This is Jim Heppelmann’s 20th year at Boston-based PTC, and ninth as CEO of the global software company at the forefront of manufacturing’s digital transformation. In the last few years, he has published numerous papers on the subject of the Industrial Internet of Things –and collected various awards for his contributions, though even recent developments may soon to need to rewritten and reexamined. That’s how fast change can happen in the tech world, and PTC’s LiveWorx 18 Technology Conference in Boston, which kicked off June 18, aims to equip attendees, both in person and livestreaming, with enough data on strategies and technology to keep up.
We caught up with Heppelmann prior to his keynote to talk about the conference, the convergence of augmented reality and Industry 4.0, and PTC’s recent "convergence" with Rockwell Automation, a partnership that could have lasting implications for connected enterprises.
IndustryWeek: What’s the major theme of your keynote?
Jim Heppelmann: The pace of change. Things are moving so fast so that you can’t think about making one change or transforming [one aspect of your business], you have to think about the pace of change and continuous transformation. If you simply set out with a new goal in mind, by the time you get to that new goal, you might be behind already. It’s really the pace of change brought on by all the technology around us changing in parallel.
I’ve had to explain this same theory to my own employees that we’re not reinventing ourselves from the old to the new; we’re changing our conception of the world. If you want participate competitively in these technologies, you just gotta’ keep moving fast. Never hold any belief for long, because it may be wrong and may be off on a tangent. It might have been true originally, but may become wrong because things change so fast.
IW: A recent Cisco survey suggests that 75% of IoT projects fail. What do you think is the underlying cause of this?
JH: There are a lot of tire kickers who run projects to learn. Once they learn, the project is over and that might count as a failure. I’m not sure that’s truly a failure. I’m not sure it was truly a project. I think the success rate of serious projects is much higher than that. It’s a moving world and a lot of times customers say let’s try something, we’ll learn and well try something serious after that with better information.
In our customer success stroke, the financial metric we share with investors, the failure rate on real projects is less than 5%.
IW: What’s on the horizon in the next few years for IoT innovation?
JH: We’re talking a lot about augmented reality. It’s got a nice counterbalance with IoT. The thing about IoT is it’s really about gathering data in the physical world and bringing it across the boundary into the digital world. AR is about taking data from the digital world and overlaying it on what a person sees in the physical world. These two create a circular loop.
And one of the things we’ve discovered is that innovation is happening on the physical to digital and human front and that AR is a way to make humans better able to process digital information.
IW: How will this impact the way humans work in the plant?
JH: Humans are analog devices. Mother nature made us to interact with the physical world. She didn’t give us any digital ports, just five physical ones: touch, taste, sound, smell and sight. In order to process digital information, we tend to look at it on a computer screen, phone, tablet or laptop. What you see on your phone frankly isn’t that different than what you’d see thirty years ago on a Windows 3 or a Macinotsh. I think in this digital explosion, we forgot about people. We can exchange information with smart connected devices all day long, but what about smart connected people? AR is the answer to smart connected people. When you put on a HoloLens, that’s the modem that modulates and demodulates digital to analog and analog to digital.
We shouldn’t just build robots that are highly productive and put humans out of work; we should also make humans more productive and let their values shine through.
IW: With the convergence of AR and IoT rapidly expanding this year, do you think 2018 is an inflection point?
JH: I’m going to say no, but I think that’s coming. The reason I say no is because my view of bottleneck in hardware. We need a better head-mounted device. The HoloLens is OK, but frankly that’s been out for a couple years and we’d all like a better HoloLens. I don’t think on the hardware front there was that much progress in 2018. If you look at 2019, I’m pretty sure Microsoft is working on a a next-gen HoloLens. And Magic Leap is getting close and starting to shop their hardware. It’s rumored to be amazing. We’ll see. 2017 and 2018 have been important to AR, just not on the hardware front. For every person that understood what AR meant at the beginning of 2017, there’s a hundred people today. Apple with AR Kit, Google with AR Core. There’s been tremendous exposure to AR.
On the PTC front, we’ve engaged with 10,000 enterprises in AR trials and proofs of concept. To me that’s a shocking number.
IW: What demos at LiveWorx 18 have you most excited?
JH: We’ll show technology nobody has seen before. One called Waypoint uses AR to capture what an expert does as they do it and converts it to an AR experience that can be replayed by a new employee, who can be coached through exactly what the expert did in the same circumstances.
There’s also a lot of a new AR tech you can use to see the digital interfaces of physical things. Imagine you have a smart coffee maker. It has a digital API, but when you look at it you can’t see it. You put on a HoloLens or even point your phone at it, you would see it. Now that’s it visible, you can program it, so in addition to turning on the lights, you can turn on the coffee maker
IW: Like many emerging technologies, developers promise it will solve all of manufacturing’s problems, from the Silver Tsunami to engaging workers. Is there too much hype around AR?
JH: To me, AR is like the web. The web was a new way to capture information. You put it on pages, put those pages on a server and deliver it onto everybody’s browser. Suddenly, there’s a breakthrough and the flow of information is dramatically lubricated.
AR is simply taking the web to the next level by making it three-dimensional and in context. Our technology — that 10,000 enterprises are using or investigating—helps to create what are fundamentally 3D pages. They’re not flat web pages, but annotations of shapes stored on a server. You see or enter shape and the content comes down and gets deployed on the object in front of you or room around you.
I don’t think it’s hype at all. I think there are challenges, but I’m a big believer. I think this will unlock immense amounts of productivity. It’s really about human productivity. It won’t make machines any better, but it will allow humans to tap into the cloud.
What if I sitting across from Garry Kasparov and there was a real chess table, and I was wearing a HoloLens that was connected to Deep Blue, I’d beat Garry Kasparov every time. Deep Blue would be informing the moves I made with my hands.
IW: This month, PTC recently announced a major partnership with Rockwell Automation. Why the move and how will it help bring manufacturing forward?
JH: If you think about our heritage, PTC’s really an engineering software company, and to a degree service software company. In the past couple of years we’ve started to make great inroads into manufacturing and factory automation. But we also realized, because we don’t have enough institutional knowledge into factory automation, that would become a limiting factor into our success. We thought it sure would be great if we could team up with one of the industrial automation leaders, as a sort of big brother, who would help us become more successful together than we would by ourselves. We ultimately selected Rockwell for that. And they have this strategy around connected enterprise, and to truly achieve, that would have to create products like the ones we already have: ThingWorx and [PTC's AR platform] Vuforia.
IW: Since this strategic partnership is so fresh and seemingly went smoothly, do you have any advice for other manufacturing CEO’s seeking partnerships?
JH: You really have to look for complementary value and win-wins. The second things is the $1 billion equity investment Rockwell made. And Rockwell’s chairman and CEO Blake Moret will have a seat on our board of directors. There are a lot of partnerships in the world that aren’t worth much, what some people call Barney relationships: "I love you, you love me, we’re all one big happy family. When Rockwell is willing to put up $1 billion, everybody at PTC, Rockwell and everywhere else knows this is something very, very serious. I think it binds us together in a very meaningful way.
As a CEO here at PTC, I have a lot of strong thoughts and I’m pushy and impatient, but when I sat down with Rockwell, I said, "Give me your connected enterprise pitch." Afterwards I said, "OK, I can align with that."
PTC’s going into the IT/OT convergence from the IT side, and Rockwell going into it from the OT side. It turns out when we meet in the middle and shake hands, we pretty much solved this problem. I think alignment of vision is critical to keep a partnership working. If you don’t have that alignment, you have all these forces pulling it apart.