Peggy and David Van Dorselaer, industry solutions GM for manufacturing, transportation, and CPG, AT&T Business, talk about how 5G is bringing a revolution in manufacturing and transportation. He explains how digital transformation means so many different things to different companies and that customer requirements are changing. He gives examples of how manufacturing is going to change with the advent of new technologies. Also, he gives tips for how businesses can get started.

Below is an excerpt from the interview. To hear the entire interview on The Peggy Smedley Show, log onto www.peggysmedleyshow.com, and select 06/04/19 from the archives.

Peggy Smedley:
So, David, you and I spent some time before the show just talking about everything that’s going on from manufacturing to transport. We solved the world’s problems. You and I don’t have to do a show right now.

David Van Dorselaer:
We don’t. I think we handled it. There’s a lot going on right now.

Smedley:
But now we need to help all of our listeners figure it out, so we’ve got to help them. Because right now, one of the things you and I both agree, the term digital transformation is overused, and people really don’t know what that means right now, or they don’t want to hear it anymore. What they really want are solutions. And you have helped a lot of companies figure out great ways to solve their problems. And we were talking about the many examples out there in manufacturing, transportation, and I think that’s an exciting time, when you can help companies figure out how to apply great solutions. Don’t you agree?

Van Dorselaer:
I really do. I mean digital transformation means so many things to so many different companies. And so as we’re working with customers, we really try to focus on the business outcomes and the values that that technology can do. If you work with, look from what we’re bringing to the market, we can help connect most things to the Internet of Things. It’s being able to provide the business value and helping customers see the outcomes that can be had with the IoT of today and in the future. And what we’re starting to see is customers, they’re starting, sometimes their second-generation of IoT implementations, sometimes they’re just starting their first one. So they’re at different places in their journey, which is why we try to stay away from the digital transformation terms and really try to focus on the business outcomes and values that we can help.

Smedley:
Because they’re at different points of the journey. Does that become complicated? Because some people don’t realize that word you just used, “journey,” it’s not an end. You constantly have to reinvest, because we use this term all the time: exponential change. Technology’s constantly changing. So to understand it, some people might really understand it and it has to start at the top. Leadership has to get it, and needs to understand what they have to do, and understand what’s really going to happen for them and their organization.

Van Dorselaer:
That’s right. And I think that’s different for each company. And I’ll just give you a couple of examples that I love to talk about, because I think the use cases and the thematic approach is really what helps companies and listeners, frankly, bridge the gap, to understand what’s happening today. And from a use case standpoint, I love to use the example of connecting and perhaps retrofitting things that are in the market today to provide insights. That’s been going on for many years. But companies are now able to be able to help drive new insights with that information and new business models. So if you’re looking at manufacturing an item, retrofitting an item that’s already out there, you can now move to an as-a-service model that you’re bringing to your customers. And that’s really interesting, because instead of selling a manufactured item one time, you’re able to create a monthly recurring revenue stream.

Van Dorselaer:
And when we have conversations like that, it’s talking about the business outcomes, it becomes much more interesting than looking at the cost to deploy the solution. Because the cost is just one item, it’s an important item and an ROI discussion, but it’s really the overall impact that we can make to our customers. And I’ll tell you, customers’ experiences, their requirements are changing based on getting that realtime information that they’re getting accustomed to in the market today.

Smedley:
Is it having them understand what their business was before, and now what their business needs to be going forward, instead of looking at it as a product as you just described? That service is now changing. So then being a manufacturer or a transportation company, they have to think about where that, I always like to say that last-mile delivery, that supply chain, what their company’s going to be versus what it was. Isn’t that how you have to help them understand a little bit?

Van Dorselaer:
It really is. And that goes back to your comment about the leadership. And starting from the top down to drive that leadership cores and values to the field. And I’ll give you an example of a company we worked with that was a wheelchair manufacturer that needed to change the way they were going to market, and fundamentally move to an as-a-service model for providing wheelchairs. And that just provides great insight, because now you’re able to see location, the health of the wheelchair, and change the business model to more of an as-a-service model, monthly recurring item versus a one-time one-and-done with the customer. This is able to provide more of an experience and a relationship with that customer that can go on for many years.

Smedley:
And that’s hard for a manufacturer, because when we think about that, they’re not used to having relationships with customers. They’re used to making a product and being done with it. So now, to have a software-as-a-service model for them, is something that’s new and it’s hard. That reoccurring revenue stream is very profitable for them. But you also have to have the right employees with the right mindset to understand how to apply the Internet of Things. Doesn’t it all have to come together when you’re really building that right solution model?

Van Dorselaer:
It does. There are thousands of manufacturing jobs that are open today in the United States, because the requirements for technology and being able to use software are so important. And as you look at new technologies that are coming in, like AR into the manufacturing floor, not only do the employees that create the code for the software need to exist, but the people on the manufacturing floor, that are actually doing the work, also have to be able to be more comfortable with software applications and using technology today than they did just five or 10 years ago.

Smedley:
So it’s that whole concept now; not only is the technology, it’s the type of technology, and it’s the skills. Talk about some more of those examples.

Van Dorselaer:
Well, I would start with a couple of examples, really, that are, I would say, more basic and have been around for a while, then I’ll move into a couple that are more futuristic.

Smedley:
Love that.

Van Dorselaer:
So first, I would start with condition-based monitoring and predictive maintenance. Those use cases have been out for a while, being able to understand the performance of a machine, to be able to provide more predictive maintenance on that particular machine, which will help the customer experience, and also provide that insight to customers and the company that manufacturer, to help make their products better in the future. So I think those are two examples of something that I think we all have some experience with, although I’ll tell you that customers are at different points in their journey on that as well. And we talked about this a little bit before the show, not everybody has done condition-based monitoring or predictive maintenance. Those are still opportunities for many companies today, and is something that we have a lot of experience with in helping customers get to that place.

Something that’s a little more futuristic, that I think is here and with edge computing and 5G will be helpful is digital twin. I heard you are talking about that in some of your previous shows. Digital twin is something that a lot of manufacturers are talking about now. It goes back to having more expertise on the floor, to be able to analyze the twin with the actual good that you’re comparing it to on the manufacturing floor. I think when you start to look at future networking capabilities, with edge computing and 5G, that’s where digital twin software will really take place and allow companies to go to the next level with IoT and helping build the next product of the future.

Smedley:
When we think about that and we talk about products of the future and you talk about digital twin, there’s a lot there, but I think there’s even more when we think about repair maintenance and other things, like fleets now. Talk a little bit about that because there’s a lot of great opportunities there, because you’re talking a lot about manufacturing, but there’s a lot of opportunities in what transportation and fleets can do in this area.

Van Dorselaer:
Well, the technology on transportation and the opportunities there are really significant. With the ability, as you mentioned, to get information off of the vehicle, off of the truck, on idle time, on fuel consumption, you’re providing a lot of insight into the trucking company, to be able to provide insight into how that asset is performing. But also think about how that impacts driver retention. So that technology, which is the huge problem in the transportation industry, if you have that insight into the vehicle, into the truck, you’re able to now be more prescriptive, look at weather trends, look at how the wait time that the trucker is waiting at the location, or the ways that you can improve that.

Smedley:
It connects the supply chain in a lot of different ways. So there’s a whole connection that I think we’ve never made before, that we’re able to because we have insights, that we can put together and tie together, that we never had before with all of the information when we talk about data and connecting it all. Is that really what’s going to happen or is happening?

Van Dorselaer:
I think it is happening. I think it goes back to you look at the software capabilities today that companies are bringing, including AT&T, really an open-source model that allows for those APIs to come in and bring those solutions together to talk to each other, and that’s where you can really gain that insight. All the way from the shop floor, you know there’s asset-tracking capabilities that have been around for a long time in IoT, but now you’re able to really understand where that asset is on the shop floor with a more precise location, tie that into getting that production in realtime, so you’re improving the manufacturing, and then not only tracking the truck as I just mentioned, but now you’re able to track the trailer, and also the goods and services inside of that through connected pallets. Those are out there today as well. So, you start to be able to connect, as you mentioned, all the way through the supply chain and really give that visibility that customers are looking for.

Smedley:
Are there some things, you and I were talking about this as well, that visibility sometimes makes people nervous, because there’s so much insight into that that they’re almost afraid of failure. They want to connect all these things, but then they really don’t know what they’re connecting, and yet at the same time, they’re biting off so much and they’re afraid to do it.

Van Dorselaer:
I agree. Start small. Start with something. Start with a use case that you’re able to tie back to a return on investment. Oftentimes I see companies looking to start, they’re really starting with the end in mind and biting off a lot. But really sometimes just looking at a business process or an opportunity and building an ROI against that is a great way to get started. I’ve seen many companies start with that, with something that they’re able to prove out, demonstrate to leadership that they’re actually able to improve, and use that as a jump-off point to really continue to go with IoT into the next generation of use cases that they can help.

Smedley:
Do you have an example that we could talk about? You don’t have to give us their name, but I mean something you could talk about.

Van Dorselaer:
Yeah, I think, we’ve worked with a lot of customers in this space, that we’re on multiple generations of IoT use cases. And what happens is that the success for one starts to foster that replication inside of an organization. They start to talk, they’re talking to their peers, and that drives the next one. I will tell you, providing insight into goods and services that we use every day, like elevators, like escalators.

Smedley:
It’s a perfect example. I hear that a lot. Those are great ones.

Van Dorselaer:
You start with connecting it, getting that insight off of it. Now you’re able to tell the mechanic what is wrong with that elevator before they go out, to ensure they have the right tool, the right part when they’re there. You then are able to take that use case into air conditioning items that they have for a building, and to escalators as well. All of this creates a better experience for the customers that are in that building, that rely on the use of that elevator and those escalators as well as the company itself for cost. You’re reducing the number of trips to be able to service an item, and you’re able to just be able to provide an overall better experience.

Smedley:
I think some of these companies are going to have to be pushed to do these things. And Walmart and some of the big giants are pushing companies into doing things that they’re afraid of doing. Do you think that’s what it’s going to take to get some of these companies to invest in IoT, to do their supply chain? Because Walmart’s dictating a lot. Will it take those big behemoths to say, “Either you’re in or you’re out.”

Van Dorselaer:
I think that’s definitely a possibility, but I think that, today, there are still many opportunities just inside of an organization, even smaller organizations, to get started and really begin to build that value. I think that overall, the larger companies can certainly foster some of that through their supply chain agreements, things that they have in the market, but I think that there is enough justification on its own to be able to help really have even smaller companies push inside of their own organization to do it. But I’ll tell you that the biggest thing to me is the consumer expectations today are different. And I think that is what is going to drive it.

Smedley:
We’re spoiled. We want things immediately, and that’s why, when people say, what’s the benefit of 5G? 5G is really—you know better than anyone, being AT&T—how is that going to change things? The immediacy of what 5G is going to do, not only from a consumer end, but from a business, and that’s going to change that immediacy you just described.

Van Dorselaer:
Absolutely. With lower latency and higher bandwidth capabilities that 5G’s going to bring, I think the opportunities are endless. With each G, we’ve seen a revolution, if you think about it.

Smedley:
But is it the same when we talk about what was 4G to 5G? We’re not really comparing the same things. We’re totally different on what we’re going to be able to do with transportation. Is that correct?

Van Dorselaer:
It’s correct. Yeah. I think manufacturing, transportation, and the consumer experience is going to change with 5G. I think the opportunities are endless. So many things are out there we still haven’t identified yet.

Smedley:
So, the sky’s the limit. We don’t even know yet.

Van Dorselaer:
We don’t. We have some ideas. We definitely have a perspective. I think as you look at edge computing capabilities, bringing those closer to the edge, allows companies to be able to do more computing there, rather than sending that to the cloud. I think that 5G capability is going to allow more flexibility for manufacturers to be able to pull machines out of service faster and provide more flexibility on the factory floor than they’re used to today. I think it’s also going to create a more massive adoption of IoT, because you’re going to have more capabilities now to be able to put more devices within that 5G capacity. And I think you start to look at AR, VR type applications, it’s going to be a great opportunity there as well. But for trucking and transportation, I think you start to look to vehicle-to-vehicle type communications and being able to really get that insight around the United States that companies are looking for.

Smedley:
We talk about autonomous vehicles. It’s one of the big things that we talk about with a lot of companies that we are going to see autonomous vehicles. Are we going to see 5G really propelling the autonomous world even more? Or are we going to see that we’ve got the traditional car companies a little bit gun shy? Or what’s it going to take to make that happen?

Van Dorselaer:
I think it’s still going to take time. I think you’re looking at a level two autonomy right now today, that’s going to take 10 to 15, 20 years to get to level five. But I think with 5G, and capabilities that come in, you’re going to have more opportunities to continue to move up the spectrum on the levels of autonomy. But we’re already seeing it today on the shop floor: manufacturing, autonomous robotics machines, they’re basically able to move, move items around. And heavy machinery as well is an area where we’re seeing autonomous take place today. So I think 5G is going to only allow those use cases to continue to expand into the future.

Smedley:
What do you think are the biggest right now? What advice, I guess I would ask, that you should give manufacturers or fleet companies or CPG companies?

Van Dorselaer:
Well, we recommend starting with a pilot, to be able to prove this out quickly. So, take an example, we have models in place within six to eight weeks that can not only connect the item, but also help customers prove out the business case. And so I think that’s an opportunity to pick one area to start, and to really, to come in work with AT&T. We also offer immersion days, so where we go out to customer locations, we take our knowledge of IoT, 5G, the manufacturing floor, and we actually go spend a day in the life and look for the opportunities there to get started. And by the way, it’s really a humbling experience when customers welcome you into their manufacturing floor to give you an opportunity to see how you can help them with their journey into the fourth industrial revolution. It’s really helpful. But I would say start with an area, an opportunity where you can pilot and not have that pilot go on for a year with undefined success criteria.

Smedley:
We’ve got about a minute and a half left. Talk about what you guys do in Plano. Because I think when you guys bring people in and, you talk about successes, you show them how, talk about some of the things you guys have an opportunity to do there.

Van Dorselaer:
Well, in Plano, we have an AT&T Foundry that is focused on innovation and the Internet of Things. And this is where customers are able to come to AT&T, bring their potential use cases or problems that they’re trying to solve, and work with our engineers there, on location. And as you mentioned, the goal there is to prove it out. And then also, if it doesn’t work out, to be able to fail quickly. I think this helps a customers get their feet wet in IoT, but also really prove out the value and the ROI for our customers, and it’s a great facility and with really talented people there.

Smedley:
We have to all be connected. This is a connected world and we all need to understand that regardless of what you see, you’re really going to have to see that that’s a society that we’re living, right?

Van Dorselaer:
That’s right.

Smedley:
It’s an exciting time. Well, 5Gs coming.

Van Dorselaer:
It’s on its way.