Advancing Industry 4.0: The "Make versus Buy" question for Industry 4.0 Solutions

Hello and welcome to the club, the Industry 4.0 Club. I'm Mike Yost, the CEO and one of the co-founders of the Industry 4.0 Club, and we are here today for our fireside chat with Sam Russom and Jason Koop of Kanoa. Welcome, guys.

Hey, Mike.

Mike, thanks for having us.

Certainly. For those of you that are not familiar with the Industry 4.0 Club, we represent an open community that is trying to shape the future of manufacturing through the adoption of Industry 4.0. Our focus on doing that is specifically because of the promise that it holds for driving value for manufacturers, their workers and the communities that rely on them. Our practice is to host practitioners and thought leaders, educators, academics, entrepreneurs, anybody with a point of view in this space to help us get a better understanding and help create better jobs and better outcomes for our manufacturers. So typically on Wednesdays is when we have our fireside chats and we invite guests like Sam and Jason to join us here and we try to extract All the knowledge that we can from them. So we will talk with them for the next 25 or 30 or 35 minutes, whatever makes sense based on the flow of the conversation and any questions that you may have. So we would certainly encourage you to enter comments, enter questions, and then if and as appropriate, we'll go ahead and we'll try to include those into the flow of the conversation. So today I'm really excited to have Jason and Sam here with us as our special guests, and I just wanted to read a caption off of the LinkedIn page for Kanoa that says Kanoa, quote, combines project management, Lean Six Sigma, and application development with business coaching, team forming, and facilitation to help companies implement continuous improvement strategies. And I think that's a continuing theme that we hear in the club, that we talk about how to solve problems, how to align technology solutions with business outcomes. So I'm really excited to jump into the conversation and learn more from these guys. Quickly, before we get to that, just a couple of housekeeping items.

Hello.

in the club is always to create a thoughtful and inclusive conversation and have an environment that is positive. So any comments or questions that you have, please keep it in that vein. And then, as I mentioned, we will take questions and pull them into the conversation as appropriate. Then lastly, I would say that you can follow the club on LinkedIn and at Industry 4.0 So with that, let's get on to the conversation, and we're going to be discussing today building versus buying from a technology solutions perspective in Industry 4.0. Jason is the co-founder and principal at Kanoa, and Sam is the business development leader. And so welcome, guys. How about if we take just the like 60 seconds or so for each of you just to give a little bit of a background on yourself, maybe talk about what got you into manufacturing, what got you into the systems side of things, and sort of what motivates you, what motivated to get you into this space, and what motivates you now going forward. Jason, do you want to start, introduce yourself?

Certainly. Yes, I'm Jason Coop. I've been in the US for about 26 years, but I actually started in the UK, in Cambridge, in electronics, electrical electronic fields for test and measurement. Saw that the world was changing there. What was most disruptive at that time was computers. So after working for 5 years in electrical electronics engineering, went back and did a degree in software engineering for real-time systems. After that, worked in the semiconductor industry and was a robotic specialist, automation and process control engineer. for about 20 years. Fascinating industry it was in. We were actually implementing MES solutions, they just weren't called MES at the time.

Sure.

It was a host supervisory control system. We did use a lot of the SEGSGEM interface at the time to connect OEM equipment up to this host system. So that was a background. I was a software developer building those, communicating to the equipment. In 2009, there was like a big shift worldwide. We had, you know, sort of the change in the sort of financial collapse. I actually went into operations management, so it was a complete shift from being a software developer, but I was now working for a steel company. I had union employees underneath me, and we had a processing line that was trying to recover and extract non-ferrous metals out of a waste stream from a shredder. That was a real eye-opener because suddenly after being in a very highly automated semiconductor world to being in a completely different industry, I'm going to business meetings or operations meetings.

Sure.

And I'm being asked my numbers. What's my inventory? What's my downtime? What's my cost per pound? And I had all these handwritten pieces of notes, so I'm telling people what they are. But the business analyst is saying he disagreed with my numbers.

Okay.

And what we found there is we couldn't actually agree on the numbers. Nobody believed the numbers. You really can't drive continuous improvement if no one believes the numbers. And after about 3 months of this, you go like, this is ridiculous. So I started looking for a solution, and that's when we started to implement MES. So since that point in there, so for about 7 years I worked in operations management, I actually got to use software and the systems. I had to use it to drive continuous improvement. After that, became a systems integrator and started working for craft breweries, bakeries, automotive, pharmaceutical, you name it. And what I kind of realized there is that in the semiconductor industry, they were really kind of the only big boys who could truly afford, you know, these big systems. Anyway, I digress. My wife, before I left this morning, said, One word, Jason, brevity. So, you know, we'll come back to that. I became a systems integrator, have helped many, many companies implement MES solutions and digital transformations. And 5 years ago, we really saw a niche in terms of helping out the market, and that's where we formed Kanoa. And I think it's, as you mentioned in here, is that we realize that software is not the— it's not the main driver of continuous improvement. It's a tool. And if you don't have the lean, the coaching, the people side of change management involved as a solution, you're not going to see a very high success rate.

Right. Excellent. Well, Jason, you're absolutely the kind of person we want to learn from. Great experience there. Sam and I have known each other a bit longer. We go back a number of years. But Sam, how about if you introduce yourself to, to the audience here?

Yeah, of course. Thanks, Mike. Actually, it was funny to always, you know, picking up new stuff as I hear Jason's intro. I hadn't thought before about 2009 being an inflection point for both of us. As you became an operations manager, I got out of university and was looking for my first opportunity out of university, and it was, you know, a recession. And the thing that I found was working for a systems integrator, Grantek, and that is what I did. And I kind of fell into the world of manufacturing that way. I certainly was not a student that was thinking that that was going to be my future, but that was the engineering job that hired me at the time, and I found a passion for it kind of through that. So yeah, I worked at Grantek for a number of years, really interesting in that systems integrator position, working with so many different manufacturers on so many different types of projects, right? So I started really focused on controls and automation in food and beverage, and then kind of grew into more analytics and reporting, still mostly focused in food and bev, but very quickly started doing more projects in pharmaceuticals and renewable energy, really focusing more on the smart manufacturing aspects of it, not just the control of these systems, but how do we actually get valuable data that people trust from all of these machines and use it to actually drive improvements? So That kind of naturally led me into more MES, Industry 4.0, smart manufacturing solutions. And now today, I recently joined Kanoa because I think they have some really interesting solutions and solution approaches as well, really geared around that, you know, what the goal is change, not just to install software and walk away type of mentality. So happy to be here and talk more about the types of software that we think really works for manufacturers.

Well, excellent. I mean, we've already talked and heard from you two, experience across several industries, food and bev and pharma and electronics and steel. And so I think that's one of the things that's really valuable is, as in the roles that you've had, you've seen a lot of businesses with real challenges and then looking towards some sort of a technology solution to Like Jason talked about, just justify your numbers, right? Stand up for, you know, your responsibility within the business, and how are you going to get a baseline of understanding between, you know, what you're responsible for and what other parts of the business are responsible for? So maybe just if we, if we take a step back and just a quick snapshot, maybe Sam, you first. Like, if somebody comes to you and introduces the idea of You know, they're going to buy, they're looking for an off-the-shelf solution to help them in any of those industries that you just talked about versus they're going to, you know, try to build something themselves, sort of a make versus buy conversation. What's your initial reaction or opinion to somebody when they pose that topic to you?

Yeah, so my first reaction is if they say they're going to make it, I don't entirely believe them because there is kind of a line that you have to draw. I mean, to a certain extent, you know, if you're making it, you're at least going to be using C#. You're not going down to programming ones and zeros, right? Or are you using a platform like from Rockwell or Ignition or something like that, right? So there's almost always going to be some aspect of what you're doing that you are bringing in from something external, right? And the other question that kind of comes to mind, especially when looking at those make decisions, really, is a lot of companies, I think, have a decision to make around kind of like what their expertise is, right, and what they really want to specialize in. One of the things that could be tough, especially for big manufacturers, is that they naturally end up bloating and having to cover a lot of different aspects of their business, right? You know, just to sell products on the market, you need you know, your product development team, your research and development, your marketing, your manufacturing. The question is, are you going to get into software development? Are you going to start to build a team or outsource a team that really specializes in how to create, maintain, grow, expand these pieces of software? Because that's a very different discipline than manufacturing. Companies that have the teams and put in the resources to do it and do it well, can do some really amazing things, but especially for companies of a certain size or ones that are really focusing on just the manufacturing and the product side, they might not always be willing to put in all of the commitment they need to really build as much as they're going to need to, and trying to find something more off the shelf is going to be a better solution for them long term.

Jason, your perspective, again, just from a very high level, Someone comes to you and says, hey, I'm thinking of building myself, or I'm thinking, I'm looking for an off-the-shelf solution. You have a general reaction?

Yeah, I guess it's an open question. You might want to throw another log on the fire for this one.

Remember what your wife said. Gravity.

So we— and I'll say we program on Ignition these days, which is kind of a very easy tool to build whatever a customer wants. And quite often we're faced with a customer saying, oh yeah, let's build this. And most of the time I'm saying here is like, you know, buy it. If you can buy it, buy it. If there is a readily available commercially off-the-shelf solution for what you want, Buy it. Um, do you want to, do you want to build an inventory management system from scratch? Are you going to build an ERP system from scratch? Um, if you can buy it, it's going to be feature-rich, it's going to be supported and maintained, it's going to provide training, um, it's going to be great, and it'd be a fraction of the cost of building it. So I'm, I'm always of an opinion here is that if you can buy it, buy it. It's a challenge that we face particularly in a manufacturing environment, is for the most part, there truly isn't a commercial solution you can buy. There are companies that sell solutions. And the challenge that we— that you see for all of the companies that we work with, because they've gone down that road where it's great, but you get to a point where you configure, you configure, you configure until you can't configure it anymore. And then you're left as a client with a choice of, do I change my business model to suit the software?

Right.

Um, right.

Yeah. And, and I can say, I mean, that, that's been my experience as well, um, that, you know, people think you're buying an off-the-shelf solution and then it needs a little bit of configuration or a little bit more configuration or a little bit of an extension or an add-on bolt-on. And next thing you know, you have something that is really more of a custom-engineered solution than it is an off-the-shelf product. Sam brought up a good point. If we go back throughout the years, what's different today, or one area that's different, obviously, that there are a number of platforms that are taking care of some of the core functionality for you and then allowing you to build applications or do visualizations or things like that. That is not the way it was back, you know, back when Jason was being held to account for his numbers and back when I was selling this stuff in the 1990s and things like that.

Mm-hmm.

So maybe talk a little bit for folks that are not familiar, sort of, are there functional areas that platforms are providing value? So be it at the data collection level or the visualization or, Sort of where you would look for sort of some core functionality from platforms and then, you know, how you extend on top of those things.

I'd like to start with that one because I think a really great example of a piece of software in the manufacturing industry that is fairly mature is something around CMMS systems, right? So maintenance management systems. There's not as much kind of process-specific or workflow-specific things in a maintenance system, so it isn't crazy that you're going to buy something off the shelf that is gonna have the right type of time tracking, the right time of mean time between failures. A lot of those kind of common practices and maintenance, there's gonna have a lot of those out of the box. And you're kind of more likely to find a general maintenance solution that works the same for a wind turbine as it does an industrial oven than you might say a process control system that's gonna work the same for those 2 types of things, right? Or some type of visualization engine. So yeah, there certainly are areas where there's a lot of very feature-rich off-the-shelf pieces of software that can help you, but there's a lot of other places that, again, it's more— it depends on how specific that part of your business is. The more specialized it is, the more it's part of your manufacturing special sauce, the less likely you're going to find something that's going to fit that well.

Jason, any thoughts on that as far as platform capabilities or areas where you can look to get at least— I don't know what the percentage is, maybe these tools get you 70% of the way there and then you configure the rest, or maybe they're 20% and you have to add 80%. But your thoughts on functional areas?

That kind of is the idea. I mean, I've done a lot of thinking about sort of, you know, I worked in the semiconductor industry and truly our focus there was actually on the equipment interface. to equipment. The semiconductor industry just got sick and tired that every time a new piece of process equipment rolled in, they had to completely design a brand new interface to it to get the data for recipe management, process control, alarms there. And that's where they came up with the sexGEM interface today. And that really was the only focus we had. It was such— it's a very, very specific industry. So the MES solution at the time, I believe, was PROMISE. And it may still be PROMISE. I think Applied Materials has taken it. You know, it works, so you don't have to worry too much about it. You can buy that solution. You're not going to build it from scratch. But again, it's a very, very specific industry, and I think that you can find commercial off-the-shelf solutions that are specific to a certain industry. But what we find here is that, as I say, that where I found like MES solutions were pretty much the domain of the automotive world, and semiconductors, maybe pharma companies who could afford the millions and millions of cost to implement these solutions. We're doing craft breweries, we're doing bakeries, we're doing one-off sausage companies, you know, you name it. Um, everybody realizes that they need these solutions in place. Digital transformation is hitting every single industry. Um, we all need it. So, so And the answer here is like, is there an 80/20 solution? We believe those absolutely are. That's kind of the direction we go in. The reason why you can't buy one solution that fits all is every business, any manner, every manufacturer is different. They'll have a different ERP system, they'll have a different visual inspection system, a CMMS, they'll use different PLCs. Their business model, their process, their process lines. Every single aspect of what a manufacturer does is different. So we do, you know, you look in here saying we need something that's going to allow us to manage our assets, we need something that's going to allow us to manage our materials through the plant, we want to have something that manages, you know, the quality inspections that we need on the line. The rest of it in terms of the interfaces, where do we get the data, where do we get the items or materials from, is that coming from an ERP system Where are we scheduling our operations from? Everyone had their all different systems. So you really need something that's kind of fluid that can connect. It's more like a glue. And that's kind of where we see like the best solutions for what we do is something that's more fluid. I don't know if you remember, maybe you're older, there was an advert by BASF and it said, we don't make the products you use, we make the products you use better.

Right.

And it was a German chemical company. No one ever heard of them, but it was all over the place. And that's kind of the sort of solution that's needed today. that will come in, it will integrate and connect to all the other systems.

So just quickly want to refresh, let everybody know that we are here talking about make versus buy decisions on Industry 4.0 solutions with Sam and Jason from Kanoa. I can see Tim and Gary online with us here and just encourage you, if you have questions or comments, please fill them in here. If not, we're going to keep going down the path that we're going down. And I thought maybe A good way to explore right now is how would you take a company through the process, right? So somebody engages with you, I guess, first of all, do they, do they come to you saying, I need to buy a blank, or are they coming to you saying, I have a problem, and then that leads you to services or some sort of a solution. So what's more typical for you? And then what's the process that you would lead people through to help make this kind of a decision?

Oh, I'd say solid 50/50 between those two, honestly. There are people that come to us and say, I am looking for OEE track and trace for quality management, something like that. They have a very— and sometimes, or I had one recently that I thought was really interesting. He'd be very specifically, I want an MES system. And it actually took a minute to say, oh, actually, hold on a minute. When you're saying MES, you're not talking about asset management, you're not talking about quality, you're not talking about maintenance. MES means track and trace for you. You're looking for a track and trace system too, right? So, um, so yeah, I think that there are some that come to solutions, there are some that come in asking for solutions, and again, like, might even have a specific idea of what they're looking for and might not always be, uh, And yeah, just might be kind of shrouding that in a different name sometimes. But yeah, there's certainly other ones that do just say, you know, it is big picture Industry 4.0 digital transformation type questions. Hey, every time I go on LinkedIn, Sam, you don't shut up about this Industry 4.0 thing. I've got a bunch of guys running around on clipboards all day and we're fighting over the data that we get out of them. How can I just be using technology better in my plants and how would you recommend that I get started?

Right.

Those latter ones are a lot more fun to go through and answer, but that's because they're more complicated. And I'll also say, I do think that in that second case in particular, usually you're talking about more than just a technology conversation, right? If you're coming pretty green, like pretty blue sky, I just need more improvements and I need to get more digital systems working in my factory. it's probably not just the selection of those digital systems that has held you back in the past. It is the way that they are influencing your process and the way that your people are adopting them. And we're usually talking about something that is a more holistic digital transformation. And that's the, I think, the promise of the transformation part of that phrase. Excellent.

Jason, anything to add?

I do. Well, in fact, I see Pramod has come up with a question and I'd like to take his question, if I may.

Yeah, let me just read that for everybody. There it is on the screen: 70% of digital solutions fail. What's up with that? So go ahead, Jeff.

I have my finger on the buzzer because I can get this one. It's resistance, it's resistance by people. We recently gave a presentation at the Global Lean Summit. It was held here in Gig Harbor, And it was about the people side of change management. And that was actually a part of it here, because I used to tell people here, like, for these digital transformations or these MES solutions, I said the success rate is about 40%. Actually, I was wrong. Apparently it's 30%. And they say that this is an expensive proposition for something that fails so much. And what is it? And basically the fact here is that we find when companies come in and they want us to implement a manufacturing solution, they're focused on the software. I mean, what kind of focus? We're talking about make versus buy. At the end of the day, yes, it's an important question. It's more of a sort of a challenge that there really isn't anything that you can buy, so you're going to have to make some aspect. But so little time is actually paid to the end goal, which is deriving value out of a solution. And I say, I've got gray hair, I've been doing this long enough that it's frustrating here, particularly when you come in at the beginning and you start to look around and saying, sort of, what's the vision for this project? So yeah, what's your business case? Where's your cross-functional team? Do you have a project charter? Where are the stakeholders? And I said, ah, don't worry about that, just implement the software. You go like, no, it's not going to work.

Yeah.

It truly is. It's why we We focused at Kano, and when we set up here, we're saying the software and the framework that we provide is just one aspect. But it's the business coaching, it's the project management, it's the change management, it's identifying the teams. And if you ask us how we go about doing this, we do an engineering study. We first understand it's looking at a company's readiness to even use or implement the change. Do you have the cross-functional team? Do you have an understanding of what it is? Do you? And then we'll move on with the pilot. And the pilot allows us first to understand what it is that we didn't know. We use an agile methodology here, so we don't know everything up front, but as we move through, the pilot will give us an understanding of what it is. And quite frankly, if you get to a point at the end of a pilot where you can see you're not ready, the company's not ready, they're going to have to change this siloed organization. It allows them to do that one for a relatively low cost as opposed to trying to implement a multi-million dollar solution and not get any value out of it.

Yeah, and I think that's actually one of the reasons why— I'm sorry, Sam, I'll let you, let you comment, um, as well here in a second. Um, even just the title of this, like Make Versus Buy, I think, I think it frames up Or highlights sort of the wrong conversation, right? Like if we're gonna go buy something versus we're looking to solve a business problem, right? Like we have a place we want to go or we have a pain we're trying to solve, then, you know, how do we go about solving that is a lot different than saying I'm gonna go buy something, or even worse, I'm gonna go try something. And I think to Jason's point, what we see oftentimes is that if folks are committed toward a path and they sample or try or prove something along the way and it fails, well, then you just try something else, that you pivot and you continue on your path versus saying, oh, we're going to try this Industry 4.0 thing, and you go do a pilot, it fails, as Pramod talked about, and you say, all right, well, that stuff didn't work, and then you're done with it. That can't be a sustainable approach, you're not going to succeed, and I think that the numbers are going to stay that way if that's the approach. I'm sorry, Sam, I cut you off.

No, no, I appreciate it. That was a good cutoff. I will say another part of it that I think includes both of those points of the conversation is one of the reasons that so many digital solutions fail is lack of proper investments, and that's not saying, oh, you stand $1 million on a piece of software and you need to spend $3 million on software. It's probably more something like, actually, you probably didn't need to spend that full million dollars on the software, but you needed to allocate another half million for personnel retraining and another half million for process refactoring and kind of the— all of the other things that your business is going to need to do around that digital solution to make it successful. I was talking to a manufacturer recently doing a big global MES rollout. And one of the most important things they talked about in their budget was their funding to allocate to individuals at each plant to backfill them for their current jobs so they could become the new champions of the MES system. So intentional investment every time they did a rollout to get people's time to make sure that they were there and embracing the change and influencing the project and continuing along and could champion that long term.

So you just, you just said something that, um, uh, I don't know if it sends off warning signs or buzzers or whatever, but you're talking half a million here, half a million there, that those sorts of numbers. Um, a lot of the, um, the folks that are part of this club, a lot of the folks that I deal with from a day-to-day basis, um, are not putting half a million dollars here and there and anywhere. They're looking— they're smaller organizations. Um, they're looking to solve specific problems that they have. They're looking at everybody evangelizing the value propositions that our space evangelizes. And I guess, does it— I guess, first of all, from your perspective, is it that kind of game that you better be looking at half a million dollars in all these different pockets, or are there more affordable ways to do it? And then I guess along with that, Does it— is there an approach, a methodology, or does it change the dynamic saying if you are a smaller organization, you're probably going to have to take on more work and potentially creating your own solutions, which would lead you more toward a platform and potentially building some of your own stuff as opposed to buying some larger system off the shelf kind of thing?

Yeah, I mean, I was just throwing around numbers like $1 million. I do know that, yes, that is a big number for a lot of companies. And I'll say it's a little bit of yes and no. I do think that especially as you're entering into kind of pilots and experimenting and doing kind of those early trial phases like we were just kind of talking about, yeah, between free demos and kind of, you know, early licenses and trials and things like that, I think there's opportunities to kind of Try things and fail fast, especially as you're trying to find the right thing. But I do think that a lot of manufacturers need to accept that digital transformation can be a very big investment depending on where you are coming from. If all of your machines— if you don't have a plant network and you need to connect everything and put in this infrastructure and start to connect it to the cloud and all that, like, that's gonna take money. So it can really depend on where you're starting from as far as how much investment you're gonna need to make. And you don't need a million-dollar solution for it to be a valid gain, right?

Right.

I mean, if you can spend $10,000 on something that really transforms the way that you all manufacture and changes your business, absolutely go for it, right? And the earlier— yeah, and it's tough, right? Because you might be able to find that solution when you're earlier in the process and have more gains to make, and then you'll hit this inflection point where, shoot, now to really get returns, I do need to connect every single asset in my plant to that. That's going to be a cliff.

Well, and that's, I mean, part of my journey career-wise took me into the manufacturing intelligence space, and that was essentially reporting, visualization, analysis of what's happening in production. And those right from the beginning have always been some of the most quick returns on investment for people to be able to visualize what's going on, drive process improvement, realize the value, et cetera, et cetera. And then that takes you to a point of saying, all right, well, here's where we are, here's what we've accomplished, and now we're looking at expanding, you know, and, you know, how we deliver or how we improve our operations. Jason, you had mentioned earlier, I think, about being in craft breweries and being in smaller implementations or organizations. Maybe your thoughts on sort of the size of company and whether that sort of puts people in one camp versus another. I can see a smaller organization wanting to buy something off the shelf because they don't have the in-house folks to do it, but then potentially being in a situation where maybe there aren't as many solutions that are available off the shelf and leaving them in a spot where they have to take on more of the systems responsibility themselves.

Well, certainly the cost of the software compared to the revenue being generated by the size of the company is going to have an impact. But ultimately here is it's the value.

Right.

How important, how much value are you going to derive from the change that you want to implement? That should be the driving force. And again, so to keep going back here, that we see the actual cost of the software not being— shouldn't be the driver for the solution. Um, building compared to buying is going to be more expensive, but buying a solution that doesn't work for your organization is probably— can be considered to be an even more expensive solution.

Yeah.

So again, here you work small. And quite frankly, I mean, when I started, I was programming in— was it Pascal? And then we did C, and then it was C++, and then it was C#, and then it was Java, and it was .NET. And it was really complex and it was really expensive. And we were using the waterfall model for development, so we weren't possibly doing any coding until we got all the requirements, and then we're not doing anything until the design. And it was an expensive, long process. In the 9 years that I was working— sorry, 7 years in operations— and I go back into software, the software world had almost completely changed. And particularly when I started looking at these new technologies and Python runtime scripting. And here's the thing, it's so easy. It's so easy compared to how it is. And that's the thing, like the tools that we have that allow you to take, you know, a partial solution and then extend it allow us to create powerful business applications in a fraction of the time, a fraction of the cost that it would take us before when we were doing it through an object-oriented Yeah, so the tools are better, right?

And when you say us, like things like we can do this, I always pride myself on being the least technical person in the room, no matter what room I'm in. I would say, well, define us, right? And so I think this comes back to the point of, do you have partners you can trust that would help guide you? Or do you have your own in-house capabilities to do these things, right? So my Assumption is that you guys establish trust with your prospective and existing customers, and they rely on you to help guide them through these types of conversations.

Yeah, and not just that, is that we partner with companies. It's not just giving you a software solution and run, because everything's so different. It's like, you guys ultimately, you need to maintain and support. And why do a lot of companies just build it? Because they don't want to hand off responsibility. to another company to only be left with something that they can't fix, they can't support, they can't maintain. So when every time we come in, like, part of our engineering study is saying, what's the cross-functional team? You know, we can get you 80% there, there's 20% customization, but that's going to be with us, with your controls engineers, with your IT personnel, and with all your different teams in the company. in terms of looking at what are the needs, what are all the different data systems or information systems to connect. And with that point, I see that Shweta— I'm probably murdering his name— has a question which I would love to answer.

Yeah, I was just going to actually kind of—

So was I.

I was going to try to lump a couple of those together because there's questions about cybersecurity, there's questions about the cloud, and I was just going to sort of interject with that. I was with a manufacturer yesterday who's got a pretty attractive offer from a cloud-based monitoring solution that has very little in-plant requirements, right? So there's some data collection that happens locally and then everything goes to the cloud and they go to a monitoring site that's specific to their plant and they can visualize their data and they're doing it. It's a really— affordable. I mean, you're talking a couple hundred dollars a month kind of subscription offering as opposed to the half a million dollars numbers we were just joking about. So maybe answer the questions here as far as— or actually, which one of the questions, Jason, did you want to specifically ask about? Because I would love to have you talk about sort of the cloud and what that offers up.

Yeah, I mean, I think we can probably combine the first one, or at least focus on the second, which is how can we work on data extracting from OTM IT systems, I'm thinking, unless ET is enterprise.

Yeah, enterprise versus IT. Yeah, we're fine.

Yeah. And it's a good point. If I go back to sort of my time in the steel industry, we're implementing an MES solution and we had this, you know, sort of giddy excitement over all the things that can become possible. So rather than dealing with paper and spreadsheets and trying to figure out numbers in here, like connect up the systems Now, a lot of our data inventory was actually coming through from the ERP system. We had a CMMS module, we had other aspects of different systems. When we worked with the IT, because we are the operations, they didn't care about our HMIs. We had FactoryTalk Studio was where we were controlling the plant. Well, now we're connecting the PLCs, we bring in Ignition, and we've got data connectors so we can connect to databases. We've got web services that we can get lists of work orders and production numbers, we can backfill and give the ERP system— sorry, it was SAI, was the inventory management system— the data it needed. We could eliminate a lot of these manual steps so that we're all dealing with the same data source. Conceptually, fantastic idea. Realistically, was never going to work in a publicly traded company. IT just threw out Sure. Sarbanes-Oxley compliance. They basically would not allow us to connect to other databases. They said that what we'll do is we will write a script, we will suck data out of the table, we'll put it into an Excel spreadsheet, and we'll email that to you.

Yeah.

You're looking at this like 2011 going, yeah, and this is the best way that we can interface the 2 systems. It got to a point where like, Oh Lord, you know, like, why even bother?

Right.

Why don't we stay where we are? So there are aspects, particularly when you're looking at the ERP system, that is your financial record, particularly if you're a publicly traded company. If you remember 2009, there were a lot of CFOs who were going to jail. Nobody wanted to go to jail, so it was probably the completely wrong time to start talking about OT, IT, let's connect these together. I think I was at a presentation. I think I heard about EMI, Enterprise Manufacturing Intelligence, and BI, Business Intelligence. What we really found in this case here was the company wanted to install Oracle BI as a tool. They were suddenly wondering, what are you guys doing over here? This was when we started looking at here saying, look, we want to do Enterprise Manufacturing Intelligence. We want to give people in the plant immediate access to real-time data that truly allows them to see what the on-hand inventory is. Do they have enough material materials to process today? Um, all of that information. Um, we can leave aspects of this out. ERPs contain financial information. Yeah, it'd be nice to know, you know, a running total of our cost per pound, but you can do that in the BI tool.

Right.

So as long as we clearly state the things that are sensitive to people, don't even ask for it, don't even try. But what we can truly do here is saying, look, we can make your BI tool better because we have access now with the system we've implemented. We're connected in real time to the machines. We can show you runtime, we can show you which work orders we're working on, we can show you, uh, how much inventory we've actually consumed in that day. We can feed it. Your reports will be fantastic. There is a space for both of these. There's delineation. If you try to muddy the waters by trying to pull data, it was like financial data into the manufacturing realm, then you will get obstruction and you won't be able to move. And I think that's kind of where you can work sort of on the data extraction between 2 systems. What is not the sensitive data? Because, uh, and I am trying to be brief, my breath keeps failing here, but I read a book and I mentioned it before by Bianca Shelton. It was MES Guide for Executives. I read it on a plane when I went to do my first MES consulting gig because now I'm meant to be the expert. That was the foreword by John Dyke that told me about the risks of project management, uh, for these types of projects. And in there she showed a point, um, where There's a model, CIA, and that security for an OT system is entirely different to security on an IT system. So CIA is confidentiality, integrity, and availability. That is the driving priority for an IT system, whereas in OT it's the other way around. It's availability of the system, it's then integrity of the data, and then it's confidentiality. It's still important, but there are 2 other ways. And there are ISA standards about cybersecurity on an IT system. And basically, the bank is saying, if you try to naively apply those security standards on an OT system, you're going to cause more damage and more harm than you're fixing. So, but possibly it doesn't necessarily answer the question about how can you work on data extracting. I think you can, as long as you know sort of the data that you're dealing with isn't of a critical sensitive nature to the company.

So I guess a question, and just one note here, we've been going about 45 minutes, so we're going to probably start to head toward the— audience is not allowed to head to the exit, but we're going to start to head toward an exit here. So if you have any questions that you want to get in, please get them in now. But just wondering, to the point which was raised earlier. I guess to answer the question about MES on the cloud, there are absolutely components of MES. There are the technology solutions, absolutely are moving to SaaS solutions and such. But I guess from a cybersecurity— was brought up earlier— if you're going to take on the responsibility yourself and build something, do you— and I guess is the cybersecurity question something that would steer you more toward a platform or an off-the-shelf solution versus advising somebody to go ahead and build on their own?

Yeah, I think it absolutely does, and I think especially when you pair that with the other question around the data extraction from OT systems, you're really kind of starting to uncover the layers of complexity it takes to make good manufacturing software, right? If you have the team in-house or the right partners that know how to do proper software development, that know how to do so in a way that adheres to best cybersecurity practices, that can talk to the equipment on your plant floor, all of the different equipment on your plant floor, in a way that is again safe and secure and all of that stuff, and you're making an appealing application that people want to use and already interact with. Like, it is tough, and there is a lot of disciplines involved in making manufacturing software. So the more of that expertise that you can kind of buy through off-the-shelf software— okay, as long as I stay in this platform and, and I respect this company and I know they're going to adhere to best practices around cybersecurity and give me the right updates that I need to keep my system secure and up to date— that's just one less thing that your development team needs to worry about, one less expertise that you need to bring into your company. And hopefully, again, if you're picking the right partners, you're just finding a professional that really specializes in making sure you're okay.

Yeah. Okay, I'd like to add to that. I have a person who I go hiking with often. He's set up a company that actually helps governments, city councils manage their budgets. He was over in Iraq and Afghanistan and trying to help up the governments there and basically saw that they have no idea how much money's coming in, how much money's going out. When he came back to the US, he saw exactly the same thing. So he's down in San Francisco, he's set up these systems that truly help government to truly understand what the revenue is, what the costs are, what their budgets are going to be, and where there's room to improve and save it. And I say that because as I'm hiking with him, I'm asking him this question that we provide MES as a SaaS. There is MES as a SaaS available. And I asked him a question here saying, how do you get, you know, people— because he only does a SaaS solution, you know, what do you say when people are concerned about the cybersecurity aspects or implications of sharing their data out on the cloud? And he looked at me and he said, Ask them if they keep their money under their pillow. If they don't trust the ability of cloud solutions in these days and the security that can be implemented, then tell them to come back when they're ready to have that discussion.

Yeah, yeah. I've said for years that I remember back in the early '90s when software was hitting the plant floor And it was ugly and it was not reliable and database leaks and blue screens of death and all those sorts of things. And we as an industry sort of said, wait, wait, you know, we're different here, right? This is real-time stuff. You have people's lives at stake, right? There's all sorts of issues why we can't have software and technology down here that's not ready for this environment. And we sort of, I think we sort of stuck with that mindset for a long time. And eventually the technology's passed us. They got past the point where they could do that reliably, they could do it deterministically, and now we're at a point where the technology is pulling us forward faster than we're ready for it, right?

Right. I mean, you look at it, most of the companies we deal with, they're already in the cloud. Sure, they've all moved in. I mean, why did they do that? Because they suddenly realized, here is saying, look, we're a company, we're where our business is to make bread. It's not to have a massive IT staff and have server racks and data warehouses and stuff. They can reduce the cost. They can actually have a more reliable, robust solution. It's the same with like building versus buying. They have to build today because there's no good solution, as we've said, that you can readily get off the shelf. But at the end of the day, that's not their IP. Their IP is a product, and if they could get away with it, if they could eliminate it, they would.

Right.

By moving stuff to a cloud and software as a service, it's a value that says, am I extracting value? Is this, you know, am I reducing my costs? Am I reducing my waste? Am I increasing the quality of my products and the value that it's giving me? And I'm paying a monthly as opposed to paying a million or 100,000 or 10,000 and wondering if I'm going to get any value. Quite frankly, by sticking in the cloud, it opens up a whole world. AI, machine learning, algorithms, all the other tools that are out there that we can now actually start to do something with the data rather than just store it in a database. It's the direction, it's the future, it's the way you want to go.

Well, and that's not even counting the irony of people that can say, oh, well, I can't do some cloud SaaS solution. I'm worried about cybersecurity. I'm going to continue running on this Windows XP computer that's using Internet Explorer connected to a Linksys router that goes directly into our modem. Like, it's a lot of the old ways of doing things are significantly less secure than the value that you get from a professionally managed SaaS solution these days between patching and operating system upgrades and things like that. I mean, a lot of, we saw, we all saw a lot of plants go down not too long ago because ransomware got into a bunch of their systems. And if they were properly patched using kind of a more modern OS, there was a good chance that that wouldn't have happened to a lot of them.

Well, I'll tell you what, you guys, appreciate the time here. I'm going to just take a second to sort of wrap up some of the notes that I took here throughout the conversation. I'll give each of you an opportunity to give some closing thoughts. And if anybody has any last-second comments here, please feel free to drop them in here. We appreciate you being here with us. You know, we talked a lot, excuse me, about the key considerations of whether you can buy an off-the-shelf solution or should strike out on your own and quote unquote build your own. We talked about what that actually means and the fact that there are platforms and tools available today that will do much of the heavy lifting out of the box for you and allow you to do some of the core stuff that is not going down to the lowest levels of truly building everything from scratch in code. We talked about concerns around scalability and being able to adapt existing solutions to your specific manufacturing processes. We've talked about security, maintenance, ongoing support, and really trying to future-proof your business by having digital capabilities. And so, you know, with that, I'll just say that, you know, I think, What it highlights to me is the need for an ecosystem. And we talk about that a lot, but that's really one of the main charters here for our club is to help people find people that can have these kind of conversations and help them move forward. So I appreciate you gentlemen being here and sharing your experience with us. And then I'll give maybe Sam, if you want to have just a quick takeaway for everybody here, and then we'll give Jason the last word before we shut down.

Oh yeah, I'll set us up for our next fireside chat. There's one thing that we didn't get to talk about that I do think is kind of an interesting thing to explore too, is one of the things we talked about in make versus buy decisions is this idea of like, are you gonna have to change your process to fit your manufacturing software? And we usually talk about that like a really dirty idea, but it doesn't always have to be. Sometimes your processes probably could use a good refresher, right? Just because you've done something a certain way for a long time and it's worked, If you're going through this digital transformation, again, it should be more than just software. It should also be changing people. It should be changing process to a certain extent where that makes sense. So I do think that as we're looking at other ways that we could be putting in software to do things, we need to just look at other ways that we run other parts of our business too. And that could be a more effective part of the picture than the technology itself.

Excellent. Well, thank you for that, Sam. Jason, you want to give us a final takeaway here for everybody?

I think if there's anything I'd say here is that, I mean, something we think about a lot here is that the solution that companies go to implement to help drive their manufacturing, they shouldn't be as complex as their actual manufacturing process. And we've seen that over and over again where you look in and it just— what they've created or what they're using or what they're trying to do is so there's an order of magnitude as complex as manufacturing. Manufacturing is a very complex business. So, you know, look for a solution. It has to be flexible. You want a lot of the heavy lifting done, as we've mentioned before, but it's also something that can be extended, extended by the clients. And realize here is that whatever you implement is going to need to be maintained and supported. Manufacturing doesn't stay in a vacuum. We find here that, and it's been hard where we've implemented manufacturing solutions and we're trying to look at the return on investment of it. In the meantime, they made upgrades to the shredder, they've added in more process equipment, they've changed so many other processes. Things are constantly changing. You're going to constantly need to be working and updating, uh, the solutions that you're putting in. Yeah, that's about it. Other than that, I can say, uh, Mike, a pleasure meeting you. Thank you so much, uh, for hosting this. This is, uh, the first one that I've done. It was actually quite fun.

We appreciate having you both here. We appreciate, you know, my other co-founders who have joined us. We saw Tim, Gary, Pramod, Shweta online interacting with us. That's what we are here for. So we appreciate everybody doing that. And we would encourage everybody to follow the Industry 4.0 Club online on our website, through LinkedIn. Look for more of these LinkedIn Live events. We will have Sam and Jason back. as well as they continue to contribute. You can look for them on LinkedIn. Again, their company is Kanoa, K-A-N-O-A. Is that correct?

That's right.

Okay. So with that, I would just thank you all again. And thank you, Sam. Thank you, Jason. Everybody have a wonderful day.

Thanks, everybody.

Bye.

Oh, I'm the only one that listened to the instructions. Yeah, that was a lot of fun, Mike.

Thanks a lot.

Thanks, guys.