Monthly Archives: April 2017

Executive Summary

Today, about half the activities that people are paid to do in the global economy have the potential to be automated by adapting currently demonstrated technology.In all, 1.2 billion full time equivalents and $14.6 trillion in wages are associated with activities that are technically automatable with current technology. This automation potential differs among countries, with the range spanning from 40% to 55%. Four economiesChina, India, Japan, and the United Statesdominate the total, accounting for just over half of the wages and almost two-thirds the number of employees associated with activities that are technically automatable by adapting currently demonstrated technologies.

Around the world, automation is transforming work, business, and the economy. China is already the largest market for robots in the world, based on volume. All economies, from Brazil and Germany to India and Saudi Arabia, stand to gain from the hefty productivity boosts that robotics and artificial intelligence will bring. The pace and extent of adoption will vary from country to country, depending on factors including wage levels. But no geography and no sector will remain untouched.

In our research we took a detailed look at 46 countries, representing about 80% of the global workforce. We examined their automation potential today whats possible by adaptingdemonstrated technologies as well as the potential similarities and differences in howautomation could take holdin the future.

How it will impact business, industry, and society.

Today, about half the activities that people are paid to do in the global economy have the potential to be automated by adapting demonstrated technology. As wevedescribed previously, our focus is on individual work activities, which we believe to be a more useful way to examine automation potential than looking at entire jobs, since most occupations consist of a number of activities with differing potential to be automated.

In all, 1.2 billion full-time equivalents and $14.6 trillion in wages are associated with activities that areautomatable with current technology. This automation potential differs among countries, rangingfrom 40% to 55%.

The differences reflect variations in sector mix and, within sectors, the mix of jobs with larger or smaller automation potential. Sector differences among economies sometimes lead to striking variations, as is the case with Japan and the United States, two advanced economies. Japan has an overall automation potential of 55% of hours worked, compared with 46% in the United States. Much of the difference is due to Japans manufacturing sector, which has a particularly high automation potential, at 71% (versus60% in the United States). Japanese manufacturing has a slightly larger concentration of work hours in production jobs (54% of hours versus the U.S.s 50%) and office and administrative support jobs (16% versus 9%). Both of these job titles comprise activities with a relatively high automation potential. By comparison, the United States has a higher proportion of work hours in management, architecture, and engineering jobs, which have a lower automation potential since they require application of specific expertise such as high-value engineering, which computers and robots currently are not able to do.

On a global level, four economies China, India, Japan, and the United States dominate the total, accounting for just over half of the wages and almost two-thirds the number of employees associated with activities that are technically automatable by adapting demonstrated technologies. Together, China and India mayaccount for the largest potential employment impact more than 700 million workers between them because of the relative size of their labor forces. Technical automation potential is also large in Europe: According to our analysis, more than 60 million full-time employee equivalents and more than $1.9 trillion in wages are associated withautomatable activities in the five largest economies (France, Germany, Italy, Spain, and the United Kingdom).

We also expect to see large differences among countries in the pace and extent of automation adoption. Numerous factors will determine automation adoption, of which technical feasibility is only one. Many of the other factors are economic and social, and include the cost of hardware or software solutions needed to integrate technologies into the workplace, labor supply and demand dynamics, and regulatory and socialacceptance. Some hardware solutions require significant capital expenditures and could be adopted faster in advanced economies than in emerging ones with lower wage levels, where it will be harder to make a business case for adoption because of low wages. But software solutions could be adopted rapidly around the world, particularly those deployed through the cloud, reducing the lag in adoption time. The pace of adoption will also depend on the benefits that countries expectautomation tobring for things other than labor substitution, such as the potential to enhance productivity, raise throughput, and improve accuracy and regulatory and social acceptance.

Regardless of the timing, automation could be the shot in the arm that the global economy sorely needs in the decades ahead. Declining birthrates and the trend toward aging in countries from China to Germany mean that peak employment will occur in most countries within 50 years. The expected decline in the share of the working-age population will open an economic growth gap thatautomation could potentially fill. We estimate that automation could increase global GDP growth by0.8% to1.4% annually, assuming that people replaced by automation rejoin the workforce and remain as productive as they were in 2014. Considering the labor substitution effect alone, we calculate that, by 2065, theproductivity growth that automation could add tothe largest economies in the world (G19 plus Nigeria) is the equivalent of an additional 1.1 billion to 2.2 billion full-time workers.

The productivity growth enabled by automation can ensure continued prosperity in aging nations and could provide an additional boost to fast-growing ones. However, automation on its own will not be sufficient to achieve long-term economic growth aspirations across the world. For that, additional productivity-boosting measures will be needed, including reworking business processes or developing new products, services, and business models.

How could automation play out among countries? We have divided our 46 focus nations into three groups, each of which could use automation to further national economic growth objectives, depending on itsdemographic trends and growth aspirations. The three groups are:

For all the differences between countries, many of automations challenges are universal. For business, the performance benefits are relatively clear, but the issues are more complicated for policy makers. They will need to find ways to embrace the opportunity for their economies to benefit from the productivity growth potential that automation offers, putting in place policies to encourage investment and market incentives to encourage innovation. At the same time, all countries will need to evolve and create policies that help workers and institutions adapt to the impact on employment.

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The Countries Most (and Least) Likely to be Affected by Automation - Harvard Business Review

Nutanix: How Automation Changed Your IT Department Forbes We hear a lot about IT automation and machine learning these days. It is mostly at the software application level where the emphasis is very much on automating blocks of code that can perform the same (or similar) function in different application use ...

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Nutanix: How Automation Changed Your IT Department - Forbes

Rockwell Automation (NYSE:ROK) is a pure-play Industrial Internet of Things (IIoT) company that is working hard to increase its revenues from selling software. It's focused on the right priorities of increasing its software sales and integrating with data analytics platforms and ERP systems. In the long run, there may be greater convergence of industrial automation software, robotics and enterprise software. This may lead to Rockwell acquiring robotics companies or even it being acquired.

Industrial Internet, which enables smart factories, exists to best serve the needs of the customer. The integration of Industrial Internet and enterprise software will help manufacturing companies respond faster to changing demands and reacting faster to product defects. Companies can achieve this flexibility while keeping costs low. Eventually, there may be very little distinction between Industrial Internet and ERP systems when tightly integrated.

The IIoT integration with rest of the enterprise software stack is still in its infancy, but the convergence of Industrial Internet and enterprise software will enable a software company to help their customers gather, analyze and act on data from the factory floor to the customer. It is an enticing prospect for any enterprise software company to be able to sell products that cover every aspect of their customer business. For these reasons, Rockwell Automation may be an ideal acquisition candidate for an enterprise software company such as Microsoft (NASDAQ:MSFT), SAP (NYSE:SAP), Oracle (NYSE:ORCL), Salesforce (NYSE:CRM) or even a company like Cisco Systems (NASDAQ:CSCO).

From the customer perspective, it is easier for them to deploy and maintain industrial automation systems from a single vendor. There is business value in making near real-time production decisions by analyzing sales data, warranty data and raw material costs. The integration of the factory and enterprise data can help bring about greater efficiencies to the company. Moreover, automated factories can help lower labor cost, improve operational efficiencies and help with preventive maintenance.

There are multiple trends driving the adoption of the Industrial Internet.

Exhibit: Trends Driving Industrial Automation (Source: Company Filings)

The cost of semiconductors and wireless hardware has dropped dramatically. It is now cost effective to add sensor technology and wireless connectivity to very low-cost industrial equipment. Now, data from every aspect of a plant can be gathered and analyzed. That data can be stored in elastic cloud environments hosted on premise or by a public cloud vendor. The cost to store and retrieve data from computing platforms has dropped dramatically too. The availability and robustness of today's Big Data tools to quickly analyze vast amounts of data and present actionable intelligence is making it easy for companies like Rockwell Automation to manage data. Demographic trends such as population growth and increased urbanization is increasing the demand for products. The income levels in many emerging countries are less than that in developed countries. The large population coupled with lower income levels necessitates efficient and flexible operations while lowering the unit cost of products. Products and services offered by Rockwell Automation help in making products efficiently.

Exhibit: Products That Rockwell Automation Helps Produce (Source: Company Filings)

Rockwell Automation operates under two business segments:

In 2016, Architecture & Software operating segment accounted for $2.64 billion or 45% of the total sales. Its Control Products & Solutions operating segment accounted for $3.24 billion or the remaining 55% of the total sales. Rockwell Automation has customers in consumer products, resource-based and transportation industries.

Exhibit: Rockwell Automation Annual Revenue (Source: Company Filings)

Software Has Larger Margins, But Has Shown Inconsistent Growth!

Exhibit: Rockwell Automation Revenue from Architecture & Software (Source: Company Filings)

Exhibit: Rockwell Automation Control Products & Solutions (Source: Company Filings)

Rockwell Automation enjoys a higher operating margin in its Software business compared to its Control Products operating segment.

To achieve a truly smart factory that can deliver on lower costs and increased efficiency, one would need an integrated approach to data management and analysis.

Exhibit: Data Management Capabilities to Truly Enable a Smart Factory (Source: Author)

Rockwell has products that enable a connected machine, help in gathering data and provide the network connectivity required to transport data to Manufacturing Execution Systems (MES) and to ERP and data analytics systems. Broadly speaking, Rockwell offers products in these categories:

It has also teamed up with Microsoft and integrated with its business intelligence software and Azure cloud to provide end-to-end system for a smart factory. In essence, Rockwell has capabilities in enabling connected machines and in data gathering via use of its networking technology, but lacks the ability and infrastructure or compute cloud to store and analyze vast amounts of data. Microsoft has expertise in the areas of Big Data storage and analysis. Its partnership is complementary.

Even though Rockwell has a stated goal to increase its revenues from software, the reality is much different. Its revenue from software hasn't shown any consistent growth. Until it starts showing consistent revenue growth in software, it may not be enticing for an enterprise software company to acquire it.

Exhibit: Revenue Growth in Architecture and Software Segment (Source: Company Filings)

There could be multiple reasons for this lack of growth in software sales:

Rockwell Automation Heavily Dependent On Revenue From Raw Materials Production

Exhibit: Revenue from Various Industry Segments (Source: Company Filings)

But there may be signs that things are about the change. Industrial companies closely monitor economic trends and pay close attention to Industrial Production (IP) Index, Manufacturing Purchasing Managers' Index (PMI), Industrial Equipment Spending and Capacity Utilization (Total Industry).

Exhibit: Economic Data on Industrial Spending and Manufacturing Trends (Source: Company Filings)

The industrial production index and capacity utilization were slightly down, but industrial equipment spending and PMI were up in the first quarter of fiscal year 2017. The economic data is positive sign for Rockwell Automation in the short term, assuming the current geopolitical risks don't dampen consumer spending and lead to a decrease in industrial production.

Rockwell Automation has built a solid foundation, but has to start showing good consistent organic growth in its software operating segment to extend its leadership position in IIoT. The eventual convergence of industrial automation and enterprise software is inevitable in the long run. There will also be further close integration between robotics and industrial automation software. For example, Rockwell and FANUC have a global collaboration agreement in place to create integrated manufacturing solutions. Rockwell may even acquire robotics companies in order to help it gain a larger share of industrial spending and further its goal of increasing software sales. Or, it may be an acquisition target for a large enterprise software company looking to gain a strong foothold in the Industrial Internet. It may first have to prove that it can be major force in industrial automation software by showing consistent growth.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Rockwell Automation: An Enterprise Software Company - Seeking Alpha

Via iGeneration,it seems that the Workflow app is in maintenance mode and unlikely to gain any new features in the foreseeable future. According to an email reply a userreceived from Workflow support, there are no further updates planned for the automation appalthough theywill continue to maintainits existing functionality presumably with occasional bug fix releases.

When Apple acquiredWorkflow in March, it remainedavailable on the App Store,manyfans of the app saw this as a signal it was not going to be abandoned. This does not seem to be the case however.

When the Workflow acquisition was announced, the app was made free. Apple has since refunded some of the user base who paid for the app previously.

In the email reply iGeneration shared with 9to5Mac, the Workflow representativeleft little room for ambiguity.No new features are coming to the app (including no new updates to the gallery of pre-builtworkflows to choose from). Heres the text of the email:

We are no longer provide the ability to submit workflows to the Gallery, as we have no further planned updates for Workflow.Overall, we are continuing to support Workflows current functionality and have no plans to end support.

Apples plans for the Workflow team are unclearalthough the most obvious inference is that the company wants to build more advanced automationfeatures into iOS itself. The Workflow appshould probablybe seen as a stop-gap offering until somethingis included in the operating system natively.

As a third-party app, Workflow always faced limitations on what it could do. It would be logical to expect an Apple approach to iOS automation to be much more streamlined and morecapable.

Perhaps iOS 11 will give more visibility on Apples wider plans for professional iPhone and iPad users.Theres also the possibility that the Workflow team is now working on something completely different inside Apple and that the buyout was more of a talent acquihire.

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Workflow automation app has no 'further updates planned' following Apple acquisition - 9 to 5 Mac

Joe Ferri

Our reliance on automation creeps into every area of business, not only into communications. You must keep in mind, however, that current technology cannot replace leadership (and probably wont either, at least for the near future). We humans can and should augment our abilities with the latest available tech, making use of its time-saving and productivity components. Similarly, we must update our own skillsets regularly, if only to just keep pace with the advances ofthe automation in foodservice.

Robots, artificial intelligence (A.I.), and the internet of things (IOT) are all coming to a foodservice operation near you. Being a master of, and not a slave to, these initiatives ought to be the goal of everyone, especially managers and would-be managers. Automation in our industry will be redefining all our roles from here on out.

Presently, we cant rely upon any of these tools for all but the most rote tasks, although there are plenty of those that can be disrupted, thus driving out inefficiencies.

So, what is it that we humans will be doing? Overseeing burger-flipping droids? Scheduling fry-bots? Programming autonomous delivery vehicles? Cleaning up the mess when one of these goes astray? Yes, absolutely, sure and you-betcha!

Were already doing some of this right now.Much of our world has defaulted to the self-service mode, due in part to the constant barrage of apps being introduced. Integrating people with systems represents the biggest challenge to our industry.

Forces at play, including the rising minimum wage, health insurance uncertainties, and a plethora of unfunded government mandates have conspired to make the foodservice industry ripe for automation. Add to these, our reliance on mobile devices, a shrinking pool of willing available talent, and shifting traffic patterns, and you have the perfect storm for disruption.

Managing all of it will fall upon those who have mastered the latest techniques, intuitively knowing which buttons to push, and which tasks to delegate.The alternative to getting ahead of the changes lying ahead: Will there be a robot managing you?

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Management By George (Jetson): Automation In Foodservice - Total Food Service (registration)

The rise of big data and the Internet of Things (IoT) come with huge potential for forward-thinking organizations. But they also pave the way for greater security challenges since both political entities and for-profit cybercriminals look to compromise IT defenses and gain complete access to network services or data.

ABI Research noted that security automation may offer the fastest route from existing security structures to adaptive solutions based on artificial intelligence (AI) frameworks. But this road isnt easy how do companies overcome new challenges on the way to emergent security AI?

Computer Business Review explained automated security processes are an essential part of empowering skilled security staff. Using current methods, many breach discovery efforts take 200 days or more, which gives attackers plenty of time to break down defenses, grab what they came for and disappear.

Huntsman Security CEO Peter Woollacott argued in Computer Business Review that the problem stems from dependence on manual processes to sort data and reach conclusions. While all of the information is coming in at machine speed, they are always underwater, making it impossible to gain ground, he said. Automation could help alleviate this issue by giving security specialists the time and space they need to identify key threat vectors and shore up infrastructure weakness.

Woollacott also emphasized specificity, noting that analysts come on board to solve problems, [like] the surgeon comes on board to cut, not to push the patient from the ward into the theater and wash them down. By relying on security professionals end to end, emerging threats and potential fixes may go unnoticed. Automating parts of the process, such as data collection and baseline analytics, allows companies to both save time and develop better security strategies.

But giving human analysts room to run is only the first step. Ideally, automation can help drive another key area of security advancement: emergent AI. Its no easy task, since designing truly emergent AI solutions which can intelligently respond to real-time security events rather than simply as their programming dictates requires machines with both the speed to access big data in real time and the ability to learn independently.

As noted by the ABI Research study, automation here can be a double-edged sword if not handled properly. Giving AI too much responsibility too soon could open up organizations to serious data breaches or record-keeping compromises.

Its no surprise, then, that many companies prefer human-AI partnerships that allow experts to leverage the broad knowledge of intelligent machines while retaining control over eventual outcomes. Increasing automation of threat analysis, historic data comparison and information gathering should further enhance these partnerships, ideally making it harder to identify where human expertise ends and machine capability begins.

Automation is a critical facet of the evolving cybersecurity market. While its immediate value stems from the ability to reduce manual process volume, this is just the beginning. Human-machine pairings, combined with improved data collection, continual learning and complete network access, should help pave the way for emergent security AI that is able to automatically and assertively defend corporate interests.

The rest is here:

Automation Advancement: The Road to Emergent Security AI? - Security Intelligence (blog)

SUDBURY, MA U.S.A. (April 13, 2017) On May 9 -11 2017, at the RAPID + tct Show Methods Machine Tools Inc., a leading supplier of precision machine tools, 3D printing technology and automation, will be showcasing a revolutionary cell solution designed to make quantum leap production increases in 3D manufacturing throughput. The first-of-its-kind automation cell, to be displayed in booth # 2637, combines additive manufacturing with robotics and subtractive processes, providing fast, highly efficient finished 3D part production.

Were really excited about this full production cell which addresses how manufacturers can successfully integrate necessary post-process machining operations in a high productivity, end-to-end solution, said Methods 3D Inc. General Manager Benjamin Fisk.

The 20-foot Methods cell includes a 3D-printed product in-feeding station which shuttles 3D parts on build plates into a FANUC C600 EDM machine that makes a cut between the parts and build plates. In the next station a FANUC robot snaps the plates from the printed parts and transfers the parts to a FANUC RoboDrill for a final machining operation.

This automated lights-out manufacturing cell was designed to drastically reduce the total time to complete parts from 3D printing to final post-processing, added John Lucier, National Automation Manager at Methods Machine Tools, Inc. It can easily quadruple total part throughput while eliminating manual labor.

The cell demonstrates Methods strength in designing innovative automation solutions for both additive and traditional manufacturing. Methods automation builds flexible automation systems for customers throughout North America, utilizing robotics and a full range of precision machine tools. Methods 3D partner 3D Systems Corporation, the originator of 3D printing and a pioneer of future 3D solutions, will be exhibiting 3D printers and production applications in booth # 911, and in # 2525 which is adjacent to Methods booth.

The RAPID + tct Show, billed as North Americas foremost event for discovery, innovation and networking in 3D manufacturing, is being held at the David L. Lawrence Convention Center in Pittsburg, PA. The event runs from May 8-11. Exhibits are open May 9 -11.

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Methods to Show Automation Cell - Advanced Manufacturing

By the early 1990s, automation technology, often referred to at the time as computer integrated manufacturing (CIM), existed for lights-out productionthe ability to make a product without direct human manipulation. However given the large production runs required to justify the costs, the economics of swapping labor (OpEx) for machines/robots (CapEx) were rarely positive, resulting in patchy adoption. Yet the future may have been foreseen.

Further challenging the return on investment (ROI) from automation at the time, and for the subsequent decades, was the offshoring of work to low-cost countries. Why build a relatively inflexible automated facility locally when competitive advantage can be maintained with a flexible manufacturing capability in a developing country?

In the last few years, however, automation made significant stridesnot just in what the technology can do, but also in the ease and speed of setup. This enabled batch sizes to shrink, driving a flexibility that, to many, could be described as agile manufacturing. Technologies such as computerized knitting, 3D printing and robotic cutting are transforming manufacturing. In addition, robotic process automation (RPA) and cognitive technologies, like natural language processing and speech recognition, are redefining what is considered routine in processes and, therefore, subject to potential automation.

With these advances in process and production automation, and the associated transference of operational to capital expense, what is the potential impact to the economics of offshoring? If an Adidas Speedfactory foretells the future, if we havent seen peak offshoring yet, we could be close to it.

The Speedfactory, while only representing a small fraction of Adidas total production output, is based near the end consumer, with initial facilities in Bavaria, Germany and Atlanta. Each factory will employ 160 people to do the work of over 1,000 in their more traditional Asia-based plants. It is not a truly lights-out facility, but is full-stream manufacturing, starting at raw materials and culminating in finished product. Rather than just a postponed customization, final assembly and inspection facility, it is a pilot for expansion at scale.

Adidas emphasized the agility of its Speedfactories, citing the need to react quickly to fickle consumer tastes and the associated dynamic demand patterns. However, it is interesting to look at the ratio of less than one job in Bavaria for every 5-plus jobs in Asia.

There is a commonly held understanding among economistsalthough subject to challenge by politiciansthat of those jobs that were lost from offshored industries, more than 80 percent were lost to automation and less than 20 perent of the jobs were actually physically relocated. Critically, though, it still made economic and strategic sense to leverage the available automation technologies in-situ offshore and realize a labor-cost arbitrage advantage.

It is quite possible, with the latest technologies constantly redefining what is considered routine and subject to automation, that we may see another 80 percent reduction in traditional roles. RPA can effectively automate the routine elements of a process, while still effectively integrating the non-routine elements that benefit from value-add human intervention. A 2013 study published by Carl Benedikt Frey and Michael Osborne examined the probability of computerization across occupations and found that 47 percent of workers in America had jobs at high risk of automation. In the traditional outsourced and offshored industries, the percentage is higher.

So, what could this mean for the future of offshoring?

Over the years, there were many reasons to offshore. The lower cost of labor was always a particularly compelling argument, along with innovation partnerships and proximity to raw materials. The latter reasons will likely be less impacted by technology developments. Automation, and the associated shift in demand to differentiated creative skills to deal with the non-routine circumstances, however, is shaping the workforce of the future, and will directly affect the shape and value of offshore operations.

We have to expect that the offshore providers will continue to adapt, as they have been doing already with the adoption of automation technologies in their facilities and the creation of non-routine services. However, as automation homogenizes production and services around the globe, and consumers expect faster, more intuitive and personalized experiences, the pendulum may swing back towards providing facilities that are geographically local to the customer.

Illustrative of this is a USA-based outsourcing company that claims that it can reduce clients costs by up to 70 percent through a combination of automation software with U.S.-based employees, but only between 20 and 40 percent by shifting IT work to a developing economy.

We know that the offshore providers will not stand idly by and watch their business erode. However, with many facilities at least partially owned by multinationals, the chance that we will see more onshoring similar to the Speedfactory is very high. So, with production automation technologies driving us to an inflection point, the percentage of production capacity offshored may now be at or near peak.

From a process automation perspective, it is less clear given that the technologies are relatively less mature. However, the timeline to largely negate the labor cost advantages of process offshoring is going to be shorter. In production and process automation, the maturity of todays technology is such that the business case to offshore or remain offshore is likely to need compelling strategic reasons, as the economics and ROI of offshoring erode.

Peter Cook is the vice president of procurement and supply chain at The Smart Cube. The Smart Cube is a global analytics firm that delivers analytics and research services to Fortune 1000 businesses, financial services institutions and management consulting firms. The Smart Cube has conducted more than 28,000 studies to date across virtually every major industry, function and region through its global team of more than 600 analysts.

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Did We Reach Peak Offshoring? How Automation Could Impact the Workforce of the Future - Supply & Demand Chain Executive