IT-OT convergence: The new paradigm in industry

  • Industry News
  • Mar 02,22
In many modern-day factories, IT and OT have converged to a certain extent. Phenomenon of IT-OT convergence has already led to improvement in productivity, with a payback of two to three years in select cases, says R Jayaraman.
IT-OT convergence: The new paradigm in industry

Trends define the state of the art and the business models industries work with. There have been four milestones recognized in the industrial history of the world. Industrial Revolutions 1,2,3 and 4. What is now called Industry 4.0 is the latest. One big trend which impacted the industry significantly was the introduction of TQM – Total Quality Management. In 1950, when Dr Deming visited Japan, which was recovering from the ravages of the atom bombs, his message found many receptive ears there. 

Toyota was perhaps the one which carried it forward, with the Toyota Production System, lean management and the like. Since then, many new changes have been absorbed into industry, the introduction of computers being one such. When the Indian IT industry demonstrated that Y2K was nothing to be worried about, the entire world woke up to the benefits of computerization. Followed by the ERPs of many types, computerization, which began with the humble MIS, became the most happening thing in the industry. Productivity surged, new product introductions became the norm with shortened lead times, information generation and usage peaked. Production lines had to be redesigned to accommodate ‘consoles management’, wherein large plants like oil refineries, blast furnaces were all managed from a small ‘control room’ using a ‘console mimic’. Unknown to many, this was the beginning of ‘integrated manufacturing’, which later moved into the service industries as well.



The world entered the era of Industry 4.0 (I-4), where machines ‘talked’ directly to each other, and, using algorithms developed by data scientists and domain experts, via Artificial Intelligence (AI), they ‘managed’ themselves. The age of ‘convergence’ of IT (Information Technologies) and OT (Operating Technologies) had arrived in the manufacturing industry. Information Technologies and Operating Technologies now had to converge to derive the quantum benefits of I-4, which is the new paradigm for a high automation driven, connected, continuously monitored, big data using integrated manufacturing. I-4 is powered by IIOT (Industrial Internet Of Things), AI, Big Data, Cloud based data processing and storage, continuous monitoring of equipment with a view to co-ordinate and maximize production and productivity. In doing all this, the key is the convergence of IT and OT. IT is defined by the terms like IIOT etc. Whereas, OT controls the value creation. Figure 1 portrays the philosophy of IT – OT convergence. 

Operating Technologies are the bundles of practices which convert raw materials into finished products. Beginning with production planning, OT encompasses purchasing, materials management, in fact, the end-to-end supply chain. So, what’s new? 

For starters, the thinking is new, made possible due to IIOT. IIOT has bestowed the power of connectivity to manufacturing like nothing else before. This connectivity, along with advancements in devices technologies, computing and storage technologies, together with AI, Machine Learning (ML), have all created a new world of manufacturing where the entire value chain is knit together, to function as a well-oiled whole instead of distinct, separated but co-ordinated parts. 

For example, like in a Toyota automobile plant in Kentucky, USA, the seat for an automobile meets with the completed chassis at the end of the assembly line and goes to the final quality check area, after which it is dispatched. In such an operation, the suppliers, the assembly line, the quality check departments work as a whole, with complete synchronization, so that productivity and quality are produced to the customer laid down standards Just In Time. Similarly, in a Tata Steel owned steel plant in Jamshedpur, the operators in the blast furnace, steel melting shop, casting shop work in tandem to close out work orders obtained online. Such stories are becoming common in Indian industry, although there is a way to go, yet. 

Whereas, when it began, discrete softwares were written for computerizing many areas of manufacturing. For this, the work was usually organized as a distinct computer department, an operations department, and others, who all provided inputs to enable the development of the softwares. In this arrangement, IT and OT remained distinct entities, with IT often supporting OT. With advancements in OTs, like CNC machines, IT entered the OT space. Sensors played a key role in taking this entry to the next stage, followed by the SCADA (Supervisory Control and Data Systems) and the ‘console mimic boards’ which saw operations in various parts of a plant being controlled from one control centre. Modern day oil refineries, power plants, many process industries like iron and steel are run in such a manner, where IT and OT have converged to a certain extent. With ERP, these practices tied in the MIS into the OT, which was the next step in the convergence. What remained was the connectivity. It may be appreciated that while a lot of IT was being deployed, it was mostly either discrete or limited to integration of adjacent processes. 

IIOT, big data, data science and cloud computing were the new Information Technologies which drove the next round of convergence. And this is till work in progress. The IIOT enabled linking of devices and equipment in various parts of a plant within itself and to the external environment, like, finished goods warehouses, distributors, retailers and customers. The online order placement, BPO handled CCHP (Customer Complaints Handling Process), were all parts of this development. The social media connectivity is another key dimension. Companies like mJunction are virtual entities, who conduct the prime parts of their business through IT and OT convergence. eCommerce companies like Flipkart, Myntra, Jio Retail are also such examples, although to a lesser degree. 

The convergence is characterized by: increased IT coverage of areas in the value chain ( for example, JSW uses a high level of automation and convergence in its steel plants in Bellary, Karnataka; Schneider uses similar levels of automation in its plants in Vadodara); increased levels of connectivity (for example, Tata Steel); increased use of consoles and control rooms and SCADA (for example, BPCL, HPCL, NTPC, Airtel); customer connect through online ordering and complaints (for example, mJunction, Tata Motors); use of social media for selling of goods (for example, Flipkart, Myntra, Big Basket). This phenomenon of IT-OT convergence has already led to improvement in productivity (estimated to be between 7 to 13% in cases), with a payback of two to three years in select cases. It is also bringing about some important changes in skilling, human interactions and HR practices. 


About the author:
R Jayaraman is the Head, Capstone Projects, at Bhavan's S P Jain Institute of Management & Research (SPJIMR). He has worked in several capacities in the Indian industry, including Tata Steel, for over 30 years. He has authored more than 60 papers in academic and techno economic journals in India and abroad. Jayaraman is also a qualified and trained Malcolm Baldrige and EFQM Business Model Lead Assessor.

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