Yoshiaki Hirabayashi, EVP Sales and Alliances
※Position at time of interview
The "silo problem" that hinders: The breakthrough for DX promotion is found in “Association "and "meaning" of data
Cognite AS (Headquartered in Norway, Co-founder and CEO: John Markus Lervik,), which attracts global investor attention, was founded in Norway in 2016. The company supports digital transformation (DX) of large and established companies in the manufacturing, energy, and infrastructure industries. The company provides the SaaS/PaaS platform that facilitates the asset management’s digitization.
We spoke with Cognite Corporation’s (Cognite’s Japanese subsidiary) president, Tetsuichi Tokusue, and the executive vice president (EVP) Sales and Alliances, Yoshiaki Hirabayashi, about how to address the "silo problem" in companies facing needed changes, and potential data utilization.
“Visualization” in a short time: Clients say “it’s like a dream”
For example, if you click on the photo of the generator in the factory, which is stored in the PC, relevant data will appear. When was it purchased? Who is in charge? How much did it cost? What is the residual value? How much power does it generate? Where is it provided to? ....... All the data about the generator is just a click away.
".”People on the ground say it's like a dream come true. When we show it to our clients' end users, they are really impressed. We often get responses like 'I didn't think we'd be able to do this.’ It's like we're living in an age where things like science fiction are possible.
This is what Cognite President Tetsuichi Tokusue has to say
Silicon Valley venture capitalists were quick to recognize its potential. Venture capitals which have invested billions of yen. This includes Accel and TCV, initial investors in Facebook and Netflix, respectively, have invested in Cognite.
"After five years in business the estimated market capitalization is already over 170 billion yen. Cognite is Norway's first unicorn company."
The founder, John Markus Lervik, is a well-known entrepreneur in Norway. The IT company he once founded was later acquired by Microsoft. He himself served as an executive officer at Microsoft, and then he left that company. He then founded several companies before funding Cognite in Norway in 2016..
"Norway is known for its North Sea oil fields, which have enriched the Norwegians. Petrochemicals, however, had been on a medium- to long-term slump. That is when the CEO of Aker, a company that explores North Sea oil fields, came to the founder of Cognite for advice. He said, "Let's do something together.”
And six months later, the idea of a business for large and established companies was born.
We can now see the status of machines around the world from our headquarters.
Companies involved in oil drilling possess hardware worth tens of billions of yen, and some up to a trillion yen. They realized that there was great potential in the DX of these assets.
“Cognite was born with Aker BP, a joint venture between Aker and the British Petroleum company, BP, holding 70% of stakes. The main feature of Cognite is that it can create a digital twin of a company's equipment using the company’s available data.”
Digital twin is a technology that reproduces a twin (copy) of the real space in the digital space based on information acquired from the real space. The reproduction enables preliminary simulations, analysis/optimization in a variety of contexts, which is then reflected back s to the real space.
“For example, Google updates its Google Maps data in real time by reflecting information posted by users, providing the latest information on congestion and stores.”
As business requires flexibility, immediacy, and the ability to respond to changes in the environment, the "digital twin" has become one of the key technologies, just as GAFA has.
Cognite's idea was to make the digital twin a reality in the fixed assets of heavy industry. However, the nature of the data collected from consumers that GAFA deals with is different from the data collected in the industrial sector. This is because the data collected for free from consumers may lack "meaning."
That's where Cognite comes in to improve productivity in the heavy industrial sector by "associating" and giving "meaning" to the collected data.
"Because of the high expectations for Cognite, we've also attracted some of the best talent in the world. Dozens of people started agile development to build prototypes, and in less than two years, we've completed a digital platform for a massive asset."
When you go digital, you can read your data anywhere in the world. You can share it with anyone and retrieve it whenever you want. You can immediately see what kind of situation a piece of equipment in a factory is in and what kind of output it is producing.
"We can now do that without being on site. It means that we can see the status of machines all over the world from our headquarters.”
You can change your corporate culture by de-siloing.
In addition, it is not simply the case that data is input. It also provides the foundation for DataOps, says Yoshiaki Hirabayashi, EVP Sales and Alliances.
"DataOps means that the people who manage the data and the people who use the data can work together to make rapid digital use of the data. In factories and other facilities, there is still a lot of data, but it's become siloed."
The various data have been managed in a disjointed manner.
"There's a lot of data that are stored separately and not linked together, so when you want to analyze something, it can take a long time to isolate the relevant data. With the Cognite platform, the collected data that are associated and given meaning. So, users can easily get to the data they're looking for, extract it, and put it to use."
This problem is not limited to factories. For example, accounting data are held by the accounting department, and sales data are held by the corporate planning department.
"Sometimes, having data has become the value of the organization. This is the reason for siloing. But this doesn't make the data come alive, and it doesn't enhance its value. By democratizing everything and making it freely available, we can achieve true digitalization and transform the enterprise.”
Not only can DataOps make you more productive and competitive, but they can also change your corporate culture.
"In fact, in Norway, we have succeeded in creating significant value in plant operations, including the transformation of the corporate culture.”
How can we reinvigorate Japan's manufacturing industry?
Data are not limited to numbers. Text, 3D information, video, and many other types of information can be captured on the motherboard.
“The information you take in is associated, contextualized, and stored by machine learning. So, it's automatically associated, and the data can be organized. Also, it's an open API, so it's easy to import data.”
As Aker's own efforts became known around the world, the world's largest oil companies, Saudi Aramco, and ExxonMobil, expressed interest. The first base was developed in Texas, USA. The second global location was in Japan.
“Japan does not have any companies involved in upstream oil, but it does have a manufacturing industry that dominated the world until the first half of the 21st century. In fact, the market for heavy industry is very large. How do we reinvigorate Japan's manufacturing industry? That's where we thought the Cognite platform could help.”
The equipment in heavy industry is enormous. There are millions of sensors in a single factory alone. But Cognite is not an expert in manufacturing plants. So Cognite's idea was to join forces with partners. First, a major plant manufacturer. And then a manufacturing consulting firm.
"What Cognite provides is not putting one easy-to-understand application in. It's a platform that goes all the way through and creates value across board. To help people understand that we thought it was important to create an ecosystem with our partners."
The system has already been introduced to a major chemical manufacturer in Japan. The purpose of the system was to combine and utilize data that had been managed on paper and was truly siloed.
"They're very happy with the system, and they especially like the fact that we're using AI to semi-automatically associate data. We've had a great response."
The Japanese market for heavy industry is huge. Even now, projects are moving forward one after another.
The attraction is the "credibility" of the office.
Mr. Tokusue and Mr. Hirabayashi worked at the Japanese subsidiary of a company that the founder, Mr. Lervik, had once started. After Microsoft acquired that company, they joined in together. The three later went on to separate careers but were approached again to join Cognite's expansion to Japan in 2019.There was a reason they chose EGG JAPAN as their office.
"Actually, the company I represented at my last job had been in here since 2015. That company was just about to vacate after an acquisition, and I knew exactly what this office had to offer, so I figured Cognite would be a good fit here, too."
The most attractive feature is its location, he said.
"We often work with major trading companies, but the headquarters of most of the companies we are involved with, including customers such as oil-related companies and chemical manufacturers, are located in this area. And of course, we have good access to transportation."
In a normal venture start-up, cash-flow management is severely limited and the company often starts with a small office, but for Cognite, which has a huge parent company, this was not a concern. Mr. Tokusue, who has been involved with starting up many new ventures, shares the following:
"Actually, that can be an unexpected stumbling block to growth. We've done a lot of start-ups, but it's tough to start from a single room in an apartment. Here, as the team grows, we can expand the room. What we also realize more than anything is the credibility of the office. If you're not well known, nobody knows where you are from. But just the fact that it is in the Shin-Marunouchi Building raises the level of credibility. This effect is much greater than we expected.”
"Since the building is operated by the Mitsubishi Estate; they can also introduce us to other companies in the Mitsubishi Group.”
The number of employees is still less than 20, but more than half of the engineers have master's degrees from Tokyo University or other universities. Some of them have even studied in Germany.
Every plant with a book value of tens of billions of yen or more in Japan has Cognite. Their medium- to long-term goal is to achieve such a state.
CETEC 2021 ONLINE オープニングイベント Keynote Speech IIIに
Cognite AS 共同創業者兼CEOの ジョン・マーカス・ラービックが登壇しております。
Interview and text by Toru Uesaka
Photo: Tomoyasu Osakabe
Editing: Kanae Maruyama
He started his career at IBM Japan and is a specialist in setting up Japanese subsidiaries of mainly Western IT companies. He holds a Master of Science in Computer Science from Stanford University.
After graduating from a U.S. university, he has held key sales positions at foreign vendors such as Verisign. His last position was Country Manager of MapR Technologies in Japan.
Since its inception, Cognite has continued to support the digital transformation of the manufacturing industry. We provide solutions that integrate and associate (contextualize) robots, 3D data, and other sensor data from the shop floor to enable the use of data in manufacturing. We work with our manufacturing customers to deliver contextualized data to them so that they can create value using their data.