Why Hitachi Data Systems now leads innovation at Hitachi group

by Arun Shankar   31 January, 2017
Why Hitachi Data Systems now leads innovation at Hitachi group

(Left to right) Richard Gadd, Senior Vice President and General Manager, EMEA; Tom Pegrume, Vice President Emerging Markets EMEA, Steve Furniss, Vice President Solutions in EMEA; all at Hitachi Data Systems.

The global Hitachi group is made up of multiple business divisions. The Information and Telecommunication Systems division is amongst the group’s top four divisions by global revenue. Its contribution is approximately 20% of the consolidated global revenue, which is close to $100 billion. The other business divisions that make up the $100 billion group include Power Systems, Social Infrastructure and Industrial Systems, Electronic Systems and Equipment, Construction Machinery, High Functional Materials and Components, Automotive Systems, Components and Devices, Smart Life and Ecofriendly Systems, Financial Services, Logistics and Other services.

Historically the business of Hitachi Data Systems has been about data. Around 15-20 years ago, Hitachi Data Systems was in the successful business of selling mainframe compatible systems. As a group, Hitachi never got out of computing technology. After the mainframe product line, another less well known, but equally significant innovation from Hitachi was virtualisation of storage.

“We have been all about data and that is our heritage, making sure data is affordable, reliable and available. We never got out of compute in Japan,” remarks Steve Furniss, Vice President Solutions, Hitachi Data Systems EMEA.

With its long baseline in computing, Hitachi realised it had some competitive advantages which it decided to bring forward. Mainframe systems, logical and physical partitioning of storage were moved away from proprietary frameworks into open systems.

“Five years ago, we brought that technology to markets in Europe and rest of the world. That is our converged business,” adds Furniss. “Do we need services around that – absolutely. We manage customer assets, either they own it or we own it, either on-premises or in a cloud environment. Fundamentally we are a cloud company now.”

The Hitachi group is restructuring to bring forward its core competencies from multiple divisions, built over tens of years, into the One Hitachi initiative. Its ability to apply IoT solutions into business functions is being consolidated into its Social Innovation division. While its IoT technologies and solutions know-how is being consolidated into Hitachi Insights.

The internal vision that has been put forward across the group, is to make Hitachi outwardly more global, consolidate its core competencies and strengths, and apply them into select business divisions. Being the most global of all its subsidiaries, Hitachi Data Systems is expected to play a leading role in the One Hitachi initiative.

“A lot of our executives from Hitachi Data Systems, are also regional executives of the entire group. The creation of Hitachi Insights, which is a group designed to build IoT solutions and bring them to market, is run by ex-Hitachi Data Systems executives,” explains Richard Gadd, Senior Vice President and General Manager, EMEA at Hitachi Data Systems.

The contribution of revenue from the Information and Telecommunication System business division to the overall revenue of the Hitachi group has remained close to 20% from 2009 to 2016. Hitachi Data Systems is part of the Information and Telecommunication System business division.(Source Ten year financial highlights. Data based on US GAAP. Yen to $ = 0.00868772)

Technology is a key ingredient of the internal guiding vision and underpins everything in the One Hitachi restructuring and go to market initiative. “In the long term that is how we see our base, as an integral part of a broader Hitachi group, that we believe will be based on IoT. In the short term our strategy is built around digital transformation and driving digital transformation into our customer base,” elaborates Gadd.

The Hitachi Insight group, as part of this initiative is responsible for selecting the most valuable assets from Hitachi’s industrial heritage and bringing them together. “It is almost like an overlay organisation. It looks at all the industrial capability, picks out pieces that are relevant, that we can drive towards IoT,” he continues.

Tom Pegrume, Vice President of Emerging Markets EMEA at Hitachi Data Systems, cites the example of the railways in UK, where Hitachi has sold its railway rolling stock as an on-time service utility, with a 30-year service level agreement, versus the traditional sale of a capital asset with a 30-year depreciation cycle.

Coming from the enterprise class data environment, and with its historical installed base of large compute and storage blocks, Hitachi Data Systems is able to gain insights into how businesses are currently managing their data. It is quite clear to them that enterprises are struggling to operate with bimodal functionality. In other words, improving operations by modernising legacy infrastructure, and making investments to boost digital transformations and innovation.

Hitachi Data Systems believes it has figured out how to do both, optimise legacy while providing a platform for innovation.

Every digital transformation project starts with data, and data is at the heart of Hitachi’s solution propositions. Businesses cannot get started into digital transformation since for most organisations data, whether unstructured, structured, or machine generated data, is segregated into silos. “Our strategy is to pull back into a single place though a single services strategy. We then touch on the management, mobilisation, governance, analysis, and consolidation of data into a single place, in order to deliver effective business outcomes. We have capabilities in all of those five areas to deliver a very effective strategy into enabling and empowering digital transformation,” elaborates Gadd.

In reality today, any project being run by the IT department can be categorised as a digital transformation project. If you peel back the layers you will often find modernising of infrastructure to meet a fundamentally changing expectation from the customer, and the inability to deliver that capability from the existing environment, to be the real driver.

“Any IT department now would not call any other project anything other than digital transformation. Even if it is a storage upgrade it is a digital transformation and the whole business is accelerating,” continues Gadd. “It is a very broad brush and the approach for digital transformation varies. Digital transformation I guess spans many things and we are not playing exclusively in IoT.”

Hitachi Data Systems is currently managing 500,000 Petabytes globally, hosted in a pay-as-you-go environment, and has been doing this for under ten years now. It also manages the Hitachi Enterprise Cloud which offers VMware on demand, either on-premises or in the cloud. Another opportunity area where Hitachi Data Systems is active is in private cloud adoption.

The long baseline of computing experience and the Hitachi group’s multiple global industrial divisions, gives Hitachi Data Systems commercial agility as a differentiator. “It was our willingness and readiness to embrace the consumption requirement, while a lot of our competitors pushed back and did not want to go down that route, since it was eroding their top line revenue.”

However, Hitachi Data Systems would like to deliver the consumption model to the end customer, the way the end customer wants to consume the technology. This could be through managed services, leasing, or an on-demand model. “We understand where the market is moving. This commitment and commercial creativity to offer them the consumption model they were looking for, set us aside from the competition,” adds Gadd.

Is the consumption model profitable for Hitachi Data Systems? Not always in year one, or even in year two, but it always delivers a profit over the duration. It needs to run for some period of time and is not a short-term return on investment model.


 

Hitachi has sold its railway rolling stock as an on-time service utility, with a 30-year service level agreement to railway in UK, versus the traditional sale of a capital asset with a 30-year depreciation cycle. (Pix: Hitachi)

Hitachi’s IoT snapshot

Provider: Hitachi Insight Group, Santa Clara, California

IoT platform offering: Lumada

IoT edge technology or partner: Arduino, IEC 61850, Nexcom, Intel, WebSockets, REST

Pre-integrated IoT Devices or partner: Hitachi Medical Systems America devices, Hitachi Rail, Johnson Controls’ Metasys

Integration functionality offerings or partner: Pentaho Data Integration, Hitachi Content Intelligence

APIs libraries for App data integration: Pentaho Java API, Pentaho API, JDBC

Certified third-party middleware: PTC’s Predictive Maintenance, Apache Cassandra, Melissa Data, Microsoft Azure IoT Hub, MongoDB

API management offerings or partner: Hitachi Integrated Middleware Managed Service, Hitachi ID Systems

System integrators’ offerings or partner: Hitachi Consulting

IoT-enabled applications or partner: Connected vehicle, predictive maintenance, public safety, transportation as a service, crime prediction

(Source: Gartner’s Market Guide for IoT Integration, June 2016)


Hitachi Data Systems works closely with global and regional system integrators including CSC, TCS, Cognizant, Tech Mahindra, to name some and. These integration partners have done extensive evaluation of Hitachi Data Systems portfolio including software, storage management, logical partitioning, content software, amongst others. One of the reasons why Hitachi Data Systems is attractive with global and regional systems integrators is because it does not compete with them in the market place with its own services.

“This is the fastest part of our go to market. The scale of the transformation that our customers are demanding, as part of their digital transformation, actually in many instances is broader than we can offer in isolation. So, the collaboration with our global system integrator partners is critical. That is something we are really looking to drive in the emerging regions,” explains Furniss.

“They understand how to modernise the application environment within a customer. And they are very demanding from a pricing and performance availability perspective.”

Other than digital transformation, the enterprise switch-over to SAP HANA is another strong driver.

“SAP is one of our fastest growing markets in the converged space. The speed at which we are seeing the adoption of SAP HANA is enormous. We see everybody going to market. Sometimes it is a regional or local systems integrator and sometimes global, and sometimes customers are trying to do it themselves. We have a route to market for each of those go to markets,” continues Furniss.

A key aspect that enables Hitachi Data Systems’ go to market with its IoT, digital transformation, and cloud solutions, is its converged infrastructure portfolio. The converged solutions are built with data governance as the core requirement and include big data and predictive analytics using the Pentaho application engine, classic storage, object storage, and other software components.

“The piece that sits on top is big data and analytics. All of that comes together as a platform and enables organisations that move into digital transformation. Data is the key and we understand data. We are changing data into revenue streams through analytics,” explains Pegrume.

Another strength leveraged into its converged solutions is enabling the cross-over between IT systems and industrial systems.

For system integrators who work with Hitachi Data Systems, the value that the vendor provides for them, is in the software layers right up to the application layer. “What we try to do is produce robust standard software up to the application layer, that is really what we offer. Most of the system integrators, do not really want to do that themselves. They want to get into the intellectually challenging activity, which is the application layer and application integration. That is why we are seeing such a huge growth in our converged platform, explains Furniss.

Another area of activity with global system integrators is their uptake of VMware type virtual machines running Hitachi Data Systems converged infrastructure. Under 90% of its converged solution sales are for private cloud where enterprises are trying to build the solutions on their own.

Hitachi Data Systems has well leveraged its competency in traditional compute and storage solutions into the present-day requirement of digital transformation solutions. It is also leveraging its base of industrial customers to move them into the business and customer engagement models of tomorrow. With the creation of Hitachi Insights, it is only matter of time before it emerges as a vendor with end to end solutions for digital businesses of the future.


 

Richard Gadd, Senior Vice President and General Manager, EMEA, Hitachi Data Systems.

Key takeaways

  • Hitachi Data Systems would like to deliver the consumption model to the end customer, the way the end customer wants to consume the technology
  • Hitachi Insight group is almost like an overlay organisation
  • Hitachi Insight group is responsible for selecting the most valuable assets from Hitachi’s industrial heritage and bringing them together
  • Hitachi Insights, which is a group designed to build IoT solutions and bring them to market, is run by ex-Hitachi Data Systems executives
  • In the long term that is how we see our base, as an integral part of a broader Hitachi group, that we believe will be based on IoT
  • In the short term our strategy is built around digital transformation and driving digital transformation into our customer base
  • It was our willingness and readiness to embrace the consumption requirement, while a lot of our competitors pushed back and did not want to go down that route

 

Tom Pegrume, Vice President Emerging Markets EMEA, Hitachi Data Systems.

Key takeaways

  • All of that comes together as a platform and enables organisations that move into digital transformation
  • Another strength leveraged into converged solutions is enabling the cross-over between IT systems and industrial systems
  • Data is the key and we understand data
  • The piece that sits on top is big data and analytics
  • We are changing data into revenue streams through analytics

 

Steve Furniss, Vice President Solutions in EMEA, Hitachi Data Systems.

Key takeaways

  • Collaboration with our global system integrator partners is critical
  • Five years ago, we brought that technology to markets in Europe and rest of the world, our converged business
  • Fundamentally we are a cloud company now
  • Other than digital transformation, the enterprise switch-over to SAP HANA is another strong driver
  • SAP is one of our fastest growing markets in the converged space
  • System integrators are very demanding from a pricing and performance availability perspective
  • System integrators understand how to modernise the application environment within a customer
  • System integrators want to get into the intellectually challenging activity, which is the application layer and application integration
  • The scale of transformation that our customers are demanding, actually in many instances is broader than we can offer in isolation
  • The speed at which we are seeing the adoption of SAP HANA is enormous
  • We have been all about data and that is our heritage, making sure data is affordable, reliable and available
  • We manage customer assets, either they own it or we own it, either on-premises or in a cloud environment
  • We never got out of compute in Japan
  • What we try to do is produce robust standard software up to the application layer

Information technology, computing, and Hitachi group

The global Hitachi group is made up of multiple business divisions. The Information and Telecommunication Systems business division is amongst the group’s top four divisions by global revenue. Its contribution is approximately 20% of the consolidated global revenue, which is close $100 billion. The other business divisions that make up the $100 billion group include Power Systems, Social Infrastructure and Industrial Systems, Electronic Systems and Equipment, Construction Machinery, High Functional Materials and Components, Automotive Systems, Components and Devices, Smart Life and Ecofriendly Systems, Financial Services, Logistics and Other services.

Other than Hitachi Data Systems, The Information and Telecommunication Systems business division of Hitachi includes, Hitachi-Omron Terminal Solutions, Hitachi Computer Products (America), Hitachi Computer Products (Europe), Hitachi Systems, Hitachi Solutions, Hitachi Consulting Corporation, Hitachi Data Systems Corporation, Hitachi Information and Telecommunication Systems Global Holding.

The Information and Telecommunication Systems business division of Hitachi sells out Systems Integration, Consulting, Cloud Services, Servers, Storage, Software, Telecommunications and Network, ATMs, amongst others.

All business divisions

Information and Telecommunication Systems, Power Systems, Social Infrastructure and Industrial Systems, Electronic Systems and Equipment, Construction Machinery, High Functional Materials and Components, Automotive Systems, Components and Devices, Smart Life and Ecofriendly Systems, Financial Services, Logistics and Other services.

Social Infrastructure and Industrial Systems

Industrial Machinery and Plants, Water treatment systems, Escalators, Elevators, Railway Vehicles and Systems, Nuclear Power Generation System, Wind Power Generation System, Monitoring and Advanced Maintenance of Plant, Solar Power Generation System, Distribution and Transmission System

Electronic Systems and Equipment

Semiconductor and LCDs Manufacturing Equipment, Medical Electronics Equipment, Electronic Parts Manufacturing System, Test and Measurement Equipment, Power Tools, Broadcasting and Wireless Communications Systems, Medical and Inspection Systems

High Functional Materials and Components

Wires and Cables, Semiconductor and Display Related Materials, Specialty Steels, High Grade Casting Components and Materials, Copper Products, Circuit Boards and Materials, Magnetic Materials and Components


Excerpts from Gartner’s Market Guide for IoT Integration, June 2016

Hitachi is applying IoT and digital transformation solutions and business models into its industrial business divisions. (Pix: Hitachi)

IoT project implementers cite integration as a top technical challenge. To help determine which IoT integration offerings best match project requirements, IT leaders must understand that IoT integration requirements differ and that integration capabilities of IoT solutions vary widely. IoT integration is a combination of IoT device and data integration, back-end system integration, and third-party middleware integration. Directors of integration must address these requirements via a combination that includes, secure and reliable communications, application and data adapters, API management support, and translation. To fill in gaps in their IoT integration capabilities, IoT solution providers often rely on partners. Partner relationship can be helpful, but it could also add technical and commercial complexity to the project.

IoT implementers have cited IoT integration as a top technical challenge. Because of this challenge, many IoT project implementers will discover that IoT solutions on the market neither address all integration use cases, nor offer best of breed integration functionality. For example, some providers of IoT solutions excel at device integration but are deficient at back-end system integration, or vice versa. Some providers offer their own best of breed integration tools, while others partner with third-party technology providers to fill the gap. Nearly all IoT solution providers advocate an API-first approach to integration, meaning that they offer and heavily advocate the use of various APIs as a primary way to address IoT integration requirements. Few offer a comprehensive portfolio of prebuilt adapters to accelerate integration with commonly used applications.

One reason for functional gaps in integration capabilities is that many IoT solutions are in their first product generations. Another reason is that some providers have prioritised their investments on more obvious IoT-specific solution capabilities, such as IoT device support, data ingestion and analytics, or security. Gartner predicts that through 2018, half the cost of implementing IoT solutions will be spent on integration. Gartner recommends IoT project implementers prioritise their investment in integration technologies and skills to ensure they are sufficiently prepared to address wide range of integration requirements needed to assemble end-to-end IoT business solutions.

Integration means making independently designed applications and data work well together. Internet of Things integration more specifically describes the unique challenge of making new IoT devices, data, platforms and applications, as well as existing IT assets work well together in the context of implementing end-to-end IoT business solutions.

What IoT project heads should plan for

  • Plan for IoT integration to represent half the cost of implementing IoT projects
  • Determine IoT integration requirements and compare IoT integration capabilities of IoT solution providers
  • Be prepared to supplement available IoT integration capabilities with one or more third-party integration tools
  • Focus extra effort on IoT device provisioning because there are differences across IoT solutions
  • Through 2018, half the cost of implementing IoT solutions will be spent on integration
  • Through 2020, 75% of IoT projects will use some form of stand-alone, third-party, integration platform

Whom to involve while building end-to-end IoT solutions

IT megavendors

IT megavendors including IBM, Microsoft, Oracle and SAP, have invested in their integration strategy and technology over many years. They usually have a portfolio of best of breed solutions targeted at general-purpose application and data integration use cases, including internal, business-to-business and cloud service integration. Offerings from these providers are likely to be available both as a stand-alone integration product and as a tightly integrated product with their well-established business applications in their overall IT solution portfolio. IoT device integration, edge computing technologies and specific IoT data ingestion capabilities are more likely capabilities associated with relatively new IoT platform, solution offerings.

OT megavendors

OT megavendors including Bosch Software, GE, Hitachi Insight Group and Schneider Electric, have prioritised their development on IoT-specific capabilities, such as IoT device provisioning, data ingestion and analytics, and IoT platform-based IoT solution verticalisation. Relative to IT generalists, IoT integration best of breed capabilities of OT megavendors are more likely to be found closer to the edge in the form of strong IoT device ecosystems, flexible edge computing, including the ability to deploy logic and data at the edge, or in gateways or in the cloud, and mature support for IoT data streaming and real-time analytics. IoT offerings from these providers are more likely to support common OT protocols. These providers typically assume an API-first approach and often rely on partners to address best of breed integration requirements for cross-vertical business application integration.

System integrators

Providers with IoT-specific system integration offerings tend to approach IoT integration challenges with a comprehensive approach to integration that addresses not only IoT devices and data, but also end-to-end infrastructure integration needs that include back-end system and data, B2B e-commerce, and cloud service integration requirements. Providers will lead with preferred partners for specific integration scenarios, but they also often leverage their customers’ investments in existing integration infrastructure. Given that most IoT-specific service offerings are relatively new, expect that skills in IoT device connectivity and data ingestion will be relatively new as compared with the stereotypical deep subject matter expertise in back-end system integration. Providers include: Accenture, Capgemini, Deloitte, EY, Hewlett Packard Enterprise, IBM, Infosys, NTT Data, Tech Mahindra and Wipro.

IoT platform, edge specialists

IoT platform, edge specialists have prioritised on IoT platform capabilities or IoT edge capabilities. IoT integration capabilities tend to be focused more on IoT device connectivity and ecosystems and data ingestion and streaming, rather than on back-end system integration, in which there is often a heavy reliance on APIs for indigenous basic interoperability and security, and a reliance on partners to fill the general-purpose integration and technology gap. Providers include Amazon, Arrayent, Ayla Networks, Axiros, Cisco, Electric Imp, Eurotech, Intel, LogMeIn, OSIsoft, Particle, PTC, Redpine Signals, Solair and Zebra.

Integration specialists

Integration specialists do not generally offer an IoT platform, but offer a general-purpose integration solution, which plays a key role addressing IoT integration through the lens of IoT device connectivity and data ingestion or IoT project integration with existing back-end applications and data. They offer best of breed data translation, quality and normalisation across a wide range of integration use cases. They also offer typically a comprehensive portfolio of adapters for different applications, support for common IoT protocols, and some form of process or workflow orchestration to support process integration. IoT solution providers often partner with providers to fill integration functionality gaps. Providers include: Bit Stew Systems, MachineShop, Dell Boomi, Informatica, Magic Software Enterprises, Moskitos, MuleSoft, Skkynet, SnapLogic, Software AG, TIBCO Software and WSO2.

API management specialists

API management specialists fill a narrow but vital gap in the integration capabilities for many IoT solution providers. API management is often used in conjunction with traditional identity and access management solutions, and as a way of further constraining access to sensitive APIs to only qualified API consumers under well-defined policies. API management capabilities are often available as a built-in feature of IoT platforms, but these built-in capabilities do not typically offer best of breed capabilities. These requirements become essential when IoT endpoints and APIs proliferate in the context of expanded deployment of end-to-end IoT business solution projects that span from IoT device to IoT platform to mobile apps to back-end systems and data. API management tools can be used stand-alone, with IoT platforms or with other integration tools. Providers include: 3scale, Akana, Apigee, Axway, CA Technologies, Hitachi and TIBCO Software.

Hitachi is applying IoT and digital transformation solutions and business models into its industrial business divisions. (Pix: Hitachi)

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