI Intelligence and have published some information about what they see happening. And they claim that by the year 2020, we’re going to have 4 billion connected people, 25 million applications, over 25 billion embedded or intelligent systems, and a manufacturing market of about $13.5 billion. And that’s comprised of things like software and analytics and network management solutions, other applications like predictive maintenance, logistics and supply chain, and also platform and other services.

And then Cisco’s estimate is by the year 2020, we’re going to see a global IoT market valued at about $14 trillion, and yeah, that’s 14 trillion. That’s quite a huge number. And that’s going to be derived from things like improved customer experiences, reducing the time to market through greater efficiencies, supply chain and logistics, reducing costs, and increasing your employee productivity.

And then in terms of the device count, BI Intelligence also looked at that. And as you’ll note on this slide, you can see that in a few short years we’re going to have over 30 billion devices connected. And these are devices that we’re all familiar with today like cars and wearables and tablets and smartphones. But the greatest amount of growth is going to be in the area of devices that have yet to be developed or have yet to go to market. And that’s going to be over $20 billion in new devices. 20 billion devices I should say.

We have two polls today that we’d like to ask our audience. And so, if you’ll take just a minute to answer this, I’ll read the question and then we’ll publish that for everyone. What IoT technology do you use today? And we’d like you to select all that apply. Health and fitness, home security, climate control, home appliances, car and automotive, baby or child monitoring, other, or none of the above. All right. We see that we’ve got about 10% of our respondents. So take a little bit more time to address that.

A little over 50%. We’ll give you a few more seconds to lock in your answers.

All right, I think we have the majority of folks now … chimed in, and so we’ve got about 54% that are using health and fitness, which is not too surprising given that we see a lot of those in the market today. Home security I think is starting to gain momentum, so 22% of the attendees are employing smart home management or smart home applications. Car and automotive is close to 50%. And then there’s obviously these categories that contain other or none of the above. So, very interesting and we might see those numbers change in the coming years as the market matures.

So now I’d like to talk about customer adoption concerns and why is it imp … Well, let me start here. There was a survey done by and they surveyed 3,000 different people, consumers. And they wanted to understand what their concerns were with IoT. So they looked at a few key areas and the first one was complexity of installation and configuration. And they found that 31% of the existing owners had issues in that area. And 43% of potential buyers were concerned.

In terms of being able to fix your own issues and the frustration levels if you couldn’t, this was really the eye-opener for me and that was that, of the existing owners of IoT devices, 61% were growing frustrated. And I think that’s something we need to keep in mind. And about 50% were concerned that if they did adopt the different devices, they were also going to have issues.

And then finally, in the area of technical support, because there’s different manufacturers and service providers that have to work together, there can be a lack of clarity about who do you contact when there’s a problem. And for existing owners, it was about 43% of the consumers that had issues in this area. And for potential buyers, a little over 50% really wanted to have a single point of contact to make sure it was simple when they needed to get help.

So why is that important to understand? Well, I think we all know that the easier it is to implement, the easier it is to use, and the easier it is to support these devices, the more customers that are going to embrace it, the more they’re going to refer to their friends, and ultimately the better customer experience they’re going to have. And that’s going to help us to increase revenue for our companies.

And this also, by understanding the consumer behavior and what they want, it’s going to help us drive better business decisions around how easy it is to use this technology and hopefully what kind of value do we need to be providing our consumers. And then also, in the case of my refrigerator experience, I think there’s a need to avoid this ho-hum experience where people get connected but maybe they don’t value the nature of the connection.

And this is really where PLM can impact. It can impact the product processes. And PLM is all about being able to bring all this information together, help you through your new product development process, improve that cross-functional team collaboration, and then being able to capture key decisions and issues along the way, and have a direct link to the product record as you go through the product lifecycle management process.

So we’ve seen massive expansion in the IoT space here at Arena. And you see a number of the customers here that represent different markets from wearables and health and fitness to smartphones, embeddable devices, augmented reality, industrial IoT, and more. And now I want to cover a few specific examples from that list to share with you what some of our customers are doing today and how they’re innovating. And the first one is from a company called Skully. And they’ve developed what they call the world’s smartest motorcycle helmet. And this helmet has a 360-degree view, basically. So you can see through your front lens and then also you look at the lower right corner of this screen shot, you can see behind you through a live camera. And in addition to that, you’re going to have access to instant navigation, turn-by-turn GPS, audio to Bluetooth, and you can see things like how fast you are going. So this really allows the rider to focus on the road ahead and not worry about activating these different devices.

The second company is in the industrial IoT space. And this is Sierra Monitor Corporation. And they’re really all about facilities management and protection of high-value assets. One of those areas is in fire and gas detection, and they’ve developed controllers and sensors to help in areas like natural gas vehicle fueling, wastewater treatment plants, oil and gas refineries, parking garages, and many other cases.

And then we have a different type of helmet here, a smart helmet. And this is for building information management. So, DAQRI has developed this ability to provide augmented realty and 4D technology so that you can do things like have thermal vision or data visualization or remote expertise. So if you’re in a different location from the worker, the worker can have the helmet, they can be viewing equipment, and the remote person can then tell them what they need to be doing with that equipment or that situation. And if you look at this little view here, you can see a worker looking at some equipment, and as they view different parts of the equipment, information will pop up on their lens. They might see some motor control information, or they might see some work instructions that they can take advantage of.

And then finally, Vocera. Vocera is a customer that is developing communication and wearable technology for medical device or health care. And what they’ve been able to do is create these communication badges that everybody wears in the hospital or the medical environment. And they have a platform that ties together the patient monitoring systems, smartphones, these badges, and the nursing call system. So it’s enabled doctors to basically be everywhere without having to travel and waste time getting from one side of a facility to the other. And this has improved patient care, the ability to respond to problems, and it’s improved the communication overall and helped them to reduce their labor costs.

So now we have the second poll. And this one is pretty straightforward. Is your company designing IoT functionality into your product today? No, yes, or uncertain. Please take a few seconds to answer that.

All right, we’ve got about half the respondents. We’ll give you a little more time. All right. So, with most of the respondents, it looks like the majority of people on this webinar today are developing IoT functionality. And that does correlate to what we’re seeing and what the industry analysts are seeing as well. There’s some that aren’t quite sure, and I think a lot of companies are trying to evaluate—is there a need with their product to develop this kind of functionality. And then there’s a number of folks out there that still have yet to do that or are not doing it right now.

All right. So, Arena has been at the center of this innovation, and we invented Cloud PLM 15 years ago. And since that time we’ve been able to attract over 900 customers and 200 of those in the IoT space specifically, like Fitbit and GoPro and Sonos. And our customers really have to innovate rapidly to be able to deliver better products and be able to take advantage of the first-mover advantages in the market. And the reality we see today is that everyone is dealing with more and more dispersed teams, complex supply chains with contract manufacturers, top-tier suppliers, sub-tier suppliers, and also remote design teams. And with all the technology that continues to evolve and the expanding regulations and environmental regulations in particular, like RoHS and REACH and WEEE, everyone has to have a way to collaborate effectively. And then finally in terms of intellectual property, making sure that you can secure your secret sauce, so to speak, so that it can’t be pirated by other competitors.

And our mission here at Arena is really to strive to improve the product development, production, and quality processes so that our customers can change the world for the better. And every product we develop and everything we do is with the mind’s eye towards that goal.

So now I’d like to share just briefly how Arena PLM helps to drive rapid IoT innovation. And it really starts with aggregating the entire product record together, the parts, the build materials, approved manufacturer’s information, documentation, specifications, drawings, and so on, into a single, secure, unified system. And doing this allows us to then leverage key product-related processes like quality in CAPA, projects, requirements management, through the entire product lifecycle as you’re going through the NPD process. And that enables you to communicate in a way that’s very effective, in real time, with your internal employees as well as with your external partners, your design partners, contract manufacturers, and so on. And the value that you’re going to see from this is an accelerated NPD, a faster time to market, being able to reduce the cost of [inaudible] and the number of quality issues, and hopefully improving your overall profitability.

This software development is having an impact, obviously. IoT requires greater electronic sensors and more and more software. And this is really accelerating the need to incorporate what’s known as ALM, or application lifecycle management, into the PLM process. And different analysts out there have been looking at this. And Accenture talks about it and they say that, “A unified ALM-PLM solution takes the best from existing hardware and software management and integrates them into a powerful set of processes and tools.” Gartner has chimed in and said that, “By employing integrated efficient processes throughout the engineering lifecycle to develop, design, and test software, they can drive down costs, improve reliability, minimize defects, and so on.” And Tech-Clarity has also said that, “The ability to tie PLM and ALM together can help product engineering better address complexity, enabling manufacturers to improve overall efficiency.”

So as we consider PLM, PLM is about managing that NPD process. Everything from concept to ideation and design and testing and ultimately through release. And over the years, PLM solutions have done a good job of managing the hardware, the mechanical side, the electrical side, but there’s kind of been this void left for the software side. And what Arena has realized is that there’s a need now, especially with IoT and all the increased software development, to tie those teams together. And so Arena is addressing this by including requirements management, hardware defect tracking, software bug tracking, so that these teams can work together and you can have a more cohesive process as you’re getting your products out the door.

I think you can see from our webinar today that innovation is going to continue to accelerate. There’s more and more IoT devices coming to market over the foreseeable future, and this means that we have to do a better job of controlling our software development, making sure these different disconnected teams can collaborate effectively, and PLM solutions are going to need to extend their borders to be able to manage this in a more comprehensive fashion. And with that, I’m going to turn the time back to Jill and she’s going to handle the Q&A portion of our webinar.

Jill Jusko:

Okay. Thank you very much. And we are going to very quickly move into the Q&A. But before we do that, I would like to ask the audience to take a moment to fill out our feedback form. And again, please take a few moments to fill out the form. And if you have your pop-up blocker enabled, we would ask that you please disable it so that you are able to receive the form. And with that, we do appear to have a number of questions from our audience. And we will get right to them.

Okay. At Scott—this first question relates very specifically to one of the poll questions, so I am going to direct it at you. You mention that the poll asks, “What IoT tech do I use today?” But our speaker would like to know how much of those answers do you think are controlled by the affordability of the technologies?

Scott Reedy:

Yeah, that’s a great question. I do think that cost has a role in this. Although, when I think about new innovative devices and I think about Apple in particular, people want to have cool technology. And while Apple may introduce new products, cost doesn’t seem to be a barrier for them when they’re looking for those new, cool, next thing in the market. So I do think it plays a role. I don’t know if it plays the greatest role. I’d say from the research that we’ve done, it really is more about can they see the value and do they understand what this is going to do for their lives. And at the end of the day, if I have a smart refrigerator or a smart home device or whatever, managing that device is more complicated than it would be to do it the old-fashioned way.

So, I think consumers are going to be on the fence and they’re not going to know whether or not it’s worth investing in that. And we see a lot of different devices on the market. You go to Best Buy and you see a number of different things. You see smart doorbells. You see smart home appliances. And people are trying to figure out, there’s a lot of confusion about which one should they use because there’s still yet to be a consolidation in the market in terms of what devices, what platforms are going to be the easiest to use and the easiest to roll out.

Jill Jusko:

Okay. Thank you. We have another question here. It’s a pretty basic one. “What does PLM stand for?”

Oleg Shilovitsky:

Okay. I think I will take this. PLM stands for product lifecycle management. And it’s often I consider it a combination of business practices, product, and technology that’s helping manufacturing companies to track product information, changes, communication with suppliers, design data, and overall product development and manufacturing processes.

Jill Jusko:

And, Scott, would you like to add anything to that or are we good?

Scott Reedy:

No, I think we’re good. Great, great question, Oleg.

Jill Jusko:

Okay. This next question I’m going to ask first to Scott and then Oleg, please jump in with anything you may need to add. The question is, “How should engineering curriculum adjust to cope with the advent of the IoT?”

Scott Reedy:

Yeah, that’s a good question. I think that obviously as we see more and more electronic development and design and software development, I think that there needs to be an emphasis on bringing these teams together and figuring out how they work together. The tools that are used today, the design tools from mechanical CAD systems to PDA tools to software version control management solutions, are all quite different. And the way that the teams interact with those solutions are different as well. But with PLM at least, there’s the ability to allow that experience to happen and the best of [inaudible] solutions on the development side or the design side, and then allow the teams to work together and bring the data together at the right time in the product lifecycle. There is a need to obviously make them aware of the different tools that are being used by the different groups. But I do think that aside from the nature to collaborate better, to bring that together at the appropriate time in the development cycle, there’s still going to continue to be a fair amount of differences in the development tools and design tools in the market.

Oleg Shilovitsky:

I would like to jump in just to build on top of what, Scott, you already mentioned. There is a famous statement by one of venture capitalist, Marc Andreessen, it says that the software is eating the world. And software is everywhere and products are, we are a sinking product because of what software can enable and the opportunity that software brings. So I think from that viewpoint, if you think about curriculum and learning, I think everyone should become a better coder and get some introductory software development. And that can help everyone to develop better product. So by introducing it in curriculums can really help to bring better engineers into this world.

Jill Jusko:

Okay. Thank you, Oleg and Scott. And the questions keep coming. Scott, this one is for you. The question is, “What are some of the challenges to outsourcing design, the electronics and software required for IoT, and how does PLM help?”

Scott Reedy:

Okay. Well I think that we touched on some of that in my prior answer. But collaboration with the external design partners can be difficult, especially if you don’t have an integrated solution to bring it all together and enable the teams to look at the latest, greatest information at any point in time. With Arena, we provide a few different ways to share information with design teams, and for that matter, with all of the supply chain partners. We provide the ability to come in through user licenses and secure access so that OEMs can grant their design partners access to specific information and be a part of the real-time formal change review process. And then in addition to that, in addition to having real-time collaboration in the formal design process, we also provide informal methods of collaboration. And one of those areas is in an area of social collaboration, which we call Arena Scribe. And that allows different users to share information and ideas around any aspect of the product record or the change process.

And the second way is, if you want to share, let’s say, a complete product snapshot, you can do that with Arena Exchange and you can share that with partners and it might be items, build materials, approved manufacture data. And it could be any of the associated files that are linked to that build material, from drawings to specifications and software code. So, I think that we really understand that to get the most from your design partners, you need an easy way to share information and solicit their feedback. And we also understand that some companies want real-time collaboration with maybe change approval capabilities, while other customers or companies may only want to share information around the latest data set with their partners. Our approach is to provide both and give you this multilayer approach that allows you to collaborate in the way that works best for your organization.

Jill Jusko:

Thank you, Scott. Our next question is for Oleg. And the question is, “What are potential difficulties for IoT adoption in manufacturing organizations?”

Oleg Shilovitsky:

Yes, that’s a great question. I think that the challenges are coming from the need to connect to distinct spaces. And if you think about design and engineering, it’s the assumption that most manufacturing companies dealing for the last century now, new technologies are coming to track data, to collect information, make analysis, and some help bringing it together with the engineering and manufacturing. And I think this connection is the biggest difficulty because it often comes as the IT discipline that companies should run like in real life for customers. Before companies learn manufacturing products, shipping it to customers, and mostly forgetting about them unless somebody will be contacting them back. Today it all comes together as a single system. And to create the system is the real difficulty. And I think once the companies are thinking how to do it in an efficient way.

Jill Jusko:

Okay, Oleg, thank you very much. We have another question coming up that I’m going to direct towards Scott. The question is, and I’m sure this is a question everybody has, “How do you deal with security concerns around the Internet of Things? It seems to make the product or service more vulnerable.”

Scott Reedy:

Yeah, I think there is an opinion out there that putting things in the Cloud is risky. And I think that many people are used to using file sharing solutions like Drop Box and other things, Google has solutions. But we’ve been doing this since 2000, and with the state of staff solutions like Arena, we have an infrastructure in place to make sure that all of your data is highly protected. And we’ve got lots of backups and redundancies within our data centers to be able to manage this in a secure way.

So, for us, it’s important that, as we work with companies, whether they’re in a highly regulated industry like medical device, in the government, and other areas, military, we want to make sure that people understand how it is we secure the data in the data centers, how we secure the data within the environment within the solution itself, and we’re very comfortable walking through that process with potential customers, making sure they have a high degree of confidence in the infrastructure and also doing risk assessments along the way. We do our own third-party risk assessments continually to make sure that we’re not putting our customers’ data at risk. And we also will do assessments within any given prospect to make sure that they’re comfortable with our infrastructure and our methodology.

Jill Jusko:

Okay, thank you, Scott. Our next question here is for Oleg. And the question is, “How can IoT extend existing PLM technologies and products?”

Oleg Shilovitsky:

Yes, very good question. I think it comes to ability of inline technologies to manage data that are coming from connected devices. This is at first because the additional representation of data that representing products in real life, this is the way PLM systems do expand in the IoT space. So if you think about real physical product, these product represent by the information that can be collected from this product, the behavior that can be collected from this product. So this information can be collected and managed by different systems, but PLM should provide the ability to connect this information in a meaningful way to existing design, engineering, and manufacturing information. So that’s a look at the expansion step for PLM systems to close the loop between virtual and physical product.

Jill Jusko:

Okay, thank you, Oleg. I am going to first direct this question at Scott. However, it seems like one that probably both of you can weigh in on. And this question is, “Of all the industries rushing into IoT, which industry do you think is ahead of the pack in implementation?”

Scott Reedy:

I think from my perspective it’s everything around the smarter home. I know that Nest got into this space early on with being able to control the thermostats. And since then, we’ve seen companies like Samsung acquire smart things and be able to manage appliances and be able to bring that all together. And I think probably more products from a consumer perspective at least in retail stores and in outlets and online that are addressing the smart home, the smart home functionality. So I think that, as I see it, it would be in smarter homes and Oleg, I’d be interested to see what you think.

Oleg Shilovitsky:

Yes, thank you. There are different perspectives here. On the one side there are a lot of industries that are exploring the assembly of modern cellular phone, mobile phone. Getting these components and basically to top of these components lots of smart products that are build. And we can see a lot of trackers and we can see a lot of cameras and such. That’s all good to create a lot of potential for connected technologies. But like you bring your example about smart fridge, so now I have smart fridge what am I going to do with this? I think on the other side, the huge potential is coming from the industrial companies. And for most of these companies, they are collecting information about its product, it’s old news.

However, here’s the thing. The new technology of collecting data, this new way of communicating and operating business data can unload a tremendous opportunity for this manufacturing companies to use this information that they never had the opportunity before. Now think about airplane which was flying and collecting information. In the past, this airplane they collect this information for the best situation is uploaded in the port and somehow used afterwards. So it’s always pretty much offline information collected from the airplane and then uploaded and used somehow. Now today the new technologies of the connecting data, analysis of data, and processing of data can actually help to collect this information in the real life, in the real time, and make a different action and different decision. So I think that industrial companies and the potential of industrial companies in the connected world is huge.

Jill Jusko:

Okay, thank you, gentlemen. This next question, Scott, “You discuss that Arena sees value in ALM with PLM. Is this different than storing the compiled binary file in the BOM, like we do now?”

Scott Reedy:

Yeah, it is different, actually. So PLM solutions have been able to store binary files, or any type of file for that matter, for many years. And the value that we see stems really from … If you think about PLM, it refers to this broad market space. And the same could be said of ALM market. And Arena doesn’t do everything within the PLM market—for instance, we don’t do and we don’t create PDM solutions or CAD solutions. But we do provide a diagnostic way to work with these different PDM or CAD solutions to bring in that CAD data from the designers at the right time. And within the broad ALM market space, there’s a lot of different players out there, like Atlassian, which sells Jira. And Atlassian also doesn’t try to deliver everything that can be done in the ALM space. When we talk about ALM, we’re talking about a portion. But it’s a very valuable portion of that ALM market. And we get an opportunity to bring together hardware, firmware, and software teams, to connect those to projects they’re working on, the requirements, and the quality assurance processes into a single unified system. These design teams have been fairly siloed in the past. So with IoT and industrial IoT, product development, the need to improve the interaction between the hardware and software teams is paramount.

Jill Jusko:

Okay, thank you, Scott. We have another question asking for some comment from both of you and I’m going to ask Oleg that you respond first. And the question is, “What is the one piece of advice you have for a business leader interested in the Internet of Things?”

Oleg Shilovitsky:

Well, very good question. I think the one recommendation and advice is that you discover the potential of electronics and software today. Because those changes are huge and this potential can unlock a lot of business opportunity and the, obviously, the manufacturing opportunity as well.

Scott Reedy:

Very good. And I think from my perspective, it really boils down to my own experiences and what I’ve seen out there. And that is making sure that you really understand the purpose or the value of what it is you’re trying to introduce. I think that there’s a lot of technology out there right now. And I think that a lot of companies are connecting devices, but maybe just for the sake of connecting them. But you really need to understand what is the behavior you are trying to address? How are you trying to improve our lives? And if you think about what’s happened in Barcelona, I think that that really has a huge impact on us as individuals, on those that might be traveling abroad, as well as on the communities we live in and our economies overall. So for me, it’s really understanding the purpose and the value before you introduce any type of connectivity.

Jill Jusko:

Okay. That is all the time we have for questions today. So first I’d like to thank Oleg and Scott for your presentation. We’d like to thank the audience for your attendance and your great questions for today’s event. And we’d also like to remind you that the presentation will be available on the website in the next few days. Again, feel free to log in to view it or to encourage your colleagues to view it.

Thank you for your attendance and have a great remainder of the day.