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Augmented Reality: Visions of the future

October 28, 2019

Even three years after the hype, Pokémon Go still serves as the best example when having to explain what is meant by “Augmented Reality”. The videogame, built on a clever blending of real-life geocaching and hunting virtual creatures “hidden behind the visible”, was the first AR application with a broader appeal. And, some would say, so far the only one.

Since then, the videogaming hype may have ebbed, but professional use of the technology has gained traction. Several TIC players such as SGS, Bureau Veritas, UL, Lloyd’s Register and ABS have adopted or have started experimenting with AR tools and solutions – most prominently SGS with its “QiiQ” rebranded version of Librestream.  Reason enough for us to head to Munich and visit Augmented World Expo Europe 2019 10 days ago, in order to take a first-hand look at the technology and to assess its viability for TIC.

Our main takeaways:

  • Specialized hands-free glasses and headset can be used for Augmented Reality, but they are no longer necessary. Thanks to the massive boost in computing power of modern smartphones and tablets, AR applications run comfortably and smoothly on these, significantly reducing the hardware cost.
  • Clearly, Augmented Reality is a fascinating technology especially for manufacturing, assembly and maintenance. The possibility to show exactly where cables are to be mounted or where holes have to be drilled, based on precise 3D CAD models, generates a huge opportunity for quality improvement, as e.g. shown by Boeing.
  • For TIC though, due to its variety of settings and its “non-invasive” inspections, this very feature seems to be less relevant or useful.
  • Therefore, current AR software development mismatches the need of the TIC industry – albeit for very good reasons from developers’ point of view.
  • However, almost all AR suites feature some sort of remote collaboration and assistance feature. That is very useful in TIC as well and probably the reason why most TIC AR deployments focus on this function, for the time being.
  • Still, much bigger potential for TIC seems to lie in automation of workflows and of reporting, and in know-how sharing and preservation, considering how dramatically some TIC players’ workforces are ageing.
  • For AR to create further value for TIC, and to generate tangible competitive advantage, considerable additional development efforts and especially intelligent customizing will be needed.
  • Leaving this to AR software providers will hardly work, as they seem to struggle with fully understanding the requirements – not surprising given the idiosyncrasy of TIC.

Customized, in part proprietary AR tools will make the difference in TIC, not deployments of standard software solutions, because the latter are intended for (significantly) different use cases in manufacturing industries.

And: successful adoption of AR for TIC is not going to be a “homerun on autopilot”. Therefore, it is sensible to, at least, start seriously experimenting with the technology now – in order to avoid missing the bus.

 

 

Image copyright: Carsten Röcker

The „Digital Challenge“ for TIC: Applied relativity

October 14, 2019

Albert Einstein’s Theory of Relativity contains many astounding and bewildering concepts. One of them is the idea that time is relative and depends on the speed of an object’s movement. In consequence, even though it subjectively may seem that the same amount of time has passed, objectively there can be huge discrepancies.

In our last blog post, and in similar vein several times before, we have talked about the mysterious “Digital Challenge” for the TIC industry. In order to avoid the impression of unsubstantiated scaremongering, let us take a look at two examples what this means in practice. We’ll come to the connection to Einstein’s great theory later.

 

Our first example for the “Digital Challenge” is the TISAX case. TISAX (Trusted Information Security Assessment Exchange), a proprietary standard for Information Security, secure data handling and data exchange was defined by the German Automotive industry association VDA based on ISO 27001.

Most German Automotive OEMs and major suppliers now require their business partners to be TISAX-certified, rendering this into a must-have for most active in that industry. A typical certification service in nature, and moreover and pleasantly “something digital”.

However, three of the “Big 4” managed to get accredited by the newly-formed accreditation body ENX before most of the TIC players – cp. http://www.enx.com/tisax/tisax-home.html. In other words: they recognized the business potential and relevance quicker and moved faster even though being TIC outsiders, winning a good part of the market.

This does not cast a too positive light on the (German) TIC industry’s ability to develop (slightly) digital business models. If key players only manage to move at a snail’s pace on their very hometurf and leave a new business very adjacent to their current offering to new contenders, what are their chances of success in less familiar and more sophisticated new services?

It can be expected that A&A players will continue this strategy and pursue similar “digital” certification opportunities in other industries – PwC and Deloitte have set up dedicated legal entities for such “Certification Services”.

 

The second example for the “Digital Challenge” is the sheer speed and force at which other new contenders e.g. from the professional services space expand in Cybersecurity and related services. To us, Accenture is probably the best example and one of the most determined players to this end.

In the last twelve months, Accenture has acquired or invested into 13 players in Cybersecurity, Software and Digital Services:

  • Pragsis Technologies, Spain (Big Data)
  • Fairway Technologies, USA (Software development)
  • Analytics 8 LP, Australia (Big Data)
  • BCT Solutions, Australia (Cybersecurity)
  • Deja vu Security, USA (Cybersecurity)
  • Cirruseo, France (Google cloud solutions)
  • Vlocity, USA (Cloud software, Series C)
  • Knowledgent Group Inc., USA (Data engineering and management)
  • PrimeQ Pty Ltd, Australia (Oracle Cloud solutions)
  • Intrigo Systems, USA (SAP cloud solutions)
  • DAZ Systems, USA (Oracle Enterprise Software)
  • MaLong Technologies, China (AI-based product recognition, Series B)
  • Pillar Technology Group, USA (Software testing)

In contrast to that, in the last twelve months, the 13 largest TIC players have made a whopping zero acquisitions in the field (at least to our knowledge; the last deals we noted were NTA/Intertek and InSite/Eurofins, both in June 2018).

To be fair, several TIC players such as SGS, UL, DNV-GL, Eurofins, Intertek or TÜV Süd have invested (in some cases substantial) organic efforts into Cybersecurity and Digital –  with new labs, alliances and partnerships, new services and digitization of processes. But that will hardly be enough to keep up with such a pace of expansion.

 

A certain pattern can be observed along these and other examples: While some TIC players apparently still need to fully comprehend the “Digital Challenge” and develop strategies for dealing with it, those who have realized what is going on struggle with being rigorous and fast enough in execution. In other words: Too little, too late.

Coming back to Einstein: Even though the TIC industry may feel that its efforts are substantial and well-timed, the rest of the world may come to a different conclusion – because both spheres are travelling at different velocities.

If the TIC industry does not “up its game” and starts playing at “digital speed”, others will prevail in “Digital TIC”. This would limit the industry to its existing businesses and services, which will increasingly be substituted by digital TIC offerings – effectively locking (most of) the industry into a shrinking market.

In that case, sooner or later fierce “dog-eat-dog”-style infighting for the remnants of contracting legacy businesses will begin, with the stronger players grabbing market shares from the weaker ones that eventually go out of business.

In a certain way, that will then be the long-awaited further consolidation of the TIC industry – only quite differently than expected and hoped-for.

The TIC Council Risk Mitigation Survey: Climate Strange

October 2, 2019

It has been a busy summer and September at adeptic, so we were only able to read the TIC Council’s 2019 Risk Mitigation Survey published and presented in June a few days ago (https://www.tic-council.org/publications/reports/climate-change-risk-mitigation-report).  

It is based on a survey of “400 senior executives with strategic decision-making responsibilities (…) from organisations with more than $100m in annual global revenue” in April and May this year.

It’s an interesting and thought-provoking read, to say the least. Quoting a few of the key, and surely memorable, statements in that paper:

  • “Storms, fire and floods are nothing new, but climate change is increasing their frequency and making their timing and location less predictable. This has severe implications for business. (…) And now there is a compound effect, because recent trends in business practices make companies even more vulnerable to climate change. Today, they rely on extended supply chains and ‘just in time’ delivery. There is more scope for disruption, and less tolerance for it.”
  • “A year ago, our respondents placed climate risk relatively low down on their priorities, but it is now expected to become a more immediate concern over the coming year.”
  • “One of the difficulties companies face in confronting climate risk is understanding the ways in which climate events can affect them.”
  • “There is little value in having a sophisticated strategy to head off reputational damage if a supplier is exposed to climate risk beyond those central controls. When the Deepwater Horizon oil rig failed catastrophically in the Gulf of Mexico in 2010, it was BP’s ‘gross negligence’ judges blamed for the disaster, despite the fact that the rig was owned by a contractor, Transocean, and the faulty cement at the heart of the failure was produced by Halliburton, another contractor.”
  • “…climate [risk] mitigation is a new area of technological development and innovation…”
  • “The most popular climate risk strategy is lowering energy consumption and becoming more efficient, and it is not hard to see why – it is a strategy that both saves them money and makes their brand look good.”

So, paraphrasing what the TIC Council survey says about the topic:

  • Storms, fires and floods will tear apart global supply chains, and companies will be blamed for causing global warming. That is ‘climate risk’.
  • While completely neglecting the topic last year, executives are now really, really worried about this…
  • … even though they don’t know what it is and what its impact could be.
  • One example for a major climate risk is faulty construction and operation of oil rigs that causes oil spills, because if we all didn’t need the oil to burn in our fancy streaker-lightning cars, it wouldn’t have happened (or so)
  • Dazzling new technologies will be needed to deal with all this
  • At the moment though, saving energy e.g. by replacing light bulbs and turning down the heating is the most popular business strategy – whatever the logical connection of that “strategy” to the original “risk” of disrupted supply chains and tarnished reputations might be

In addition, in contrast to this gretesque climate panicking, macroeconomic risks are disregarded as a low-risk “also-ran” - despite the Sino-American trade dispute, despite worsening economic indicators in all major economies that prompted central banks to cut interest rates, despite Brexit and the still unsolved Eurozone calamities. A balanced and informed risk assessment, certainly.

/Irony off: Did someone, either at the TIC Council or at Longitude, read this outright nonsense before it went into publication and online? And does anyone there believe that such a botch job will be taken seriously and position the TIC industry as a trustworthy partner for mitigating risks?

Rather, this vexing effort, to us a comical blend of apocalyptic prophecy, logical inconsistency and stylistic inability based on poorly designed research, still illustrates the TIC industry’s intellectual and strategic tragedy.

In the survey, as far as discernible in all the wordiness, “climate risk” seems to be comprised of two aspects: An “operational risk arising from severe weather events” and a “reputational risk arising from angry consumers blaming companies for destroying Earth”.

Dealing with the former would require helping clients identifying critical elements in their operational setups, restructuring their supply chains and footprints to make them more resilient and slowly transforming their business systems. Leaving aside for a moment that this is the job and the domain of consultants, not of inspectors and auditors, it above all requires being sufficiently competent and not just delivering data sets. It would require to be on par with clients, understanding how their businesses and the technologies they employ work.

Dealing with the latter, if really addressing the problem beyond PR, requires pushing that transformation even further, with carbon-free production, completely new products, recycling schemes etc. – a major design, engineering and managerial effort that requires even deeper,  more comprehensive and quite industry-specific competence. If supposed to go beyond generalized statements, this would mean e.g. to tell Automotive OEMs which type of vehicles are most eco-friendly over the life-cycle, how to minimize the resource requirements for producing these, where to ethically source required materials and how to organize a more climate-friendly manufacturing.

In short: Playing an active role in fighting climate change requires being competent enough to guide others through a complete transformation of their businesses. Does TIC really have the competence to guide e.g. the Automotive industry to this end and act as a sparring partner? Doubtful.  

Moreover, TIC never played this role. In their role as impartial experts, TIC companies judge how well others have done something in hindsight and do not tell them how to do it in the first place. This separates the auditor from the consultant, and distinguishes the 3rd party from the 2nd party. Both roles are hard to reconcile and difficult to balance in a single enterprise.

Of course, if some TIC companies or even the industry in its entirety feels compelled to move into this new direction, who are we to stop them? But probably, it might make sense to think twice before abandoning one of the most successful service industry business models without a cause, only to chase the buzzword of 2019 based on a flawed study, and meeting such benevolent and pleasant competition as McKinsey or Accenture.

 

PS: We encourage our readers to consider alternative views on the topic, e.g. http://perspectives.occstrategy.com/post/102fn90/can-tic-solve-climate-change, and to share their opinions with us. Let’s discuss!