hilscher award write up

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2017 Global Industrial IoT Communication Solutions Enabling Technology Leadership Award

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Page 1: Hilscher Award Write Up

2017 Global Industrial IoTCommunication Solutions

Enabling Technology Leadership Award

Page 2: Hilscher Award Write Up

BEST PRACTICES RESEARCH

© Frost & Sullivan 2017 2 “We Accelerate Growth”

Contents Industry Challenges .............................................................................................. 3

Technology Leverage and Customer Impact of Hilscher ............................................. 3

Conclusion........................................................................................................... 7

Significance of Enabling Technology Leadership ............................................................. 8

Understanding Enabling Technology Leadership ....................................................... 8

Key Benchmarking Criteria .................................................................................... 9

The Intersection between 360-Degree Research and Best Practices Awards ....................... 9

Research Methodology .......................................................................................... 9

Best Practices Recognition: 10 Steps to Researching, Identifying, and Recognizing Best Practices ................................................................................................................. 10

About Frost & Sullivan .............................................................................................. 11

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© Frost & Sullivan 2017 3 “We Accelerate Growth”

Background and Company Performance

Industry Challenges

With the rise in connected technology, almost all industries are adopting the Internet of Things (IoT) within their enterprises. Many Industrial IoT (IIoT)-based software platforms find acceptance among industrial companies for their use of Big Data, advanced analytics, and real-time monitoring of industrial equipment to improve performance, process visibility, operations, and preventive maintenance.1 The IIoT Mega Trend emerged from this market shift, which focuses on leveraging a convergence of technologies, both in the cloud and on the plant floor, to provide these data analysis capabilities.

Frost & Sullivan research predicts that the global automation industry will grow 4.5%, from $53.51 billion in revenues for 2015 to $55.94 billion in 2016. As industrial customers implement more smart sensors and intelligent field devices and adapt these IIoT technologies into their operations, more successful use-cases will encourage further growth.2

Globally, the automation market faces three key challenges. The first involves the connecting of multiple machines and systems from multiple technology generations and vendors into one fully integrated system. Many industrial plants have already invested in multiple non-compatible network protocols, leaving them needing manners of allowing these networks to seamlessly communicate and transfer data to provide advanced analysis. Secondly, many automated industrial and manufacturing plants do not understand the benefits or complexity of IIoT solutions; many purchase IIoT solutions and are then unable to collect critical data or cannot interpret or analyze the data correctly as a means to increase productivity. Finally, global regulations regarding network protocols and data transmission vary from region to region and are constantly changing, causing many IIoT systems to fall out of compliance, causing downtimes in analysis and increased costs of re-coding software.

For the successful and profitable transition to IIoT, automated industrial and manufacturing plants need a partner in implementing solutions that can provide advanced levels of expertise and consulting, in addition to technically advanced solutions to ensure solutions are enacting desired outcomes and are compliant with the current standards.

Technology Leverage and Customer Impact of Hilscher

Headquartered in Hattersheim (Frankfurt) Germany and founded in 1986, Hilscher Gesellshaft für Systemautomation mbH (Hilscher) provides advanced communication solutions for industrial automation. The company commits to ensuring seamless data transmission and customer satisfaction, leading it to expand its offerings to include IoT 1 See Frost & Sullivan’s 2016 Outlook of the Global Automation Industry,K016-10, Mar. 2016. 2 See Frost & Sullivan’s 2016 Outlook of the Global Automation Industry.

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capabilities and provide best-in-class data analytics support by leveraging a variety of network protocols. As a result, Hilscher experiences continuous, substantial year-over-year growth, and is positioned as the future connectivity partner for IoT communication in industrial automation and for information technology (IT) vendors seeking to expand offerings into the market.

Pushing the Bounds of Innovation

In 2006, Hilscher took the strategic approach to design its proprietary netX chips, allowing it to create cost-effective solutions that interface with a variety of plant networking protocols and conform to the variable standards and regulations worldwide. By designing its chips, Hilscher can continuously integrate new capabilities into its solutions to remain at the forefront of innovation and meet the industry’s emerging trends. Its netX chip line is the most technologically advanced on the market, supporting 17 network protocols with 33 different master and slave stacks to easily integrate into Fieldbus and Ethernet networks. In addition to its advanced netX chip-line, Hilscher provides cost-effective gateway solutions that allow communication between two different industrial networks. As a result of its extensive product lines and customer-centric focus, vendors and original equipment manufacturers (OEMs)—with Hilscher’s support and expert recommendations—pick the required protocol or gateway combination and fit the proper netX solution directly into their equipment.

Hilscher’s Approach: “Industrial Cloud Communication”

As the IIoT Mega Trend influence current device requirements, OEMs and end users now leverage IoT products in an attempt to gain better analysis of workflows and production levels for more efficient operations. Relying on its history of expertise in chip and gateway development, Hilscher created its netIOT™ line to provide IoT functionality. Its offerings include:

• netIOT™ Interface modules, such as the netIC for IoT, are the first IoT-enabled communications modules for field sensors, integrating IoT capabilities at the point of measurement, making it possible to access the device via Ethernet networks and laying the foundation for cloud-based data management.

• netIOT™ Edge-gateways securely couple automation networks to a cloud and offer easy access for diagnostics. Furthermore, these gateways provide wireless connectivity and remote access to devices from tablets and smart phones, supporting data processing and extraction remotely.

• netIOT™ Service is a line of software products that establishes smart connectivity to IT infrastructure and architectures. These connectivity applications are being developed together with companies like SAP and IBM to enable high-level use cases and fulfill security requirements.

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The company line of netIOT™ solutions provides real-time control and handles IoT information retrieval capabilities in a single chipset, empowering the shift toward IIoT. This advancement allows OEMs to create IoT-ready devices out-of-the-box, a huge advantage for manufacturers as IoT becomes a requirement for efficient communication and automation.

Hilscher’s Expertise Ensures Solutions Fit Customers’ Specific Needs

Hilscher serves two primary customer bases: automation device manufacturers who integrate Hilscher’s boards or chips in their devices, and end users who need a packaged gateway solution to bridge non-compatible communication protocols in their specific applications. Hilscher works closely with a customer’s engineering departments embedding Hilscher’s boards or chips into automation devices to understand their requirements and needs and recommend the proper solution to fit their application and requirements. Customers can either perform engineering or coding on solutions and software internally or choose to leverage Hilscher’s engineering experts to complete any customizations, providing flexibility tailored to the capabilities of the customer’s staff. Hilscher’s fully packaged, PC-board-based solutions are primarily used by end users in one of two manners: to allow the application running on a PC to communicate to an industrial network or to make dissimilar networks talk to each other. For Hilscher's end-user gateway solutions, the company works closely to ensure that the fully-packaged solution connects the specific controllers and signals needed and provides thorough documentation so a customer can implement the products themselves with little or no support after delivery.

Transformational Value

Industrial and manufacturing companies need advanced communications capacities that offer real-time data transmission and communication, while also remaining compliant with shifting regional and global standards, to increase productivity and streamline workflows. To accomplish this, companies seek a vendor that provides technologically advanced communications solutions, embedded software, support throughout the life-span of their project, and expertise in global certification organizations to ensure compliance. Despite this need, many market vendors only specialize in parts of these sectors. Hilscher’s unique value proposition lies in its leading-expertise in all four of these sectors, allowing the company to provide customers with industry-leading chips, embedded software, and support. The company offers a broad range of products used by automation vendors to connect different plant equipment in a variety of applications. Furthermore, Hilscher develops its software and chips designs internally; the company manufactures its chips locally from a single source supplier to reduce overall manufacturing and shipping costs and ensure timely delivery to customers.

Building Close Customer Relationships to Provide Best-in-Class Service and Support

Hilscher establishes long-term relationships with customers, allowing them to ensure that

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customers continuously leverage the best solutions. Since the company works directly with customers’ R&D departments, it remains in continuous communication with customers to ensure the solution continues to meet their specific needs. Furthermore, as customers wish to upgrade, Hilscher can use the customer’s previous code and toolsets in new solution generations, saving tremendous time, and thereby cost, as these capabilities do not require re-creation from scratch. With long-term relationships built on repeated success, customers trust Hilscher’s expertise in making recommendations and upgrades. Hilscher also utilizes a variety of education channels—including digital advertisements, direct calling, email marketing, and social media alerts—to inform customers of new or upcoming upgrades. Additionally, Hilscher holds an annual Technical User Group meeting in Germany to further educate customers. During this event, Hilscher’s executives, product developers, and technical experts hold presentations to inform customers of upcoming innovations and help them understand the additional value of new product generations.

Hilscher’s Commercialization Success

Hilscher is an active participant in the global standards associations that set regulations and standards for worldwide data communication both regionally and globally, including EtherCAT Technology Group, PROFINET International Organization, ODVA, and the OPC Foundation. As a result, Hilscher continuously updates its software stacks on chips to ensure that it remains compliant with the latest regulations. With its continuous innovation and commitment to customer satisfaction, Hilscher has experienced consistent, robust growth of about 10% each year over the last four years. The company’s primary customer base—about 45%—is in Germany, with its next largest market share in the United States and then Japan, due to most major automation companies and product vendors being primarily located in these three countries. Further influencing Hilscher’s growth, the German government drives the shift to Industrial IoT with its Industrie 4.0 initiative; the US is also at the forefront of the shift to Industrial IoT. These two countries are working together to set standards for global data collection and transmission in reaction to the shift to IIoT and worldwide collaboration and expansion.

Leading the Industry’s Paradigm Shift

As the first industrial automation infrastructure vendor to identify the industry shift to IoT, Hilscher established partnerships with leading IT providers, IBM and SAP, in 2014 and 2015, allowing the company to lead the transition to IoT-enabled solutions. These partnerships empowered Hilscher to integrate IT and IIoT capabilities into its solutions, providing additional value by enabling greater communication and data transmission efficiencies. Furthermore, these solutions uniquely position Hilscher, as competitors within the industrial automation infrastructure industry remain one to two years behind Hilscher in terms of technical development. Additionally, IT and IoT solution vendors do not have Hilscher’s expertise in industrial and manufacturing workflows, leaving them unable to ensure that solutions meet industrial demands and can streamline workflows and increase productivity. Furthermore, these new IT and IoT competitors face challenges to remain educated on

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regulatory changes, causing solutions to fall out of compliance with standard changes regionally and worldwide. Hilscher plans to emulate this strategy in other applications by actively seeking out partnerships with tier two or three IT and IoT companies whose platforms have become an industry standard in niche manufacturing environments.

Conclusion

As industrial vendors with automated systems desire greater insight into their operations and turn to leveraging solutions with IoT capabilities, there are challenges with connecting non-compatible network protocols to allow efficient enterprise-wide data transmission and communication. To combat these challenges and lead the shift to IIoT, Hilscher provides advanced communication solutions for industrial automation, allowing customers to more efficiently streamline workflows and increase productivity. The company’s best-in-class line of netIOT™ solutions provides real-time control and IoT information retrieval capabilities across dissimilar network protocols or in a single chipset. As a result, customers gain deep insight into their operations by leveraging data analytics capabilities. Hilscher has experienced consistent, large year-over-year growth and is positioned to continue as the leading connectivity partner for IoT communication in industrial automation.

With its strong overall performance, Hilscher earns Frost & Sullivan’s 2017 Global Enabling Technology Leadership Award in the Industrial IoT communications solutions industry.

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Significance of Enabling Technology Leadership

Ultimately, growth in any organization depends upon customers purchasing from your company, and then making the decision to return time and again. In a sense, then, everything is truly about the customer—and making those customers happy is the cornerstone of any long-term successful growth strategy. To achieve these goals through technology leadership, an organization must be best-in-class in three key areas: understanding demand, nurturing the brand, and differentiating from the competition.

Understanding Enabling Technology Leadership Product quality (driven by innovative technology) is the foundation of delivering customer value. When complemented by an equally rigorous focus on the customer, companies can begin to differentiate themselves from the competition. From awareness, to consideration, to purchase, to follow-up support, best-practice organizations deliver a unique and enjoyable experience that gives customers confidence in the company, its products, and its integrity.

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Key Benchmarking Criteria For the Enabling Technology Leadership Award, Frost & Sullivan analysts independently evaluated two key factors—Technology Leverage and Customer Impact—according to the criteria identified below.

Technology Leverage Criterion 1: Commitment to Innovation Criterion 2: Commitment to Creativity Criterion 3: Stage Gate Efficiency Criterion 4: Commercialization Success Criterion 5: Application Diversity

Customer Impact Criterion 1: Price/Performance Value Criterion 2: Customer Purchase Experience Criterion 3: Customer Ownership Experience Criterion 4: Customer Service Experience

Criterion 5: Brand Equity

The Intersection between 360-Degree Research and Best Practices Awards

Research Methodology Frost & Sullivan’s 360-degree research methodology represents the analytical rigor of our research process. It offers a 360-degree-view of industry challenges, trends, and issues by integrating all 7 of Frost & Sullivan's research methodologies. Too often, companies make important growth decisions based on a narrow understanding of their environment, leading to errors of both omission and commission. Successful growth strategies are founded on a thorough understanding of market, technical, economic, financial, customer, best practices, and demographic analyses. The integration of these research disciplines into the 360-degree research methodology provides an evaluation platform for benchmarking industry players and for identifying those performing at best-in-class levels.

360-DEGREE RESEARCH: SEEING ORDER IN THE CHAOS

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Best Practices Recognition: 10 Steps to Researching, Identifying, and Recognizing Best Practices

Frost & Sullivan Awards follow a 10-step process to evaluate award candidates and assess their fit with select best practice criteria. The reputation and integrity of the Awards are based on close adherence to this process.

STEP OBJECTIVE KEY ACTIVITIES OUTPUT

1 Monitor, target, and screen

Identify award recipient candidates from around the globe

• Conduct in-depth industry research

• Identify emerging sectors • Scan multiple geographies

Pipeline of candidates who potentially meet all best-practice criteria

2 Perform 360-degree research

Perform comprehensive, 360-degree research on all candidates in the pipeline

• Interview thought leaders and industry practitioners

• Assess candidates’ fit with best-practice criteria

• Rank all candidates

Matrix positioning all candidates’ performance relative to one another

3

Invite thought leadership in best practices

Perform in-depth examination of all candidates

• Confirm best-practice criteria • Examine eligibility of all

candidates • Identify any information gaps

Detailed profiles of all ranked candidates

4 Initiate research director review

Conduct an unbiased evaluation of all candidate profiles

• Brainstorm ranking options • Invite multiple perspectives

on candidates’ performance • Update candidate profiles

Final prioritization of all eligible candidates and companion best-practice positioning paper

5 Assemble panel of industry experts

Present findings to an expert panel of industry thought leaders

• Share findings • Strengthen cases for

candidate eligibility • Prioritize candidates

Refined list of prioritized award candidates

6 Conduct global industry review

Build consensus on award candidates’ eligibility

• Hold global team meeting to review all candidates

• Pressure-test fit with criteria • Confirm inclusion of all

eligible candidates

Final list of eligible award candidates, representing success stories worldwide

7 Perform quality check

Develop official award consideration materials

• Perform final performance benchmarking activities

• Write nominations • Perform quality review

High-quality, accurate, and creative presentation of nominees’ successes

8 Reconnect with panel of industry experts

Finalize the selection of the best-practice award recipient

• Review analysis with panel • Build consensus • Select winner

Decision on which company performs best against all best-practice criteria

9 Communicate recognition

Inform award recipient of award recognition

• Present award to the CEO • Inspire the organization for

continued success • Celebrate the recipient’s

performance

Announcement of award and plan for how recipient can use the award to enhance the brand

10 Take strategic action

Upon licensing, company may share award news with stakeholders and customers

• Coordinate media outreach • Design a marketing plan • Assess award’s role in future

strategic planning

Widespread awareness of recipient’s award status among investors, media personnel, and employees

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© Frost & Sullivan 2017 11 “We Accelerate Growth”

About Frost & Sullivan Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best in class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best practice models to drive the generation, evaluation and implementation of powerful growth strategies. Frost & Sullivan leverages over 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from 31 offices on six continents. To join our Growth Partnership, please visit http://www.frost.com.