Digital Transformation, Digital Twins, and the Metaverse with Microsoft

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#beyondthenow IoT Security Podcast

SERIES 2

EPISODE 2

In the first of two #beyondthenow podcast episodes with Microsoft, we explore the wider impact of the IoT and digital transformation on businesses, setting the scene for the importance of IoT security. Listen as Tony Shakib (General Manager, Azure IoT, Microsoft) sits down with David to discuss why digital transformation is becoming a necessity, how the IoT is helping fuel a more proactive business model and why security should be part of the core fabric of your solutions.

Listen to a Sneak Peek

"I think we're at a turning point where we're kind of going from that educational phase, where people were skeptical about the value of digital transformation, to the mass adoption phase, where they realize that digital transformation is no longer an option, it is a matter of necessity."
Tony Shakib, General Manager, Azure IoT, Microsoft

HIGHLIGHTS

Key talking points in this episode:

  • Introduction to Tony Shakib (General Manager, Microsoft Azure IoT). [01:18]: "I’m Tony Shakib, General Manager, Azure IoT. I'm part of the engineering team and my job is actually one of the most interesting jobs at Microsoft. Where, even though I'm part of the engineering, because we're innovating at such a rapid pace sometimes it's hard for our customers and partners to keep up with it. So honestly, our job is to help them take advantage of our latest innovations and help them build solutions. And we work with the leading customers and partners. My job is to set the example on how to go through digital transformation, how to build solutions the proper way, and then once we've done it, we hope to use that as an example with the rest of our sales team and partner community. So that the rest of the community can follow and take advantage of our technology. It's almost always like on a treadmill on the leading side of taking advantage of our technology and innovations and building the most creative solutions."
  • What are the main types of industries that Microsoft are helping with their digital transformation journey? [03:01]: "We've been working on our IoT platform for a long time. It's about six years into the journey. We've invested a lot of money into it to really develop a very rich set of portfolios of capabilities. And it fundamentally is a horizontal platform, that you can take advantage of in any industry to build any kind of solution. But having said that there are five or six industries that we also lean in and try to go deeper into it, as I said to work with the customers and drive the innovation. Industries that we've spent the most amount of time with and we are having really good success with, as witnessed by analysts like Gartner, where they put us on their magic quadrant. The main industry is manufacturing, both discreet and process manufacturing, the other industry is retail, the other one is healthcare. And then one of the most interesting ones is like the connected spaces and sustainability, and many other things that come into it. And then you can kind of like take that and go deeper into agriculture and transportation and many other areas as well. But mostly the large enterprises and heavy industries are where we're focusing on transforming their business and helping them take advantage of technology to do things a lot more efficiently."
  • The three phases of digital transformation: connectivity, context, connected ecosystems. [05:29]: "We are working with some of the most amazing companies around the globe, but having said that this whole digital transformation thing is still fairly new and there are not that many companies that are deep into it. So let me try to help define what do we mean by digital transformation? We look at digital transformation, typically in three phases, phase one starts with connecting things, whatever things are in your environment. For example, if you're operating a large factory- and some of these factories are the size of Manhattan- we’re not talking about small operations. So very large operations where they have millions of things, the way they're producing things, they have a lot of people that are operating it and they have a lot of actual actuators, sensors, boilers, machines- things like that. So the first thing is to start by connecting all of these things and visualizing ‘how are things being run?’. And it would really surprise you that that visibility is not there today. A lot of people are operating these factories, I don't wanna say blindly, but just based on some past experience when things happen, they don't really have instant visibility and an ability to understand what's going on and how to react to it. So, number one is just connecting things. That visibility gives you an enormous amount of power to manage your operations. The second phase of this is what we call connected environments, which is where the concept of digital twins comes in, and that's where you kind of look at the context in which these different things are operating in. And what are the consequences of the information, together with your inventory, together with the supply chain, together with all the other things that are happening? So when you put it in the context, then you get a much richer set of data in which you can react and run your operations. But the context brings the relationships and those relationships that are constantly changing- it's hard to keep track of. And that's where we have digital twins that will help you manage that. And then the third phase of it is what we call connected ecosystems that not only have full visibility of your environment and your things, but you can also connect that upstream and downstream to your suppliers and to your customers where all these things can manage themselves in real-time automatically. So, when you get to that phase, then you have a significant advantage, over your competitors with the way you run your business. So those are the three phases of digital transformation that we typically go through with our customers."
  • Digital transformation results in operational efficiency but also allows you to grow your business in new ways. [09:09]: "The net result of digital transformation is always two-fold. One-fold is, as you said, operational efficiency: how do I run things much more efficiently to save cost and to be, a leaner operation and a more proactive operation? So, one part is always efficiency and cost-saving. But the more important part of it is also, what are the new outcomes and business innovations that I can create? How do I do more with the existing assets that I have and how do I create net new revenue streams or capabilities. And that's where, with digital transformation, you are getting into simulating different outcomes? We have a lot of companies that due to COVID, their business is growing about 700%. Not only they don't want to disrupt the existing business, but they also have to find a way to seven X the business. They have to grow the number of lines, the number of robots, the number of things, but they don't wanna just do the next thing and run into the next bottleneck. And they have to predict all the way through, what do I have to do to get to 700% throughput? What things need to happen ahead of time without disrupting the current business. So that's kind of like what this would allow you to do."
  • What are digital twins? [11:43]: "'Digital twins' sounds complex but it's actually very simple. What it means is that at the end of the day you have a business that you are running, it could be a factory, it could be a hospital, it could be an EV charging station. So there is something physical that you have and you're operating it today. So what digital twins is, we effectively create a digital replica of that environment where you are running things. And then we start tinkering with that digital replica. We start doing simulations to see what can I do to run it better. And instead of picking that factory and trying a hundred things by trial and error, of which one or two out of the hundred ways might be the best way to do it. You simulate it, find what is the best way to do it, and then you apply that to the physical environment. And then it's not only doing it once to find the best outcome but also to run it in real-time. Because in any process manufacturing environment, things are going wrong, right, or different all the time. And just to be able to have that visibility to react in real-time, as different things happen to get the optimum outcome is what digital twins would allow you to do. A virtual way to experiment, figure out the best way, and then apply it to the way you're running the physical operations. That essentially is what digital twins will allow you to do. And we have created ontologies, which is that relational knowledge base of all these twins in different environments. That could be a digital twin of a mall, it could be a digital twin of an airport, could be a digital twin of a smart building in New York City, it could be a digital twin of a campus, a factory, a hospital. And just doing those simulations to find the best outcome and then running it as such is what digital twins would allow you to do."
  • The IoT is fueling a more proactive business model. [14:17]: "That's exactly where IoT comes in. The role of IoT is to have a connection to those physical sensors, bringing that real-time information where we can effectively go from a reactive world, which is what the old CRM model was all about. You wanted to know what's the status of something, you send a message, you go courier it and you see whether it's healthy or not. So we're completely changing that paradigm to a proactive world where those signals are constantly flowing northbound into your business applications and proactively alerting you when something is not going to be going the most optimum way. So then you can have AI algorithms, or even with people that can then take those advantages, that's exactly where IoT comes in and that transformation from a reactive CRM world to a proactive digital twin world."
  • The IoT is helping build the industrial metaverse. [15:47]: "It's all at the heart of it. They all go together. Effectively the metaverse, we kind of break it down into three different parts. There is the consumer metaverse, there is the enterprise metaverse and then there's the industrial metaverse. So the part that I'm mostly talking about here with IoT is the industrial metaverse, where we constantly are in touch with the real world, we have a digital replica of that, that we can constantly simulate and explore different ways of running the business to get the efficiency and creating the new business outcomes and then building towards that. So that's kind of like our definition of it."
  • Businesses are realizing that digital transformation is no longer optional. [17:25]: "I think I've been involved with IoT for about 10, 15 years. I started at Cisco, now at Microsoft, many different companies, thousands of different digital transformation projects. And honestly, I think we're at a turning point where we're kind of going from that educational phase where people were skeptical about the value of it, to the mass adoption phase, especially accelerated by COVID, where they realize that digital transformation is no longer an option, it’s a matter of necessity. Some of the examples, the best examples I can tell you is “how do I run my operations remotely?”- before I had to have people all over it. But now with technology, I don't have to be walking up and down the assembly line and I can just have full visibility of my operations and only get involved when I need to, or proactively. Another example is just the whole supply chain. Before it was very much siloed and fragmented. And now you realize that if you don't have the technology to interconnect my up and downstream supply chain and react to different market signals, inventory and supply levels, it's going to be very difficult to be on top of things. These are all perfect examples of like, “how do I manage my workforce?”- where it's disrupted by different aspects and be able to schedule things much more efficiently, do load balancing. These are all fantastic examples that are happening in the mainstream. And before there was this fear of what would it do to my workforce, now it's just a matter of, I have no other choice but to do it this way. Before the fear of security that “Hey, if I go to a cloud, I'm going to lose control” thinking, now they realize that having things in the cloud is a lot more secure and manageable than things on the ground. So I think to a large extent, these transformations have been accelerated, people understand it, now we're getting to the adoption phase."
  • Microsoft's a zero-trust approach to IoT security and their IoT security solutions. [20:30]: "Security is very important to IoT and digital transformation. By connecting things to the cloud or managing them at the edge, at Microsoft we have this posture that we call zero trust IoT security. And basically, by the experience that we've had of working with the large enterprises over the last number of decades, you realize that you are operating in hostile environments, that you can't assume security is going to be there. You have to assume zero trust, that anything can go wrong at any time, and build a completely robust network that can operate in that environment. And to master that we came out a couple of years ago with what we defined as seven properties of highly secure networks. Of which it goes into a lot of detail, all the way, starting from identity, to access control, to accept that things are going to change all the time. So you have to be monitoring and reacting and remediating in real-time. And just building a complete set of solutions, with technologies like Azure sphere that provide that level of security in the Silicon to Defender for IoT that has all these practices that don't take anything for granted. It understands that in the IoT there are a lot of brownfield devices that are going to be agentless. So you can't just go and put an agent on it, you have to build a network that can monitor the traffic and then manage it in a secure way from the cloud. So we built all these practices and that's how we've been able to provide that trust for our customers that Microsoft brings to the table and build networks that are robust, that can operate in these zero trust and hostile environments."
  • Legacy devices are one of the biggest challenges for those starting their digital transformation journey. [23:21]: "Part of the challenge is there's just a lot of legacy out there. There are a lot of antiquated networks. There's a lot of environments that were built 20, 30, 40, 50, you know, 70 years ago. And we can't disrupt them they're running critical infrastructure. So we have to overlay this on top of an existing running operation and then provide those added capabilities in a very secure way, without disrupting the operations. I think that's quite often the biggest challenge. Not so much technology is the change management, is how do you then educate the people that are running it the old way to deal with the new way? How do you deal with the massive amounts of data that's coming in? How do you make sense of the data? And those are typically the challenges. And then we have a lot of practices in a very methodical way and how to go through will then step by step and get it done."
  • Tony’s predictions for the IoT landscape in five years. [26:01]: "I think the fascinating thing that we see happening is this transition from a reactive world, that we all live in, to a proactive world. That's where at Microsoft, we want to be leading and we want to be anticipating these changes that the abundance of big data will bring forward. IoT is and will be one of the largest sources of big data. We believe about 70% of all the data generated, it's not going to just be the back-end IT, but more of OT data- the operational data coming from the real world. We're building the systems to adapt and manage it. There are all these concepts, you can call it metaverse, you could call it digital twins, you could call it digital transformation. But at the end of the day, the interesting thing is the intersection of IoT with AI and big data- that connection between the three and having the cloud infrastructure with unlimited compute and storage data to process the data that's coming in, make sense of it and create real-time intelligent outcomes which is really the exciting part. We also realize that not everything's going to happen in the data and we're building a system that is a hybrid between the cloud and the edge because not everything will happen in the cloud. But we have a system that's elastic enough where all the intelligent training and scoring algorithms will happen in the cloud, and then it'll get distributed into a compute environment, whether it's 5G, whether it's edge computing or whatever, and to disseminate that information and run things more efficiently. So just kind of making sense of all the data in a distributed world, reacting to it, making it constantly more intelligent and delivering value to our customers is really the journey that we're going to see get accelerated more and more in the next three to five years."
  • Edge compute and cloud compute are equally important. [28:51]: "I think data will always have gravity and a lot of it will happen closer to the edge. But the intelligence of what do you do with that data and the algorithms that will make sense of the data will be centrally orchestrated from the cloud. But it will always be an orchestration between edge and cloud. It's this elastic framework that we're building. And it also changes from application to application. Some of them, would always need to fill a gap, it has different requirements, the data throughput is so high that needs to be done on the edge. And that's fine with us. Some of them, not so much, and it's a lot cheaper to do it in a hybrid structure. We can do that as well. So we have a very flexible architecture that can handle both."
  • Tony’s advice for the listeners: utilize the existing guidance on IoT security to better understand the nuances of IoT security in your industry. [30:07]: "I think with IoT security, you really need to go deep into these different industries, understand the nuances that they each have, and then how to apply the seven properties of a highly secure architecture that we've developed. It's working, so I encourage everybody to take advantage of that. And honestly, we didn't write that for Microsoft. We wrote it for the industry that anybody can benefit from it. Then just also accepting this zero-trust environment, that you can't take anything for granted, security is an important factor and it needs to be thought through as the core fabric of your architecture. The way you build a solution is also another thing that we work with our customers and encourage everyone to think about. So those are two very important to keep in mind."

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