Is There a Role for MSPs and 5G in Smart Manufacturing?

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2Q 2018 | IN-5143

Given the relevance of the Internet of Things (IoT) to smart manufacturing, this sector is often considered a key market for the future revenue growth of Mobile Service Providers (MSPs) and network vendors. However, so far, smart manufacturing has developed with its own technology partners with little involvement from MSPs; so, how can MSPs change this dynamic and become key market players?

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5G-ACIA Starts the 5G Discussion between OT and IT Players

NEWS


In April 2018, companies from Operational Technology (OT) and Information Technology (IT) backgrounds, industrial associations, and academia joined forces to launch the 5G Alliance for Connected Industries and Automation (5G-ACIA). The alliance wants to help its members to understand the two converging worlds of OT and IT, and is meant to be a platform that fosters innovation within the industry with a focus on the potential of 5G in bringing smart manufacturing to the next level of its evolution. Members of the 5G-ACIA include leading traditional industrial players such as Bosch and Siemens, along with leading IT companies such as T-Systems, Intel, and Ericsson.

The challenge now for the 5G-ACIA is to effectively support the expansion of the 5G industrial ecosystem, create a real dialogue, and ensure the alignment of companies with very different interests. Creating the 5G-ACIA was the right choice; however, the need for the group highlights the fact that the role and potential of MSPs and 5G in manufacturing is far from clear and that there is no certainty about the value proposition or business model of 5G and its ability to deliver better Return on Investment (ROI) compared to other solutions.

MSPs Need to Understand the Market if They Want 5G to Be a Leading Solution

IMPACT


The creation of the 5G-ACIA shows that while manufacturing is a key area for MSPs and network vendors, there is still a lot of work needed for those players to enter such an entrenched market and to prove the competitive advantage of their solutions, including 5G. The manufacturing market is in the midst of digitization and increasing adoption of IoT technologies; however, this is a market dominated by traditional technology partners such as ABB, GE, Siemens, etc.,which are often active across the whole value chain from hardware to connectivity and from software to services. It is also a fragmented market where proprietary protocols and wired solutions such as Fieldbus, PROFINET, etc. dominate the connectivity landscape, and where wireless connectivity is still seen with hesitation and doubts in regard to performance, reliability, and security.

Despite manufacturing having been distant from MSPs offerings, there is a common view across different industry players that 5G is a technology with the potential to really boost the smart manufacturing sector. 5G Enhanced Mobile Broadband (eMBB), Ultra-Reliable Low-Latency (URLLC), and Massive Machine-Type Communication (mMTC) capabilities are set to support a wide range of applications such as remote control and asset tracking and new transformative technologies such as collaborative robotics and Augmented Reality (AR). However, the technology needs to be tested to prove that it actually delivers better performance and costs than existing technologies. The goals of the various players must be aligned and successful business models must be found, and this is precisely the reason the 5G-ACIA was created.

MSPs and network vendors will not enter this market easily and the 5G-ACIA is a way for them to understand the views, problems, goals, and challenges of OT providers and manufacturers, all information essential for them to fine tune their offerings and business models. Similarly, through the alliance, OT companies can better understand cellular technology and MSPs’ strategies, roadmaps, and long-term goals.

The Manufacturing Market Demands Solutions, Not Technologies

RECOMMENDATIONS


MSPs need to see smart manufacturing as a new market for them and as such they need to build their expertise and trust by strengthening relationships with existing providers and proving the worth of their solutions in a market that has stringent requirements. If they will fail to collaborate with traditional powerhouses, they will not be able to become leading players in this segment, even with the arrival of 5G.

5G has great potential on paper, but that is not enough and companies must demonstrate the benefits and ROI delivered by using that technology. The low-latency and mission-critical capabilities of 5G are essential to differentiate it from other competing protocols as with them, 5G can support industrial technologies such as mobile and collaborative robotics or automated guided vehicles. However, while 5G could deliver results beyond what is provided by other technologies, this does not mean that the manufacturing industry will blindly bet on 5G over other better known options, and MSPs and network vendors need to step up their efforts to educate the market. 5G will need to provide evidence of delivering better results than existing technologies. It will need to communicate with existing technology as manufacturers will not replace all their equipment, and will need Original Equipment Manufacturers (OEMs) to embed cellular modules in their production.

5G strategies must be tailored to the needs of the specific vertical and of all its players from OEM suppliers to end customers, and this can be done only by creating platforms for dialogue and cooperation. Any technology, and even 5G, is not enough alone as without a solid business and go to market plan, it will fail. 5G could be a game changer for MSPs; however, that is not their only option. and while building 5G momentum, MSPs and network vendors must also use current technologies, namely private Long-Term Evolution (LTE) (which on paper has similar capabilities to 5G and could be used as a first step on the road to 5G) and Low-Power, Wide-Area Network (LPWAN) connectivity to target specific areas of the market and to prove their role as trusted connectivity partners and the results delivered by cellular technologies in the factory.

The 5G-ACIA has a pivotal role to support the expansion of an ecosystem; create a dialogue between OT and IT; increase the industry exposure to 5G; ensure the effective alignment of views; and to collaborate on the standardization process, application, and business cases. Practical strategies such as Proof of Concept (PoC) supported by real business models, limited application-specific deployments, and promotion of success stories while securing OEMs start embedding cellular modules in their products could be used to pave the way for 5G adoption. At the moment, the alliance still has a strong German/European flavor, with many partners coming from this region, and it needs to go global and add more partners from all corners of the world as a wider partner ecosystem is essential for the success of MSPs and 5G in manufacturing.

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