How to think about Hitachi’s Vantara and the industrial IoT

Five years after GE started its big push into the industrial internet, Hitachi has unveiled a new company designed to challenge GE’s industrial IoT prominence. Hitachi Vantara is the result of taking the business transformation group known as Hitachi Insight Group and formalizing it as a new business that will also include elements from Hitachi Data Systems and its Pentaho database and data analytics platform. There are two pieces to this news that matter for the industrial IoT.

One is the creation of Vantara, which is supposed to provide a salve of data science and expertise to businesses that want to collect and make meaning of their data. Hitachi Vantara will join other companies who have industrial IoT platforms and offerings. The closest is probably GE’s Predix, but one could also make a case for Accenture’s professional services or even IBM’s software components delivered as a service via Watson APIs. Vantara’s software that brings all this together is called Lumada.

Lumada was created last year and has all of the major elements of an IoT platform. It can handle telemetry, data analytics and visualization, and device management. It can run in the cloud or on-premise. A company take elements in Lumada it wants and run it with other software programs.

The second piece of the news is that Hitachi is going all in on this concept of using access to data, better analytics and machine learning to transform its own myriad lines of business. These lines of business include making trains, elevators, manufacturing equipment and even converged computing gear. Every Hitachi business will get what it calls a Chief Lumada Officer that will report to the head of that line of business. The goal of this executive will be to “digitally transform the business.” That could mean anything from turning a business that once sold hard goods into a service, or optimizing a manufacturing line using techniques similar to a flow diagram to structure development processes.

And because there are two new elements here, there is also the possibility of failing at one and succeeding at the other. The chief Lumada officers are part of the internal effort whereby Hitachi is trying to transform its own business using tools that it will also sell to others. The external effort is where Hitachi sells its Lumada software and professional services to others.

In many ways, the internal and external elements are linked. For example, the train business has a deal in England to provide trains as a service for Virgin Rail Group. This was a deal that came about as part of an effort to upgrade rail equipment. Instead of selling new bullet trains, the Hitachi train group is now selling what is essentially uptime. You no longer buy the train in advance and maintain it. Hitachi sells you a working train and does what is necessary to ensure it stays working.

But to enable this new business model the bullet train group needed help from the folks that eventually became Vantara. I bring this up because GE faced a similar internal and external revamp to handle the business changes wrought by the internet of things. Later it walked back some of its efforts around Predix. GE actually did an excellent job on the internal facing aspects of its digital transformation. Where it struggled was the external aspects, where it was trying to become a software company.

GE has done a good job getting its various business units to understand the importance of digital, while getting them to repackage products and services with that in mind. GE now sells airplane engines not as a physical part, but based on the hours flown. With Current, a new business built around lighting, it’s turning the concept of selling light bulbs into a variety of services tied to energy efficiency and safety.

Where it has struggled is in selling the lessons it has learned during its business transformation. As a result, GE may never become the software company it hoped to be. And this is the two-pronged challenge Hitachi Vantara also faces.

There are a few things that make Hitachi’s efforts compelling. One is that, like GE, it understands hard assets because it makes them. So when it talks about getting data from machines, it really does know what data those machines provide and the forms that data takes.

Two is that customers get to keep their data. This extends from not trying to suck in data and deliver it back for a fee, to providing resources for manufacturing partners if they want to model how a proprietary system performs. Hitachi gives security-minded participants a black box where the data lives and no one can see it.

Finally, Hitachi has data scientists that it can assign to build general purpose algorithms and to work with customers trying to understand how they can use IoT to improve their own business. It is willing and able to build a professional services offering around this.

So while Hitachi may be following in GE’s footsteps, creating a company that can handle both internal and external digital transformation projects is very much in line with the skills it has. It also has the advantage of seeing where GE struggled and learning from that.

Finally, like all companies seeing the influx of data and analytics into their business, Hitachi has to adapt. To do nothing would be to watch someone else come in and offer the services of the future that Hitachi left on the table.