Hitachi Digital Services: IT/OT Convergence Across the Ecosystem

Principal Analyst Bozhidar Hristov joins “TBR Talks” host Patrick Heffernan for a discussion on Hitachi Digital Services’ view into Industry 5.0. Looking beyond the marketing spin of Industry 5.0, the pair discuss how Hitachi Digital Services leverages its engineering expertise, industrial know-how and IT capabilities to bring solutions to the market with its partners.

“I think just the way that Hitachi framed its value proposition — I think they coined it as Industry 5.0 and it’s IT plus OT plus AI — is a good way to start thinking about bringing the parties together, and obviously, that’s the part of the messaging, part of the marketing approach. I get that part, but kind of peeling back behind what’s actually — what’s the meaning behind the Industry 5.0, what are Hitachi’s capabilities — it’s really falling back on its legacy expertise and really being part of that engineering cycle,” said Hristov.

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Edited by Haley Demers

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Art by Amanda Hamilton Sy

Hitachi Digital Services: IT/OT Convergence Across the Ecosystem

TBR Talks Host Patrick Heffernan: Hi everyone, I’m Patrick Heffernan from Technology Business Research and I’m here with my colleague Boz Hristov for this very special, quick episode because we recently spent time with Hitachi Digital Services, a company that we don’t traditionally cover and we haven’t spent a lot of time with, but we were both intrigued by everything that we heard over a couple of days out in Dallas, I had to remember where we were Boz, Dallas. And so, we’re going to publish a special report on the event, what we call at TBR an Event Perspective, but I wanted to think ahead a little bit to, who ought to be reading this report. Because again, we haven’t spent a lot of time with them, this is new for us and possibly new for our clients and folks who typically read our research. 

So, three things came to mind for me Boz. One, any company that’s working in the IT/OT convergence, any company that’s doing that should be reading this report. Second, the management consultancies that we talk about and talk with very frequently. And then third, the technology partners, particularly the hyperscalers and the ISV’s, again the big global ones that we talk to all the time. So, knowing what you know from the time we spent with Hitachi and thinking about those three different groups, what are some of the reasons why? Let’s start with IT/OT convergence, like, why is that going to be- why is this report going to be helpful for them?

Bozhidar Hristov, TBR Principal Analyst: Yeah, absolutely. I think just the way that Hitachi framed its value proposition, I think they coined it as Industry 5.0 and it’s IT plus OT plus AI, is a good way to start thinking about bringing the parties together and obviously that’s the part of the messaging, part of the marketing approach. I get that part, but kind of peeling back behind what’s actually- what’s the meaning behind the Industry 5.0, what are Hitachi’s capabilities, it’s really falling back on its legacy expertise and really being part of that engineering cycle. Hitachi as a company, as a conglomerate, you know, as a massive conglomerate that has brands in pretty much every facet of the economy, investing in a lot of the physical products and investing understanding into what does it take to be a product engineering company, makes it an easy, you know, easier transition as you’re trying to bring in the OT and speaking the OT language. Now, the IT part becomes, you know, the important element here, as Hitachi Digital Services outside the bigger broader Hitachi has start investing in its IP capabilities and skills training, investing in partner technologies, understanding the implementation side, the services side and so forth, so then obviously comes the AI component that everyone is investing in, and they certainly are not shy of investing as well as having the know how of again the bigger brother Hitachi. So, it’s- I would say the IT/OT is buyer and reader probably OT have more familiarity with Hitachi but bringing the Hitachi Digital Services element to the mix wrapped in AI offerings, you know, certainly will elevate those discussions. So having the DNA, having the background of engineering, knowing the OT side of the house and now bringing in the IT capabilities that they have been expanding and enhancing through experience through the client use cases because it will be of use to understand what else can Hitachi Digital Services do for traditional OT buyer and how they can actually help them to connect better with IT buyers.

Patrick: Yeah, and I I totally agree that the IT plus OT plus AI is just a really smart way to frame what’s happening in the IT/OT conversion space. And then the last thing you said I think is really important when we think about the management consultancies and why should they care? Hitachi Digital Services is not large, so they’re not going to be stealing revenue from anybody, but they are going to win, and they have been winning, consulting engagements with known clients, with existing clients because they’re on the ground, because they have that expertise, because they provide something that a lot of management consultancies can provide, which is the ability to execute, the ability to actually provide the services all the way through, particularly again in the heavy manufacturing or in the spaces where they play, and I guess that’s the other reason why I think it’s important for the management consultancies to consider Hitachi Digital Services because they were very clear that there are certain industries where they have strengths, they have experience, they have the permission to play. And so, for the management consultancies looking to perhaps expand their footprint in automotive, in rail, in transportation, in utilities and energy, in all those areas, they are- they could be a really solid partner for a consultancy to say we can do a lot of this work, but we also can bring in our friends from Hitachi Digital Services.

Boz: Yeah, absolutely. I think- we know some of the major consultancies and IT services peers have already- product engineering has been double bonded to them, looking at the OT as a new buyer persona that can pursue, you know, discussions with certainly many have not shied away. Some of the IT services companies like Accenture and Capgemini and the HCLs of the world certainly have done a little more aggressively, so maybe perceived as more of a competitor to Hitachi in that sense. But then the likes of PwC and Deloitte, they do have, you know, that C-suite relationship that in an attached-with Hitachi can be a little bit more little, with Hitachi Digital Services, can be a bit more partner-like or co-opetitive-like set up than just pure competition.

Patrick: Yeah. And, they speak to the OT buyer in a way that that the management consultancies don’t. So, then the last group is the hyperscalers and the huge ISVs, the Salesforces and ServiceNows of the world and I think there, Hitachi Digital Services is not among the top ten partners for those, you know, for AWS and Microsoft and SAP and the rest. But they’re growing, and they’re growing in a way that I think should be something that those companies keep an eye on and maybe look to say, as we reevaluate our different relationships, as we evaluate our ecosystems, we look to consulting and IT services partners, is this somebody we should be partnering with because of the capabilities they’re bringing, particularly again around IT and the OT buyer and particularly around that convergence, that blending of AI into it. Yes, that they have companies and partners that can do that with them. But this is one that maybe has a unique set of- unique combination of skills and capabilities and current clients, to be honest.

Boz: Yeah, you made an important point. They may not be the number one partner. You may hear a little bit of pushback from Hitachi on that I guess.

Patrick: Maybe.

Boz: But I can put that big Asterix there, that’s in the TBR view of the world. 

Patrick: Yeah. 

Boz: And the way we scale the practices of the large GSIs and looking to the- when we do our data modeling and understanding how- what’s the size of those practices, and how are they changing, but they do have some strong relationships and they’ve been recognized by some of those partners as top partners for a particular domain area and whatnot. But beyond the marketing that Hitachi is looking for why the likes of Amazon or SAP or Oracle should be caring about Hitachi, I mean again they bring in that technology know how, the stack, an understanding of how it all fits together, how it all you know, essentially stitches together. Especially as the worlds, the macro trend, I should say, not the world, but the macro trend in the IT space is moving towards the physical AI.

Patrick: Right.

Boz: So, Hitachi provides a really strong conduit into the physical AI discussion in terms of how they can actually connect, you know, the hyperscalers, they provide the backbone infrastructure, the ISV partners can certainly provide those layers of application modernization and optimization everyone is talking about. But Hitachi actually makes that better connection into that physical AI world that, you know, the OT buyer can actually be able to have a better position with. So, again it’s the physical AI, is kind of the North Star at the moment for most of the vendors that we track, and I think when it comes to the relationship between Hitachi Digital Services and the hyperscalers and ISVs, they can be that accelerating lane essentially, their conduit to get quicker, faster.

Patrick: Right.

Boz: And provide more opportunities to them.

Boz: Oh yeah.

Final thoughts

Patrick: Excellent Boz. Thank you very much, and thanks everybody. I know, a quick sort of quick little in-between seasons episode, but really wanted to get this out there to complement the Special Report we’re putting out. Thank you.

Boz: Thank you.

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