Handbook I 4.0 SMARTSystems

Handbook of Industry 4.
0
and SMART Systems
Handbook of Industry 4.0
and SMART Systems
Diego Galar Pascual

Pasquale Daponte
Uday Kumar
CRC Press
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Contents
Preface...................................................................................................................................................... vii
Authors....................................................................................................................................................... xi
1. Fundamentals of Industry 4.0.......................................................................................................... 1
2. SMARTness and Pervasive Computing........................................................................................ 47
3. The Industry 4.0 Architecture and Cyber-Physical Systems..................................................... 79
4. Cloud Computing, Data Sources and Data Centers.................................................................. 119
5. Big Data Analytics as Service Provider...................................................................................... 155
6. IoT and the Need for Data Rationalization................................................................................. 189
7. OPERATOR 4.0............................................................................................................................ 239
8. Cybersecurity and Risk................................................................................................................ 287
9. Industry 4.0 across the Sectors.................................................................................................... 349
Index....................................................................................................................................................... 365
v
Preface
Modern market becomes more global and less national or local. Developed world market is reflected in
the wide range of new products, the rapid obsolescence of products, and the emergence of new products,
high quality standards, short delivery, and decreasing costs. Such conditions are very difficult for the
classical industrial production we have today, and thanks to the 29 progress of modern technological
achievements, such as communication networks and the Internet, that force us to develop and introduce
a new modern era of industrial production based on communicational informational linking of manufac-
turers and customers. This transformative shift in production and manufacturing paradigm is popularly
termed as Industry 4.0. Industry 4.0 has elicited much interest from both industry and academia. A recent
literature survey identified the basic concept, perspectives, key technologies, and industrial applications
of Industry 4.0 and examined its challenges and future trends [1,2] . However, no work has established
a systematic framework of smart manufacturing systems for Industry 4.0 that guides academic research
and industrial implementation until now. To fill the gap, this study proposes a conceptual framework for
Industry 4.0 and Smart Systems.
Actually many disruptive technologies, such as Cloud Computing, Internet of Things (IoT), big data
analytics, and artificial intelligence, have emerged. These technologies are permeating the manufacturing
industry and make it smart and capable of addressing current challenges, such as increasing customized
requirements, improved quality, and reduced time to market. An increasing number of sensors are being
used in equipment (e.g., machine tools) to enable them to self-sense, self-act, and communicate with one
another. Through these technologies, real-time production data can be obtained and shared to facilitate
rapid and accurate decision making. The connection of physical manufacturing equipment and devices
over the Internet together with big data analytics in the digital world (e.g., the cloud) has resulted in the
emergence of a revolutionary means of production, namely, Cyber Physical Production Systems (CPPS).
CPPS are a materialization of the general concept CPS in the manufacturing environment. The intercon-
nection and interoperability of CPS entities in manufacturing shop floors together with analytics and
knowledge learning methodology provide an intelligent decision support system. The widespread appli-
cation of CPS (or CPPS) has ushered in the fourth stage of industrial production, namely, Industry 4.0.
CPPS consist of autonomous and cooperative elements and subsystems, connecting communications
and interactions in different situations, at all levels of production, machines, processes to manufacturing,
and logistics networks. Their operational modeling and forecasting allows the implementation of a series
of basic applied oriented research tasks, and above all controlled systems at any level. The basic assump-
tion in terms of CPPS is reflected in the research and defining relations through the prism of autonomy,
cooperation, optimization and response to the assigned tasks. By integrating analytic and simulation-
based approaches, this prediction may be described in greater detail than ever before. Such systems must
confront a series of new challenges in terms of operational sensor networks, smart actuators, databases
and many others, above all, communication protocols.
CPPS will enable and support the communication between humans, machines, and products alike.
The elements of a CPPS are able to acquire and process data, and can self-control certain tasks and
interact with humans via interfaces.
Although extensive effort continues to be exerted to make systems smart, smart systems do not have a
widely accepted definition. In Industry 4.0, CPPS can be regarded as smart manufacturing systems. CPPS
comprise smart machines, warehousing systems, and production facilities that have been developed digi-
tally and feature end-to-end Information and Communication Technology (ICT)-based integration from
inbound logistics to production, marketing, outbound logistics, and service. Smart manufacturing sys-
tems can generally be defined as fully integrated and collaborative manufacturing systems that respond
in real time to meet the changing demands and conditions in factories and supply networks and satisfy
vii
viii Preface
varying customer needs. Key enabling technologies for smart manufacturing systems include CPS, IoT,
Internet of Services (IoS), cloud-based solutions, Artificial Intelligence (AI), and Big Data Analytics.
Today we are on the threshold of a new industrial revolution, the revolution by which digital networks
are related to operating values in the intelligent factory, and that includes everything from the initial
idea, through design, development, and manufacture, to maintenance, service, and recycling. Industries
4.0 include horizontal integration of data flow between partners, suppliers, and customers, as well as
vertical integration within the organization’s frames – from development to final product. It merges the
virtual and the real world. The result is a system in which all processes are fully integrated – system in
information in real-time frame. The speed and rate of changes in consumer trends will be a significant
driver of Industry 4.0.
Since the products are configured to respond to the preferences of individual users, production must
be more flexible and must be shorter.
The point is to create value for customers, and that means to involve them in the process from the
beginning. Of course, the companies that use the highly efficient mass production to achieve economies
of scale are in benefit, while at the same time they have the opportunity to offer a high level of adaptation.
The industries in developed countries in Europe and North America are based on the exploitation of
CPS through technology based on the integration of wireless systems, wireless control system, machine
learning, and production-based sensors. Such industries are developing a national platform for new pro-
duction systems and new age of Industry4.0-based access to the Internet and CPS.
CPS are a new generation of systems that integrate computer and physical abilities. With the combi-
nation of cyber systems and physical systems, user semantic laws can be traced and thus communicate
with people. Cybernetic systems are a summation of logic and sensor unit, while the physical systems
are a summation of actuator units. Through the ability to interact and expand capabilities of the physical
world using computing power, communication technologies and control mechanisms, CPS allow feed-
back loops, improving production processes and optimum support of people in their decision-making
processes. By using the corresponding sensor technology, CPS are able to receive direct physical data
and convert them into digital signals. They can share this information and access the available data that
connect it to digital networks, thereby forming an IOT.
On the other hand, production of new generation should be adjusted to changeable conditions and
issues put before it. Optimization of plant operations will be implemented by improving and speeding
up communications. Starting points are the solutions offered by a vision of “smart environment” for
production.
In order to create a large-scale smart system, smart devices are used. The term “smart” (often used
to mark intelligence) seems to be applicable in different contexts, because its meaning with respect to
objects is not yet clearly defined.
Smart, in some contexts, refers to an independent device, which usually consists of the sensor, and/or
to activate the microprocessor and transceiver. However, adjective smart is used to characterize and that
contributes to the implementation of additional meanings, which introduced multi-platform communi-
cation and increase of its computing capacity. Intelligence is revealed through cooperation in networks
with other smart devices, which have the possibility to check the system updates and decide whether to
act on them or not. Such a network is called smart grid. They may find a reference to smart objects as
objects that have the ability to connect the stored data, as well as offer access to it for human or machine’s
needs. There are so much smart products that are equipped with memory options so that they can be
understood as a kind of living product.
This era, which is which sensors and chips identify and locate products, and in which products know
their history and current status. This network of machines, storage systems, and manufacturing plants
that will exchange inevitably ahead of us is by the scientific circles of developed European countries
cooled new industrial revolution or Industry 4.0.
The modern process of globalization is characterized by its essential dimensions. First, it marks the
objective planetary processes:
Preface ix
• The essence of technological evolution; compression of time and space, reducing the distance
and time required for more branched, global communication.
• Close connection and interdependence of societies; everything is in a wider range of activities
that have become transnational, and cannot be managed solely within the individual states.
Globalization means the spread of identical form (industrialism and then post-industrialism,
market economy and multi-party political system) to almost the entire social world space.
Retrospectively looking at previous revolutionary development of manufacturing from its beginning

until today, we can see that the period between these revolutions drastically reduced and that we are
walking rapid steps into the future. The emergence of the Internet and Internet technologies of modern
times undoubtedly made a big progress in all human activities. It is an inevitable integration into produc-
tion systems, which will further affect the increase in the complexity of the existing production systems,
as well as new systems coming to us, such as CPPS. The development of production systems in the spirit
of CPPS, use of digitization and e-business imperative is to aspire to smart factories – factories of the
future.
Machines take up the human role in factories. But still the human integration is inevitable with a digi-
tal, electronic, virtual world, so that our work is preceded by further development of production systems
in terms of reliability, efficiency, safety, etc. The current and future development is characterized by
profound and rapid scientific and technological changes, which result with reindustrialization existing
industries and the revitalization of a wide range of human activities and public functions in private life.
Technological development, as the most important factor and an important prerequisite of general
development, presupposes the development and application of new technologies and imposes the need
for restructuring of existing , as well as designing new plants with new settings (fractal, virtual factory).
Therefore, the necessary rapid and immediate change in the existing situation is needed, and it must
include:
• General support in defining development strategies and policies of its realization,

• Strategically oriented factors, research institutions, and supporting institutions, and
• Industrially organized development of new scientific knowledge and their direct transfer into
the economy of the region. Simultaneous changes are possible only on the basis of unique
development strategy in which an important place should take the establishment of regional ,
especially innovation networks of smart factory, which should be the generator of new prod-
ucts, services, and job creation.
The book covers a wide range of topics, including Fundamentals and Architecture of Industry 4.0, Cyber
Physical Systems (CPS), Smartness and Pervasive Computing, Cloud Computing, Big Data Analytics,
Cybersecurity and Risks, and finally Industry 4.0 across the sectors. A number of demonstrative sce-
narios are presented, and current challenges and future research directions are discussed.
We expect that the book will be useful for the beginners as well as for the researchers working in the
field of Industry 4.0 and smart systems
Authors
Diego Galar Pascual is a Professor of Condition Monitoring in the Division of Operation and
Maintenance Engineering at Luleå University of Technology (LTU), where he is coordinating several
H2020 projects related to different aspects of cyber-physical systems, Industry 4.0, IoT, or industrial Big
Data. He was also involved in the SKF UTC center located in Lulea focusing on SMART bearings and
also actively involved in national projects with the Swedish industry or funded by Swedish national agen-
cies such as Vinnova. He has been involved in the raw materials business of Scandinavia, especially with
mining and oil and gas for Sweden and Norway, respectively. Indeed, LKAB, Boliden or STATOIL have
been partners or funders of projects in the CBM field for specific equipment such as loaders, dumpers,
rotating equipment, linear assets, and so on.
He is also the principal researcher in Tecnalia (Spain), heading the Maintenance and Reliability
research group within the Division of Industry and Transport.
He has authored more than 500 journal and conference papers, books, and technical reports in the
field of maintenance, working also as a member of editorial boards, scientific committees, and chairing
international journals and conferences and actively participating in national and international commit-
tees for standardization and R&D in the topics of reliability and maintenance.
In the international arena, he has been a Visiting Professor at the Polytechnic of Braganza (Portugal),
University of Valencia, NIU (USA) and the Universidad Pontificia Católica de Chile. Currently, he is
Visiting Professor at the University of Sunderland (UK), University of Maryland (USA), University of
Stavanger (NOR), and Chongqing University (China).
Pasquale Daponte was born in Minori (SA), Italy, on March 7, 1957. He obtained his bachelor’s degree
and master’s degree “cum laude” in Electrical Engineering in 1981 from the University of Naples, Italy.
He is a Full Professor of Electronic Measurements at the University of Sannio—Benevento.
From 2016, he is the Chair of the Italian Association on Electrical and Electronic Measurements. He is
Past President of IMEKO.
He is a member of I2MTC Board, Working Group of the IEEE Instrumentation and Measurement
Technical Committee N°10 Subcommittee of the Waveform Measurements and Analysis Committee,
IMEKO Technical Committee TC-4 “Measurements of Electrical Quantities,” Editorial Board
of Measurement Journal, Acta IMEKO and of Sensors. He is an Associate Editor of IET Science
Measurement & Technology journal.
He has organized some national or international meetings in the field of Electronic Measurements and
European cooperation, and he was the General Chairman of the IEEE Instrumentation and Measurement
Technical Conference for 2006, and Technical Programme Co-Chair for I2MTC 2015.
He was a co-founder of the IEEE Symposium on Measurement for Medical Applications MeMeA; now,
he is the Chair of the MeMeA Steering Committee (memea2018.ieee-ims.org). He is the co-founder of the
IEEE Workshop on Metrology for AeroSpace (www.metroaerospace.org), IEEE Workshop on Metrology
for Archaeology and Cultural Heritage (www.metroarcheo.com), IMEKO Workshop on Metrology for
Geotechnics (www.metrogeotechnics.org), IEEE Workshop on Metrology for the Sea (www.metrosea.org),
and IEEE Workshop on Metrology for Industry 4.0 and IoT (www.metroind40iot.org).
He is involved in some European projects. He has published more than 300 scientific papers in journals
and presented papers at national and international conferences on the following subjects: Measurements
and Drones, ADC and DAC Modelling and Testing, Digital Signal Processing, and Distributed
Measurement Systems.
He received the award for the research on the digital signal processing of the ultrasounds in echo-
ophthalmology in 1987 from the Italian Society of Ophthalmology, the IEEE Fellowship in 2009, the
Laurea Honoris Causa in Electrical Engineering from Technical University “Gheorghe Asachi” of
xi
xii Authors
Iasi (Romania) in 2009, “The Ludwik Finkelstein Medal 2014” from the Institute of Measurement and
Control of United Kingdom, and the “Career Excellence Award” from the IEEE Instrumentation and
Measurement Society “For a lifelong career and outstanding leadership in research and education on
instrumentation and measurement, and a passionate and continuous service, international in scope, to the
profession” in May 2018, and IMEKO Distinguished Service Award in September 2018.
Uday Kumar is Chair Professor of Operation and Maintenance Engineering, Director of Research and
Innovation (Sustainable Transport), and Director of Luleå Railway Research Center at Luleå University
of Technology, Luleå, Sweden.
His teaching, research, and consulting interests are equipment maintenance, reliability and maintain-
ability analysis, product support, life cycle costing (LCC), risk analysis, system analysis, eMaintenance,
and asset management.
He is a Visiting Faculty at the Center of Intelligent Maintenance System (IMS) – a center sponsored by
National Science Foundation, Cincinnati, USA, since 2011; External Examiner and Program Reviewer
for Reliability and Asset Management Program of the University of Manchester; Distinguished Visiting
Professor at Tsinghua University, Beijing; honorary professor at Beijing Jiao Tong University, Beijing; etc.
Earlier, he has been a Visiting Faculty at Imperial College London; Helsinki University of Technology,
Helsinki; University of Stavanger, Norway; etc.
He has more than 30 years of experience in consulting and finding solutions to industrial problems,
directly or indirectly related to maintenance of engineering asserts. He has published more than 300
papers in international journals and conference proceedings dealing with various aspects of maintenance
of engineering systems, and has coauthored four books on Maintenance Engineering and contributed to
World Encyclopaedia on Risk Management.
He is an elected member of Royal Swedish Academy of Engineering Sciences.
1
Fundamentals of Industry 4.0
CONTENTS
1.1 Introduction....................................................................................................................................... 3
1.2 Industry 4.0....................................................................................................................................... 4
1.2.1 Definition of Industry 4.0.................................................................................................... 5
1.2.2 What Is Industry 4.0?.......................................................................................................... 5
1.2.2.1 Industry 4.0—What Is It?................................................................................... 5
1.2.2.2 Talking about a Revolution: What Is New in Industry 4.0?............................... 6
1.2.2.3 On the Path to Industry 4.0: What Needs to Be Done?..................................... 6
1.2.3 Key Paradigm of Industry 4.0............................................................................................. 6
1.2.4 Industry 4.0 Conception...................................................................................................... 7
1.2.4.1 Five Main Components of Networked Production............................................ 7
1.2.5 Framework of Industry 4.0: Conception and Technologies................................................ 8
1.2.6 Nine Pillars of Technological Advancement...................................................................... 8
1.2.6.1 Big Data and Analytics...................................................................................... 9
1.2.6.2 Autonomous Robots..........................................................................................11
1.2.6.3 Simulation.........................................................................................................11
1.2.6.4 Horizontal and Vertical System Integration.....................................................11
1.2.6.5 Industrial IoT.....................................................................................................11
1.2.6.6 Cybersecurity................................................................................................... 12
1.2.6.7 The Cloud......................................................................................................... 12
1.2.6.8 Additive Manufacturing................................................................................... 12
1.2.6.9 Augmented Reality........................................................................................... 12
1.2.7 Macro Perspective of Industry 4.0.................................................................................... 12
1.2.8 Micro Perspective of Industry 4.0......................................................................................14
1.2.9 Industry 4.0 Components.................................................................................................. 15
1.2.9.1 Cyber-Physical Systems (CPS)......................................................................... 15
1.2.9.2 Internet of Things............................................................................................. 15
1.2.9.3 Internet of Services...........................................................................................16
1.2.9.4 Smart Factories.................................................................................................17
1.2.10 Industry 4.0: Design Principles..........................................................................................17
1.2.10.1 Interoperability..................................................................................................17
1.2.10.2 Virtualization....................................................................................................18
1.2.10.3 Decentralization................................................................................................18
1.2.10.4 Real-Time Capability........................................................................................18
1.2.10.5 Service Orientation...........................................................................................18
1.2.10.6 Modularity.........................................................................................................18
1.2.11 Impact of Industry 4.0........................................................................................................18
1.2.11.1 Quantifying the Impact: Germany as an Example...........................................18
1.2.11.2 Producers: Transforming Production Processes and Systems......................... 19
1.2.11.3 Manufacturing-System Suppliers: Meeting New Demands and Defining
New Standards................................................................................................. 21
1
2 Handbook of Industry 4.0 and SMART Systems
1.2.12 The Way Forward.............................................................................................................. 21

1.2.12.1 Producers Must Set Priorities and Upgrade the Workforce............................. 22
1.2.12.2 Manufacturing-System Suppliers Must Leverage Technologies...................... 22
1.2.12.3 Infrastructure and Education Must Be Adapted.............................................. 22
1.3 RAMI 4.0 (Reference Architecture Model Industry 4.0)............................................................... 23
1.3.1 RAMI 4.0.......................................................................................................................... 23
1.3.2 Additional Details of RAMI 4.0....................................................................................... 24
1.3.2.1 Function of Layers on Vertical Axis................................................................ 24
1.3.2.2 Function of Layers on the Horizontal Left Axis.............................................. 25
1.3.2.3 Hierarchical System Architecture in Industry 4.0........................................... 26
1.3.3 Industry 4.0 Component Model........................................................................................ 26
1.3.3.1 Specification of the Industry 4.0 Component Model....................................... 27
1.4 Servitization.................................................................................................................................... 29
1.4.1 The Concept of Servitization............................................................................................ 29
1.4.2 Defining Servitization....................................................................................................... 30
1.4.2.1 Drivers of Servitization.....................................................................................31
1.4.3 Features of Servitization................................................................................................... 32
1.4.4 Current State of Servitization and Impacts from Industry 4.0......................................... 32
1.4.5 Industry 4.0 Services......................................................................................................... 33
1.4.5.1 Industry 4.0 Servitization Framework............................................................. 33
1.5 Product Service-System (PSS)........................................................................................................ 34
1.5.1 Definition of a PSS............................................................................................................ 34
1.5.2 Features of a PSS.............................................................................................................. 35
1.5.2.1 Product-Oriented PSS (PoPSS)........................................................................ 37
1.5.2.2 Use-Oriented PSS (UoPSS)............................................................................. 37
1.5.2.3 Result-Oriented PSS (RoPSS).......................................................................... 38
1.5.3 Why PSS?.......................................................................................................................... 38
1.5.3.1 Environmental Rationales................................................................................ 39
1.5.3.2 Economic Rationales........................................................................................ 40
1.5.3.3 Customer-Driven Rationales.............................................................................41
1.5.3.4 Technological Drivers.......................................................................................41
References................................................................................................................................................. 42
LIST OF FIGURES
Figure 1.1 Main technologies of Industry 4.0...................................................................................... 8

Figure 1.2 Nine advances transforming industrial production............................................................. 9
Figure 1.3 Industry 4.0 is changing traditional manufacturing relationships.................................... 10
Figure 1.4 Macro perspective of Industry 4.0.................................................................................... 13
Figure 1.5 Micro perspective of Industry 4.0......................................................................................14
Figure 1.6 In Germany, Industry 4.0 will generate significant productivity gains............................ 20
Figure 1.7 In Germany, Industry 4.0 will lead to increased manufacturing employment................. 21
Figure 1.8 RAMI 4.0 model................................................................................................................ 24
Figure 1.9 New control pyramid of RAMI 4.0................................................................................... 26
Figure 1.10 Industry 4.0 component model.......................................................................................... 27
Figure 1.11 Industry 4.0 component..................................................................................................... 28
Fundamentals of Industry 4.0 3
Figure 1.12 Repository of the digital factory........................................................................................ 29

Figure 1.13 I4 servitization framework................................................................................................ 33
Figure 1.14 Evolution of the product-service system concept.............................................................. 36
Figure 1.15 (a) Traditional purchase of photocopier; (b) purchase of a document management
capability........................................................................................................................... 37
Figure 1.16 Product-service systems.................................................................................................... 38
Figure 1.17 PSS exemplification........................................................................................................... 39
Figure 1.18 Smiling curve in a servitization perspective..................................................................... 40
LIST OF TABLES
Table 1.1 Trends and expected developments in value creation factors................................................16

Table 1.2 Design principles of each industry 4.0 component................................................................17
Table 1.3 Servitization definitions........................................................................................................ 30
Table 1.4 Popular definitions of a product-service system................................................................... 35
1.1 Introduction
Industry 4.0 is one of the most frequently discussed topics among practitioners and academics today.
For example, the German federal government announced Industry 4.0 as one of the key initiatives of its
high-tech strategy in 2011 (Kagermann et al., 2013). Since then, numerous academic publications, practi-
cal articles and conferences have focused on the topic (Hermann et al., 2015).
The fascination for Industry 4.0 is twofold. First, for the first time, an industrial revolution has been
predicted a priori, not observed ex-post (Drath, 2014). This provides opportunities for companies and
research institutes to actively shape the future. Second, the economic impact of this industrial revolu-
tion is supposed to be huge, as Industry 4.0 promises substantially increased operational effectiveness
as well as the development of entirely new business models, services and products (Kagermann et al.,
2013; Kagermann et al., 2014; Kempf et al., 2014). A recent study has estimated that these benefits will
have contributed as much as 78 billion euros to the German GDP by the year 2025 (Bauer et al., 2014).
Germany will not be the sole country to profit; similar benefits are expected throughout the world.
With Industry 4.0 becoming a top priority for many research centers, universities and companies within
the past three years, the manifold contributions from academics and practitioners have made the mean-
ing of the term more blurry than concrete (Bauernhansl et al., 2014). Even the key promoters of the idea,
the “Industry 4.0 Working Group” and the “Plattform Industry 4.0,” only describe the vision, the basic
technologies the idea aims at and selected scenarios (Kagermann et al., 2013). They do not provide a
clear definition. As a result, a generally accepted definition of Industry 4.0 has not been published to date
(Bauer et al., 2014).
According to Jasperneite et al. (2012), scientific research is always impeded if clear definitions are
lacking, as any theoretical study requires a sound conceptual and terminological foundation. Companies
also face difficulties when trying to develop ideas or take action, but are not sure what exactly for. “Even
though Industry 4.0 is one of the most frequently discussed topics these days, I could not explain to
my son what it really means,” a production site manager with automotive manufacturer Audi puts it.
This comment reflects the finding of a recent study that “most companies in Germany do not have a
clear understanding of what Industry 4.0 is and what it will look like” (eco—Verband der deutschen
Internetwirschaft, 2014).
As the term is unclear, companies are struggling when it comes to identifying and implementing
Industry 4.0 scenarios. Design principles explicitly address this issue by providing a “systemization of
knowledge” (Gregor et al., 2009) and describing the constituents of a phenomenon. In this way, design
principles support practitioners by developing appropriate solutions. From an academic perspective,
design principles are the foundation of design theory (Gregor et al., 2002). However, we could not find
any explicit Industry 4.0 design principles during our search of the literature (Hermann et al., 2015).
This chapter aims to fill this gap in the research. Based on a literature review, it provides a definition
of Industry 4.0 and identifies six design principles that companies should consider when implementing
Industry 4.0 solutions (Hermann et al., 2015).
1.2 Industry 4.0

The term “Industry 4.0” is used for the industrial revolution taking place currently. This industrial revo-
lution has been preceded by three other industrial revolutions. The first was the introduction of mechani-
cal production facilities starting in the second half of the eighteenth century; this intensified throughout
the nineteenth century. The introduction of electricity and the division of labor (i.e., Taylorism) in the
1870s led to the second industrial revolution. The third industrial revolution, also called “the digital
revolution,” started in the 1970s, when advanced electronics and information technology (IT) developed
the automation of production processes (Hermann et al., 2015).
The term “Industry 4.0” was introduced in Germany in 2011, when an association of representatives
from business, politics and academia promoted the idea as an approach to strengthening the competi-
tiveness of the manufacturing industry (Kagermann et al., 2011). The German federal government sup-
ported the idea by announcing that Industry 4.0 would be an integral part of its “High-Tech Strategy
2020 for Germany” initiative, aimed at technological innovation leadership. The subsequently formed
“Industry 4.0 Working Group” developed recommendations for implementation; these were published in
April 2013 (Kagermann et al., 2013). In this publication, Kagermann et al. (2013) describe their vision
of Industry 4.0 as follows.
In the future, businesses will establish global networks that incorporate their machinery, warehousing
systems and production facilities in the shape of cyber-physical systems (CPS). In the manufacturing envi-
ronment, these CPS comprise smart machines, storage systems and production facilities capable of autono-
mously exchanging information, triggering actions and controlling each other independently. This facilitates
fundamental improvements to the industrial processes involved in manufacturing, engineering, material
usage and supply chain and life cycle management. The smart factories that are already beginning to appear
employ a completely new approach to production. Smart products are uniquely identifiable, may be located
at all times and know their own history, current status and alternative routes to achieving their target state.
The embedded manufacturing systems are vertically networked with business processes within factories and
enterprises and horizontally connected to dispersed value networks that can be managed in real time—from
the moment an order is placed right through to outbound logistics. In addition, they both enable and require
end-to-end engineering across the entire value chain (Kagermann et al., 2013).
These ideas built the foundation for the Industry 4.0 manifesto published in 2013 by the German
National Academy of Science and Engineering (Acatech, 2013).
The term is currently used globally. At the European level, the public–private partnership for Factories
of the Future (FoF) addresses and develops Industry 4.0-related topics (European Commission, 2015).
In the United States, Industry 4.0 is promoted by the Industrial Internet Consortium (IIC) (Stock and
Seliger, 2016).
The paradigm of Industry 4.0 has the following three dimensions (Industry 4.0: Whitepaper FuE-
Themen, 2015; Acatech, 2015; VDI/VDE-GMA, 2015a):
1. Horizontal integration across the entire value creation network,

2. End-to-end engineering across the entire product life cycle and
3. Vertical integration and networked manufacturing systems.
Horizontal integration across the entire value creation network includes cross-company and internal
company intelligent cross-linking and digitalization of value creation modules throughout the value
chain of a product life cycle and between value chains of adjoining product life cycles.
End-to-end engineering across the entire product life cycle refers to intelligent cross-linking and digi-
talization throughout all phases of a product life cycle, from the raw material acquisition to manufactur-
ing, product use, and product end of life.
Vertical integration and networked manufacturing systems include the intelligent cross-linking and
digitalization within the different aggregation and hierarchical levels of a value creation module from
manufacturing stations via manufacturing cells, lines and factories, also integrating the associated value
chain activities, such as marketing and sales or technology development (Acatech, 2015).
Intelligent cross-linking and digitalization covers the application of an end-to-end solution using infor-
mation and communication technologies (ICTs) embedded in the cloud (Stock and Seliger, 2016).
In a manufacturing system, intelligent cross-linking is realized by the application of CPS operating in
a self-organized and decentralized manner (Acatech, 2015; Gausemeier et al., 2015; Spath et al., 2013).
They are based on embedded mechatronic components, i.e., applied sensor systems for collecting data,
as well as actuator systems for influencing physical processes (Gausemeier et al., 2015). Cyber-physical
systems are intelligently linked with each other and are continuously interchanging data via virtual
networks such as the cloud in real-time. The cloud itself is implemented in the Internet of Things (IoT)
and services (Acatech, 2015). As part of a sociotechnical system, CPS use human–machine interfaces to
interact with operators (Hirsch-Kreinsen and Weyer, 2014).
1.2.1 Definition of Industry 4.0

Based on the findings of the literature review, we define Industry 4.0 as follows: Industry 4.0 is a collec-
tive term for technologies and concepts of value chain organization. Within the modular structured smart
factories of Industry 4.0, CPS monitor physical processes, create a virtual copy of the physical world
and make decentralized decisions. Over the IoT, CPS communicate and cooperate with each other and
humans in real time. Through the IoS, both internal and cross-organizational services are offered and
utilized by participants in the value chain (Hermann et al., 2015).
1.2.2 What Is Industry 4.0?

Industry 4.0 is multifaceted. It includes screws communicating with assembly robots, self-driving fork-
lifts stocking high shelves with goods, and intelligent machines coordinating independently running
production processes. In Industry 4.0, people, machines and products are directly connected with each
other (Plattform Industrie 4.0).
1.2.2.1 Industry 4.0—What Is It?

Industry 4.0 refers to the intelligent networking of machines and processes in industry with the help of
ICT. There are many ways for companies to use intelligent networking. The possibilities include:
• Flexible production: Many companies use a step-by-step process to develop a product. By

being digitally networked, these steps can be better coordinated and the machine load better
planned.
• Convertible factory: Future production lines can be built in modules and quickly assembled for
tasks. Productivity and efficiency will be improved; individualized products can be produced
in small quantities at affordable prices.
• Customer-oriented solutions: Consumers and producers will move closer together. The cus-
tomers themselves can design products according to their wishes—for example, sneakers
designed and tailored to the customer’s unique foot shape. At the same time, smart products
that are already being delivered and in use can send data to the manufacturer. By using these
data, the manufacturer can improve his or her products and offer the customer novel services.
• Optimized logistics: Algorithms can calculate ideal delivery routes; machines indepen-
dently report when they need new material—smart networking enables an optimal flow
of goods.
• Use of data: Data on the production process and the condition of a product can be combined and
analyzed. Data analysis will provide guidance on how to make a product more efficiently. More
importantly, there is a foundation for completely new business models and services. For exam-
ple, lift manufacturers can offer their customers “predictive maintenance”: elevators equipped
with sensors that continuously send data about their condition. Product wear can be detected
and corrected before it leads to an elevator system failure.
• Resource-efficient circular economy: The entire life cycle of a product can be considered with
the support of data. The design phase will be able to determine which materials can be recycled
(Plattform Industrie 4.0).
1.2.2.2 Talking about a Revolution: What Is New in Industry 4.0?

Since the 1970s, IT has been incorporated into business. Desktop PCs, the use of office IT and the first
computer-aided automation revolutionized the industry. For Industry 4.0, it is not the computer that is the
core technology, but rather the Internet. Digitalizing production is gaining a new level of quality with
global networking across corporate and national borders. With IoT and machine-to-machine communi-
cation, manufacturing facilities are becoming more intelligent (Plattform Industrie 4.0).
1.2.2.3 On the Path to Industry 4.0: What Needs to Be Done?

Implementing Industry 4.0 is a complex project: the more processes companies digitalize and network,
the more interfaces are created between different actors. Uniform norms and standards for different
industrial sectors, IT security and data protection play an equally central role as the legal framework,
changes in education and jobs, the development of new business models and corresponding research
(Plattform Industrie 4.0).
1.2.3 Key Paradigm of Industry 4.0

Industry 4.0 can be broken down into three major paradigms: the smart product, the smart machine and
the augmented operator.
The guiding idea of the smart product is to extend the role of a product so that it becomes an active
rather than passive part of the system. Products have memory in which operational data and require-
ments are stored so that the product itself requests the required resources and orchestrates the production
processes required for its completion (Loskyll et al., 2012). The ultimate goal is the creation of self-
configuring processes in highly modular production systems (Weyer et al., 2015).
In the paradigm of the smart machine, machines become cyber-physical production systems. The tradi-
tional production hierarchy is replaced by a decentralized self-organization enabled by CPS (Zamfirescu
et al., 2014). The autonomic components with local control intelligence can communicate to other field
devices, production modules and products through open networks and semantic descriptions. In this way,
machines are able to self-organize within the production network. Production lines are so flexible and
modular that even the smallest lot size can be produced under conditions of highly flexible mass pro-
duction. A CPS-based modular production line allows an easy plug-and-play integration or the replace-
ment of one production line with a new manufacturing unit, e.g., in the case of reconfiguration (Weyer
et al., 2015).
The augmented operator targets the technological support of workers in the challenging environ-
ment of highly modular production systems. Industry 4.0 is not gravitating toward worker-less pro-
duction facilities (unlike the Computer Integrated Manufacturing (CIM) approach of the 1980s).
Human operators are acknowledged as the most flexible parts of a production system, as they can
adapt to challenging work environments (Schmitt et al., 2013). As the most flexible entity in production
systems, workers will be faced with a variety of jobs, ranging from specification and monitoring to ver-
ification of production strategies. By the same token, they will manually intervene in the autonomously
organized production system, if required. Optimum support can be provided by mobile, context-
sensitive user interfaces and user-focused assistance systems (Gorecky et al., 2014). Established inter-
action technologies offer forward-looking solutions, including some from the consumer goods market
(e.g., tablets, smart glasses and smart watches). Of course the latter need to be adapted to industrial
conditions. Through technological support, workers can realize their full potential, thereby becoming
strategic decision-makers and fl exible problem solvers capable to handle the steadily rising technical
complexity (Weyer et al., 2015).
1.2.4 Industry 4.0 Conception

In the twenty-first century, product life cycles are shorter and consumers demand more complex, unique
products in larger quantities. Both pose challenges to production.
There are many indications that current practices in the utilization of resources are not sustainable,
with a consequent effect on production.
The industrial sector is experiencing a paradigm shift, which will change production drastically.
The traditional, centrally controlled and monitored processes will be replaced by decentralized control
built on the self-regulating ability of products and work units that communicate with each other.
The essence of Industry 4.0 is the introduction of network-linked intelligent systems to achieve self-
regulating production: in this new workplace, people, machines, equipment and products will commu-
nicate with one another.
The goal is to ensure flexible, economical and efficient production. All parts of the production process
will communicate with all other parts via a central production control system.
In effect, products will control their own production, with virtual and actual reality merging during
production. Scheduling will be also controlled by communicating units. Factories will be self-regulating
and optimize their own operation (Gubán and Kovás, 2017).
1.2.4.1 Five Main Components of Networked Production

The five main elements of networked production are the following:
• Digital workpieces
Each workpiece knows the dimensions, quality requirements and order of its own processing.
• Intelligent machines
Intelligent machines communicate simultaneously with the production control system and the
workpiece being processed, so that the machine coordinates, controls and optimizes itself.
• Vertical network connections
After processing the customer’s unique specifications for the product to be manufactured, the
production control system forward automated rules to the equipment. Essentially, the products
control their own manufacturing process, as they communicate with the equipment, devices
and other workpieces on the conditions of production.
• Horizontal network connections
Communication is realized not only within one factory, but throughout the whole supply chain,
between the suppliers, manufacturers and service providers. The main purpose is to enhance
the efficiency of production and to utilize the resources in a more economical way.
• Smart workpieces
The product to be manufactured senses the production environment with internal sensors and
controls and monitors its own production process to meet the production standards; it can do
so because it can communicate with the equipment, as well as with the components already
incorporated or about to be incorporated.
Industry 4.0 is not a future technology. In July 2015, the Changing Precision Technology Company
(in Dongguan, China) became the first factory where only robots work. Each labor process is exe-
cuted by machines: production is done by computer-operated robots and transport is implemented
by self-driven vehicles; even the storage process is completely automatic (Gubán and Kovás, 2017).
1.2.5 Framework of Industry 4.0: Conception and Technologies

Through the production in a global network, the manufacturing process can flexibly adapt to unique
customer demands, to the activity of the other parties of the supply chain and to the rapidly changing
economic environment.
Industry 4.0 is recognized globally. A 2016 survey by PricewaterhouseCoopers (PwC) identifies three
main areas where it affects the corporate world:
• Integration and digitalization of horizontal and vertical value chains,

• Digitalization of products and services, and
• Formation of digital business models and customer relations.
The new connected technologies are shown in Figure 1.1.
1.2.6 Nine Pillars of Technological Advancement

Technological advances have driven dramatic increases in industrial productivity since the dawn of the
Industrial Revolution. The steam engine powered factories in the nineteenth century, electrification led
to mass production in the early part of the twentieth century, and industry became automated in the
1970s. In the decades that followed, industrial technological advancements were incremental, as break-
throughs transformed IT, mobile communications and e-commerce.
Currently, we are in the midst of a fourth wave of technological advancement: the rise of new digital
industrial technology known as Industry 4.0. The transformation is powered by nine major advances in
Autonomous
Robots
System
Cybersecurity
integraon
Big Data Internet of

Things
Augmented INDUSTRY 4.0

reality Simulaon
Cloud Addive
compung manufacturing
FIGURE 1.1 Main technologies of Industry 4.0. (From Rübmann, M. et al., Industry 4.0: The Future of Productivity and
Growth in Manufacturing Industries, The Boston Consulting Group (BCG), 2015.)
Autonomous
Big data and Robots
analy
cs
Simula
on
Augmented Horizontal and ver

cal
reality system integra
on
INDUSTRY 4.0
Addi
ve The Industrial
manufacturing Internet of Things
The Cloud Cybersecurity
FIGURE 1.2 Nine advances transforming industrial production. (From Rübmann, M. et al., Industry 4.0: The Future of
Productivity and Growth in Manufacturing Industries, The Boston Consulting Group (BCG), 2015.)
technology: big data and analytics; autonomous robots, simulation, horizontal and vertical system inte-
gration, the Industrial IoT, cybersecurity, the cloud, additive manufacturing and augmented reality (see
Figure 1.2). In this transformation, sensors, machines, workpieces and IT systems are connected along
the value chain beyond a single enterprise. These connected systems (also called CPS) can interact with
one another using standard Internet-based protocols. They can analyze data to predict failure, config-
ure themselves and adapt to changes. Industry 4.0 will make it possible to gather and analyze data across
machines, enabling faster, more flexible and more efficient processes to produce high-quality goods at
reduced costs. This, in turn, will increase manufacturing productivity, shift economics, foster industrial
growth and modify the profile of the workforce, ultimately changing the competitiveness of companies
and regions (Rübmann et al., 2015).
Many of the nine advances in technology are already used in manufacturing, but with Industry 4.0,
they will totally transform production: isolated, optimized cells will come together as a fully integrated,
automated and optimized production flow, leading to greater efficiency and changing traditional produc-
tion relationships among suppliers, producers and customers, as well as between human and machine
(see Figure 1.3) (Rübmann et al., 2015).
1.2.6.1 Big Data and Analytics

The first of the nine pillars is big data and analytics. Analytics based on large data sets have recently
emerged in the manufacturing world; such analytics optimize production quality, save energy, and
improve equipment service. In the Industry 4.0 context, the collection and comprehensive evaluation
of data from many different sources (production equipment and systems as well as enterprise- and
customer-management systems) will become a standard support in real-time decision-making.
For instance, the semiconductor manufacturing company, Infineon Technologies, has decreased prod-
uct failures by correlating single-chip data captured in the testing phase at the end of the production
process with process data collected in the wafer status phase earlier in the process. In this way, Infineon
can identify patterns that help discharge faulty chips early in the production process and improve produc-
tion quality (Rübmann et al., 2015).
10
...to fully integrated data and

product flows across borders
Greater automoon will
displace some of the least
skilled labor but will require
Integrated communicaon higher skilled labor for
along the enre value chain monitoring and managing
reduces work in progress the factory of the future
inventory
From isolated,
opmized cells... TODAY INDUSTRY 4.0
Automated
Automated
Automated
Automated Automated
Machine to machine and machine to human interacon

enables customizaon and small batches
FIGURE 1.3 Industry 4.0 is changing traditional manufacturing relationships. (From Rübmann, M. et al., Industry 4.0: The Future of Productivity and Growth in Manufacturing
Industries, The Boston Consulting Group (BCG), 2015.)
Handbook of Industry 4.0 and SMART Systems
1.2.6.2 Autonomous Robots

Manufacturers in many industries have long used robots to tackle complex assignments, but robots are
evolving for even greater utility. They are becoming more autonomous, flexible and cooperative. Eventually,
they will interact with one another and work safely side by side with humans and learn from them. These
robots will cost less and have a greater range of capabilities than those used in manufacturing today.
For example, Kuka—a European manufacturer of robotic equipment—offers autonomous robots that
interact with one another. These robots are interconnected so that they can work together and auto-
matically adjust their actions to accommodate the next unfinished product in line. High-end sensors and
control units enable close collaboration with humans. Similarly, industrial-robot supplier ABB is launching
a two-armed robot called YuMi that is specifically designed to assemble products (such as consumer
electronics) alongside humans. Two padded arms and computer vision allow safe interaction and parts
recognition (Rübmann et al., 2015).
1.2.6.3 Simulation
In the engineering phase of production, three-dimensional (3-D) simulations of products, materials and
production processes are already used, but in the future, simulations will be used more extensively in
plant operations as well. These simulations will leverage real-time data to mirror the physical world in
a virtual model, which can include machines, products and humans. This will allow operators to test
and optimize the machine settings for the next product in line in the virtual world before the physical
changeover, thereby reducing machine setup times and increasing quality.
For example, Siemens and a German machine-tool vendor developed a virtual machine that can simu-
late the machining of parts using data from the physical machine. This lowers the setup time for the
actual machining process by as much as 80% (Rübmann et al., 2015).
1.2.6.4 Horizontal and Vertical System Integration

Most of today’s IT systems are not fully integrated. Companies, suppliers, and customers are rarely
closely linked, nor are departments such as engineering, production and service. In addition, func-
tions from the enterprise to the shop floor level are not fully integrated. Even engineering itself—from
products to plants to automation—lacks complete integration. However, with Industry 4.0, companies,
departments, functions and capabilities will become much more cohesive, as cross-company, universal
data-integration networks evolve and enable truly automated value chains.
For instance, Dassault Systèmes and BoostAeroSpace launched a collaboration platform for the
European aerospace and defense industry. The platform, AirDesign, serves as a common workspace for
design and manufacturing collaboration and is available as a service on a private cloud. It manages the
complex task of exchanging product and production data among multiple partners (Rübmann et al., 2015).
1.2.6.5 Industrial IoT

Today, only some of a manufacturer’s sensors and machines are networked and make use of embedded
computing. They are typically organized in a vertical automation pyramid in which sensors and field
devices with limited intelligence and automation controllers feed into an overarching manufacturing-
process control system. However, with the Industrial IoT, more devices (sometimes including even unfin-
ished products) will be enriched with embedded computing and connected using standard technologies.
This will allow field devices to communicate and interact both with one another and with more central-
ized controllers, as necessary. It will also decentralize analytics and decision-making, enabling real-time
responses.
Bosch Rexroth, a drive-and-control-system vendor, has outfitted a production facility for valves with a
semi-automated, decentralized production process. Products are identified by radio-frequency identifica-
tion codes, and workstations “know” which manufacturing steps must be performed for each product and
can adapt to perform the specific operation (Rübmann et al., 2015).
1.2.6.6 Cybersecurity
Many companies still rely on unconnected or closed management and production systems. With the
increased connectivity and the use of the standard communications protocols accompanying Industry
4.0, the need to protect critical industrial systems and manufacturing lines from cybersecurity threats
increases dramatically. As a result, secure, reliable communications, as well as sophisticated identity and
access management of machines and users, are essential.
Several industrial-equipment vendors have joined forces with cybersecurity companies through part-
nerships or acquisitions (Rübmann et al., 2015).
1.2.6.7 The Cloud
Companies are already using cloud-based software for some enterprise and analytics applications, but
with Industry 4.0, more production-related undertakings will require increased data sharing across sites
and company boundaries. At the same time, the performance of cloud technologies will improve, achiev-
ing reaction times of just several milliseconds. As a result, machine data and functionality will increas-
ingly be deployed in the cloud, enabling more data-driven services for production systems. Even systems
that monitor and control processes may become cloud-based.
Vendors of manufacturing execution systems have started to offer cloud-based solutions (Rübmann
et al., 2015).
1.2.6.8 Additive Manufacturing

Companies have just begun to adopt additive manufacturing, such as 3-D printing, which they use mostly
to prototype and produce individual components. With Industry 4.0, these additive-manufacturing meth-
ods will be widely used to produce small batches of customized products that offer construction advan-
tages, such as complex, lightweight designs. High-performance, decentralized additive manufacturing
systems will reduce transport distances and stock on hand.
For instance, aerospace companies are already using additive manufacturing to apply new designs that
reduce aircraft weight, lowering their expenses for raw materials such as titanium.
1.2.6.9 Augmented Reality

Augmented-reality-based systems support a variety of services, such as selecting parts in a warehouse
and sending repair instructions over mobile devices. These systems are currently in their infancy, but in
the future, companies will make much broader use of augmented reality to provide workers with real-
time information to improve decision-making and work procedures.
For example, workers may receive instructions on how to replace a particular part as they are looking
at the actual system needing repair. This information may be displayed directly in their field of vision
using devices such as augmented-reality glasses.
Another application is virtual training. Siemens has developed a virtual plant-operator training mod-
ule for its COMOS software; the module uses a realistic, data-based 3-D environment with augmented-
reality glasses to training plant personnel to handle emergencies. In this virtual world, operators can
learn to interact with machines by clicking on a cyber-representation. They can also change parameters
and retrieve operational data and maintenance instructions.
1.2.7 Macro Perspective of Industry 4.0

The macro perspective of Industry 4.0, as shown in Figure 1.4, covers horizontal integration and the
end-to-end engineering dimension of Industry 4.0. This visualization is based on a strong product-
life-cycle-related point of view; in other words, cross-linked product life cycles become a central element
of the value creation networks (Stock and Seliger, 2016).
Smart Logiscs
Smart Factory
Manufacturing
Mining
Consumer
Raw Water Reservoir

Material
acquision Use and Smart Grid
Service
Cloud
Smart Home
Renewable Energies
Product Lyfe Cycle

End of Life
Energy Supply
Water Supply
FIGURE 1.4 Macro perspective of Industry 4.0. (From Stock, T. and Seliger, G., Opportunities of Sustainable
Manufacturing in Industry 4.0. 13th Global Conference on Sustainable Manufacturing—Decoupling Growth from
Resource Use, Institute of Machine Tools and Factory Management, Technische Universität Berlin, 10587 Berlin, Germany.
2212–8271© 2016 The Authors. Published by Elsevier B.V, 2016.)
From the macro perspective, horizontal integration is characterized by a network of value cre-
ation modules. Value creation modules are defined as the interplay of different value creation factors,
i.e., equipment, human, organization, process and product (Seliger et al., 2007). The value creation
modules, represented in their highest level of aggregation by factories, are cross-linked throughout
the complete value chain of a product life cycle, as well as with the value creation modules in value
chains of adjoining product life cycles. This linkage results in an intelligent network of value creation
modules covering the value chains of different product life cycles. This intelligent network provides
an environment for new and innovative business models and is thus leading to a change in business
models.
As shown in Figure 1.4, end-to-end engineering from the macro perspective is the cross-linking of
stakeholders, products and equipment along the product life cycle, beginning with the raw material acqui-
sition phase and ending with the end-of-life phase. The products, the various stakeholders such as cus-
tomers, workers or suppliers, and the manufacturing equipment are embedded in a virtual network and
are interchanging data in and between the phases of a product life cycle. This life cycle consists of the
raw material acquisition phase, the manufacturing phase—containing the product development, the engi-
neering of the related manufacturing system and the manufacturing of the product—the use and service
phase, the end-of-life phase—containing reuse, remanufacturing, recycling, recovery and disposal—and
the transport between all phases.
These value creation modules, i.e., factories embedded in this ubiquitous flow of smart data, will
evolve to become smart factories. Smart factories are already manufacturing smart products and are
being supplied with energy from smart grids and with water from freshwater reservoirs. The material
flow along the product life cycle and between adjoining product life cycles will be accomplished by
smart logistics. The stream of smart data between the various elements of the value creation networks is
interchanged via the cloud (Stock and Seliger, 2016).
Smart data are created by expediently structuring information from big data; smart data can be used
for knowledge advances and decision-making throughout the product life cycle (Smart Data Innovation
Lab., 2015). When smart factories use embedded CPS for value creation, the smart product can self-
organize its required manufacturing processes and its flow throughout the factory in a decentralized
manner by interchanging smart data with the CPS (Kletti et al., 2015).
A smart product contains information on its requirements for the manufacturing processes and manu-
facturing equipment. Smart logistics use CPS to support the material flow within the factory and between
factories, customers and other stakeholders. They are controlled in a decentralized manner according to
the requirements of the product. A smart grid using renewable energies dynamically matches the energy
generation of suppliers with the energy demand of consumers, e.g., smart factories or smart homes, by
using short-term energy storages for buffering. Within a smart grid, energy consumers and suppliers can
be the same (Stock and Seliger, 2016).
1.2.8 Micro Perspective of Industry 4.0

The micro perspective of Industry 4.0 presented in Figure 1.5 covers horizontal and vertical integration
within smart factories and is also part of the end-to-end engineering dimension.
As a value creation module at the highest level of aggregation, the smart factory contains various
value creation modules on lower aggregation levels, including manufacturing lines, manufacturing
cells or manufacturing stations. Smart factories will increasingly use renewable energies in addition
to the supply provided by the external smart grid (Berger et al., 2014). The factory will thus become
an energy supplier and consumer at the same time. The smart grid, along with the energy management
system of the smart factory, will handle the dynamic requirements of energy supply and feedback.
The supply of fresh water is another essential resource, requiring adequate water reservoirs (Stock
and Seliger, 2016).
Smart Factory
Consumer
Smart Grid
Outbound
Logiscs
Renewable Final
Water Energies Product
Reservoir
In-house Transport Value Creaon

Value
Supplies Creaon
Factors
Inbound
Module
Logiscs
Product
Manufacturing
Markeng and
Process
Supplier Sales
Cloud Service
Procurement
Technology Human
Development
Human Resource
Management
Infrastructure
Value Chain Acvies
FIGURE 1.5 Micro perspective of Industry 4.0. (From Stock, T., and Seliger G., Opportunities of Sustainable
Manufacturing in Industry 4.0. 13th Global Conference on Sustainable Manufacturing—Decoupling Growth from
Resource Use, Institute of Machine Tools and Factory Management, Technische Universität Berlin, 10587 Berlin, Germany.
2212–8271© 2016 The Authors. Published by Elsevier B.V, 2016.)
From the micro perspective, horizontal integration is characterized by cross-linked value creation
modules along the material flow of the smart factory and smart logistics. The in- and outbound
logistics to and from factories will be characterized by transport equipment able to agilely react
to unforeseen events, such as a change in traffic or weather, and to autonomously operate between
the starting point and the destination. The autonomously operating transport equipment such as
automated guided vehicles (AGVs) will be used for in-house transport along the material flow. All
transport equipment will interchange smart data with the value creation modules to achieve the
decentralized coordination of supplies and products with the transport systems. For this purpose,
the supplies and products will contain identification systems, e.g., radio-frequency identification
(RFID) chips or QR codes, to enable a wireless identification and localization of all materials in the
value chain (Stock and Seliger, 2016).
From the macro perspective, vertical integration requires the intelligent cross-linking of value creation
factors, including products, equipment and humans, along the various aggregation levels of the value
creation modules, from manufacturing stations via manufacturing cells, to manufacturing lines, up to the
level of the smart factory. This networking throughout the aggregation levels includes the cross-linking
of the value creation modules with the different value chain activities, e.g., marketing and sales, service,
procurement and so on. (Porter 2015).
The value creation module in a factory refers to an embedded CPS. The manufacturing equipment,
e.g., machine tools or assembly tools, use sensor systems to identify and localize the value creation fac-
tors, such as the products or the humans, and to monitor the manufacturing processes, e.g., the cutting,
assembly or transport processes. Depending on the monitored smart data, the applied actuators in the
manufacturing equipment can react in real time on specific changes in products, humans or processes.
The communication and the exchange of the smart data between the value creation factors, between the
value creation module and the transport equipment and between the different levels of aggregation and
value chain activities are executed via the cloud.
Table 1.1 provides an overview of the main trends and expected development in the value creation fac-
tors of Industry 4.0 (Stock and Seliger, 2016).
1.2.9 Industry 4.0 Components

1.2.9.1 Cyber-Physical Systems (CPS)
An important component of Industry 4.0 is the fusion of the physical and the virtual world (Kagermann
et al., 2014). This fusion is made possible by CPS. Cyber-physical systems are “integrations of com-
putation and physical processes. Embedded computers and networks monitor and control the physical
processes, usually with feedback loops where physical processes affect computations and vice versa”
(Lee et al., 2008). The development of CPS can be divided into three phases. The first generation of
CPS includes identification technologies such as RFID tags, which allow unique identification. Storage
and analytics have to be provided as a centralized service. The second generation of CPS is equipped
with sensors and actuators with a limited range of functions. In the third generation, CPS can store and
analyze data, are equipped with multiple sensors and actuators and are network compatible (Bauernhansl
et al., 2014). One example of a CPS is the intelligent bin (iBin) by Würth. It contains a built-in infrared
camera module for C-parts management; the camera determines the number of C-parts within the iBin.
If the quantity falls below the safety stock, the iBin automatically orders new parts via RFID. This allows
consumption-based C-parts management in real time (Günthner et al., 2014).
1.2.9.2 Internet of Things

According to Kagermann, the integration of the IoT with the Internet of Services (IoS) in the manu-
facturing process initiated the fourth industrial revolution (Kagermann et al., 2013). The IoT allows
“things” and “objects,” such as RFID, sensors, actuators and mobile phones, to “interact with each
other and cooperate with their neighboring ‘smart’ components, to reach common goals” (Giusto et al.,
2010). Based on the definition of CPS stated above, “things” and “objects” can be understood as CPS.
TABLE 1.1
Trends and Expected Developments in Value Creation Factors
Equipment Manufacturing equipment will be characterized by the application of highly automated machine
tools and robots. The equipment will be able to flexibly adapt to changes in the other value
creation factors; for example, robots will work together collaboratively with human workers
on joint tasks (Kagermann et al., 2015).
Human Jobs in manufacturing sectors are likely to become automated (Frey and Osborne, 2013). The numbers
of workers will thus decrease. The remaining manufacturing jobs will contain more knowledge work
and more short-term and hard-to-plan tasks (Spath et al., 2013). Workers increasingly have to monitor
automated equipment, are being integrated in decentralized decision-making, and are participating in
engineering activities as part of the end-to-end engineering.
Organization The increasing organizational complexity in the manufacturing system cannot be managed centrally
from a certain point. Decision-making will thus become decentralized. Decision-making will
autonomously incorporate local information (Kletti et al., 2015). The decision itself will be made
by the workers or by the equipment using methods from artificial intelligence.
Process Additive manufacturing technologies, also known as 3-D printing, will be increasingly deployed in
value creation processes, as the costs of additive manufacturing are rapidly dropping and speed and
precision are simultaneously increasing (Hagel III et al., 2015). This allows designing more
complex, stronger, and more lightweight geometries and the application of additive manufacturing
to higher quantities and larger scales of the product (Hagel III et al., 2015).
Product Products will be manufactured in a batch size according to the individual requirements of the
customer (Acatech 2015). This mass customization of the product integrates the customer as
early as possible in the value chain. The physical product will also be combined with new
services offering functionality and access rather than product ownership to the customer as
part of new business models (Hagel III et al., 2015).
Source: Stock, T. and Seliger, G., Opportunities of Sustainable Manufacturing in Industry 4.0, 13th Global Conference on
Sustainable Manufacturing—Decoupling Growth from Resource Use, Institute of Machine Tools and Factory
Management, Technische Universität Berlin, 10587 Berlin, Germany. 2212–8271© 2016 The Authors. Published
by Elsevier B.V, 2016.
Therefore, the IoT can be defined as a network in which CPS cooperate with each other through unique
addressing schemas. Application examples of the IoT include smart factories, smart homes, and smart
grids (Bauernhansl et al., 2014).
1.2.9.3 Internet of Services

The IoS enables “service vendors to offer their services via the Internet. […] The IoS consists of partici-
pants, an infrastructure for services, business models and the services themselves. Services are offered
and combined into value-added services by various suppliers; they are communicated to users as well as
consumers and are accessed by them via various channels” (Buxmann et al., 2009). This development
allows a new and dynamic variation of the distribution of individual value chain activities (Industry
4.0: Whitepaper FuE-Themen, 2015). It is conceivable that this concept will be transferred from sin-
gle factories to entire value-added networks in the future. Factories may go one step further and offer
special production technologies instead of just production types. These production technologies will be
offered over the IoS and used to manufacture products or compensate production capacities (Scheer
et al., 2013). The idea of the IoS has already been implemented in a project named SMART FACE
under the “Autonomics for Industry 4.0” program initiated by the German Federal Ministry for Economic
Affairs and Energy. The project has developed a new distributed production control for the automotive
industry, based on a service-oriented architecture. This allows the use of modular assembly stations that
can be flexibly modified or expanded. The transportation between the assembly stations is ensured by
AGVs. Both assembly stations and AGVs offer their services through the IoS. The vehicle bodies know
their customer-specific configuration and can decide autonomously which working steps are needed.
Therefore, they can individually compose the required processes through the IoS and autonomously navi-
gate through the production (Fraunhofer-Institut für Materialfluss und Logistik (IML), 2014).
1.2.9.4 Smart Factories

A “key feature of Industry 4.0” (Kagermann et al., 2013), the smart factory
“is defined as a factory that context-aware assists people and machines in execution of their
tasks. This is achieved by systems working in background, so-called Calm-systems and context-
aware means that the system can take into consideration context information like the position
and status of an object. These systems accomplish their tasks based on information coming from
physical and virtual world. Information of the physical world is, e.g., position or condition of
a tool, in contrast to information of the virtual world like electronic documents, drawings and
simulation models. […] Calm systems are referring in this context to the hardware of a Smart
Factory. The main difference between calm and other types of systems is the ability to commu-
nicate and interact with its environment” (Lucke et al., 2008).
Based on the definitions stated above for CPS and the IoT, the smart factory can be defined as a factory
where CPS communicate over the IoT and assist people and machines in the execution of their tasks.
An example of a smart factory is the WITTENSTEIN group’s production facility in Fellbach, Germany.
The facility is organized according to the principles of lean production. Intelligent workpiece carriers
are used to implement a demand-driven run. They report when a workpiece is ready to be picked up and
initiate the run only if there is a demand. This helps reduce the number of runs and relieves employees
from unnecessary work (Schlick et al., 2014).
1.2.10 Industry 4.0: Design Principles

The above definitions of the Industry 4.0 components drive the design principles for Industry 4.0
scenarios. Six design principles can be derived from the four components (see Table 1.2) (Hermann
et al., 2015).
The design principles are explained in the following subsections by using the example of
SmartFactoryKL. SmartFactoryKL is a vendor-independent technology initiative at the German Research
Center for Artificial Intelligence. The plant was built as part of the RES-COM project. It processes parts
for key finders and assembles them. The housing of the key finders is equipped with an RFID tag con-
taining all relevant production data (Schlick et al., 2014).
1.2.10.1 Interoperability
Interoperability is a very important enabler of Industry 4.0. Interoperability means all CPS within a plant
(workpiece carriers, assembly station and products) are able to communicate with each other “through
open nets and semantic descriptions” (Hermann et al., 2015).
TABLE 1.2
Design Principles of Each Industry 4.0 Component
Cyber-Physical Internet Internet Smart
Systems of Things of Services Factory
Interoperability X X X X
Virtualization X — — X
Decentralization X — — X
Real-time capability — — — X
Service orientation — — X —
Modularity — — X —
Source: Hermann, M. et al., Design Principles for Industrie 4.0 Scenarios: A Literature Review,
Technische Universität Dortmund. Fakultät Maschinenbau, Audi Stiftungslehrstuhl
Supply Net Order Management, Working Paper No. 01/2015, 2015.
1.2.10.2 Virtualization
Through virtualization, CPS are able to monitor physical processes. Sensor data are linked to virtual
plant models and simulation models, creating a virtual copy of the physical world. In the SmartFactoryKL
plant, the virtual model includes the condition of all CPS. In the case of failure, a human can be noti-
fied. In addition, all necessary information, such as the next working steps or safety arrangements, is
provided (Gorecky et al., 2014). Thus, humans are supported in handling the rising technical complexity
(Hermann et al., 2015).
1.2.10.3 Decentralization
The rising demand for individual products makes it increasingly difficult to control systems centrally.
Embedded computers enable CPS to make decisions on their own. Only in cases of failure are tasks
delegated to a higher level (Hompel and Otto, 2014). Nevertheless, for quality assurance and traceability,
it is necessary to keep track of the whole system at all times. In the context of the SmartFactoryKL, plant
decentralization means the RFID tags “tell” machines which working steps are necessary. Therefore,
central planning and controlling are no longer needed (Schlick et al., 2014).
1.2.10.4 Real-Time Capability

For organizational tasks, data must be collected and analyzed in real time. In the SmartFactoryKL, the
status of the plant and all its equipment is permanently tracked and analyzed. Thus, the plant can react to
the failure of a machine and reroute products to another machine (Schlick et al., 2014).
1.2.10.5 Service Orientation

The services of companies, CPS and humans are available over the IoS and can be utilized by other
stakeholders. They can be offered both internally and across company borders. The SmartFactoryKL
plant is based on a service-oriented architecture, wherein all CPS offer their functionalities in an encap-
sulated web service (Hermann et al., 2015). As a result, the product-specific process operation can be
based on the customer-specific requirements provided by the RFID tag (Schlick et al., 2014).
1.2.10.6 Modularity
Modular systems can flexibly adapt to changing requirements by replacing or expanding individual
modules. Therefore, modular systems can be easily adjusted to accommodate seasonal fluctuations
or changed product characteristics. In the SmartFactoryKL plant, new modules can be added using the
Plug&Play principle. Based on standardized software and hardware interfaces (Schlick et al., 2014), new
modules are identified automatically and can be utilized immediately via the IoS (Hermann et al., 2015).
1.2.11 Impact of Industry 4.0

The race to adopt elements of Industry 4.0 is underway among companies in Europe, the United States,
and Asia (Rübmann et al., 2015).
1.2.11.1 Quantifying the Impact: Germany as an Example

To quantitatively understand the potential worldwide impact of Industry 4.0, we analyzed German manu-
facturing and found that the fourth wave of technological advancement will bring benefits in four areas
(Rübmann et al., 2015). It should be noted that although we specify Germany in the following, the result
also applies to other countries.
• Productivity. During the next 5–10 years, Industry 4.0 will be embraced by more compa-
nies, boosting productivity across all German manufacturing sectors by €90–€150 billion.
Productivity improvements on conversion costs, which exclude the cost of materials, will range
from 15% to 25%. When the materials costs are factored in, productivity gains of 5%–8% will
be achieved. These improvements will vary by industry. Industrial component manufacturers
stand to achieve some of the largest productivity improvements (e.g., 20%–30%), and automo-
tive companies can expect increases of 10%–20% (see Figure 1.6).
• Revenue Growth. Industry 4.0 will also drive revenue growth. Manufacturers’ demand for
enhanced equipment and new data applications, as well as consumer demand for a wider vari-
ety of increasingly customized products, will drive additional revenue growth of approximately
€30 billion a year, or roughly 1% of Germany’s GDP.
• Employment. In our analysis of Industry 4.0’s impact on German manufacturing, we found
that the growth it stimulates will lead to a 6% increase in employment during the next 10 years
(see Figure 1.7). The demand for employees in the mechanical engineering sector may also
rise even more—by as much as 10% during the same period. However, different skills will be
required. In the short term, the trend toward greater automation will displace some of the often
low-skilled laborers who perform simple, repetitive tasks. At the same time, the growing use of
software, connectivity and analytics will increase the demand for employees with competen-
cies in software development and IT technologies, such as mechatronics experts with software
skills. (Mechatronics is a field of engineering that comprises multiple engineering disciplines.)
This competency transformation is one of the key challenges ahead.
• Investment. Adapting production processes to incorporate Industry 4.0 will require that
German producers invest approximately €250 billion during the next 10 years (approximately
1%–1.5% of manufacturers’ revenues).
The estimated benefits in Germany illustrate the potential impact of Industry 4.0 on manufacturing
globally. Industry 4.0 will have a direct effect on producers and their labor force and on companies that
supply manufacturing systems (Rübmann et al., 2015).
1.2.11.2 Producers: Transforming Production Processes and Systems

The next wave of manufacturing will affect producers’ entire value chain, from design to after-sales
service systems (Rübmann et al., 2015):
• Along the value chain, production processes will be optimized by the use of integrated IT
systems. Today’s insular manufacturing cells will be replaced by fully automated, integrated
production lines.
• Products, production processes and production automation will be designed and commis-
sioned virtually in one integrated process through the collaboration of producers and suppliers.
Physical prototypes will be reduced to an absolute minimum.
• Manufacturing processes will increase in flexibility and allow the economical production of
small lot sizes. Robots, smart machines and smart products that communicate with one another
and make certain autonomous decisions will provide this flexibility.
• Manufacturing processes will be enhanced through learning and self-optimizing pieces of
equipment that will, e.g., adjust their own parameters, as they sense certain properties of the
unfinished product.
• Automated logistics using autonomous vehicles and robots will adjust automatically to produc-
tion needs.
Industry 4.0 allows a faster response to customer needs than it is possible today. It improves the flexibil-
ity, speed, productivity and quality of the production process. In addition, it lays the foundation for the
adoption of new business models, production processes and other innovations. This will enable a new
level of mass customization as more industrial producers invest in Industry 4.0 technologies to enhance
and customize their offerings systems (Rübmann et al., 2015).
20
Additional productivity Total additional

Industry Total gross production: on conversion costs: productivity gains: 5% –
€2 trillion 15% – 25% 8% or €90 – €150 billion
0 10 20 30 40 50 60 0 10 20 30 40 0 10 20 30 40
55
10 - 15 4-7
1
25 - 35 9 - 12
Mechanical
Engineering
6
20 - 30 10 - 15
6
20 - 30 4-7
10
20 - 30 5 - 10
22
10 - 20 6-9
Gross producon Producvity Producvity total

share in Germany (%) conversion costs (%) manufacturing costs (%)
FIGURE 1.6 In Germany, Industry 4.0 will generate significant productivity gains. (From Rübmann, M. et al., Industry 4.0: The Future of Productivity and Growth in Manufacturing
Industries, The Boston Consulting Group (BCG). 2015.)
Relave development Absolute development of employees

2015–2025
Industry 6,500 6%
CAGR (%) 6,450
Thounsands of employees
Mechanical
0.9
Engineering 6,400
Food and
0.7
beverage 6,300
Automove 0.2 15
50 22
Other 0.6 6,200
95
6,100
6,060
0
Employees Food and Other

2015 beverage
Mechanical Automove Employees
Engineering 2025
A significant shi in the skill profile is required to enable growth
FIGURE 1.7 In Germany, Industry 4.0 will lead to increased manufacturing employment. (From Rübmann, M. et al.,
Industry 4.0: The Future of Productivity and Growth in Manufacturing Industries, The Boston Consulting Group (BCG).
2015.)
1.2.11.3 Manufacturing-System Suppliers: Meeting New Demands

and Defining New Standards
As manufacturers demand the greater connectivity and interaction offered by Industry 4.0-capable
machines and systems in their factories, manufacturing-system suppliers will have to expand the role
of IT in their products. The changes will likely include a greater modularization of functionality with
deployments in the cloud and on embedded devices. With increases in the overall functionality and
complexity of systems, there is a need for a greater distribution of decision-making. In addition, online
portals for downloading software and collaborative partner relationships may offer more flexible and
adaptable equipment configurations. Automation architectures will also evolve for different use cases.
Suppliers will have to prepare for these various scenarios and support these shifts.
Industrial-automation vendors and most machine tool manufacturers already have significant software
development capabilities, but Industry 4.0 will require even more. In addition, these vendors will have
to compete with the IT players who are moving into the growing market for shop-floor- and production-
related applications and data-driven services.
The growing interconnectivity between machines, products, parts and humans will also require new
international standards that define the interaction of these elements in the digital factory of the future.
Efforts to develop these standards are in their early stages but are being driven by traditional stan-
dardization bodies and emerging consortia. Germany’s Plattform Industrie 4.0 was the first driver, but
the US-based IIC—founded in March 2014 by manufacturing, Internet, IT, and telecommunications
companies—represents an important alternative. Subsequently, a new body, the Dialogplattform
Industrie 4.0, has been formed in Germany to counteract the IIC’s strong position. Several other stan-
dardization organizations have ambitions in the field. Strategically choosing participation in these and
other bodies and actively shaping the standardization agenda will be critical for manufacturing-system
suppliers (Rübmann et al., 2015).
1.2.12 The Way Forward

Industries and countries will embrace Industry 4.0 at different rates and in different ways. Industries
with a high level of product variants, such as the automotive and food-and-beverage industries, will
benefit from a higher degree of flexibility, as this will generate productivity gains, e.g., and industries
that demand high quality, such as semiconductors and pharmaceuticals, will benefit from data-
analytics-driven improvements that reduce error rates.
Countries with high-cost skilled labor will be able to capitalize on the higher degree of automation
combined with the increased demand for more highly skilled labor. However, many emerging markets
with a young, technology-savvy workforce might jump at the opportunity to create entirely new manu-
facturing concepts.
To actively shape the transformation, producers and system suppliers must take decisive action to
embrace the nine pillars of technological advancement mentioned earlier. They must also address the
need to adapt to the appropriate infrastructure and education (Rübmann et al., 2015).
1.2.12.1 Producers Must Set Priorities and Upgrade the Workforce

Producers have to set priorities among their production processes and enhance their workforce’s com-
petencies as follows:
• Identify key areas for improvement, such as flexibility, speed, productivity and quality. Then,
consider how the nine pillars of technological advancement can drive improvement in the des-
ignated areas. Avoid getting stuck in incremental approaches; instead, consider more funda-
mental changes enabled by a combination of the nine technologies.
• Analyze the long-term impact on the workforce and conduct strategic workforce planning.
Adapt roles, recruiting, and vocational training to prepare the workforce with the additional IT
skills that will be required.
While these improvements already hold significant potential for existing industries, emerging fields
could use Industry 4.0 technology to dislodge existing standards using innovative factory layouts and
production processes (Rübmann et al., 2015).
1.2.12.2 Manufacturing-System Suppliers Must Leverage Technologies

Manufacturing-system suppliers need to understand how they can employ technologies in new use cases
to offer the greatest benefits to their customers. These technologies can be leveraged for different offer-
ings, such as the enhancement of networked embedded systems and automation, the development of new
software products and the delivery of new services such as analytics-driven services. To do so, they need
to build the right foundation:
• Define which business model to leverage for their enhanced or new offers.
• Build the technological foundation, such as the tool base for analytics.
• Build the right organization structure and capabilities.
• Develop partnerships in the digital world.
• Participate in and shape technological standardization.
In parallel, system suppliers need to build a scenario-based vision of the long-term industry evolution and
ensure that their strategy will prepare them for the most likely scenarios (Rübmann et al., 2015).
1.2.12.3 Infrastructure and Education Must Be Adapted

Producers, as well as suppliers, must work to adapt infrastructure and education, as they embrace the
technologies of Industry 4.0. This is best addressed through a combined effort involving government,
industry associations, and businesses to achieve the following:
• Upgrade technological infrastructure, such as fixed and mobile broadband services.

Infrastructure must be rendered fast, secure and reliable enough for companies to depend on it
for near real-time data.
• Adapt school curricula, training and university programs and strengthen entrepreneurial
approaches to increase the IT-related skills and innovation abilities of the workforce.
Industry 4.0 presents tremendous opportunities for innovative producers, system suppliers and entire
regions. However, as with previous transformational developments, Industry 4.0 poses a severe threat to
laggards. As business models, economics and skill requirements shift, we could well see major changes
in top positions, at both company and regional levels (Rübmann et al., 2015).
1.3 RAMI 4.0 (Reference Architecture Model Industry 4.0)

Much has been said and written about Industry 4.0. Many authors are convinced that it is not a future
trend but is already happening. A better understanding of the technical background of the Industry 4.0
platform is already required, and companies must take steps toward Industry 4.0 applications.
Industry 4.0 offers the following:
1. Digitization and integration of networks, both simple technical-economic ones and complex
technical-economic ones,
2. Digitization of products and services and
3. New market models.
These activities are interconnected by communication systems, including IoT, IoS and Internet of People.
Because of these technologies, entities will be able to communicate with each other and utilize data from
the production owner during the entire life cycle of systems, while also removing borders between enter-
prises and countries. All entities throughout the whole production-market network will have relevant
data. For example, producers will be able to draw on features of very modern components even in the
design and testing phase.
The digitization of industrial production will create new digital market models. For example, on the
basis of the data accessible in the cloud, users will be able to predict a shutdown of production of some
of production entities.
To achieve this complex production-market network, a number of German firms—the leading country
in Industry 4.0 activities and ideas—developed and published Reference Architecture Model Industry
4.0 (RAMI 4.0). Because of the abovementioned three interconnected factors, RAMI 4.0 includes a 3-D
graphical model (Zezulka et al., 2016).
1.3.1 RAMI 4.0

The creators of the RAMI 4.0 model are BITCOM, VDMA, and ZWEI. They decided to develop a 3-D
model because they wanted a model that can represent all manually interconnected features of technical-
economic properties. Smart Grid Architecture Model (SGAM), a model developed for communication
in networks of renewable energy sources, seemed an appropriate model for the Industry 4.0 applications.
RAMI 4.0 is a small modification of the SGAM . Because SGAM and RAMI 4.0 cover approximately 15
industrial areas, the RAMI 4.0 model allows different aspects to be incorporated (see Figure 1.8). Thus,
layers on the vertical axis represent different aspects (the market aspect, the perspective of functions,
information, communication, the integration of components) (Manzei et al., 2016; VDI/VDE-GMA,
2016; VDI/VDE-GMA, 2015a).
A very important criterion in modern engineering is the product life cycle and its value stream.
The left-hand horizontal axis of RAMI 4.0 displays this feature. It expresses, e.g., constant data acqui-
sition throughout the life cycle. The digitization of the whole development-market chain has great poten-
tial to improve products, machines, and other layers of the Industry 4.0 architecture throughout the life
cycle, thus meeting the IEC 62890 draft standard.
Value Stream
IEC 62890
Layers
Business
Funconal
Informaonal
Communicaonal
Integraon
Asset
Maintenance Maintenance
Development Producon
/ Usage / Usage
Type Instance
FIGURE 1.8 RAMI 4.0 model. (From VDI/VDE-GMA (Gesellschaft Messund Automatisierungstechnik), Statusreport:
Industrie 4.0—Technical Assets Basic terminology concepts, life cycles and administration models, 2016.)
The right-hand side of the horizontal axis describes the function of the components in the Industry 4.0.
Only the function of the components is specified, there is no specification for implementation. The axis
follows both IEC 6224 and the 61512 standards. However, the IEC 6224 and the 61512 standards are
intended for components in one enterprise or work unit only. Therefore, the highest level on this side is
the Connected world (Zezulka et al., 2016).
1.3.2 Additional Details of RAMI 4.0

The individual layers and their interrelationships are described below (Umsetyungsstrategie Industrie
4.0: Ergebnisbericht der Plattform Industrie 4.0., 2015).
1.3.2.1 Function of Layers on Vertical Axis

• Asset Layer
This layer represents reality, e.g., physical components such as archives, documents, linear
axes, metal parts and diagrams. Humans are also part of the Asset Layer. They are connected
with the virtual reality world by the Integration layer. Assets can be passively connected to the
higher Integration Layer by means of QR codes.
• Integration Layer
This layer provides information on assets (hardware or software, components) in a form that is
available for computer processing (Mikolajek et al., 2015). It performs computer control of the
process, generates events from assets and contains elements that are connected with IT (RFID
readers, sensors, HMI, actuators, etc.). The integration of persons is part of the Integration layer
function as well.
• Communication Layer
This layer standardizes communication by means of a uniform data format. It provides services
to the Information Layer; it also provides services to control the Integration Layer.
• Information Layer
This layer provides run time for preprocessing events and executing event-related rules. It enables
formal description of the rules and event pre-processing. Other functions include ensuring data
integrity, consistent integration of different data, obtaining new, higher quality data (data, infor-
mation, knowledge) and providing structured data by means of service interfaces. It also receives
events and transforms them to match the data available for the higher layer.
• Functional Layer
This layer enables formal descriptions of functions and creates a platform for horizontal integra-
tion of various functions. It contains a modeling environment for services supporting business
processes and a run time environment for applications and technical functionality. Rules and
decision-making logic are generated in the Functional Layer. Some users apply to lower layers
as well, but remote access and horizontal integration can occur only within the Functional layer
because of the need for data integrity.
• Business Layer
This layer ensures the integrity of functions in the value stream, thus enabling mapping busi-
ness models and the overall process. It follows legal and regulatory framework conditions and
enables modeling of the rules that the system has to follow. It also creates a link among differ-
ent business processes.
1.3.2.2 Function of Layers on the Horizontal Left Axis

The left-hand side of the horizontal axis represents the life cycle and value stream of industrial produc-
tion. This axis is divided into type and instance.
A type refers to any product, machine or Software (SW) / Hardware (HW). It covers design orders,
development and testing up to the prototype of production. After all tests and validation, the type is
prepared for serial production. The type of any component, machine or HW/SW and so on creates
a basis for serial production. Each manufactured product represents an instance of that type; for
example, it has a unique serial number.
The instances are sold and delivered to customers. Types become instances when they are installed in
a particular system. The change from type to instance may be repeated many times. The structure of the
life cycle and value stream in the diagram shows a division of type into development and maintenance
or usage, but because of the physical nature of the problem, instances consist of production and mainte-
nance or usage, not development.
The function of layers on the horizontal left axis can be explained by the following simple example:
The development of a new electrical drive represents the creation of a new type of engine. The drive
is developed, initial samples are set up and tested, and a first prototype series is manufactured and
validated. After successful testing, the new drive type is released for sale (product designation in sales
catalog of the producer). At this point, the first serial production can be started. Each drive in has a serial
number (a unique identification) and is an instance of the previously developed electrical drive. Feedback
from customers on instances of the type may lead to corrections in the mechanical part of the drive and
correction in the control SW. This represents modification of the type, i.e., applied as amendments to the
type documentation, and new instances of the modified type are produced.
The left-hand side of the RAMI 4.0 model represents the value stream. Digitization and linking of the
value stream (in Industry 4.0) have enormous potential to improve produced types. Logistic data can be
used in assembly; purchasing departments will see inventories in real time and know where the supplier
parts are at any moment; customers see the completion status of the product during production and so on.
The value stream in the totally digitized production enables the linking of purchasing, order planning,
assembly, logistics, maintenance, customers and suppliers and so on. This obviously has great potential
to make improvements to products.
The life cycle can therefore be viewed together with the value-adding processes it contains and not in
isolation as in the present production processes (Umsetyungsstrategie Industrie 4.0: Ergebnisbericht der
Plattform Industrie 4.0., 2015).
1.3.2.3 Hierarchical System Architecture in Industry 4.0

Industry 4.0 brings changes in the architecture of production, and it is no longer a classical control pyramid.
Figure 1.9 shows the “new” Industry 4.0 control pyramid. The figure does not show an implementation
scheme; rather, it displays the function of the components of Industry 4.0. More specifically, it shows the right
horizontal axis of the RAMI 4.0 model (DKE and Elektronik Informationstechnik in DIN und VDE, 2015).
As indicated in the figure, this architecture follows the IEC 62264 and IEC 61512 standards. It includes
both control devices and machines and systems. The colored blocs correspond to levels of the right
horizontal axis of the 3-D RAMI 4.0 model. The other blocks represent different types of production:
batch, continuous processes and repetitive or discrete production. The level above the IEC standards area
describes groups of factories, collaboration within external engineering firms, component suppliers and
customers: the Connected World area of the new “pyramid” (Zezulka et al., 2016).
1.3.3 Industry 4.0 Component Model

A second model developed by BITCOM, VDMA and ZWEI during the last one year is the Industry 4.0
component model. It is intended to help producers and system integrators create HW and SW compo-
nents for Industry 4.0. It is the first (appeared in July 2016) specific model derived from the RAMI 4.0
model. It enables better description of cyber-physical features and communication among virtual and
cyber-physical objects and processes. The HW and SW components of future production will be able to
fulfill requested tasks by means of implemented features specified in the Industry 4.0 components model.
Enhancement Industrie 4.0 Connected World
* EIC 62264-1: 2013 Enterprise-control system integraon Enterprise

Part 1: Models and terminology
* EIC 61512-1: 1997 Batch control
Part 1: Models and terminology
* ISA Dra 88/95 Technical Report Using ISA-88 and
ISA-95 Together Site
Area
Work
Centers Process cell Producon Unit Producon Line Storage zone
Work Equipment
Unit Unit Work cell Storage unit
Units
Equipment used
Equipment Equipment
Staon for storage or
Module Module
movent
Control Module Control Module Control Decive
Equipment used Equipment used Equipment used in

in batch in connuos repeve or discrete
producon producon producon
Field Device
Enhancement Industrie 4.0
Product
FIGURE 1.9 New control pyramid of RAMI 4.0. (From VDI/VDE-GMA, 2015b.)

The most important feature is the ability for virtual objects and processes to communicate with real
objects and processes of production. Any component of an Industry 4.0 system can take an electronic
container (shell) of secured data during the entire life cycle of a product. The data are available to all
entities in the technical-production chain (Zezulka et al., 2016).
This model offers standardized, secure and safe real-time communication among all production com-
ponents. The electronic container (shell) of data and the Industry 4.0 component model are shown in
Figure 1.10 (VDI/VDE-GMA, 2015b).
1.3.3.1 Specification of the Industry 4.0 Component Model

The initial condition of the Industry 4.0 platform is that different objects with different communica-
tion abilities have to be implemented as Industry 4.0 components. Figure 1.10 shows how an object of
production becomes a component. The object (thing) is a standard technological object (component of a
machine, machine, SW, etc.) but does not have a component’s features. Only when the object (thing) is
surrounded by an administrative shell (data container), can it be described as an Industry 4.0 component.
The administrative shell covers both the virtual representation and the technical function of the object
(thing). The figure shows four examples of how the object (thing) becomes the Industry 4.0 component,
and the examples are explained in more detail below:
1. An entire machine can become an Industry 4.0 component as a result of its control system (e.g.,
programmable logic controller ([PLC]). This is done, e.g., by the producer and PLC integrator.
2. A strategically important assembly from a supplier can be regarded as an Industry 4.0 compo-
nent and registered separately as an asset management and maintenance system. This can be
done by the component manufacturer.
3. A terminal block can also be considered an Industry 4.0 component, as it may be important to
keep it up to date throughout the life cycle. This can be implemented by an electrical engineer.
Thing, e.g. Example of I4.0 components Not an I4.0 component

Machine*
Administraon Administraon (Unknown)

(Anonymous)
Shell Shell
Individually Things
Known)
Thing, e.g. Thing, e.g. Enty
Machine* Terminal block*
*= Interference / data format

Administraon Administraon I4.0 compilant
Shell Shell
Thing, e.g. Thing, e.g.

Electrical Axis* Standart soware*
(Thing provides access (Higher level system

to administraon shell) provides access to
administraon shell)
I4.0 – compliant communicaon
FIGURE 1.10 Industry 4.0 component model. (From VDI/VDE-GMA, 2015b.)

4. The software can represent an important asset in the production equipment. Such software
could be a required standard for large sets of machines. The supplier may also wish to sell
extended functions for his or her products separately.
The Industry 4.0 component model has the following requirements (VDI/VDE-GMA, 2015a):
1. A network of Industry 4.0 components must be structured in such a way that connections
between any end points (i.e., Industry 4.0 components) are possible. The Industry 4.0 compo-
nents and their contents must follow a common model.
2. It must be possible to define the concept of an Industry 4.0 component in such a way that it can
meet requirements in different areas, i.e., office floor and shop floor.
3. The Industry 4.0 communication must perform in such a way that the data of a virtual represen-
tation of an Industry 4.0 component can be kept either in the object itself or in a (higher level)
IT system.
As mentioned above, for Industry 4.0 systems, communication is a high priority. Therefore, if the properties
of an Industry 4.0 component are to be made available, at least one information system must be connected
with the object. This requires at least passive communication by the object; this means an object does
not necessarily have to have the ability to carry out Industry 4.0 compliant communication as set out by the
GMA Technical Committee 7.21. Rather, the object can be extended to constitute Industry 4.0 components.
In this way, e.g., a Profinet device can become an Industry 4.0 component (VDI/VDE-GMA, 2015a).
The second priority of Industry 4.0 is virtual representation. This occurs in the information layer of
the RAMI 4.0 model. Virtual representation contains data of the object (thing). These data can either be
kept in the Industry 4.0 component itself and made available to the outside world by Industry 4.0 compli-
ant communication or be stored in an IT system, which makes them available to the outside world by
Industry 4.0 compliant communication. One important part of the virtual representation is the “manifest.”
The manifest is a directory of the individual data contents of the virtual representation. It contains meta-
information. It also contains necessary data on the Industry 4.0 component. Further data in the virtual
representation include those on individual life cycle phases, e.g., CAD data, terminal diagrams or manu-
als. A schematic of the Industry 4.0 component is shown in Figure 1.11 (Umsetyungsstrategie Industrie
4.0: Ergebnisbericht der Plattform Industrie 4.0., 2015).
The virtual representation of an object has to be data-structured. Therefore, the administrative shell
of any Industry 4.0 component should contain specific information expressed in a proper Industry 4.0
vocabulary and in an Industry 4.0 format. Depending on the purpose, the Industry 4.0 component can
have more than one administrative shell.
I4.0 components
Administraon Shell Manifest

with: Virtual representaon
with: Technical funcionality
Resource
manager
Things
Thing
Thing
FIGURE 1.11 Industry 4.0 component. (From Umsetyungsstrategie Industrie 4.0: Ergebnisbericht der Plattform
Industrie 4.0., 2015.)
Life cycle of the factory
Maintenance/ Maintenance/
Producon Design
Usage Usage
Instance Type
Repository
Access to data and funcon
Administraon Administraon Administraon

Shell* Shell* Shell*
Shopfloor
Idenficaon
Thing, e.g. Thing, e.g. Thing, e.g.

Machine 2* Terminal block* Machine 1*
FIGURE 1.12 Repository of the digital factory. (From Umsetyungsstrategie Industrie 4.0: Ergebnisbericht der Plattform
Industrie 4.0., 2015.)
It is important to note that an Industry 4.0 component can have a technical function. It can be, e.g., soft-
ware for local planning in connection with the object (thing), software for project planning, configuration,
operator control and services. It can also contain value added to the object and further technical functions.
The technical function is in the functional layer of the RAMI 4.0 model. Figure 1.12 shows the deploy-
ment of Industry 4.0 components in the future digital factory. Components are mapped into the repository
based on their administrative shells and their mutual connections. The physical factory is then represented
in a digital form in the repository (digital factory) in administrative shells and their connections (reposi-
tory) by means of dynamic actualization during the life cycle of the factory (Manzei et al., 2016).
The Industry 4.0 components must be able to enter into and initiate all possible cross-connections
within the Industry 4.0 factory.
1.4 Servitization
Industry 4.0 is changing the shape of the manufacturing sector. In Industry 4.0, real and virtual worlds
are merging, with equipment, products, and people increasingly connected via the Internet. These con-
nected systems, of CPS, interact to analyze data, predict failure modes, reconfigure themselves, and
continuously adapt to changes in customer demand. As mentioned at the beginning of the chapter, the
concept of Industry 4.0 first appeared in the German manufacturing sector (Schlaepfer and Koch, 2015)
and is currently used globally.
Another concept making inroads globally is servitization, i.e., the delivery of a service component along
with a product, to add value to that product. It is quickly becoming a business imperative. Industry 4.0 pres-
ents many opportunities for firms who have servitized or are looking to do so (Huxtable and Schaefer, 2016).
1.4.1 The Concept of Servitization

Servitization captures the attitude of firms who are increasingly bundling (or integrating) services with
the goods they produce and sell (Schmenner 2009). Although it is not a new trend (Schmenner, 2009),
the term itself was created in the 1980s (Vandermerwe and Rada, 1988). Its meaning goes beyond adding
ancillary services to products to include the desire of manufacturers to get closer to customers and accom-
modate their underlying needs (Schmenner 2009). Mitchell says the business models of manufactur-
ing firms are changing, with companies adding complementary services to what was already provided,
(Mitchell, 2004). Essentially, companies still offer the same products (although these are evolving), but
with the different business models, these can be commercialized in different ways yielding different
returns. In short, servitization is a strategy embracing a service orientation to satisfy customers’ needs,
to achieve competitive advantages and to enhance the performance of the firm (Ren and Gregory, 2007).
Businesses, governments and academics are showing a growing interest in the development of
service-led strategies, arguably because the servitization shift has important economic implications. It is
associated with activities to create additional value and to develop distinctive competencies and capabili-
ties, both of which might lead to competitive advantages in economies previously based simply on cost
(Baines et al., 2009).
Servitizing firms deliver capabilities to customers to gain a competitive edge (Jacob and Ulaga, 2008).
The goal is not to sell “just” products but to offer solutions to customers (Baines et al., 2007), by integrat-
ing services with the products, creating a bundle (Vandermerwe and Rada, 1988).
Many manufacturing firms have already implemented servitization. Goedkoop identified almost
150 in 1999. A commonly cited example is the Rolls-Royce concept of “TotalCare,” whereby the com-
pany shifted from just selling airplane engines to also offering subsequent services (Neely et al., 2008).
Another is the Xerox offer of “pay per click” scanning, printing and copying (Baines et al., 2013). These
examples (analyzed later in the text), together with many others (see Hilti et al., 2017), indicate the trend
to offer customers “value in use” (Baines et al., 2009). This means offering capabilities to solve the users’
own particular problems (Bureca et al., 2017).
1.4.2 Defining Servitization

The terms service and product are intrinsically linked to discussions of servitization. A product is typi-
fied by a material artifact (e.g., car, boat, airplane). The term services is more contentious, often used
loosely and defined based on what a service is not (i.e., a product). In manufacturing, the word services
usually refers to an offering (e.g., maintenance, repair, insurance). We define services as an “economic
activity that does not result in ownership of a tangible asset” (Oxford English Dictionary, 1999).
The first use of the term servitization was by Vandermerwe and Rada in a 1988 article published in
European Management Journal, “Servitization of Business: Adding Value by Adding Services.” They define
servitization as “the increased offering of fuller market packages or ‘bundles’ of customer focused combina-
tions of goods, services, support, self-service and knowledge in order to add value to core product offer-
ings.” They argue that “services are performed and not produced and are essentially intangible.”
Over the last 20 years, many authors have discussed the servitization of manufacturing (see Lightfoot
et al., 2012). As a result, there are many definitions of the term; three of them are outlined in Table 1.3.
In all definitions, the delivery of product-based services is a central issue, and they are all broadly in
agreement with the definition stated by Vandermerwe and Rada (1988).
However, a slight deviation is seen in the definition of Lewis (2004) who refers to the idea of a func-
tional product. In the product-service systems (PSSs) literature, this is considered a specific type of
product-service offering. Although the servitization and PSS research communities have differing
TABLE 1.3
Servitization Definitions
Neely et al. (2008) “The innovation of organizations’ capabilities and processes to better create mutual
value through a shift from selling products to selling product service systems.”
Baines et al. (2009) “Servitization is the concept of manufacturers offering services tightly coupled to
their products.”
Van Looy and Visnjic (2013) “A trend in which manufacturing firms adopt more and more service components
in their offerings.”
Source: Huxtable, J. and Schaefer, D., On Servitization of the Manufacturing Industry in the UK. Changeable, Agile,
Reconfigurable & Virtual Production. Procedia CIRP 52 (2016), 46–51. University of Bath, Bath, BA2 7AY, UK, 2016.
perspectives on the world, they are converging toward a common conclusion that manufacturing compa-
nies should be focusing on selling integrated solutions or PSS. A link with servitization is also identified
by Baines et al. (2007); they define PSS as an integrated combination of products and services that deliv-
ers value in use. Although these two bodies of research have developed separately, it currently seems
appropriate to refine the servitization definition to encompass the PSS theme. This leads to the following
definition: servitization represents the changing of an organization’s capabilities and processes to better
create mutual value through a shift from selling products to selling PSS (Baines et al., 2009).
1.4.2.1 Drivers of Servitization

• Economic: Traditional manufacturing has shifted production away from Western economies to
emerging economies such as China and India. Lower labor rates in these nations mean Western
firms cannot compete on cost alone; therefore, they have transitioned to services.
• Environmental: Global populations are rising, and as a result, resources are being stretched.
Western companies are looking to “do more with less.” Services are considered to promote
dematerialization, making servitization a viable strategy.
• Social & Market: Service contributions to an economy have a direct link to wealth.
• Technology: ICT is a key enabler of servitization. Developments in ICT mean certain services,
such as product monitoring and GPS position tracking, are available currently when they were
not before (Huxtable and Schaefer, 2016).
The main financial drivers often mentioned in the literature are higher profit margins and stability of income.
For manufacturers with high installed product bases (e.g., aerospace, locomotive, and automotive), Wise
and Baumgartner (1999) estimate service revenues can be one or two orders of magnitude higher than that
of new product sales. Slack (2005) agrees and points out that in these sectors, there is often higher revenue
potential. Sawhney et al. (2004) identify companies that have enjoyed success with this approach (e.g., GE,
IBM, Siemens, and Hewlett Packard) and achieved stable revenues from services, despite significant drops
in sales. Ward and Graves (2005) emphasize that the increased life cycle of many modern complex prod-
ucts, such as aircraft, is pushing the most significant revenues downstream toward in-service support. These
product-service combinations tend to be less sensitive to price-based competition and thus provide higher
levels of profitability than offering the physical product alone. Finally, product-service sales tend to be
counter-cyclical or more resistant to the economic cycles affecting investment and goods purchase. This can
help secure a regular income and balance the effects of mature markets and unfavorable economic cycles.
Service elements are used by companies to differentiate their manufacturing offerings from those of
others to gain a competitive edge. Competitive advantages achieved through services are often more
sustainable; in addition, as they are less visible and more labor-dependent, services are more difficult to
imitate. Today, differentiating strategies based on product innovation, technological superiority or low
prices are becoming incredibly difficult to maintain. Frambach et al. (1997) say value-added services can
enhance the customer value to the point where homogeneous physical products are perceived as custom-
ized. These increase barriers to competitors.
The marketing opportunities offered by servitization are generally understood as the use of services to
sell more products. The service component is known to influence the purchasing decision; thus, assessing
its importance is a common concern of marketing literature. This is especially true in industrial mar-
kets where customers are increasingly demanding services. There are pressures to create more flexible
firms, narrower definitions of core competencies and higher technological complexity; these often lead to
increasing pressure to outsource services (Lewis et al., 2004). Services may create customer loyalty to the
point where the customer can become dependent on the supplier. Services tend to induce repeat sales, and
by intensifying contact opportunities with the customer, the supplier may be in the right position to offer
other products or services. Finally, by offering services, companies gain insight into their customers’
needs and can develop more tailored offerings (Baines et al., 2009).
To sum up, servitization frequently occurs because of financial drivers (e.g. revenue stream and profit
margin), strategic drivers (e.g. competitive opportunities and advantages) and marketing drivers (e.g.
customer relationships and product differentiation) (Baines et al., 2009).
1.4.3 Features of Servitization

Manufacturing companies have been selling services for some time. Traditionally, the tendency has
been for managers to view services as a necessary evil in the context of marketing strategies. In this
thinking, the main part of total value creation stemmed from physical goods, and services were
purely an add-on. As discussed above, however, there has been a dramatic change in the way services
are produced and marketed by manufacturing companies. The provision of services is a conscious
and explicit strategy with services a main differentiating factor in a totally integrated product and
service offering. Today, services are fundamental value-added activities, and the product is just a
part of the offering.
A key feature of servitization strategies is the focus on the customer’s specific needs. Customers are
not provided with products but with tailored “solutions.” These deliver desired outcomes for specific
customers, or types of customers, even if this requires the incorporation of products from other vendors.
The use of “multi-vendor” products to deliver customer-centric solutions is exemplified by Alstom’s
maintenance, upgrade and operation of trains and signaling systems. Another is Rockwell’s on-site asset
management of the maintenance and repair of automation products. Oliva and Kallenberg (2003) con-
sider this customer orientation has two separate elements. First, they identify a shift of the service offer-
ing from product-oriented services to a “user’s processes oriented services” (i.e., a shift from a focus
on ensuring the proper functioning and/or customer use of the product, a focus on the efficiency and
effectiveness of the end-user’s processes related to the product). Second, they note a shift in the nature of
customer interaction from transaction-based to relationship-based (i.e., a shift from selling products to
establishing and maintaining a relationship with the customer).
There are many forms of servitization, and each has different features. The literature identifies poten-
tial applications along a “product-service continuum.” The continuum runs from traditional manufactur-
ers who merely offer services as add-ons to their products to service providers who offer services as the
main part of their value creation process. As observed by Gebauer et al. (2008), companies have to look
at their unique opportunities and challenges at different levels of “service infusion” and deliberately
define their position on the continuum. This is envisioned as a dynamic process, with companies redefin-
ing their position over time but always steadily moving toward service dominance at the far end of the
continuum (Baines et al., 2009).
1.4.4 Current State of Servitization and Impacts from Industry 4.0

A study of 57 firms in the UK sought to determine the state of servitization in that country (Huxtable
and Schaefer, 2016), asking three questions. We discuss this case study here because it sheds light on the
extent to which servitization is part of today’s business economy.
How many firms have adopted servitization-based business models?

Of the 57 firms analyzed, 61% are currently offering a clearly defined product-service mix, with
39% indicating they generate revenue purely from the sale of goods.
What percentage of revenue are firms generating from services?
Twenty-seven of the 35 firms who had clearly adopted a servitization-based business model pro-
vided a quantitative breakdown of the revenue they derived from both products and services.
Results indicated that, on average, income from services was 27%. A distribution analysis high-
lighted that 75% of the firms are deriving less than 40% of their revenue from services. This sug-
gests many firms are not reaching the 50:50 ratio of leading firms in the field of servitization and
should consider growing their service sector.
How many firms are offering services related to Industry 4.0?
The results showed that 35% of firms were offering services related to Industry 4.0. This indi-
cates a large proportion of the companies who have adopted servitization-based business models
are not harnessing the full potential of Industry 4.0 within their service offerings (Huxtable and
Schaefer, 2016).
1.4.5 Industry 4.0 Services

This final section integrates the new service offerings identified by the servitization literature unto an
Industry 4.0 servitization framework (Huxtable and Schaefer, 2016).
1.4.5.1 Industry 4.0 Servitization Framework

The servitization literature commonly describes three categories of services offered by manufacturing
firms. Basic services are “outcome-focused on product provision,” e.g., spare parts. Intermediate ser-
vices center on enhancing the product’s use and condition, e.g., helpdesks or conditioning monitoring.
Finally, advanced services are focused on the performance of the product (Lightfoot and Baines, 2013).
For example, when Rolls-Royce sell “power by the hour” with its airplane engines, this is an advanced
service because they are selling a solution with contractual guarantees.
The Industry 4.0 servitization framework merges the Industry 4.0-related services discussed earlier
with these three service categories, creating a tool that businesses can use to identify the Industry 4.0
services and to ensure the services offered are in line with their servitization strategy. Typically, firms
begin selling basic services, and then develop these services throughout the intermediate phase with
the aim of offering advanced services in the future. Advanced services have a range of complexities;
thus, their effective delivery can take substantial time, resources and planning. Figure 1.13 shows the
Industry 4.0 servitization framework; the third layer, flexibility, indicates that many of the services
could be offered on all three levels (Huxtable and Schaefer, 2016).
Advanced
Autonomy Cyber Segurity Cloud Big Data
Tesng Equiment as
a service
Autonomous Incident Virtual Machines as Advanced Advanced

Funonallity Response a service Pricing Services
Machine / Tools as a
service
Cyber Consulng Condion

Servizaon
Monitoring
Safety Services Product focused
Cyber Training
SaaS
Predicve Intermediate
Risk Management Manintenance Services
Autonomous Soware
Informaon Outsourcing
Cyber Segurity Big Data
Packages Consulng
Data re-sell
Automated Base
Services Services
Big Data
Outsourcing
Industry 4.0
FIGURE 1.13 I4 servitization framework. (From Huxtable, J. and Schaefer, D., Procedia CIRP, 52, 46–51, 2016.)
1.5 Product Service-System (PSS)

A PSS is an integrated combination of products and services. This concept embraces a service-led com-
petitive strategy, environmental sustainability and the basis to differentiate oneself from competitors
who simply offer lower-priced products.
The concept of a PSS is a special case of servitization. A PSS can be thought of as a market proposi-
tion that extends the traditional functionality of a product by incorporating additional services. Here,
the emphasis is on the “sale of use” rather than the “sale of product.” The customer pays for using an
asset, rather than simply buying it, and so benefits from a restructuring of the risks, responsibilities, and
costs traditionally associated with ownership. Similarly, suppliers or manufacturers can improve their
competitiveness, as these solutions may be clearly differentiated from product-based offerings while
simultaneously retaining asset ownership, thus enhancing utilization, reliability, design, and protection.
The concept of a PSS also embraces sustainability. The underpinning expectation is that a pure PSS
will have a lower environmental impact than a more traditional transaction where an enterprise manufac-
tures products but then transfers responsibilities of ownership and use to the customer.
An illustration of both the business and environmental benefits of a PSS is the Total Care Package
offered to airlines by Rolls-Royce. Rather than transferring ownership of the gas turbine engine to the
airline, Rolls-Royce leases out “power-by-the-hour.” The spares and maintenance service they offer are
exemplary. Furthermore, as Rolls-Royce maintains direct access to the asset, the company can col-
lect data on product performance and use. Such data can then enable the improvement of performance
parameters (e.g., maintenance schedules) to improve engine efficiency and asset utilization, thereby
reducing total costs and the environmental impact (Baines et al., 2007).
Product-service system is a potentially valuable concept for manufacturers based in developed econo-
mies. Manufacturing industries worldwide continue to undergo colossal change. Traditional producers
are increasingly challenged by countries with a low-cost labor base, with the survival of many European
operations in doubt, and the relocation of production facilities prolific. Thus, the popular advice to manu-
facturers is that, to sustain competitiveness, they should “move up the value chain” and focus on deliv-
ering knowledge-intensive products and services (Hewitt et al., 2002). Such actions are consistent with
the adoption of a PSS-based competitive strategy that uses product, process, and customer knowledge to
reduce the total cost of a product (Baines et al., 2007).
The concept of PSS has been discussed in the literature for over a decade (see, e.g., Goedkoop et al.,
1999; Meijkamp et al., 2000; Mont et al., 2002; Manzini and Vezzoli, 2003), but the industry still seems
slow to adopt it. Although the literature and existing case studies point to many benefits, major inhibitors of
adoption include the design and management of engineering, manufacturing, and supply chain operations.
A concerted and coordinated research program may be required to create a platform of knowledge and tech-
nology to encourage the wide-scale adoption of competitive strategies based on PSS (Baines et al., 2007).
1.5.1 Definition of a PSS

The first formal definition of a PSS was given by Goedkoop (1999). Most researchers and practitioners
have broadly adopted this definition (see Table 1.1) and interpreted a PSS as “product(s) and service(s)
combined in a system to deliver required user functionality in a way that reduces the impact on the envi-
ronment.” Goedkoop et al. (1999) define the key elements of a PSS as the following:
1. Product: a tangible commodity manufactured to be sold.

2. Service: an activity (work) done for others with an economic value and often done on a com-
mercial basis.
3. System: a collection of elements, including their relations.
Most authors see a PSS as a competitive proposition and refer to the need for customer satisfaction and
economic viability. Many also link PSS with achieving sustainability, but only Manzini et al. (2001)
see this as the ultimate goal. Interestingly, the concept of dematerialization is frequently applied to the
concept of PSS (see Table 1.4).
TABLE 1.4
Popular Definitions of a Product-Service System
Goedkoop et al. (1999) “A product-service system is a system of products, services, networks of ‘players’
and supporting infrastructure that continuously strives to be competitive, satisfy
customer needs and have a lower environmental impact than traditional business
models.”
Centre for Sustainable Design “A pre-designed system of products, supporting infrastructure and necessary
(2002) networks that fulfill a user’s needs on the market, have a smaller environmental
impact than separate product and services with the same function fulfillment and
are self-learning.”
Mont et al. (2001) “A system of products, services, supporting networks, and infrastructure that is
designed to be: competitive, satisfy customer needs and have a lower environmental
impact than traditional business models.”
Manzini and Vezolli (2003) “An innovation strategy, shifting the business focus from designing (and selling)
physical products only, to designing (and selling) a system of products and services
which are jointly capable of fulfilling specific client demands.”
Brandstotter (2003) “A PSS consists of tangible products and intangible services, designed
and combined so that they are jointly capable of fulfilling specific
customer needs. Additionally PSS tries to reach the goals of
sustainable development.”
Wong et al. (2004) “Product-Service Systems (PSS) may be defined as a solution offered for sale that
involves both a product and a service element, to deliver the required functionality.”
ELIMA (2005) “A product-service system is defined as a system of products, services, supporting
networks, and infrastructure that is designed to [be]: Competitive, Satisfy customer
needs, & Have a lower environmental impact than traditional business models.”
Source: Baines, T. S. et al., Proc. I. Mech. Eng. B-J. Eng., 221(10), 1543–1552, 2007.
Dematerialization refers to the opportunity offered by a PSS to break the link between value deliv-
ered to the customer or user and the amount of physical material needed to create that value, thus pro-
viding environmental benefits. While this is often stated as an important aim by PSS practitioners and
researchers, the term seldom appears in definitions. Accordingly, Baines et al. (2007) offer the following
definition:
“A PSS is an integrated product and service offering that delivers value in use. A PSS offers the
opportunity to decouple economic success from material consumption and hence reduce the
environmental impact of economic activity. The PSS logic is premised on utilizing the knowl-
edge of the designer manufacturer to both increase value as an output and decrease material and
other costs as an input to a system” (Baines et al., 2007).
1.5.2 Features of a PSS

Traditionally, products have been considered separately from services. However, recent years have seen
the servitization of products and the “productization” of services. Morelli (2003) sees servitization as
the evolution of product identity to a point where the material component is inseparable from the service
system. Similarly, “productization” is the evolution of the service component to include a product or a
new service component marketed as a product. The convergence of these trends, whereby a product and
a service are considered a single offering, represents a PSS (Figure 1.14). Wong (2004) sees a PSS as
fitting onto a continuum (see Section 1.4.3), where pure products are at one end and pure services at the
other end.
A PSS features a particular model of business. Consider the traditional purchase of a photocopier.
As illustrated in Figure 1.15a, the manufacturer provides the technology and, provisionally, the servicing
based on the technology in the field. In return, the manufacturer is rewarded financially. Although the
Product
Service System
Product(s) Service(s)
and and
Service(s) Product(s)
Product(s) Service(s)
FIGURE 1.14 Evolution of the product-service system concept. (From Baines, T.S. et al., Proc. I. Mech. Eng. B J Eng.
221(10), 1543–1552, 2007.)
customer seeks only to use the asset, to do so, he or she must first purchase the equipment (asset), and
then monitor performance, arrange servicing, and take responsibility for equipment disposal. In short,
the responsibilities of ownership lie with the customer.
With a PSS, asset ownership is not transferred to the customer (Figure 1.15b). In the case of the photo-
copier, the manufacturer will typically provide “a document management solution.” Then, the manufac-
turer, rather than the customer, will select and provide the equipment, monitor performance, and carry
out servicing and disposal. In return, the manufacturer receives payment as the customer uses the printing
capability.
Although different authors use different labels and different subdivisions, there is some convergence
in their ideas. As highlighted by Manzini and Vezolli (2003), Manzini et al. (2001), Mont (2002) and
ELIMA (2005), authors tend to agree on the existence of three types of PSS (see Figure 1.16):
1. Product-oriented PSS: promoting or selling the product in a traditional manner, while including
in the original act of sale additional services such as after-sales service to guarantee function-
ality and durability of the product owned by the customer (maintenance, repair, re-use, and
recycling, and helping customers optimize the application of a product through training and
consulting). The company is motivated to introduce a PSS to minimize costs for a long-lasting,
well-functioning product and to design products to take account of product end-of-life (reusable
or easily replaceable or recyclable parts).
2. Use-oriented PSS: selling the use or availability of a product that is not owned by the customer
(e.g., leasing, sharing). In this case, the company is motivated to create a PSS to maximize the
use of the product needed to meet demand and to extend the life of the product and materials
used to produce it.
3. Result-oriented PSS: selling a result or capability instead of a product. Companies offer a cus-
tomized mix of services where the producer maintains ownership of the product and the cus-
tomer pays only for the provision of agreed results.
All three types satisfy customer needs by combining products and services systemized to deliver the
desired utility or function. However, the results-orientated model is more sophisticated and represents
the most popular interpretation of the features of a PSS (Baines et al., 2007).
Use Cash
Cash Technology
Monitor Service
Consumables
Selec on & disposal
(a)
Use Cash
Disposal
Service
(b) Monitor
Cash Consumables
Technology
FIGURE 1.15 (a) Traditional purchase of photocopier; (b) purchase of a document management capability. (From Baines,
T.S. et al., Proc. I. Mech. Eng. B J Eng., 221, 1543–1552, 2007.)
1.5.2.1 Product-Oriented PSS (PoPSS)

Product-oriented PSS refers to physical products surrounded by product-related services whose aim is to
improve the functionality and performance of the product and/or to manage its life cycle (Manzini et al.,
2001; Baines et al., 2007).
In these product-service bundles, the offer is mostly represented by the “pure product” and to a lesser
extent by its related services, making this category of PSS close to the traditional selling mode (Tukker
et al., 2004). Nevertheless, PoPSS envisages the integration of some services, such as advice or con-
sultancy to improve the customer’s applications of the product or features to enhance its maintenance,
repair, reuse and/or recycling. These activities are directed at improving the availability, durability and
performance of the product (Tukker et al., 2004; Baines et al., 2007).
An example is Allegrini’s “Casa Quick” home delivery of detergents; the company combines the
selling of products with the support of experts who provide advice for their use (UNEP, 2002). Another
example is home delivery with parcel tracking services (Torsten and May, 2016).
1.5.2.2 Use-Oriented PSS (UoPSS)

In use-oriented PSS, the value delivered by a company is approximately equally shared between the
intangible and tangible components of its offer.
Product Service System

The Product Ownership is retained Product + Ownership
Product content
Value mainly in (tangible
tangible)) Value mainly in
service content Service content product content
(intangible)
intangible)
Pure Service Use oriented Product Pure

Service oriented PSS PSS oriented PSS Product
6. Acvity 3. Product lease 1. Product

management 4. Product related
7. Pay per renng
renng// 2. Advice and
service unit sharing consultancy
8. Funonal 5. Product
result pooling
SERVITIZATION SHIFT
FIGURE 1.16 Product-service systems. (From Tukker, A., Bus. Strat. Env., 13, 246–260, 2004.)
Use-oriented PSS are aimed at offering the maximum possible availability of the product to sell its
effective use rather than its property rights (Baines et al., 2007). Hence, unlike PoPSS, the ownership
of the product is not transferred to the customer, but is retained by the firm. They are a sort of
“pay-as-you-go” or “spend-when-you-use” applications, in which, following Tukker (2004), the product
might be leased, shared, rented or pooled between different users. An example is Hilti’s “Total Fleet
Management” offer (Hilti, 2017), which is about renting—instead of selling—all the tools necessary for
many applications in the construction industry, ensuring their availability, functioning and maintenance.
1.5.2.3 Result-Oriented PSS (RoPSS)

Result-oriented PSS directly deliver capabilities and solutions to customers (Baines et al., 2007).
This might mean, according to Tukker (2004), selling the whole management of some activities (much
like outsourcing), letting customers pay-per-service unit (e.g., per washed dress, instead of per washing
machine sold) or per functional result (e.g., transporting customer from point A to point B, regardless
of the time and fuel involved). Obviously, in these cases, the ownership of the product is retained by the
company (Bureca et al., 2017).
Xerox and Canon have successful “pay per copy” lease and take back programs (Baines et al., 2007).
Rolls-Royce’s “TotalCare” (explained earlier in the text) is an example of RoPSS, as, without giving away
ownership, the company gets paid a “fixed dollar per flying hour,” much like the “pay per service unit”
concept. Other examples include food catering services and some offers of transportation companies.
Figure 1.17 summarizes the concepts discussed in the previous paragraphs, applying Tukker’s (2004)
PSS theory to a car manufacturer. The figure represents all the possible combinations for cars and service
bundles, providing examples of every kind of offer (Bureca et al., 2017).
1.5.3 Why PSS?

At this stage, it might be useful to explore the rationale for choosing a certain type of PSS. Broadly
speaking, four main categories summarize the reasons for and the benefits and drivers of the selection of
a PSS: environmental, economic, customer-related, and technological (Bureca et al., 2017).
Pure Product Service System Pure

Services Products
RoPSS UoPSS PoPSS
Service Sale Acvity Product Lease Product + Product Sale
(e. g. $ for being Management ($ for the exclusive Related Services (e. g. $ in
transported without ($ for accesing to a ulizaon of a car, ($ for having a car + exchange of a car)
me-limited, without becoming included
using any product)
complete, car the owner) maintenance)
transportaon
service)
Service Lease Sell Sell
Teleport
Repair
Pay per Service Product Product +

Unit Sharing/Renng Advice – Key:
($ for accesing to a ($ for the non- Consultancy
specific car, for exclusive, me- ($ for having a car + Producer/
specific amounts of limited, ulizaon of Manufacturing
fuel, mileage & me) driving course)
a car)
Product
Sell (e. g. Car)
Service Rent
Advice
Customer/
User
Funconal Product Pooling
Result ($ for the me- Group of
($ for being limited, ulizaon of customers/ Users
transported from a car, simultaneously
point A to point B, with other users) Type of
regardless me/
transacon
fuel/etc. involved)
Service Rent
FIGURE 1.17 PSS exemplification. (From Tukker, A., Bus. Strat. Env., 13, 246–260, 2004.)
1.5.3.1 Environmental Rationales

This first category refers to the PSS associated benefits in terms of a more sustainable consumption by
increasing the deployment of underutilized assets and having a less environmental impact. Certainly,
if the ownership of the offered product is not transferred to the customer, not only can that product be
utilized more times by different users, but also, in the long run, fewer products need to be produced,
thus leading to a decrease in the environmental footprint of the manufacturer (Goedkoop et al., 1999;
Manzini et al., 2001; Oman et al., 2003; Baines et al., 2007). Moreover, by offering PSS, companies are
incentivized to manage the life cycle of every product more effectively to reduce their own costs (Baines
et al., 2007; UNEP, 2002). This implies reusing, repairing and recycling (especially in PoPSS), rear-
ranging and re-managing for the next users (especially in UoPSS) and making products as efficient as
possible (especially in RoPSS) (Bureca et al., 2017).
Such efforts lead to increased efficiency in resource use, the optimized use of assets, and decreased
waste and pollution (Goedkoop et al., 1999; Manzini et al., 2001; Oman et al., 2003; Baines et al., 2007).
Benefits accrue not only to the producer and customer, but also to the society and the environment (Mont
et al., 2002).
1.5.3.2 Economic Rationales

Scholars tend to emphasize the environmental rationale as the main driver of PSS, but without economic
incentives, their implementation would not be so widespread (Bureca et al., 2017).
First of all, as Baines et al. (2007) make clear that “the fundamental business benefit of a PSS is an
improvement of the total value for the customer through increasing service elements,” and higher value,
in most cases, corresponds to higher revenue streams. In some sectors, the revenues associated with ser-
vices might be up to two orders of magnitude higher than those associated with the sale of new products,
suggesting manufacturers need to go downstream in their value chain, closer to end customers (Wise
and Baumgartner, 1999). According to a 2013 IDC study, North American equipment manufacturers are
moving toward maximizing aftermarket service revenue, as this is expected to yield greater revenues in
the coming years (IDC Manufacturing Insights, 2013). In a sense, these concepts are consistent with the
idea of Stan Shuh’s smiling curve, shown in Figure 1.18. It is also possible to see the servitization shift as
the progressive advancement of manufacturers from the center to the right of the value chain (Jian and
Wu, 2011), representing higher value-adding activities.
Manufacturers who provide “service components” deliver alternatives for standardization and mass
production (Baines et al., 2007), offering more strategic choices and options to differentiate themselves
from their competitors (Manzini et al., 2001; Mont et al., 2002). Gebauer et al. (2005) say that by increas-
ing the intangible component of an offer, it is possible to increase its inimitability, thus enhancing the
durability of the competitive advantage of the company (Grant et al., 2013). Getting closer to customers
by offering services (see Vandermerwe and Rada, 1988) translates into a lock-out effect for competitors
and lock-in for customers. Possible side effects include securing or even increasing the company’s exist-
ing market share and revenues (Grant et al., 2013).
Value Added
Aer sales
R&D services
Producon of Markeng &

components Sales
High High
marning marning
Assembly
Low marning
Low
Upstream Downstream Value Chain
SERVITIZATION SHIFT
FIGURE 1.18 Smiling curve in a servitization perspective. (From Bureca, A., The Role of the Internet of Things from
A Servitization Perspective, Opportunities and challenges for the implementation of Product-Service Systems, A mul-
tiple case study, Double Degree Program: Master’s degree in Management—LUISS MSc, In Innovation and Industrial
Management—GU, Academic Year 2016–2017, 2017.)
The UK-based Ellen MacArthur Foundation calculates the creation of a circular economy could help
European manufacturers save around 630 USD billion a year in 2025 (Lovins et al., 2014). Although dis-
cussing a circular economy is not our purpose here, in some of its applications, the PSS concept certainly
comes close to it. Arguably, then, its widespread implementation could lead to decreases in production
costs for the manufacturer, boosting its margins (as foreseen by the smiling curve). Moreover, substantial
long-lasting revenues might be captured by using a product base with a long life cycle, as suggested by
Oliva and Kallenberg (2003). However, product-service sales tend to be countercyclical and thus resist
economic cycles in general (Oliva and Kallenberg, 2003).
Baines (2007, 2009) says the potential loss of sales caused by increasing services (because of the
higher product life cycle and utilization of the installed product base, as explained earlier) is more than
offset by higher profit margins and increased stability in income.
1.5.3.3 Customer-Driven Rationales

Manufacturers are moving beyond the production of pure physical goods because customers are demand-
ing more services (Oliva and Kallenberg, 2003). Product-service system might deliver improved cus-
tomization and higher quality because of the flexible characteristics implicit in the service component
(Baines et al., 2007).
According to Prahald (2004), the relationships established with customers should no longer be
transition-based and passive. Customers are demanding to have a voice and to receive more informa-
tion (Grant, 2013; Prahald, 2004) and customization (Grant et al., 2013; Oliva and Kallenberg, 2003;
Vandermerwe and Rada, 1988). A customer-centric approach is needed (Bureca et al., 2017).
Mathieu (2001) suggests that a PSS might be developed around the product or around the customer,
using the latter case as an example in which customer-centricity has to be reached and improved. His
contribution, together with Mont’s (2002), suggests that PSS, compared to traditional offers of pure
physical products, leads to the involvement demanded by customers. This means that customers them-
selves have indirectly asked for PSS and contributed to their development, while enjoying the benefits of
flexibility, customization and better relationships with the producer (Baines et al., 2007).
Another aspect to be considered is whether customers’ non-ownership of a product is a benefit for
them. Of course, it is impossible to generalize, considering the multitude of factors that might influ-
ence the possible answer, including the type of product, manufacturer, customer, industry, environment
and social status. However, because the customer lacks the property rights to the good, the producer
must assume the burden of monitoring, maintaining and undertaking administrative tasks (Baines et al.,
2007), while the customer enjoys improved availability, durability and performance of the product
(Tukker et al., 2004).
1.5.3.4 Technological Drivers

The fourth driver of PSS diffusion is related to the technological development that paved the way to
the integration of products with services. Roger (2009) shows how the evolution in transportation and
communication technologies accelerated the trend to combine manufacturing and service functions.
Kowalkowski et al. (2013) narrow the focus to explain how ICTs were a key enabler of servitization,
stating that their development and diffusion allowed the creation of new PSS. The ICT diffusion also
allowed more manufacturer-controlled activities close to the end customer, such as marketing, sales,
financing and purchasing. Before that, manufacturers tended to be independent wholesalers or jobbers
(Roger et al., 2009).
The many innovative technological tools available today have been used to transform production pro-
cesses and implement new business models (Manyika et al., 2015). Arguably, the mobile phone diffusion
facilitated the implementations of PoPSS, as, because of the device, customers were able to get in contact
with the manufacturer to receive real-time assistance from everywhere. The more recent development
of the IoT offered revolutionary ways for manufacturers to optimize operations and develop innovative
offers (Thoben et al., 2017; Forrester Consulting, 2015). Currently, formerly offline tools can be easily
connected and interconnected, and services can be moved from reactive to predictive (Masson et al.,
2016). These evolving conditions may have progressively led manufacturers to increasingly use ICT to
servitize their offers (Bureca et al., 2017).
Most recently, incredible progress has been made in the quality, size, potential and price of sens-
ing systems, so that they now offer great and affordable service opportunities (Thoben et al., 2017).
The study by Goldman Sachs reports, in the last decade, the prices of sensors dropped by 60%, on aver-
age, processing costs declined by nearly 60X, and wireless connectivity became available for free or at a
very low cost (Goldman Sachs Global Investment Research, 2014).
These opportunities may convince manufacturers to offer their customers the advantages of tech-
nological applications. They could make use of their existing product base, but could be remote from
customers while still keeping track of their utilization patterns, in order to trigger service components
(Shah et al., 2006; Tamburini et al., 2016).
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2
SMARTness and Pervasive Computing
CONTENTS
2.1 Pervasive Computing..................................................................................................................... 48
2.1.1 Introduction..................................................................................................................... 48
2.1.2 Definitions of Pervasive Computing............................................................................... 49
2.1.3 History of Pervasive Computing..................................................................................... 50
2.1.3.1 Distributed Systems....................................................................................... 50
2.1.3.2 Mobile Computing..........................................................................................51
2.1.3.3 Three Waves of Computing........................................................................... 52
2.1.3.4 Core Concepts of Pervasive Computing........................................................ 53
2.1.3.5 Goals of Pervasive Computing...................................................................... 54
2.1.3.6 Research Issues of Pervasive Computing...................................................... 54
2.2 Problems of Pervasive Computing................................................................................................. 55
2.3 Proposed Infrastructure for Pervasive (Ubiquitous) Computing: UbiCloud................................. 56
2.4 Applications of Pervasive Computing........................................................................................... 59
2.4.1 Smart Homes................................................................................................................... 59
2.4.2 Smart Appliances.............................................................................................................61
2.4.3 Smart Cars........................................................................................................................61
2.4.4 Smart “Things”............................................................................................................... 62
2.4.5 Social Networking........................................................................................................... 63
2.5 Health Care.................................................................................................................................... 63
2.5.1 Transportation................................................................................................................. 64
2.6 Two Stages of Pervasive Computing Development....................................................................... 65
2.7 Impact of Pervasive Computing..................................................................................................... 67
2.7.1 Impact on Privacy........................................................................................................... 67
2.7.2 Economic Impact............................................................................................................ 67
2.7.3 Social Impact.................................................................................................................. 67
2.7.4 Winners and Losers in Pervasive Computing................................................................. 68
2.8 Differences between Traditional Networking and Pervasive Computing..................................... 68
2.8.1 Advantages of Pervasive Computing.............................................................................. 68
2.9 Typical Sensors Needed in Pervasive Computing......................................................................... 69
2.9.1 Movement........................................................................................................................ 69
2.9.2 Acceleration.................................................................................................................... 69
2.9.3 Light................................................................................................................................ 69
2.9.4 Proximity......................................................................................................................... 70
2.9.5 Audio............................................................................................................................... 70
2.9.6 Temperature.................................................................................................................... 70
2.9.7 Mechanical Force............................................................................................................ 71
2.9.8 Humidity......................................................................................................................... 71
2.10 Defining Smart Spaces.................................................................................................................. 71
2.10.1 EasyMeeting.................................................................................................................... 71
2.10.2 MavHome........................................................................................................................ 72
2.10.3 GatorTech Smart Home................................................................................................... 72
47
2.11 Attributes of Smart Spaces in Pervasive Computing..................................................................... 72

2.11.1 UbiComp Devices........................................................................................................... 73
2.11.1.1 Wireless Networks......................................................................................... 73
2.11.1.2 Sensors........................................................................................................... 73
2.11.1.3 Reasoning Mechanism................................................................................... 74
2.11.1.4 User Mobility................................................................................................. 74
2.12 Pervasive Computing and IoT........................................................................................................ 74
References................................................................................................................................................. 74
LIST OF FIGURES
Figure 2.1 Pervasive computing: a vision of the future of computers................................................ 49

Figure 2.2 Taxonomy of research problems in pervasive computing................................................. 50
Figure 2.3 Pervasive computing framework....................................................................................... 52
Figure 2.4 Major trends in computing................................................................................................ 53
Figure 2.5 UbiCloud environment...................................................................................................... 56
Figure 2.6 U
A suggests service of interest and sends it with the service list to mobUser via
the message id_service_list/suggested_services.............................................................. 57
Figure 2.7 Interactions between SD, UA, and mobUser.. .......................................................58
Figure 2.8 Achievement of localized scalability and adaptability..................................................... 59
Figure 2.9 Applications of pervasive computing................................................................................ 60
Figure 2.10 Pervasive computing technologies in health care............................................................. 63
Figure 2.11 Providing on-demand information for customers from departure place to destination.....64
Figure 2.12 Two stages of pervasive computing development............................................................. 65
Figure 2.13 D
evelopments and dependencies in pervasive computing. (Arrows within the
category describe evolutionary processes and arrows reaching across categories
represent influences.)......................................................................................................... 66
Figure 2.14 Components of smart spaces............................................................................................. 72
Figure 2.15 Palm-sized mobile computer............................................................................................. 73
2.1 Pervasive Computing

2.1.1 Introduction
Pervasive computing, also called ubiquitous computing or UbiComp (Hansmann, 2003), is the grow-
ing trend to embed microprocessors in everyday objects and activities so that they can communicate
information (Rouse, 2016). The Internet of Things (IoT) is a related term. It is based on the concept of
what happens when computers move away from the desktop and become immersed in the surrounding
environment, as illustrated in Figure 2.1 (Vasseur and Dunkels, 2010).
Someone using pervasive computing engages many computational devices and systems simultane-
ously and is often not aware that he or she is doing so. Machines currently fit the human environment
instead of forcing humans to enter theirs (York and Pendharkar, 2004). Embedded microprocessors
allow the creation of smart products that sense the environment and communicate unobtrusively.
SMARTness and Pervasive Computing 49
FIGURE 2.1 Pervasive computing: a vision of the future of computers. (From Vasseur, J.P. and Dunkels, A.,
Interconnecting Smart Objects with IP. The Next Internet, Morgan Kaufmann Publishers is an Imprint of Elsevier,
Amsterdam, the Netherlands, 2010.)
Almost any device, from clothing to tools to appliances to cars to homes to the human body, can be
embedded with chips to connect the device to an infinite network of other devices. The goal of per-
vasive computing is to make devices “smart,” thus creating a sensor network capable of collecting,
processing and sending data, and, ultimately, communicating as a means to adapt to the data’s context
and activity; in essence, a network that can understand its surroundings, also can improve the human
experience and quality of life.
The goal of pervasive computing, which combines current network technologies with wireless comput-
ing, voice recognition, Internet capability, and artificial intelligence, is to create an environment where
the connectivity of devices is embedded in such a way that the connectivity is unobtrusive and always
available (Zaslavsky, 2008).
Pervasive computing encompasses a wide range of topics, including UbiComp, IoT, distributed com-
puting, mobile computing, human-computer interaction, context-aware computing, and artificial intelli-
gence (Remijn, 2013). Its applications include energy, military, safety, consumer, health care, production,
social networking, assisted living, smart spaces, and logistics. All applications require adaptability,
reliability, context awareness, and flexibility (Raychoudhury et al., 2013).
An example of pervasive computing is an Apple Watch informing a user of a phone call and allowing him
to complete the call through the watch, or a registered user of Amazon’s streaming music service may ask
her Echo device to play a song, and the song is played without any other user intervention (Rouse, 2016).
Pervasive computing systems have a human-centric structure, mobility and pervasiveness. They also
need to be fault-tolerant and robust. Multidisciplinary areas cooperate in pervasive computing, and for
this reason, security, and privacy are vital (Zaharakis and Komninos, 2012).
2.1.2 Definitions of Pervasive Computing

• Pervasive computing is the method of enhancing computer use by making many computers
available throughout the physical environment, but making them effectively invisible to the
user, defined by Mark Weiser (Hamed Mousa, 2013).
• Pervasive computing integrates computation into the environment, rather than having comput-
ers that are distinct objects.
• Pervasive computing enables people to interact with information-processing devices more nat-
urally and casually, and in ways that suit whatever location or context they find themselves in
(Bartram, 2008).
• Pervasive computing is a paradigm shift where technology becomes virtually invisible in our
lives (Hamed Mousa, 2013).
2.1.3 History of Pervasive Computing

The idea of pervasive computing has been around for years, but the current version was articulated by
Mark Weiser in 1988 at the computer science lab of Xerox PARC. From Weiser’s perspective, pervasive
computing was the opposite of virtual reality. In virtual reality, the user is immersed in a computer-
generated environment. In contrast, pervasive computing is invisible “everywhere computing” embed-
ded in the objects around us—the floor, the lights, our cars, the washing machine, our cell phones, our
clothes, and so on (Turban et al., 2005).
Pervasive computing represents a major evolutionary step in work that began in the mid-1970s, when
the PC first brought computers closer to people. Although the PC has not delivered the full potential of
information technology to users, it took a first step toward making computers (if not computing) popular
(if not pervasive). It was also an instrumental factor in the phenomenal growth of hardware components
and the development of graphical user interfaces (Saha and Mukherjee, 2003).
Two distinct earlier steps in the evolution of pervasive computing are distributed systems and mobile
computing (Satyanarayanan, 2001). Figure 2.2 shows how research problems in pervasive computing
relate to those in distributed systems and mobile computing (Ye et al., 2009).
2.1.3.1 Distributed Systems

With the advent of networking, personal computing evolved into distributed computing. As computers
became connected, they began to share capabilities over the network. Distributed computing marked the
next step toward pervasive computing by introducing seamless access to remote information resources
and communication with fault tolerance, high availability, and security (Satyanarayanan, 2001).
Remote communicaon
protocol layering, RPC, end to end args…
Fault tolerence
ACID, two-phasecommit, nested transacons…
High availavility
replicaon, rollback recovery…
DISTRIBUTED
SYSTEMS X MOBILE
COMPUTING X PERVASIVE
COMPUTING
Remote informaon access

dist. sile systems, dist. Databases, caching…
Distributed security
encrypon, mutual authencaon...
Mobile networking
mobile IP, ad hoc networks, wireless TCP fixes...
Mobile informaon access * Smart space

disconnected operaon, weak consistency…
* Invisivility
Adaptave applicaons
proxies, transcoding, agility… * Localized scalability
Energy-aware systems * Uneven condioning
goal-directed adaptaon, disk spin-down…
Locaon sensivity
GPS, WaveLan triangulaon, context-awareness...
FIGURE 2.2 Taxonomy of research problems in pervasive computing. (From Satyanarayanan, M., IEEE Personal
Commun., 8, 10–17, 2001.)
Although the World Wide Web was not designed to be a distributed computing infrastructure, its
networking ubiquity has made it an attractive choice for experimenting with distributed computing con-
cepts. It has also created a culture that is substantially more amenable to the deployment of pervasive
computing environments than the culture that existed when Weiser first articulated his vision. The ad hoc
nature of the Web’s growth has proved that we can distribute computing capabilities in a big way without
losing scalability. The simple mechanisms for linking resources have provided a means for integrating
distributed information bases into a single structure.
Most importantly, the Web has pioneered the creation of a nearly ubiquitous information and com-
munications infrastructure. Many users now routinely refer to their point of presence within the digital
world—typically, their homepages, portals, or e-mail addresses. The computer they use to access these
“places” has become largely irrelevant. Although the Web does not pervade the real world of physical
entities, it is a potential starting point for pervasive computing (Saha and Mukherjee, 2003).
The research from the mid-1970s through the early 1990s created a conceptual framework and
algorithmic base that has enduring value in all work involving two or more computers connected by a
network—whether mobile or static, wired or wireless, or sparse or pervasive. This body of knowledge
spans many areas foundational to pervasive computing and is well codified in textbooks (Couloris et al.,
2001; Lynch and Patt-Shamir, 1993; Mullender, 1993).
Briefly summed up, distributed computing involves the following:
• Remote communication, including protocol layering, remote procedure calls (Birrell and
Nelson, 1984), the use of timeouts, and the use of end-to-end arguments in functionality
(Saltzer et al., 1984).
• Fault tolerance, including atomic transactions, distributed and nested transactions, and two-
phase commit (Gray and Reuter, 1993).
• High availability, including optimistic and pessimistic replica control (Davidson, Garcia-
Molina and Skeen, 1985), mirrored execution (Borg et al., 1989), and optimistic recovery
(Strom and Yemini, 1985).
• Remote information access, including caching, function shipping, distributed file systems, and
distributed databases (Satyanarayanan, 1989).
• Security, including encryption-based mutual authentication and privacy (Needham and
Schroeder, 1978).
2.1.3.2 Mobile Computing

The appearance of full-function laptop computers and wireless local area networks in the early 1990s led
researchers to confront the problems that arise when building a distributed system with mobile clients.
The field of mobile computing was thus born. Although many basic principles of distributed system
design continued to apply, four key constraints of mobility forced the development of specialized tech-
niques: unpredictable variation in network quality, lowered trust, and robustness of mobile elements,
limitations on local resources imposed by weight and size constraints, and concern for battery power
consumption (Satyanarayanan, 1996).
The size and price of mobile devices are falling every day and could eventually support the vision of
pervasive inch-scale computing devices readily available to users in any human environment. Cellular
phone systems that separate the handset from the subscriber identity module (SIM) card approximate
this model of operation. Subscribers can insert their SIM card and automatically use any handset, placing
and receiving calls as if it were their own phone.
Users can already access the same point in the Web from several different devices—office or home PC,
cell phone, personal digital assistant (PDA), and so forth. In this sense, for most users, what matters is
the view a particular machine provides of the digital world. Subscriber identity module cards also dem-
onstrate that the end system is becoming less important than the access to the digital world. In this sense,
we are well on the way to computers “disappearing,” freeing users to focus beyond them.
Applicaons Applicaons
Pervasive middleware
Pervasive
networking
Pervasive Pervasive
device device
User interface User interface
Pervasive
device
User interface
Applicaons Applicaons
FIGURE 2.3 Pervasive computing framework. (From Saha, D. and Mukherjee, A., Computer, 36, 25–33, 2003.)
The “anytime anywhere” goal of mobile computing is essentially a reactive approach to information

access, but it prepares the way for pervasive computing’s proactive “all the time everywhere” goal. As
shown in Figure 2.3, pervasive computing is a superset of mobile computing. In addition to mobility, per-
vasive systems require support for interoperability, scalability, smartness, and invisibility to ensure that
users have seamless access to computing whenever they need it (Saha and Mukherjee, 2003).
Mobile computing is an active and evolving field of research, whose body of knowledge awaits codifi-
cation in textbooks. The results achieved thus far can be grouped into the following broad areas:
• Mobile networking, including Mobile IP (Bhagwat et al., 1966), ad hoc protocols (Royer and
Toh, 1999), and techniques for improving TCP performance in wireless networks (Bakre and
Badrinath, 1995; Brewer et al., 1998).
• Mobile information access, including disconnected operation (Kistler and Satyanarayanan,
1992), bandwidth-adaptive file access (Mummert et al., 1995), and selective control of data
consistency (Tait and Duchamp, 1992; Terry et al., 1995).
• Support for adaptive applications, including transcoding by proxies (Fox et al., 1996) and adap-
tive resource management (Noble et al., 1997).
• System-level energy saving techniques, such as energy-aware adaptation (Flinn and
Satyanarayanan, 1999), variable-speed processor scheduling (Weiser et al., 1994), and energy-
sensitive memory management (Lebeck et al., 2000).
• Location sensitivity, including location sensing (Want et al., 1992; Ward et al., 1997) and
location-aware system behavior (Schilit et al., 1994; Spreitzer and Theimer, 1993; Voelker and
Bershad, 1994).
2.1.3.3 Three Waves of Computing

• Mainframe computing (1960s–1970s): Massive computers executed big data processing appli-
cations; but there were very few computers in the world (see Figure 2.4) (Hamed Mousa,
2013).
• Desktop computing (1980s–1990s): One computer at every desk to help in business-related
activities; computers connected in intranets to a massive global network (Internet), all wired
(see Figure 2.4) (Hamed Mousa, 2013).
18
* Mainframe (one computer, many people).
16
* PC (one person, one computer).
14
* Ubiquitous Compung (one person,
many computers).
12
10
Sales
8
6
4
2
0
1975
1955
1995
1965
2005
1945
1985
1950
1970
1990
1960
2000
1940
1980
Year
FIGURE 2.4 Major trends in computing. (From Hamed Mousa, A.A., Ubiquitous/Pervasive Computing, Ecommerce
Technical Support Systems Manager, Cairo, Egypt, 2, 2013.)
• Pervasive computing (2000s to present): In The Rise of the Network Society, Manuel Castells
suggests there is an ongoing shift from already-decentralized, stand-alone microcomput-
ers and mainframes toward entirely pervasive computing. Castells uses the example of the
Internet as the start of a pervasive computing system. The logical progression from that
paradigm is a system where that networking logic becomes applicable in every realm of daily
activity, in every location and every context. Castells envisages a system where billions of
miniature, ubiquitous intercommunication devices will be spread worldwide (see Figure 2.4).
2.1.3.4 Core Concepts of Pervasive Computing

At their core, all models of pervasive computing share a vision of small, inexpensive, robust-networked
processing devices, distributed at all scales throughout everyday life and generally turned to common-
place ends. For example, a domestic pervasive computing environment might interconnect lighting and
environmental controls with personal biometric monitors woven into clothing so that illumination and
heating conditions in a room might be modulated, continuously and imperceptibly. Another common sce-
nario posits refrigerators “aware” of their suitably tagged contents, able to both plan a variety of menus
from the food actually on hand and warn users of stale or spoiled food.
Pervasive computing presents challenges across computer science in systems design and engineering,
in systems modeling, and in user interface design. Contemporary human–computer interaction models,
whether command-line, menu-driven, or graphical user interface-based, are inappropriate and inadequate.
This suggests that the “natural” interaction paradigm appropriate to a fully robust pervasive computing
has yet to emerge—although in many ways we are already living in a pervasive world. Contemporary
devices that lend some support to this idea include mobile phones, digital audio players, radiofrequency
identification tags, GPS, and interactive whiteboards (Hamed Mousa, 2013).
Three basic forms for pervasive system devices are tabs, pads, and boards (Hamed Mousa, 2013):
• Tabs: wearable centimeter-sized devices;

• Pads: hand-held decimeter-sized devices;
• Boards: meter-sized interactive display devices.
These three forms are characterized by being macro-sized, having a planar form and incorporating
visual output displays. Each can be expanded into a much more diverse and potentially more useful range
of pervasive computing devices.
More recently, the following three forms have been proposed for pervasive systems (Hamed Mousa,
2013):
• Dust: miniaturized devices can be without visual output displays, e.g., microelectromechanical
systems (MEMS), ranging from nanometers through micrometers to millimeters.
• Skin: fabrics based on light emitting and conductive polymers and organic computer devices
can be formed into more flexible non-planar display surfaces and products, such as clothes or
curtains. Microelectromechanical system devices can also be painted onto various surfaces so
that a variety of physical world structures can act as networked surfaces of MEMS.
• Clay: ensembles of MEMS can be formed into arbitrary three-dimensional shapes as artifacts
resembling many different kinds of physical object.
Pervasive computing may be seen as consisting of many layers, each with its own role, which together
form a single system (Hamed Mousa, 2013):
• Layer 1: task management layer. This layer monitors user task, context, and index, maps user
task to need for the services in the environment, and manages complex dependencies.
• Layer 2: environment management layer. This layer monitors resources and their capabilities
and maps service need and user-level states of specific capabilities.
• Layer 3: environment layer. This layer monitors relevant resources and manages the reliability
of these resources.
2.1.3.5 Goals of Pervasive Computing

• Become an invisible technology;
• Integrate virtual and physical worlds;
• Exist in desks, rooms, buildings, and life more generally;
• Take data out of the environment, leaving behind an enhanced ability to act (Bartram, 2008).
2.1.3.6 Research Issues of Pervasive Computing

The advent of networking enabled independent personal computers to evolve into distributed systems.
The mechanisms for linking remote resources provided a means of integrating distributed information
into a single structure and distributing computing capabilities (Saha and Mukherjee, 2003). A simi-
lar evolution is driving distributed systems to become pervasive by introducing seamless access to
remote information resources and communication with fault tolerance, high availability, and security
(Ye et al., 2009).
Mobile computing emerged from the integration of cellular technology and the network. Short-range
wireless and wide-area wireless (or wired communication) then boosted the development of mobile
computing. Both the size and price of mobile devices (e.g., laptop or mobile phones) are falling every
day and could eventually support pervasive computing with inch-scale computing devices readily avail-
able for use in any human environment. In mobile computing, the research problems overlapping with
pervasive computing include mobile networking, mobile information access, adaptive applications,
energy-aware systems, and location sensitivity (Ye et al., 2009).
While it is possible to get caught up in the “pervasive-ness” part of this new technology, it is also
important to realize how much such systems rely on existing information bases and infrastructures.
In transportation, for example, services such as Google Maps provide much of the raw information
needed to create the value added, location-based service. Pervasive systems are therefore only part of a
larger information infrastructure. It is necessary to appreciate both how small a part of the overall sys-
tem may need to be pervasive, but equally how large is the impact of providing seamless integration of
services in everyday life (Satyanarayanan, 2001).
This brings us to several research issues. The first issue is the effective use of smart spaces. A smart space
is a work or living space with embedded computers, information appliances, and multimodal sensors that
allow people to work and live efficiently (together or individually) with an unprecedented access to informa-
tion and support from local computers (Stanford et al., 2003). Examples of suitable sites for smart spaces
include a business meeting room, a medical consultation meeting room, a training and education facility, a
house, a classroom, and a crisis management command center. A smart space should adapt to the changes in
an environment, recognizing different users and providing personalized services (Ye et al., 2009).
The second research issue is invisibility. Streitz and Nixon identify two forms of invisibility (Streitz
and Nixon, 2005):
• Physical invisibility refers to the miniaturization of computing devices and their embedding
within and throughout the individual and the environment, e.g., in clothes, glasses, pens, cups,
or even the human body.
• Cognitive invisibility refers to the ability to use the system’s services in a manner that is free from
distraction. A pervasive computing environment should interact with users at almost a subcon-
scious level if it is to continuously meet the expectations of users; it should rarely present them
with surprises. This is also described as minimal user distraction by Satyanarayanan (2001).
The third research issue is localized scalability. Scalability is a critical problem in pervasive computing,
as the intensity of interactions between devices will increase in environments where more and more
users are involved. The density of these interactions must be decreased by reducing distant interactions
that are of little relevance to current applications.
The fourth research issue is masking heterogeneity. The rate of penetration of pervasive comput-
ing technology into infrastructure will vary considerably. Making pervasive computing technology
invisible requires reductions in the amount of variation in different technologies, infrastructures, and
environments (Ye et al., 2009). One way to reduce the amount of variation seen by a user is to have
his or her personal computing space compensate for ‘‘dumb’’ environments. As a trivial example,
a system capable of disconnected operation is able to mask the absence of wireless coverage in its
environment. Complete invisibility may be impossible, but reduced variability is well within our reach
(Satyanarayanan, 1996).
2.2 Problems of Pervasive Computing

1. Heterogeneity of devices, such as devices’ capabilities, platforms, and network protocols;
2. Unanticipated (unpredictable) availability of devices, network connections, and services;
3. Rapidly aging devices, ambiguities, incompleteness, and uncertainty of context information;
4. Spontaneous mobility of devices and users, leading to unavailability of devices/services;
5. Diverse interactions:
• Between users and the environment;
• Among multiple environmental resources;
• Among multiple users;
• Among small social groups (e.g., family, friend);
• Different combination of those types;
User preferences should be invisible and shift seamlessly over time, but preferences differ;
6. Computational resources, battery power, memory, and bandwidth can be limited.
7. Enormous number of distributed system elements (Estrin et al., 2002);
8. Need for mobility, with computing sessions distributed over a range of devices (Henricksen
et al., 2001);
9. Human attention is an especially scarce resource in such environments, because the user is
often preoccupied with walking, driving, or other real-world interactions (Garlan et al., 2002).
2.3 Proposed Infrastructure for Pervasive (Ubiquitous) Computing: UbiCloud

An infrastructure for a pervasive (ubiquitous) computing environment empowered by cloud services
has been called “UbiCloud.” Figure 2.5 shows the UbiCloud environment. As shown in the figure,
the infrastructure is comprised of two main components: the Cloud Computing component and the
ubiquitous computing (UbiComp) component (Youssef, 2013).
• CC component: This component represents the cloud with all its service models (IaaS, PaaS,
SaaS). It provides users in the pervasive computing environment with all services they need.
For example, if the pervasive computing environment is a mall, the restaurant service provider
can help a user find an Italian restaurant. If a user is looking for stores with sales or bargains,
the sales service provider can help him find a good deal. It is the responsibility of cloud service
providers (CSPs) to offer these services to users based on the service-level agreements (Joint
FIGURE 2.5 UbiCloud environment. (From Youssef, A., Int. J. Ad hoc, Sens. Ubiquitous Comp., 4, 2013.)
and Baker, 2011). However, these services should also satisfy the pervasive computing envi-
ronment characteristics of invisibility, adaptability, and localized scalability (Youssef, 2013).
• UbiComp component: This component represents the pervasive computing environment and
includes the following entities (Youssef, 2013):
• Service directory (SD): a directory for all services offered in UbiCloud
• User agent (UA): any embedded device that receives a service request from the user and
sends it to SD
• Mobile user (mobUser): any user who moves in the smart place or from one smart place to
another and uses a mobile device to interact with UA.
The protocol organizing interactions between these entities inside the UbiCloud environment can be
described as follows:
• First, each service provider (SP) in the cloud registers its service at the SD. This can be done
via a service_register message sent from SP to SD and an ACK message sent from SD to SP.
Hence, SD contains all services provided by the cloud for this smart place and knows which
SP provides each service.
• On startup, UA identifies users’ preferences and intentions from the information on their
mobile device.
• Service directory creates a service list for the smart space and broadcasts it via a service_list
message to all UAs located in this smart place. Later, if a new SP registers a service at SD, it
updates the service list and broadcasts the update list to all UAs.
• Based on users’ intentions and preferences, UA suggests services that may be of interest to
a specific user and sends it with the service list to mobUser via the message id_service_list/
suggested_services. These steps are illustrated in Figure 2.6.
SP SD UA mobUser
service_register
ACK
me
service_register
ACK
service_list
id_service_list/
suggested service
FIGURE 2.6 UA suggests service of interest and sends it with the service list to mobUser via the message id_service_list/
suggested_services. (From Youssef, A., Int. J. Ad hoc Sens. Ubiq. Co., 4, 2013.)
SP SD UA mobUser
service_request
id_service_request
id_service_request
me
id_service_response
id_service_response
service_response
FIGURE 2.7 Interactions between SD, UA, and mobUser. (From Youssef, A., Int. J. Ad hoc Sens. Ubiq. Co.,
4, 2013.)
The interaction between SD, UA, and mobUser is shown in Figure 2.7 and is described below (Youssef,
2013):
1. The mobUser uses his or her mobile device to send a service request message to UA.
2. User agent adds a user identity header to the message (id_service_request) and forwards it to
Service Agent (SA).
3. SA knows which SP provides this service on the cloud; thus, it forwards the message to the
appropriate SP.
4. When SP receives a service request message from SA, it replies with id_service_response to UA.
5. User agent forwards the service response message to the mobUser.
The cloud services registered at SD are relevant to the smart space. When the user moves from one smart
place to another, a different service list is registered at SD of the new place. This helps achieve local
scalability and adaptability. This concept is depicted in Figure 2.8.
The UbiCloud infrastructure helps solve some inherent problems in pervasive computing. With the
power of computing, storage, and networking capabilities of the cloud, intensive applications that are
time-sensitive or need large storage space or wider bandwidth can now run in pervasive computing
environments. With the high scalability of CC, more computing resources can be added. Therefore,
more services can be provided by CSPs to more users in the pervasive computing environment. These
services are available as users move inside or across pervasive environments at any time, because they
are provided by the cloud.
FIGURE 2.8 Achievement of localized scalability and adaptability. (From Youssef, A., Int. J. Ad hoc, Sens.
Ubiquitous Comp., 4, 2013.)
2.4 Applications of Pervasive Computing

Pervasive computing is maturing from its origins as an academic research topic to a commercial reality.
It has many potential applications, from the intelligent office and the smart home to health care, gam-
ing and leisure systems, and public transportation. The specific application domains discussed here are
smart homes, smart appliances, smart cars, smart “things,” social networking, health care, and public
transportation (Ye et al., 2009). Several existing and future applications of pervasive computing are
illustrated in Figure 2.9 (Turban et al., 2005).
2.4.1 Smart Homes

Pervasive computing technologies are becoming essential components in the home environment. A house
can be set up to act as an intelligent agent, perceiving the state of the home environment through installed
sensors and acting through device controllers.
14 1
13
2
12
11
10
5
9
8 6
7
1. Smart building materials: 8. Autonomous robot-mailbox performing

Sense vibraon, temperature, monitors. nominally manual labor.
Monitor premise for intruders.
Cancel street noise. 9. Street light senses food and motor traffic
polices area.
2. Bridge deck erected with smart building materials:
Senses, report traffic, wind loads. 10. Ranking / Business:
Monitors structural integrity. ATM machines, cash registers, bar-code readers, credit card devices.
Security devices offers personal Ids, but also sense vibraons and
3. Autonomous robot-sweeper. (body) heat and moon and monitors premises.
4. Wireless communicaon, including Links to GPS 11. Home networks:

satellites, Net access. Most electrical appliances including toasters, cable TV set-top boxes,
toys, phones, thermostats, PCs.
5. Smart sensors pills:
Programmable delivery vehicles for pharmaceucals. 12. Smart building materials.
Internal sensing applicaons. Smart pain.
Smart concrete.
Smart gets.
6. Embedded automobile devices:
Anlock brakes.
Air bags.
13. Smart cement detects earthquake acvity.
Evaluate performance.
Provide Net access. 14. Collar on dog for wireless locaon via GPS link.
Clothes on man (personal cybernecs) offers
7. Fire hydrant measures water flow, senses heat, offers similar abilies. As well as networking and heat
security mechanisms. sensors.
FIGURE 2.9 Applications of pervasive computing. (From Estrin, D., Commun. ACM, 43, 38–39, 2000.)
The goal is to maximize the comfort and security of the inhabitants and minimize operation cost.
For example, applications in a smart home can improve energy efficiency by automatically adjusting
heating, cooling, or lighting levels according to the condition of the inhabitants (e.g., location or body
temperature). They can provide reminders of shopping orders according to the usage of groceries and
schedule the entertainment system (e.g., playing music or movies, or switching on a TV) according to the
inhabitants’ hobbies and habits. In these cases, pervasive computing technologies are applied to identify,
automate, and predict the activity patterns of inhabitants from synthetic and real collected data (Cook
et al., 2003; Logan et al., 2007).
In the United States, tens of thousands of homes are already equipped with home-automation devices,
and there are signs that Europe—which has much lower home Internet use—is following suit (Turban
et al., 2005).
2.4.2 Smart Appliances

One of the key elements of a smart home is the smart appliance, an Internet-ready appliance that can be
controlled by a small handheld device or desktop computer via a home intranet (wire or wireless) or the
public Internet.
Appliance manufacturers are interested not only in the sale of appliances but also in servicing them.
In most cases, the manufacturer loses touch with a purchased appliance unless the customer registers it
for warranty purposes. Potentially, a networked appliance could provide a manufacturer with informa-
tion that could be used to capture or report on its operation, performance, and usage. In addition, the
networked appliance could provide information for diagnostic purposes—for monitoring, troubleshoot-
ing, repairing, or maintaining the device.
To date, however, consumers have shown little interest in smart appliances. For now, appliance manu-
facturers are focusing on improving people’s lives by eliminating repetitive, no quality tasks. One exam-
ple is Sunbeam’s corded home linking technology (HLT) products that communicate with one another
using an embedded technology called power line communication (PLC). For instance, an HTL alarm
clock can coordinate an entire morning’s routine: the heating system, the coffeemaker, and the lights
(Turban et al., 2005).
2.4.3 Smart Cars

Every car today has at least one computer on board to operate the engine, regulate fuel consumption, and
control exhaust emissions. The average automobile on the road has 20 or more microprocessors, under the
hood, behind the dash, in the door panels, and on the undercarriage. Microprocessors control the radio,
decide when the transmission should shift gears, remember a seat position, and adjust the temperature.
They can make the suspension work better, help drivers see in the dark, and warn when a tire is low. In the
shop, the onboard microprocessors are used to diagnose problems. Car computers often operate indepen-
dently, but some swap data among themselves—a growing trend. The microprocessors in a car require
little maintenance, continuing to operate through extreme temperature, vibration, and humidity.
There is a growing trend to connect car microprocessors to mobile networks and to the Internet.
Emergency assistance, driving directions, and e-mail are some of the services these connections can
support. To increase safety, drivers can use voice-activated controls, even to access the Web. General
Motor’s OnStar system (onstar.com) already supports many of these services.
The next generation of smart cars is likely to provide even more automated services, especially in
emergency situations. Some expect cars will have a device for automatic crash notification (ACN).
This still-experimental device would automatically notify the police of an accident involving an ACN-
equipped car and its location. Such systems would determine the speed upon impact, whether the car has
rolled over, and whether the driver and passengers were wearing seat belts. Information of this sort might
be used by emergency personnel to determine the severity of the accident and what types of services
will be needed.
Ideally, smart cars eventually will be able to drive themselves. Known as autonomous land vehicles,
these cars follow geographic information system maps and use sensors in a wireless environment to iden-
tify obstacles. Such vehicles are already on the roads in California, Pennsylvania, and Germany (on an
experimental basis, of course) (Turban et al., 2005).
2.4.4 Smart “Things”

Other devices and instruments can be made “smart” (Turban et al., 2005). Some examples are discussed
below:
• Barcodes. A typical barcode, known as the Universal Product Code, is made up of 12 digits, in
various groups. The first two show the country where it was issued, the next four represent the
manufacturer, and the remaining six are the product code assigned by the manufacturer. On a
package, the code is represented by a series of bars and spaces of varying widths.
Barcodes have been used for 25 years, but they have some limitations. First, they require line-
of-sight of the scanning device. This is fine in a store but can pose substantial problems in a
manufacturing plant, a warehouse, or on a shipping or receiving dock. Second, they are printed
on paper and so can be ripped, soiled, or lost. Third, the barcode identifies the manufacturer
and product, not the item. For example, every carton of milk of a given producer has the same
barcode, regardless of when it was produced. This makes a barcode useless in determining
things such as the expiration date.
• Auto-ID. This is an alternative identification method that overcomes the limitations of bar-
codes. It has been promoted over the past couple of years by the Auto Identification (Auto-ID)
Center (autoidcenter.org). This organization is a partnership of more than 87 global companies
and three of the world’s leading research universities: MIT in the United States, University
of Cambridge in the UK, and University of Adelaide in Australia. The companies include
manufacturers (e.g., Coca-Cola, Gillette, Canon), retailers (e.g., Wal-Mart, Tesco in the UK),
shippers (e.g., UPS, US Postal Service), standards bodies (e.g., Uniform Code Council), and
government agencies (e.g., US Department of Defense).
The mission of the Auto-ID Center goes well beyond replacing one code with another. Its
stated aim is to create an IoT, a network that connects computers to objects—ranging from
boxes of laundry detergent to pairs of jeans to airplane engines. This IoT will provide the abil-
ity to track individual items, as they move from factories to store shelves to recycling facilities.
This will make possible near-perfect supply chain visibility.
• Radio-frequency identification (RFID): RFID uses radio waves to automatically identify indi-
vidual items. Typically, a microchip with product information and an antenna are embedded in
an RFID tag. The antenna transmits the identification information by radio waves to an RFID
reader; the reader passes the information on to computers that can make use of it.
RFID has been around for a while. In World War II, RFIDs were used to identify
friendly aircraft. Today, they are used in wireless tollbooth systems, such as E-ZPass.
In Singapore, they are used in a system called Electronic Road Pricing, which charges dif-
ferent prices to drive on different roads at different times, encouraging drivers to stay off
busy roads at busy times. Every car has an RFID tag that communicates with card readers
on the major roads.
RFID can also be used in health care. For example, RFID can monitor patients and staff in a hospital.
Initially, RFID tags were mounted on patients at certain places; later, low-frequency and high-frequency
RFID systems were placed on patients but these systems were restricted because of their short range and
very low data transfer rate. Today, they are mounted in the human body instead of on the body (Sani
et al., 2010).
Until now, a main problem with RFID has been the expense. Tags have cost at least US 50 cents,
which makes them unusable for low-priced items. A California company called Alien Technology
(alientechnology.com) has invented a way to mass-produce RFID tags for less than US 10 cents apiece for
large production runs. In January 2003, Gillette placed an order with Alien Technology for 500 million
RFID tags (RFID Journal, November 15, 2002). Gillette is using the tags in a number of trial programs.
In one of the early trials, Gillette attached the tags to Mach 3 razors shipped to Wal-Mart, whose store
shelves are equipped with special RFID readers. The overall success of RFID tags in the marketplace
will depend on the outcome of trials such as this.
2.4.5 Social Networking

The popularity of social networking owes much to the recent technological developments of smart-
phones and the increasing pervasive connections of Internet networks, because of which reaching real-
time worldwide news and staying up to date have become very easy. With a pervasive communication
platform composed of smartphones, network infrastructures and social networking, messages can be
transmitted anywhere at any time (Kirci, 2017).
2.5 Health Care

Pervasive health care is an emerging research discipline, focusing on the development and applica-
tion of pervasive computing technology for health care and life wellness (Coyle et al., 2007). Pervasive
computing technologies introduce new diagnostic and monitoring methods that directly contribute to
improvements in therapy and medical treatment (Bohn et al., 2003). These methods involve sensors and
monitoring devices, such as blood pressure cuffs and glucose meters, which can collect and disseminate
information to health care providers. They can support a better understanding of facets of a patient’s
daily life and then appropriately modify therapies to the individual.
One of the scenarios would be a hospital where a patient is constantly monitored, and the findings are
linked to a diagnostic process (also see above section on RFIDs). Thus, it could be possible to advise
the hospital canteen to prepare special food for this particular patient or to adapt to the patient’s specific
medication according to his current health condition.
Pervasive computing technologies can also improve the procedure of medical treatment (an exam-
ple is shown in Figure 2.10). In emergency care, they can accelerate access to medical records at the
emergency site or seek urgent help from multiple experts virtually. In the surgical field, they can
FIGURE 2.10 Pervasive computing technologies in health care. (From Adamer, K. et al., Developing a wearable assistant
for hospital ward rounds: An experience report, Proceedings of the International Conference for Industry and Academia
on Internet of Things, Springer-Verlag Berlin Heidelberg, 2008.)
collect and process an ever-increasing range of telemetric data from instruments used in an operating
room and augment human ability to detect patterns that could require immediate action (Borriello
et al., 2007).
2.5.1 Transportation
Pervasive computing technologies are entering everyday life as embedded systems in transportation
(Farkas et al., 2006; Cunningham and Cahill, 2000). The introduction of pervasive computing into trans-
portation has been facilitated by a range of technologies, particularly networks and positioning systems
(Ye et al., 2009).
A number of applications have already emerged. In tourist guides, a pervasive computing system can
provide personalized services (such as locating a specific type of restaurant or planning a day trip) for
visitors based on their location and preferences. In traffic control, a system can be immediately informed
of congestion or accidents and notify all approaching drivers. In route planning, a system can suggest
the most convenient routes for users based on the current traffic conditions and the transportation mode
being used. At a public transportation hub, a system can provide high value-added services to improve
customer convenience (see Figure 2.11) (Nakagawa et al., 2011).
FIGURE 2.11 Providing on-demand information for customers from departure place to destination. (From Study on
new value creation for a ubiquitous society, Special edition paper. JR EAST Technical Review-No. 9, Frontier Service
Development Laboratory, Research and Development Center of JR East Group, https://www.jreast.co.jp/e/development/
tech/pdf_9/Tec-09-17-27eng.pdf. Accessed 2018.)
2.6 Two Stages of Pervasive Computing Development

Pervasive computing will likely develop in two stages (Gabriel and Bovenschulte, 2006). These are
explained below and illustrated in Figure 2.12.
The first stage, PvC-1, will see the establishment of numerous products and applications seeking the
goals of mobility and ad-hoc networking. This will essentially be a continuation of current trends, such
as the miniaturization and integration of various functions in electronic devices to the point of creating
smart objects. During this stage, context awareness will be realized in a simplified form, e.g., in the form
of user profiles. Despite their permanent linkage to communications and data networks, these smart
objects will remain largely isolated solutions that join a great number of capabilities, especially those
relating to communications and data processing.
In a parallel process, more and more everyday technical objects will be outfitted with microcon-
trollers, sensors and so on and thus upgraded to smart objects. Their capabilities will be tailored to
specific tasks and provide simple forms of networking. As these parallel trends converge, they will lead
to isolated applications defined by specific use models or manufacturers. During this transition phase,
media ruptures among isolated applications will be overcome; however, barriers to other solutions or
applications will remain (Gabriel and Bovenschulte, 2006).
The second stage, PvC-2, will occur after this interim stage of isolated applications. It will feature the
emergence of a truly open networking structure without media ruptures. Experts estimate that PvC-2
will establish itself in roughly 10 years (Gabriel and Bovenschulte, 2006).
During the PvC-1 phase, pervasive computing’s characteristics and capabilities will increase in
number and make qualitative gains. The ability to perform operations in the background without
receiving explicit commands will be a central characteristic of a seemingly invisible ICT structure.
In PvC-1, this kind of context awareness will at first be based on user profiles, in much the same way as
many Internet services today. It is expected that these profiles will be Internet-based and then accessed
and used by the individual smart objects. This profile-based context awareness will be extended sig-
nificantly in PvC-2.
In PvC-2, smart objects will be able to respond intelligently and on a case-by-case basis to the situ-
ational needs and/or environment of the user. Smart objects will require well-functioning software agent
FIGURE 2.12 Two stages of pervasive computing development. (From Gabriel, P. and Bovenschulte, M., Pervasive
Computing: Trends and Impacts. Federal Office for Information Security, Bibliographic information of the German
National Library, © 2006 Bundesamt für Sicherheit in der Informationstechnik–BSI Godesberger Allee 185–189, 53175
Bonn, Germany, 2006.)
technology based on artificial intelligence and knowledge management paradigms. These agents’ flex-
ible world models will permit a functional, adaptive logic. User-defined action will be possible in different—
even unfamiliar—contexts.
Qualitative leaps similar to those expected in the transition from PvC-1 to PvC-2 are expected in
pervasive computing’s impact as well. The embedding of pervasive computing components into a vast
number of everyday objects will pose new challenges to recycling. The integration of pervasive comput-
ing components will turn those objects, which are currently relatively homogeneous, into mixed-material
objects. They will no longer be compatible with present recycling methods based on unmixed materials.
Laborious pretreatment and/or entirely new procedures will be required, even for some of today’s ordi-
nary consumer materials.
The number of components in pervasive computing will grow significantly during the transition
to PvC-2 as media ruptures will have been overcome, the technology will have matured and the
cost-effective mass production of products and applications will have begun. The number of smart
objects will increase rapidly. On the one hand, this means recycling will constantly face new quali-
tative challenges; on the other hand, the cumulative impact of these changes will push the existing
recycling infrastructure to its limits.
Figure 2.13 illustrates the key development trends and cross-linkages in pervasive computing. It pro-
vides a highly condensed illustration of the prospects for pervasive computing development (Gabriel and
Bovenschulte, 2006).
FIGURE 2.13 Developments and dependencies in pervasive computing. (Arrows within the category describe evolu-
tionary processes and arrows reaching across categories represent influences.) (From Gabriel, P. and Bovenschulte, M.,
Pervasive Computing: Trends and Impacts. Federal Office for Information Security, Bibliographic information of the
German National Library, © 2006 Bundesamt für Sicherheit in der Informationstechnik–BSI Godesberger Allee 185–189,
53175 Bonn, Germany, 2006.)
2.7 Impact of Pervasive Computing

Pervasive computing will permeate everyday life—both private and working—and is expected to have
far-reaching consequences that will be reflected in a variety of socioeconomic contexts. Both positive
and negative effects are likely at several levels. Safety versus privacy, for example, makes up two ends of
one pole. The following sections discuss pervasive computing’s impact in terms of privacy, economics,
society, and the digital divide (Gabriel and Bovenschulte, 2006).
2.7.1 Impact on Privacy

In terms of privacy, slightly positive effects are expected for the application fields of security, medicine,
and production; moderately negative effects are expected in other application contexts.
A pervasive computing design for privacy that conforms to data protection standards is regarded as a
requirement for ensuring privacy and is preferred to the downstream concept of context-dependent data
protection filters (digital bubbles). Only a system architecture that protects privacy from the outset can
prevent serious conflicts in data protection from developing. In the use and processing of data, rendering
all steps in the process visible and logically comprehensible seems to be of less importance. Far more
crucial is a user’s explicit trust in a particular pervasive computing system that the SP will handle per-
sonal data responsibly.
Apart from this concern, there is the risk that frequent use of a pervasive computing application
could lead to the inattentive handling of personal data. This means that the premature availabil-
ity of a groundbreaking pervasive computing application could result in limited public attention
being given to the protection of privacy during its crucial phase of implementation (Gabriel and
Bovenschulte, 2006).
2.7.2 Economic Impact

Among the economic effects associated with pervasive computing, work efficiency is expected to
improve. This will become most apparent in the key economic areas of production, logistics, and com-
merce. This will not, however, play a role in smart homes. It is worth noting that no significant efficiency
gains from pervasive computing are expected for housework, professionals working at home, and home
care of the elderly and/or ill. The motivation for introducing pervasive computing into the smart home
is to increase personal comfort, which is not quantifiable in economic terms. Experts anticipate effects
similar to those resulting from the introduction of modern household appliances during industrialization.
At that time, the time saved by the use of new appliances was counteracted by increased demands in
hygiene and cleanliness, which resulted in extra work.
Moderately positive effects are anticipated for increasing energy and resource efficiency in all areas
of application. Significant increases are expected, however, in production, especially logistics. Indeed,
pervasive computing’s potential for commerce and production is immense because of its ability to self-
organize and control industrial processes. Such self-organization depends on several things, including
the availability of fully developed knowledge-based systems. Developing these systems, however, poses
a significant challenge. Finally, newly adapted recycling procedures will be needed to allow the reuse
of pervasive computing components that have been integrated and embedded into everyday objects
(Gabriel and Bovenschulte, 2006).
2.7.3 Social Impact

Clear positive effects are predicted for pervasive computing’s support of personal activities in medicine,
the home, communications, and car, while moderately positive effects are expected in inner and external
security, and in production, logistics, and commerce. Improvements in safety are anticipated primarily
in military and security-related applications, especially in medical applications. The automotive branch
will also profit somewhat, according to expert opinion.
Pervasive computing is not expected to produce any negative “rebound effects,” which would offset
or even negate pervasive computing’s positive effects. This is true for work and attention efficiency,
resource consumption, and a man or woman’s ability to orient and locate himself or herself in the envi-
ronment (Gabriel and Bovenschulte, 2006).
2.7.4 Winners and Losers in Pervasive Computing

The experts identify several social groups as winners and losers in pervasive computing. The elderly
and persons with little experience with technology stand out as groups that could benefit from pervasive
computing and be disadvantaged by it as well.
The first generation of pervasive computing applications is likely to demand a certain level of knowl-
edge and requirements that will result in a temporary division between pervasive computing’s winners
and losers. However, this divide should subside as the functional logic of later pervasive computing
generations is automated, and cost-effective mass production sets in.
It is therefore imperative that a pervasive computing infrastructure offers easy access, either in technical,
financial, or intellectual terms. Otherwise, a digital divide will emerge between those with and those with-
out access to pervasive computing. Other groups that experts believe could suffer disadvantages as a result
of pervasive computing include small businesses and retailers, political minorities, critics or skeptics, mar-
ginal groups, and persons with “unusual” backgrounds. Also mentioned in this context are persons who
intentionally avoid participation in a pervasive computing-based system or those who cannot participate.
There are two dimensions to the potential disadvantages resulting from pervasive computing: those
associated with surveillance and those associated with an inadequate access to pervasive computing-
based infrastructures and services. Pointing to entire countries lacking a pervasive computing infrastruc-
ture, some experts speak of a digital divide on the global level (Gabriel and Bovenschulte, 2006).
2.8 Differences between Traditional Networking and Pervasive Computing

The number of machines associated with the Internet has been expanding at an exponential rate and will
keep growing, as the existing systems of installed workstations are joined with the larger, worldwide
system and as new systems of inserted apparatuses are developed in homes and workplaces. The sorts of
apparatuses that will be used to gain access to the Internet are no longer restricted to desktops and serv-
ers. A large portion of these mechanisms is versatile, changing geographic position as well as their spot
in the topology of the system.
Unlike traditional desktop computers and existing networks, the new devices will have the following
characteristics:
• Many will have small, inexpensive processors with limited memory and little or no persistent storage.
• They will connect to other computing elements without the direct intervention of users.
• They will often be connected by wireless networks.
• They will change rapidly, sometimes by being mobile, sometimes by going on and offline
at widely varying rates. Over time, they will be replaced (or fail) far more rapidly than is
now common.
• They will be used as a source of information, often sending that information into the center of
the network to which they are attached.
2.8.1 Advantages of Pervasive Computing

Pervasive processing will provide the instruments to oversee data rapidly, effectively, and smoothly.
• It will allow individuals to finish an expanding number of individual and expert transactions
utilizing a class of adroit and convenient machines or “sharp gadgets” installed with chips that
permit clients to connect to insightful systems.
• It will regulate straightforward and secure access to important data. Individuals will have help-
ful access to applicable data archived on effective systems, permitting them to make a move
anyplace, at any time.
• It will empower people to be more effective in their work (Chandini et al., 2014).
2.9 Typical Sensors Needed in Pervasive Computing

The selection of a sensor must consider restrictions of form factors and energy consumption, as most
devices are embedded into everyday objects, making many of them small and mobile. The following
sections provide an overview of some sensors and explain their implementation and application issues
(Beigl et al., 2004).
2.9.1 Movement
The detection of simple movements and movement patterns of objects is a component of many applica-
tions. Devices are mostly only active when they are grabbed by the user and therefore moved. A move-
ment sensor can determine the movement state of an object and distinguish between activity levels or
even recognize special conditions or situations. The MediaCup application can detect if someone is
holding the cup, drinking, or if the cup is simply sitting on the table. Another context is vibration, with
sensors built into environments to detect situations such as earthquakes.
The most popular movement sensors are ball or mercury switches. The ball switch is much more sensitive
and can react very fast and even detect vibrations coming from sound sources. It only requires one digital input/
output line to the microprocessor and consumes no extra power besides the output signal (Beigl et al., 2004).
2.9.2 Acceleration
This sensor can replace simple movement sensors but can also go beyond them. Acceleration is an impor-
tant way to supervise the condition of sensitive goods (Decker et al., 2004). The acceleration vector of
a moved object is an excellent source for generating the shared context of physically collocated objects,
e.g., for context proximity.
In the Smart-It Friends application (Holmquist et al., 2001), objects compare their acceleration vectors
and decide whether they are together in a compound or not.
Acceleration sensors can be used to measure the earth’s gravitational force on an object to determine
its angle of orientation relative to the ground. One sample usage scenario was to find the orientation of
furniture parts during the assembly process of Smart Furniture (Holmquist et al., 2004).
Because of the size and the power consumption, only MEMS types of acceleration sensors are appli-
cable on a small and wireless device. They have accuracies down to some mg resolution at update rates
around 100 Hz. This is sufficient to determine movement patterns or to measure angles with respect
to the earth’s gravity, but not enough to realize inertial navigation systems. In comparison to simple
movement sensors, their power consumption is higher and their response time is lower. In addition, their
values are of much broader use (Beigl et al., 2004).
2.9.3 Light
Measuring light intensities at various wavelengths is mainly used to detect environmental conditions.
Precision is less important than efficiency—especially power consumption—and flexibility in the choice
of the detected wavelength. Combining measurements from different spectral areas allows distinguish-
ing between light sources, such as sunlight or artificial light, as each source has its own spectral distribu-
tion. Typical contexts that can be acquired include abstract location determinations according to the light
pattern. For example, in the TEA project, light sensors are used to decide whether a person is outside or
indoors. A light sensor may serve as a replacement for a movement sensor by processing the knowledge
of how movement influences the light level on parts of a moved object.
A benefit of light sensors is their low power data communication. The limited distance of the propa-
gation of light signals makes them the ideal choice for building location beacons, as in the MemoClip
application and other IrDA SIR standard-based systems.
To minimize the package size of the light sensor, parts with integrated filters and amplification are
preferred, as they do not require additional circuitry. Available sensors either generate an analog value
representing the light level or are stand-alone sensors with a digital interface such as I2C. A major prob-
lem of cheap low power light sensor types is that their sensitivity range is limited. Applying different
optical filters can solve this problem. Such light sensors are normally inexpensive and small and are
therefore applied in many settings (Beigl et al., 2004).
2.9.4 Proximity
Like the movement sensor, the detection of the proximity of a subject can be used to launch applications that
are inactive when no user is around. In contrast to other sensor types, this sensor directly provides a simple
context without interpretation, namely the “subject is around” context. Derived contexts are (human) activ-
ity level in an environment that can be derived from the pattern delivered by proximity sensors.
Determining proximity is generally done with passive infrared sensors or capacitive sensors. They nor-
mally carry an integrated design and signal activity in an observed area.
These sensors are still quite large and consume considerable amounts of energy. Their use is therefore
only valuable in dedicated settings (Beigl et al., 2004).
2.9.5 Audio
Analyzing audio information from the environment can be useful to understand the context of a mobile
device. Even simple algorithms can produce valuable information. The sound level can lead to conclu-
sions about the activity level in a certain surrounding, and zero-crossing detections can inform about
the sound source and distinguish between speech, music, male or female speakers, or situations such as
audio in a car or in a meeting. Moreover, sound is a local, unique, and fast-changing context and provides
a good basis for automatic generation of keys or finding nearby objects using context proximity algo-
rithms (Robinson and Beigl, 2003).
Typically, audio sensing needs three parts: a microphone, an amplifier, and an A/D converter. For the
conditions of small package and low power operation, only capacitive microphones are applicable.
Design of the amplification is restricted by available space and power consumption, which makes the
resulting audio sensor subsystem suitable for analyzing environment noises and speech in rooms of up
to 40 m2 in size. Applications requiring extensive analysis of signals beyond 10 kHz or requiring high
signal-to-noise ratio are beyond these simple audio sensor subsystems. Still, many audio algorithms can
be implemented to work on-the-fly without the need to store the sampled audio values—an exhausting
task on small processors with limited resources (Beigl et al., 2004).
2.9.6 Temperature
The temperature of an object (e.g., for a liquid in a cup) or the environment may be of interest. For both
measurements, the flexibility of use and robustness are more important than precision of the device.
In many cases, not the temperature value itself (in degrees) but a differentiation between some states is
sufficient. The MediaCup, for example, has only three temperature distinctions, “cold,” “warm,” and “hot.”
Temperature sensors are also used for product monitoring during transportation (Decker et al., 2004).
Temperature sensors are available as temperature sensitive materials (positive temperature coefficient
[PTC] / Negative temperature coefficient [NTC]) that require contact with the object or as infrared sensors
that measure radiation. The easiest way is to use integrated sensors connected via a bus such as I2C. These
sensors are very small and easy to use. As temperature normally changes slowly, the period for measure-
ments for a continuous monitoring of temperature in typical pervasive computing settings is in the 10-second
range. This makes a temperature sensor very low power in its mean consumption (Beigl et al., 2004).
2.9.7 Mechanical Force

Touch or force sensors are useful to detect situations such as “object is lying on the desk” by simply
applying them to the bottom of the object. Depending on the sensor, a more differentiated context can be
derived by, for example, measuring the weight of a glass and using it to conclude the fill level. The change
of weight distribution over time can also be used to make conclusions on activity type contexts, such
as “a subject is nervous while sitting on a chair.” In a simpler manner, mechanical sensors may be used
as an interface and act as a tangible interactive medium. In the Smart Furniture application, force sensors
were used to determine whether parts of furniture were fastened together by simply placing these sensors
between the connecting parts.
Foil type force sensors have a small outline, low energy consumption, and flexible attachment.
They can be used in measurement ranges from 1 g to several kg (equivalent weight) but are normally
not designed for precise measurement without elaborate calibration. Such sensors can be used to measure
the force of a human hand or the weight of portable objects (Beigl et al., 2004).
2.9.8 Humidity
Sensing the air humidity is useful for determining both environmental and internal conditions. This mea-
surement can be exploited in the monitoring of goods during transportation that are sensitive to humidity,
such as paintings. Collaborative readings of these sensor values in buildings, together with temperature
and vibration, provide the basis for the analysis of the status of such constructions.
Often, humidity sensors are just a net of small printed wires on a material measuring the resistance
of that material, which strongly varies with the humidity it is exposed to. When used in construction,
these sensors are often separated from the rest of the sensor electronics and embedded into the mea-
sured object, e.g., into concrete. Intelligent sensors with integrated amplification and a digital data bus
can be used to measure environmental humidity (Beigl et al., 2004).
2.10 Defining Smart Spaces

Smart spaces, at an abstract level, can be identified as environments that can understand and react to
human desires. The research into these environments is motivated by continual miniaturization of com-
puting devices and the possibility of augmenting humans’ everyday tasks (Streitz and Nixon, 2005).
The possibility of converging pervasive computing technologies with machine learning techniques has
boosted research interest in smart spaces (Szewcyzk et al., 2009).
Smart spaces incorporate processes to make the environment smart or pseudo-intelligent. These pro-
cesses can be categorized as a bottom-up and top-down cycle (Cook and Das, 2007). Sensors monitor and
collect physical information in a bottom-up, low-level process, while decisions are made by a reasoning
mechanism, and the resulting actions are implemented from a top-down, high-level process.
2.10.1 EasyMeeting
EasyMeeting (Chen et al., 2004) is a smart meeting environment with the aim of providing appropriate
services and information to participants and the speaker within its perimeter. This environment exploits
the distributed nature of intelligent agents, computing devices, services, and sensors, integrated by a
context-aware broker (CoBra) to provide a coherent view of the environment. In addition, CoBra medi-
ates sharing a coherent view of the environment with intelligent agents.
The current state of the art for EasyMeeting is the exploitation of meeting context to deliver appropri-
ate services and information. By meeting context, Chen et al. (2004) mean meeting-related events such
as identity of participants, speakers, start time of the meeting, slide presentation, and other related tasks.
To achieve this, however, the environment uses sensing devices to detect Bluetooth-enabled devices of
participants, such as phones and PDAs, and a speech recognition system to recognize and respond to the
speaker’s voice (Lupiana et al., 2009).
2.10.2 MavHome
MavHome is a multidisciplinary project with the aim of developing a smart environment that acts as an
agent of its inhabitants (Das et al., 2004). The ultimate goal of this environment is to provide maximum
comfort to its inhabitants with minimum operational costs. Ideally, this environment will be able to
predict, based on daily movement patterns, where the inhabitant goes and automatically do things previ-
ously performed manually.
MavHome leverages integration, artificial intelligence, multimedia, and database systems to meet its
goals. The environment monitors activity through sensors; then the information is transferred to an agent
that selects appropriate commands to affect the environment. The captured information from sensors, along
with the proposed decision, is stored in a database for future reference. The environment also monitors
users’ mobility by periodically searching for terminal sensors worn by inhabitants (Lupiana et al., 2009).
2.10.3 GatorTech Smart Home

“Programmable pervasive spaces” or “smart home in a box” are common synonyms for the GatorTech
project (Helal et al., 2005). This project aims to develop a smart environment that assists its inhabitants,
particularly elderly or disabled people. Ideally, the GatorTech Smart Home will be able to sense the sur-
roundings, monitor the inhabitants, and automatically establish communications with remote monitoring
and intervention services.
The GatorTech Smart Home is saturated with novel computing devices, referred to as smart technolo-
gies, i.e., sensors and actuators integrated to accomplish specific pseudo-intelligent operations. The cur-
rent state of the art of the GatorTech environment is its generic middleware, which facilitates automatic
integration of system components for collaborative actions (Lupiana et al., 2009).
2.11 Attributes of Smart Spaces in Pervasive Computing

Pervasive computing environments are open and dynamic, and the support for user mobility is both basic
and crucial. Therefore, smart spaces need to be predictive and highly integrated to take advantage of the
nearest devices to support true user mobility. By true user mobility, we mean the ability of an environ-
ment to continuously provide access to computational tasks and resources anywhere and everywhere in
that environment (Lupiana et al., 2009).
Smart spaces in the context of pervasive computing must have the following four components that will
also support true user mobility: UbiComp devices, wireless networks, sensors, and a reasoning mecha-
nism, as shown in Figure 2.14 (Lupiana et al., 2009).
Wireless
Networks
Reasoning
Mechanism
UbiComp
Sensors
Devices
FIGURE 2.14 Components of smart spaces. (From Lupiana, D. et al., Defining smart space in the context of ubiquitous
computing, Special Issue on ICIT 2009 Conference—Web and Agent Systems, Dublin Institute of Technology, Dublin,
Ireland, 2009.)
2.11.1 UbiComp Devices

UbiComp devices go beyond desktop computing to perform tasks that were previously considered com-
putationally difficult. Devices have a range of sizes and costs. They can be everywhere and almost invisi-
ble (Weiser, 1991; Want et al., 1995). The employees’ palm-sized mobile computer, shown in Figure 2.15,
is an example of such a device. UbiComp devices require support for both intuitive user interactions and
user mobility (Lupiana et al., 2009).
2.11.1.1 Wireless Networks

Wireless networks in smart spaces support user mobility and facilitate the integration of computing
devices and sensors to form sensor networks. These sensor networks are responsible for acquiring and
distributing information from individual sensors to a reasoning mechanism in smart spaces (Cook and
Das, 2007).
2.11.1.2 Sensors
Sensors can be widely defined as physical devices that augment the physical sensing of the environment
(Tilak et al., 2002). Based on this definition, audio microphones and video cameras are regarded as sen-
sors, although they are only currently becoming sufficiently miniaturized to be unseen. Smart sensors go
further to include limited reasoning on the sensed information (Cook and Das, 2007). Sensors provide
real-time data about the environment that allows the smart space to react to a user’s desires. Regardless
FIGURE 2.15 Palm-sized mobile computer. (From Lupiana, D. et al., Defining smart space in the context of ubiquitous
computing, Special Issue on ICIT 2009 Conference—Web and Agent Systems, Dublin Institute of Technology, Dublin,
Ireland, 2009.)
of their capabilities, sensors, when connected with a wireless network, enable smart spaces to model
and communicate the current state of the physical environment to the reasoning mechanism (Lupiana
et al., 2009).
2.11.1.3 Reasoning Mechanism

Smart spaces need to be highly integrated with sensory and computing devices. This means that these
environments collect vast amounts of information on a daily basis. To fully utilize this information,
smart spaces must deploy reasoning mechanisms to filter and manage the information. The role of the
reasoning mechanism is twofold; modeling of collected information into abstracted useful knowledge
and reasoning with this to support users’ activities (Cook and Das, 2007).
2.11.1.4 User Mobility

Smart spaces must support true user mobility and seamlessly integrate computing devices to provide
transparent and intuitive user interaction (Lupiana et al., 2009).
2.12 Pervasive Computing and IoT

According to Webopedia.com, pervasive computing, also called ubiquitous computing, “is the idea that
almost any device, from clothing to tools to appliances to cars to homes to the human body to your coffee
mug, can be imbedded with chips to connect the device to an infinite network of other devices ... in such
a way that the connectivity is unobtrusive and always available.”
Webopedia defines IoT as “the ever-growing network of physical objects that feature an IP address
for Internet connectivity, and the communication that occurs between these objects and other Internet-
enabled devices and systems.” It goes on to say that IoT “extends Internet connectivity beyond traditional
devices ... to a diverse range of devices and everyday things that utilize embedded technology to com-
municate and interact with the external environment, all via the Internet.”
Pervasive computing and IoT examine similar problems and face similar challenges. Some might argue
that pervasive computing focuses more on HCI issues—on making the connected things disappear from
human attention—while IoT focuses more on connecting the devices. The IoT community also focuses
on HCI issues, and the pervasive community considers connecting devices as well. Both communities
are interested in issues beyond just technology, such as privacy, security and ethics. Both communi-
ties are pursuing similar use cases, including smart cities, environmental monitoring, agriculture, home
automation, and health and wellness monitoring. They share the same (or at least largely overlapping)
technical interests and goals (Ebling and IBM T. J. Watson Research Center, 2016).
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3
The Industry 4.0 Architecture and
Cyber-Physical Systems
CONTENTS
3.1 Cyber-Physical Systems (CPSs)..................................................................................................... 81
3.1.1 Introduction..................................................................................................................... 81
3.1.2 Concept and Characteristics of Cyber-Physical Systems............................................... 82
3.1.2.1 Concept............................................................................................................ 82
3.1.2.2 Characteristics.................................................................................................. 84
3.1.3 Research on CPS Architecture....................................................................................... 85
3.2 CPS 5C Level Architecture........................................................................................................... 88
3.2.1 Smart Connection............................................................................................................ 89
3.2.2 Data-to-Information Conversion..................................................................................... 89
3.2.3 Cyber............................................................................................................................... 89
3.2.4 Cognition......................................................................................................................... 90
3.2.5 Configuration.................................................................................................................. 90
3.3 Implementation of 5C CPS Architecture in Factories................................................................... 90
3.3.1 CPS-Based Smart Machines........................................................................................... 91
3.4 Adaptive Clustering for Self-Aware Machine Analytics............................................................... 94
3.4.1 Similarity-Based Clustering for Machine Condition and Working Regimes.................. 94
3.4.2 Prognostics of Machine Health under Complex and Multi-regime Conditions............. 95
3.5 Classic Applications of CPS.......................................................................................................... 96
3.6 Classification of CPS in Context of Industry 4.0........................................................................... 98
3.6.1 Building Blocks of Industry 4.0: Cyber-Physical Systems............................................. 99
3.6.2 Cyber-Physical Systems (CPS) in Industry 4.0 Vision................................................... 99
3.6.3 Cyber-Physical Systems: Summary of Key Characteristics......................................... 100
3.7 Operational Technology and Information Technology.................................................................101
3.7.1 OT Support.....................................................................................................................101
3.7.2 IT Support......................................................................................................................101
3.8 IT and OT Convergence in Industrial IoT................................................................................... 103
3.8.1 IT and OT: A Disappearing Distinction....................................................................... 104
3.8.2 How Does IoT Bring IT and OT Together?.................................................................. 104
3.8.2.1 When Worlds Collide—Industrial Internet of Things................................... 104
3.8.2.2 New Concerns for Both Sides........................................................................ 105
3.8.2.3 Finding Common Ground.............................................................................. 106
3.9 Data and Optimization across the Value Chain: IT, OT and Cyber-Physical Systems in
“Smart Anything”....................................................................................................................... 106
3.10 Industry 4.0 Principles: Horizontal and Vertical Integration...................................................... 108
3.10.1 Horizontal Integration in Industry 4.0.......................................................................... 108
3.10.2 Vertical Integration in Industry 4.0............................................................................... 109
3.11 Basic Functions and Uses of CPS.................................................................................................110
3.12 Practical Example of a Cyber-Physical System: The Self-Modifying Machine..........................112
79
3.13 Digital Platforms...........................................................................................................................113

3.13.1 Need for a Digital Platform............................................................................................114
3.13.2 Digital Platforms............................................................................................................115
3.13.3 Building a Digital Business Technology Platform.........................................................115
3.13.3.1 How to Build a Digital Business Technology Platform................................115
3.13.4 Toward Digital Platforms...............................................................................................116
References................................................................................................................................................117
LIST OF FIGURES
Figure 3.1 Service-oriented architecture of CPS................................................................................ 83

Figure 3.2 System integration of CPS................................................................................................. 84
Figure 3.3 Architecture of CPS.......................................................................................................... 86
Figure 3.4 5C architecture to implement CPS.................................................................................... 89
Figure 3.5 Applications and techniques associated with each level of the 5C architecture............... 90
Figure 3.6 Flow of data and information in a CPS-enabled factory based on 5C CPS architecture...... 91
Figure 3.7 Overall CPS setup for band saw machines........................................................................ 92
Figure 3.8 Adaptive health state recognition for blade condition (each color represents a
cluster of feature values for a specific working regime).................................................... 93
Figure 3.9 User interface for real-time access of machine health information.................................. 93
Figure 3.10 Adaptive clustering algorithm........................................................................................... 94
Figure 3.11 Utilization matrix-based prognostics................................................................................ 95
Figure 3.12 CPS in an operating room................................................................................................. 97
Figure 3.13 CPS electric power grid..................................................................................................... 97
Figure 3.14 Integrated intelligent road with unmanned vehicles......................................................... 98
Figure 3.15 Cyber-physical system in a smart factory......................................................................... 99
Figure 3.16 Industry 4.0: organization and control in the lifecycle of products................................ 100
Figure 3.17 Pyramid structure of modern production systems and accompanying software............ 102
Figure 3.18 Industry 4.0 structure of IT support and operative level control.................................... 103
Figure 3.19 IT and OT in utilities....................................................................................................... 104
Figure 3.20 IT and OT meet and converge in industrial Internet of Things...................................... 105
Figure 3.21 Industry 4.0: the convergence of IT, OT and cyber-physical systems............................ 107
Figure 3.22 Horizontal integration in Industry 4.0............................................................................ 108
Figure 3.23 H
orizontal integration in Industry 4.0/Horizontal ecosystems of value, based on
information...................................................................................................................... 109
Figure 3.24 Vertical integration in Industry 4.0 across hierarchical levels........................................110
Figure 3.25 CPS platforms linking individual CPS, external systems and the operator....................111
Figure 3.26 C
onventional hierarchical integration of a positioning system into a machine that
itself acts as a CPS...........................................................................................................112
The Industry 4.0 Architecture and Cyber-Physical Systems 81
Figure 3.27 Positioning system as independent CPS within the machine..........................................113

Figure 3.28 Digital connects everything.............................................................................................114
Figure 3.29 Digital business technology platform..............................................................................116
Figure 3.30 Cross-cutting concerns.....................................................................................................116
LIST OF TABLES
Table 3.1 Comparison of today’s factory and an industry 4.0 factory.................................................. 81

Table 3.2 Stress matrix for rotating machinery.................................................................................... 96
3.1 Cyber-Physical Systems (CPSs)

3.1.1 Introduction
Cyber-physical system (CPS) is a transformative technology for managing interconnected systems
including both physical assets and computational capabilities (Baheti and Gill, 2011). The greater avail-
ability and affordability of sensors, data acquisition systems and computer networks, as well as the
competitive nature of today’s industry, means more factories are implementing high-tech methodolo-
gies. The ever-growing use of sensors and networked machines has resulted in the continuous gen-
eration of high volume data or Big Data (Lee et al., 2013a; Shi et al., 2011). Cyber-physical systems
have the potential to handle Big Data and leverage the interconnectivity of machines to reach the goal
of intelligent, resilient and self-adaptable machines (Krogh, 2015; National Institute of Standards and
Technology, 2013). Furthermore, by integrating CPS into their current production, logistics and service
practices, factories could become Industry 4.0 factories, significantly boosting their economic potential
(Lee and Lapira, 2013; Lee et al., 2013b). For instance, a joint report by the Fraunhofer Institute and the
industry association Bitkom says that with the introduction of Industry 4.0, the German economy will
be boosted by 267 billion euros by 2025 (Stadler, 2015). Table 3.1 compares current and Industry 4.0
factories (Lee, 2013).
TABLE 3.1
Comparison of Today’s Factory and an Industry 4.0 Factory
Today’s Factory Industry 4.0
Data
Source Attributes Technologies Attributes Technologies
Component Sensor Precision Smart sensors and fault Self-aware Degradation
detection Self-predict monitoring &
remaining useful life
prediction
Machine Controller Producibility & Condition-based Self-aware Uptime with predictive
performance monitoring & diagnostics Self-predict health monitoring
Self-compare
Production Networked Productivity & Lean operations: work and Self-configure Worry-free productivity!
system system overall waste reduction Self-maintain
equipment Self-organize
effectiveness
Source: From Lee, J. et al., A cyber-physical systems architecture for industry 4.0-based manufacturing systems, NSF
Industry/University Cooperative Research Center on Intelligent Maintenance Systems (IMS), University of
Cincinnati, Cincinnati, OH, 2014.
Cyber-physical system is in the initial stage of development. For it to reach its full potential in the
industry, it is essential to clearly define its structure and methodology. With this in mind, a unified system
framework has been designed for general applications. Corresponding algorithms and technologies have
been proposed at each system layer to collaborate with the unified structure to achieve enhanced equip-
ment efficiency, reliability and product quality (Lee et al., 2014).
3.1.2 Concept and Characteristics of Cyber-Physical Systems

3.1.2.1 Concept
The term cyber-physical system refers to a new generation of systems with integrated computational
and physical capabilities that can interact with humans through many new modalities. The ability to
interact with and expand the capabilities of the physical world through computation, communication and
control is a key enabler of technological development. Opportunities and research challenges include the
design and development of next-generation airplanes and space vehicles, hybrid gas-electric vehicles,
fully autonomous urban vehicles and prostheses that allow brain signals to control physical objects.
Over the years, systems and control researchers have developed powerful system science and engi-
neering methods and tools, such as time and frequency domain methods, state space analysis, system
identification, filtering, prediction, optimization, robust control and stochastic control. At the same time,
computer science researchers have made major breakthroughs in new programming languages, real-
time computing techniques, visualization methods, compiler designs, embedded systems architectures
and systems software, and innovative approaches to ensure computer system reliability, cyber security
and fault tolerance. Computer science researchers have also developed a variety of powerful modeling
formalisms and verification tools.
Cyber-physical systems research aims to integrate knowledge and engineering principles across the
computational and engineering disciplines (networking, control, software, human interaction, learning
theory, as well as electrical, mechanical, chemical, biomedical, material science and other engineering
disciplines) to develop new CPS science and supporting technology.
In industrial practice, many engineering systems have been designed by decoupling the control system
design from the hardware or software implementation details. After the control system is designed and veri-
fied by extensive simulation, ad hoc tuning methods have been used to address modeling uncertainty and ran-
dom disturbances. However, the integration of various subsystems, while keeping the system functional and
operational, has been time-consuming and costly. For example, in the automotive industry, a vehicle control
system relies on system components manufactured by different vendors with their own software and hard-
ware. A major challenge for original equipment manufacturers who provide parts to a supply chain is to hold
down costs by developing components that can be integrated into different vehicles (Baheti and Gill, 2011).
The increasing complexity of components and the use of more advanced technologies for sensors
and actuators, wireless communication and multicore processors pose a major challenge for building
next-generation vehicle control systems. Both the supplier and integrator need new systems science that
enables reliable and cost-effective integration of independently developed system components. In addi-
tion, both theory and tools are needed to develop cost-effective methods to (Baheti and Gill, 2011):
1. Design, analyze, and verify components at various levels of abstraction, including the system
and software architecture levels, subject to constraints from other levels;
2. Analyze and understand interactions between the vehicle control systems and other subsystems
(engine, transmission, steering, wheel, brake and suspension);
3. Ensure safety, stability, and performance while minimizing vehicle cost to the consumer. New
functionality and the cost of vehicle control systems are increasingly becoming major differen-
tiating factors in the business viability of automobile manufacturing.
Cyber-physical systems is an emerging research area that involves the overlapping and integration of
multiple fields of science and engineering; computer scientists and network professionals must collabo-
rate closely with experts in many different fields such as automation and control, civil engineering,
mechanical engineering and biology. Therefore, definitions of CPS mostly reflect the perspective of the
scholars positing them (Liu et al., 2017).
Lee defines CPS as the integration of computational and physical processes, with embedded computer
and networks monitoring and controlling the physical processes. Physical processes affect computations
by feedback loops and vice versa (Lee, 2007). In another study, He regards CPS as controllable, credible
and scalable networked physical equipment systems, an in-depth integration of computation, communi-
cations and control ability on the basis of environmental perception (He, 2010). Finally, Liu et al. (2017)
say that through the feedback loop of mutual effects between computing processes and physical pro-
cesses, in-depth integrations and real-time interactions increase or expand the function of networks and
physical systems and monitor or control a physical entity in a safe, reliable, efficient and real-time way.
The service-oriented architecture of CPS is shown in Figure 3.1.
Gonzalez et al. (2008) propose that CPS is a network physical engineering system, which monitors and
controls the operations of physical system through computation. The US Defense Advanced Research
Projects Agency says the physical network system refers to systems whose functions are largely derived
from software and electromechanical systems. In fact, all defense systems (such as aircraft, spacecraft,
naval vessels, ground vehicles, etc.) and their subsystems are CPS. Integrated circuits, microelectrome-
chanical systems and nanoelectromechanical systems are also types of CPS (Liu et al., 2017).
Wireless sensor networks (WSNs) and the Internet of Things (IoT) are different. Wireless sensor net-
work senses a signal but does not necessarily identify a specific object out of many objects being sensed.
It emphasizes the perception of information and provides data support for a variety of specific applica-
tions through data collection, processing, integration and routing.
IoT interconnects Internet information sensing devices such as wireless sensors and radio-frequency
identification (RFID) through wireless networks and Internet technology; it is a new type of network
that can realize the overall perception, reliable transmission and intelligent processing of information.
In contrast, CPS is a controllable, credible and scalable network system; it integrates computing, com-
munication and control on the basis of information acquisition in IoT. Through the feedback loop of the
interaction between the calculation process and the physical process, deep integration and real-time
interactions are realized to increase or to extend a new function, so that a physical entity can be detected
or controlled in a safe, reliable, and efficient way. The IoT generally has a perception, but no or just
simple control of the physical world, while CPS not only has the ability to sense the physical world, but
also possesses the ability to control. Its requirement of computing capability for equipment far exceeds
that of IoT and WSN (Liu et al., 2017).
To sum up, CPS features a tight combination of and coordination between network systems and
physical systems. By organic integration and in-depth collaboration of computation, communications
and control (3C) technology, CPS can realize the real-time sensing, dynamic control and information
FIGURE 3.1 Service-oriented architecture of CPS. (From Liu, Y. et al., IEEE/CAA J. Autom. Sinica, 4, 27–40, 2017.)
FIGURE 3.2 System integration of CPS. (From Liu, Y. et al., IEEE/CAA J. Autom. Sinica, 4, 27–40, 2017.)
services of large engineering systems. The term CPS also refers to distributed heterogeneous systems
that contain network systems and physical systems with different functions; in addition, the structure
and function vary among their subsystems and are distributed in different geographic scopes. Wired or
wireless communications are needed for subsystems to coordinate. Cyber-physical system integration is
shown in Figure 3.2.
3.1.2.2 Characteristics
Cyber-physical system interacts with physical systems through networks; the end system of a CPS is
normally a centralized and tightly coupled embedded computing system, which contains a large number
of physical systems composed of intelligent wireless sensors (Liu et al., 2017). CPS has the following
characteristics:
1. Physical system: This includes physical system design such as hardware design, energy man-
agement, hardware size and connectivity encapsulation and system testing. Engineers and
scientists in this field have a deep understanding of mechanics, electronics, biology and chem-
istry; they understand the technical characteristics of sensors, and they know how to process
measurement data using signal processing technology. Every physical system has its own net-
work characteristics, a maximized multilevel network coverage, a variety of complex tempo-
ral and spatial scales to meet the time requirements of different tasks and a high degree of
automation.
2. Information system: The information in physical system engineering can be transformed into
the rules and models of a software system. The most basic task is to reach a balance among
factors such as real-time system, network system, file system, hierarchical storage system,
memory management, modular software design, concurrent design and formal verification.
3. Integration of heterogeneous systems: CPS are heterogeneous distributed systems featuring the
integration and interaction of information systems and physical systems.
4. Security, real-time capability and predictability: Because network systems and physical system
are open, invasions, tampering, counterfeiting and other malicious attacks may occur, as well
as delays in network transmission. Cyber-physical system must be able to offer credibility,
security, validity, real-time capability, dynamism and predictability. For credibility, the iden-
tity of information-collecting sources or control instruction senders must be authenticated, and
the receiver must be able to determine the real identity of the sender to prevent counterfeiting.
Security requires the encryption and decryption of sent or received information, and the pri-
vacy of information must be protected. For validity, the accuracy of processing, as well as the
validity and integrity of information or instructions sent, must be guaranteed to prevent uncer-
tainties and noise in CPS processing from affecting the system’s processing accuracy. Real-
time capability means collected information or instructions must be transmitted in a timely
manner to meet the real-time requirements of task processing. Dynamism includes dynamic
reorganization and reconfiguration, automatically adjusting rules and generating commands
based on the task requirements; it also includes changes in external environments to eliminate
bias and meet task requirements according to preset rules. With predictability, CPS resource
allocation strategy can reasonably allocate resources to multiple competing real-time tasks at
any moment and in any case, so that the real-time requirements of every real-time task can be
satisfied.
3.1.3 Research on CPS Architecture

Cyber-physical system research has just begun. As CPS is the integration of multidisciplinary heteroge-
neous systems, without a unified global model, CPS research is carried out by experts in various areas
from the perspective of applications in their own field. At present, CPS research mainly focuses on sys-
tem architecture, information processing and software design.
Modeling can be considered as the technology to describe a target system before completion. Cyber-
physical system architecture is being researched and developed, and CPS models must be modified and
integrated on the basis of existing physical systems, network systems and computer system structure.
Abstraction and modeling of communication, computation and physical dynamics on different scales
including time scales are also needed to develop CPS.
The CPS system structure can be divided into three layers: user, information system and physical
system layers. The physical system is the foundation of the CPS; it is composed of embedded systems,
sensor networks, smart chips and so on, and it takes charge of the collection and transmission of infor-
mation and the execution of control signals. The information system layer is mainly responsible for the
transmission and processing of the data collected by the physical system. The user layer completes the
work, including data query, strategy and safety protection, in a human–computer interaction environ-
ment. Cyber-physical system runs as a closed loop. The architecture of CPS is shown in Figure 3.3
(Liu et al., 2017).
The function of each part of the architecture (Figure 3.3) is explained as follows:
1. Sensor networks: Acquire real-time data through a variety of sensors and embedded sys-
tems; conduct analog-to-digital conversion of collected data and other processes, includ-
ing data encryption and data integration through collection nodes; protect the security of
data transmission (privacy, integrity and non-repudiation); reduce the network energy con-
sumption by energy management; apply real-time data protection technology to real-time
processing.
2. Next-generation network systems: Deploy anti-hacking and defense technology against
a variety of network attacks; ensure the safety of data transmission with high-performance
encryption algorithms and certification authority (CA) authentication technology; realize rapid
exchange of data transmission by optimizing existing routing algorithms; change the existing
network system structure through “best efforts” to provide real-time network transmission
services.
3. Data center: Stores data transmitted by sensor networks through next-generation network sys-
tems; checks authenticity and integrity of received data and stores data if they pass inspection,
otherwise sends a message to control center (control center then sends control signals to the
actuator who notifies the sensor network nodes to collect data again); conducts routine mainte-
nance of the database; responds to instructions sent by control center, such as query; performs
regular emergency treatments to prevent database from collapse.
FIGURE 3.3 Architecture of CPS. (From Liu, Y. et al., IEEE/CAA J. Autom. Sinica, 4, 27–40, 2017.)
4. Control center: Receives inquiry instructions sent by users; sends query command to data
center after identity authentication; categorizes the query results according to control strate-
gies; reports back to the user if queries meet the requirements, otherwise determines the
location of the node by node positioning technology and sends control instructions to actua-
tors for corresponding processing; conducts forecast analysis and performance analysis of
CPS behavior through data mining technology and uncertainty processing technology; detects
network and node failure through fault diagnosis technology and conduct corresponding pro-
cessing; ensures the real-time control processing of CPS through real-time control technol-
ogy. It should be noted that control center configuration policy can be dynamically adjusted
according to users’ needs.
5. Actuator networks: Receive control instructions from control center; send control instructions
to corresponding nodes.
6. System user: Communicates with CPS; sends inquiry instructions to control center; receives
feedback data; can send definitions and revised control strategies to control center to be exe-
cuted. System users include a variety of WEB servers, individual hosts and external devices.
In this model, CPS runs under closed-loop control; the model considers real-time capability, security and
system performance so that it can preliminarily meet future CPS requirements.
Some scholars have studied the system architecture of CPS from different application perspectives
(Liu et al., 2017). For example, Sun et al. (2007) argue that the advanced power grid is a complex real-
time system with network and physical components. Each part may function well independently, but
not when they are combined, because the interference may cause errors, for example, the violation of
Nyquist rate in the frequency domain. They propose using RT-Promela to build a model that can repre-
sent frequency interference and use the real-time interference of real-time sensor protocol for informa-
tion via negotiation detection to test the accuracy of CPS components. The model solves the problem
of multiple clock variables in collaboration processing caused by a lack of real-time and asynchronous
interaction of components (Sun et al., 2007).
Ilic et al. (2010) established a CPS energy system dynamic model with distributed sensing and
control and discussed the process of information exchange between components in this model; they
also discussed using the model to develop interactive protocols between an embedded system control
terminal and a network system (Ilic et al., 2010). In another study, He built a coordination framework
based on the perception of model and future energy system control. He also improved the opera-
tion of complex power system using data mining techniques and new sensor technologies (He, 2010).
Unfortunately, these studies can only be applied in power systems and do not have enough versatility
(Liu et al., 2017).
An actuator network is composed of a plurality of actuator units and control nodes. Control nodes are
responsible for receiving the control command from the control center and sending commands to one or
more specific actuator unit for execution, so that certain physical attributes of the physical world can be
adjusted and controlled. To solve the problem of the collaborative design of feedback control and sched-
uling, Zhang et al. discuss a method of scheduling when several actuators are controlled by a controller
(single processor) to achieve a balance between the time delay and the control performance by adopting
off-line and online strategies, respectively. However, the method only considers the physical system, i.e.,
the control part, and ignores the information system (Zhang et al., 2008a). Tan et al. (2010) study the archi-
tecture of CPS and propose a CPS system model adopting an event-driven real-time scheduling scheme,
which solves the problem of real-time task scheduling in the sensor nodes periodic task model and the
actuator event-triggered task model. However, the authors do not provide experimental verification; thus,
the system running efficiency is not verified (Tan et al., 2010). Zhang et al. (2008b) propose to simultane-
ously process periodic and non-periodic events in CPS-oriented real-time middleware, and they suggest
the corresponding algorithms of access control and load balancing, but they do not analyze the time cost
of middleware services. Finally, the random server concept proposed by Faggioli et al. (2010) performs
well in processing event-triggered random tasks and meets time predictability requirements, but there are
deficiencies in the processing mechanism if there is time overhead or server overload (Liu et al., 2017).
Cyber-physical system has strict requirements for real-time capability and the abstraction of physical
awareness. As system components might need synchronous or asynchronous interaction with the physi-
cal world, a global reference time is fundamental for all CPS components to communicate and work
properly.
Information and events of physical systems are abstractions of system components, and the objects
abstracted have a life cycle. Different system components can have different credibility and reliability
for different input sources according to individual preferences, experiences and knowledge. Thus, the
abstraction of the same input events may produce completely different outputs because of the different
system components. Therefore, CPS must have unified time, trust quantification and communication
mechanisms at the system level.
Tan puts forward a CPS architectural prototype using aspects of the global reference time, information-
driven events, trust quantification, publish or subscribe plans, control semantics and network technology.
In this architectural prototype, an advanced control unit adopts a tight coupling sensor and actuator
mechanism and conducts precise real-time control at the system level to ensure the validity of the control
loop (Tan et al., 2008). However, the prototype does not solve problems such as how to publish a sched-
uling plan or how to define event models and information models in large-scale heterogeneous CPS.
Crenshaw et al. (2007) design plants controlled by external association, executive control equipment and
domain models to estimate the state of plants; they create a simple reference model that satisfies security
requirements.
In CPS, it is difficult to realize real-time predictability to control physical systems. To enhance the sus-
tainability and predictability of CPS, Lin and Panahi (2010) study real-time service-oriented architecture
(SOA) and establish a real-time service-oriented architecture enterprise service bus model. They use
real-time SOA middleware services to establish a service accountability mechanism and a real-time
global resource management service process (Lin and Panahi, 2010). Because of the limitations of ser-
vices and known resources, the authors adopt the method of reserving resources and using middleware
to monitor the performance of every service in the process in advance to ensure real-time prediction.
Pasqualetti et al. (2013) propose a model and method of automatically extracting cyber-physical systems
using a custom programming language; it can be applied to temperature sensors with fault tolerance.
However, the model lacks versatility because the abstraction accuracy of the automatic processing is
not considered, and the scope of application is limited (Liu et al., 2017).
Cyber-physical system research is limited by the specific application environment, the development
environment and the theoretical system in question. Most existing system models were established spe-
cifically for different local applications and do not consider the correlation of various demands and
restrictions in CPS networks. As there is no mature global system model, further research is necessary
(Liu et al., 2017).
3.2 CPS 5C Level Architecture

The so-called 5-level CPS structure, or the 5C architecture, provides step-by-step guidelines for devel-
oping and deploying a CPS for manufacturing applications. In general, CPS has two main functional
components:
1. Advanced connectivity ensures real-time data acquisition from the physical world and informa-
tion feedback from cyberspace;
2. Intelligent data management, analytics and computational capability construct cyberspace.
However, these requirements are abstract and not specific enough for implementation. In contrast, the 5C
architecture clearly defines, in a sequential workflow manner, how to construct CPS from the initial data
acquisition, to the analytics, to the final value creation. Figure 3.4 outlines the 5C architecture.
FIGURE 3.4 5C architecture to implement CPS. (From Lee, J. et al., A cyber-physical systems architecture for indus-
try 4.0-based manufacturing systems, NSF Industry/University Cooperative Research Center on Intelligent Maintenance
Systems (IMS), University of Cincinnati, Cincinnati, OH, 2014.)
3.2.1 Smart Connection

Acquiring accurate and reliable data from machines and their components is the first step in develop-
ing a CPS application. The data might be directly measured by sensors or obtained from controllers or
enterprise manufacturing systems, such as enterprise resource planning (ERP), manufacturing execu-
tion system (MES), supply chain management (SCM) and collaborative manufacturing management
(CMM). Two important factors at this level must be considered. First, considering various types of
data, a seamless and tether-free method to manage data acquisition procedure and transferring data to
the central server is required where specific protocols such as MTConnect are useful (Vijayaraghavan
et al., 2008). Second, proper sensors (type and specification) must be selected for the first level (Lee
et al., 2014).
3.2.2 Data-to-Information Conversion

Meaningful information must be derived from the data. Several tools and methodologies have been
developed to convert data to information, with algorithms designed specifically for prognostics and
asset health management applications. By calculating health, the remaining useful life (RUL) and
so on, the second level of CPS architecture brings self-awareness to machines (see Figure 3.5) (Lee
et al., 2014).
3.2.3 Cyber
The cyber level is a central information hub, with information pushed to it from every connected machine.
Massive amounts of information are gathered; thus, specific analytics have to be used to extract relevant
information on the status of individual machines. With these analytics, the performance of a single
machine can be compared with others in the fleet and rated accordingly. In addition, similarities between
machine performance and the performance of previous assets (historical information) can be measured
to predict future behavior (Lee et al., 2014).
FIGURE 3.5 Applications and techniques associated with each level of the 5C architecture. (From Lee, J. et al., A cyber-
physical systems architecture for industry 4.0-based manufacturing systems, NSF Industry/University Cooperative
Research Center on Intelligent Maintenance Systems (IMS), University of Cincinnati, Cincinnati, OH, 2014.)
3.2.4 Cognition
Implementing CPS on this level generates a thorough knowledge of the monitored system. Proper pre-
sentation of the acquired knowledge to expert users will lead to the correct decision. As comparative
information and individual machine status are both available, it is possible to determine the priority of
tasks and optimize the maintenance process. Proper info-graphics are necessary to completely transfer
acquired knowledge to users (Lee et al., 2014).
3.2.5 Configuration
The configuration level features feedback from cyberspace to physical space. This level acts as a supervisory
control system or a resilience control system. The machines self-configure and self-adapt, and the corrective
and preventive decisions made in the cognition level are applied to the monitored system (Lee et al., 2014).
3.3 Implementation of 5C CPS Architecture in Factories

Implementing CPS in today’s factories has advantages for components, machines and production sys-
tems (see Table 3.1).
At the component stage, once the sensory data from critical components are converted into informa-
tion, a cyber-twin of each component becomes responsible for capturing time machine records and syn-
thesizing future steps to provide self-awareness and self-prediction. At the machine stage, more advanced
machine data, e.g., controller parameters, are aggregated to the components’ information to monitor the
status and generate the cyber-twin of each particular machine. These machine twins in CPS provide
additional self-comparison capability. At the production system stage, the aggregated knowledge from
components and machine level information provide self-configurability and self-maintainability to the
factory. This level of knowledge guarantees a worry-free and near-zero downtime production and provides
optimized production planning and inventory management plans (see Figure 3.6) (Lee et al., 2014).
FIGURE 3.6 Flow of data and information in a CPS-enabled factory based on 5C CPS architecture. (From Lee, J.
et al., A cyber-physical systems architecture for industry 4.0-based manufacturing systems, NSF Industry/University
Cooperative Research Center on Intelligent Maintenance Systems (IMS), University of Cincinnati, Cincinnati, OH,
2014.)
3.3.1 CPS-Based Smart Machines

Cyber-physical system-based smart machines are becoming more popular and more viable in the industry.
In this section, we explain how one industrial process, machining, can benefit from the application of CPS.
Machining processes in the manufacturing industry represent a highly dynamic and complex situation
for condition-based maintenance and prognosis and health management (PHM). A computer numeri-
cally controlled (CNC) machine can usually handle a wide range of materials with different hardness and
geometric shapes and consequently requires different combinations of machine tool and cutting param-
eters to operate. Traditional PHM strategies are usually developed for a limited range of machine types
and working conditions and cannot handle an entire manufacturing floor where machines can be utilized
under a wide range of working regimes that cannot be modeled comprehensively beforehand. A CPS
framework with a 5C structure is a better solution. A CPS for machine tools can be used to process and
analyze machining data and to evaluate the health condition of critical components (e.g., tool cutter),
improving the overall equipment efficiency and reliability by predicting upcoming failures, scheduling
maintenance beforehand and controlling processes adaptively.
In factories, machining processes start with sawing large pieces of material into designated sizes.
Given the upstream nature of the sawing process, the quality and speed of sawing affect the entire
production, and any error could be propagated to the following steps and result in bad quality products.
Performing accurate cuts requires a slower cutting process, and this hampers the overall productivity of
the manufacturing line. Therefore, while it is not possible to maximize these two requirements at the
same time, an optimal balance between surface quality and speed has to be achieved. In such situations,
the health status of the band sawing machine and its components play a significant role in both the speed
and quality of cuts. The availability of precise health information from the machine will help determine
the optimum cutting speed and accuracy.
As shown in Figure 3.7, at the connectivity level, data are acquired from machines through both add-
on sensors and controller signals. In addition to the add-on vibration, acoustic emission, temperature and
sensor information, 20 control variables, such as blade speed, cutting time and blade height, are taken
from the programmable logic controller (PLC) to clarify the working status of each machine. The data
are now processed in the industrial computer connected to each machine.
FIGURE 3.7 Overall CPS setup for band saw machines. (From Lee, J. et al., Industrial big data analytics and cyber-
physical systems for future maintenance & service innovation, The Fourth International Conference on Through-
life Engineering Services, NSF I/UCRC Center for Intelligent Maintenance Systems (IMS), University of Cincinnati,
Cincinnati, OH, 3–7, 2015.)
At the conversion level, the industrial computer performs feature extraction and data preparation.
The feature extraction consists of extracting conventional time domain and frequency domain features,
such as RMS, kurtosis, frequency band energy percentage and so on, from vibration and acoustic signals.
Calculated features, along with other machine state data, are sent through Ethernet or a Wi-Fi network
to the cloud server where the feature values are managed and stored in the database (Lee et al., 2015).
At the cyber level, the cloud server applies an adaptive clustering method to segment the blade perfor-
mance history (from installation to the present time) into discrete working regimes based on the relative
change of the features compared to the normal baseline and the local noise distribution (see Figure 3.8).
The adaptive clustering method compares the current values of the features with the baseline and historical
working values. It identifies the most suitable cluster from the history to match with the present working
condition. If no suitable cluster is found, the algorithm generates a new cluster as a new working regime and
generates related health models for that regime. If the same working condition happens again, the algorithm
has its signatures in memory and will automatically cluster the new data into that specific working regime
(Yang et al., 2015).
The health stages can be further utilized at the cognition level and configuration level for optimization
purposes. For example, when the blade is new, a higher cutting speed can be used for high productivity
without hampering the quality, while after a certain amount of degradation has been detected, a more
moderate cutting should be applied to ensure quality. To help in the decision-making process, Web and
iOS-based user interfaces have been developed so that the health information of each connected machine
tool can be accessed in real time (see Figure 3.9) (Lee et al., 2015).
Cyber-physical systems are becoming more common in the manufacturing industry. Managing indus-
trial big data is challenging, making a generic architecture for implementing CPS necessary. The 5C
architecture discussed here can automate and centralize data processing, health assessment and prog-
nostics. This architecture covers all necessary steps from acquiring data, processing the information,
presenting information to the users and supporting decision-making. The health information generated
FIGURE 3.8 Adaptive health state recognition for blade condition (each color represents a cluster of feature values for
a specific working regime). (From Lee, J. et al., Industrial big data analytics and cyber-physical systems for future main-
tenance & service innovation, The Fourth International Conference on Through-life Engineering Services, NSF I/UCRC
Center for Intelligent Maintenance Systems (IMS), University of Cincinnati, Cincinnati, OH, 3–7, 2015.)
FIGURE 3.9 User interface for real-time access of machine health information. (From Lee, J. et al., Industrial big data
analytics and cyber-physical systems for future maintenance & service innovation, The Fourth International Conference
on Through-life Engineering Services, NSF I/UCRC Center for Intelligent Maintenance Systems (IMS), University of
Cincinnati, Cincinnati, OH, 3–7, 2015.)
by the system can also be used for higher level functions, such as maintenance scheduling and optimized
control, to achieve higher overall system productivity and reliability. As the case study suggests, the 5C
architecture would be helpful in processing and managing a fleet of CNC sawing machines. Its applica-
tion would be equally useful in other sectors.
Integration of the 5C CPS architecture is still in its infancy, but all five levels of the architecture offer an
enormous possibility. For example, the cyber level has the potential to develop new algorithms for fleet-
level analysis of machines’ performance over distributed data management systems (Lee et al., 2015).
3.4 Adaptive Clustering for Self-Aware Machine Analytics

The effectiveness of the proposed CPS structure relies on the performance of the data analysis functions
deployed at the cyber level. The cyber level serves as a bridge connecting the lower level data acquisition
and upper-level cognition functions; it is required to autonomously summarize, learn and accumulate
system knowledge based on data collected from a group of machines. The system knowledge includes
possible working regimes, machine condition, failure modes and degradation patterns; these, in turn, are
used by cognition and reconfiguration functions for optimization and failure avoidance.
Because of complications in machine configuration and usage patterns, autonomous data processing and
machine learning are of high priority, especially as the traditional ad hoc algorithm model cannot be applied
to complex or even unexpected situations. A two-step autonomous machine learning and knowledge extrac-
tion methodology has been proposed to perform health assessment and prognostics within the CPS structure.
3.4.1 Similarity-Based Clustering for Machine Condition and Working Regimes

In a fleet, there is always a certain amount of similarity among machines. For example, machines per-
forming similar tasks or having similar service times may have similar performance and health condi-
tion. Based on such similarities, machine clusters can be built as a knowledge base representing the
performance and working condition of different machines (Bagheri et al., 2015).
Unsupervised learning algorithms such as self-organizing map (SOM) and Gaussian Mixture Model
can be used to autonomously create clusters for different working regimes and machine conditions.
The adaptive clustering methodology proposed in Figure 3.10 utilizes an online update mechanism: the
Time
Machine
Normalizaon based on work regime
Knowledge based
for health Normal 1 Normal 2
assessment
Failure 2
Failure 1 New
Cluster
Compare with
exisng clusters
Similar
Yes cluster found No
Cluster Assign new
update Cluster
FIGURE 3.10 Adaptive clustering algorithm. (From Bagheri, B. et al., Cyber-physical systems architecture for self-aware
machines in industry 4.0 environment, Center for Intelligent Maintenance Systems, University of Cincinnati Cincinnati,
OH, 1622–1627, 2015.)
algorithm compares the latest input to the existing cluster and tries to identify one cluster that is most
similar to the input sample using a multidimensional distance measurement.
The search for a similar cluster will have one of two possible results (Bagheri et al., 2015):
1. Similar cluster found. If it is this case, the machine from which the sample has been collected
will be labeled as having the health condition defined by the identified cluster. Depending on
the deviation between the existing cluster and the latest sample, the algorithm will update the
existing cluster using new information from the latest sample.
2. No similar cluster found. In this case, the algorithm will hold its operation with the current
sample until it sees enough out-of-cluster samples. When the out-of-cluster samples exceed a
certain number, it means there is a new machine behavior that has not been modeled. The algo-
rithm will automatically create one or more new clusters to represent the new behavior.
The clustering algorithm can be very adaptive to new conditions. Moreover, the self-growing
cluster can be used as the knowledge base for health assessment in the proposed cyberspace.
With such a mechanism, different machine performance behavior can be accumulated in the
knowledge base and utilized in future health assessments.
3.4.2 Prognostics of Machine Health under Complex and Multi-regime Conditions

After the health condition and the working regimes are identified for each machine, the next step is to
predict the RUL. First, the relationship between machine degradation and the utilization (stress) his-
tory is built using utilization history and measurement data. Many existing prediction algorithms fail to
perform well for in-field machines because they cannot handle complex working regimes and may alter
the actual degradation pattern from lab tests. The proposed prediction method is based on the fact that
degradation is caused by more than just time. Other parameters such as stress participate in machine
degradation. Therefore, a general-purpose prediction algorithm has to be based on stress vs. life relation-
ship. The workflow of the proposed methodology is presented in Figure 3.11.
Steps 1 and 2 extract and accumulate stress vs. life information and use this as the knowledge
foundation for prognostics. Steps 3 and 4 use the knowledge base to make predictions about a par-
ticular machine. A stress matrix is used to determine stress; it summarizes the major stress factors
that cause a particular system to degrade. A sample stress matrix for rotating machinery is presented
in Table 3.1.
FIGURE 3.11 Utilization matrix-based prognostics. (From Bagheri, B. et al., Cyber-physical systems architecture for
self-aware machines in industry 4.0 environment, Center for Intelligent Maintenance Systems, University of Cincinnati
Cincinnati, OH, 1622–1627, 2015.)
TABLE 3.2
Stress Matrix for Rotating Machinery
High Load Low Load
High speed Degradation rate 1 Degradation rate 1
Low speed Degradation rate 1 Degradation rate 1
Source: Bagheri, B. et al., Cyber-physical systems architecture for self-
aware machines in industry 4.0 environment, Center for Intelligent
Maintenance Systems, University of Cincinnati Cincinnati, OH,
1622–1627, 2015.
For some systems, such as CNC machines, more dimensions (e.g., material hardness, machining
parameters, volume of removed material, etc.) need to be added to the stress matrix to cover all major
factors that cause degradation. After the stress matrix is defined, machine learning algorithms such as
Bayesian belief network and hidden Markov model can be used to relate the different degradation rates
observed in a fleet of equipment to the corresponding stress history. Eventually, a degradation rate as
shown in Table 3.2 can be generated and used for prediction under different usage patterns in real-world
applications (Bagheri et al., 2015).
3.5 Classic Applications of CPS

Computation technology has been expanded to include all human existence and activities, both cyber
and physical worlds, to realize the integration and unity of the physical world and information systems.
The rapid development of the Internet is allowing us to interconnect a variety of devices so that we
may process information rapidly and efficiently. For example, IoT permits the interconnection and infor-
mation exchange of all kinds of items through the sensing equipment attached to them by techniques
such as RFID and 802.15.4; the original people–people interaction on Internet is transformed into a
wider content connection network. Like IoT, CPS combines computational space and the physical world;
it also has the function of control in addition to basic perception functions (Liu et al., 2017).
Cyber-physical system has an extensive range of applications, including aerospace equipment, medical
devices and systems, manufacturing, traffic control, environmental control, critical infrastructure (electricity,
irrigation networks, communication systems), industrial production data collection automation, automated
processes, energy consumption and regeneration, the next generation power grid, future defense systems,
distributed robotics, civil infrastructure and so on. With the continuous development and improvement of
science and engineering, CPS will expand into areas such as interventions (collision avoidance), precision
(robotic surgery and nanoscale manufacturing), data mining (data classification, evaluation, predicted aggre-
gation, etc.), dangerous or inaccessible operating environments (search and rescue, firefighting and deep-sea
exploration), coordination (air traffic control, war) and efficiency (zero net energy buildings) (Wolf, 2009).
Tan et al. (2009) give three examples of classic applications of CPS: health care and medicine, intel-
ligent roads and unmanned vehicle and electric power grid (Rajkumar, 2007; Krogh 2015).
A. Health care and medicine

The domain of health care and medicine includes national health information, electronic
patient records, home care information, hospital operating rooms and so on. These are increas-
ingly controlled by computer systems with hardware and software components; they represent
real-time systems with safety and timing requirements. An operating room CPS is shown in
Figure 3.12 (Shi et al., 2011).
B. Electric power grid
In power grids, electronics and embedded control software form a CPS; the design is influenced by
fault tolerance, security, decentralized control, and economic or ethical social aspects (McMillin
et al., 2007). Figure 3.13 shows an electric power grid CPS (Rajkumar, 2007; Krogh, 2015).
FIGURE 3.12 CPS in an operating room. (From Rajkumar, R., CPS briefing, Carnegie Mellon University, 2007; Krogh,
B.H., Cyber Physical Systems: The need for new models and design paradigms, Presentation report, PPT, Carnegie Mellon
University, 1–31, 2015.)
FIGURE 3.13 CPS electric power grid. (From Rajkumar, R., CPS briefing, Carnegie Mellon University, 2007; Krogh,
B.H., Cyber Physical Systems: The need for new models and design paradigms, Presentation report, PPT, Carnegie Mellon
University, 1–31, 2015.)
FIGURE 3.14 Integrated intelligent road with unmanned vehicles. (From Shi, J. et al., In International Conference on
Wireless Communications and Signal Processing (WCP), 1–6, 2011.)
C. Integrated intelligent roads with unmanned vehicles

With the development of sensor networks, embedded systems and so on, CPS has the poten-
tial to create integrated intelligent roads with unmanned vehicle, as shown in Figure 3.14
(Shi et al., 2011).
3.6 Classification of CPS in Context of Industry 4.0

The basic aim of Industry 4.0 is to ensure global competitiveness by adapting manufacturing units to
meet changing customer requirements within the shortest possible time. This adaptation integrates
all upstream and downstream stages of production, and only products that are definitely needed
are produced. The optimal integration of people with their particular skills makes the adaptation
possible.
One approach to the need for individualization and flexibilization involves networking machines,
equipment, tools, storage systems and emerging products in the IoT; a factory networked in such a way
is termed a “smart factory.”
However, how can objects be networked? All nonhuman participants in manufacturing exist in the real
world of production that can be grasped with the five senses, but they also exist beyond that in a “virtual
image” that reflects the real world and is supplemented by information. This virtual image can be found
in the world of information technology (IT) and depict all the possibilities and abilities of the production
participants as well as their current states.
Based on the information of the virtual image, it is possible for an individual decentralized participant
in manufacturing to make independent decisions and to communicate these directly to neighboring pro-
duction participants. For example, an intelligent transport container may request supplies from another
machine if it discovers that the relevant bin is empty.
FIGURE 3.15 Cyber-physical system in a smart factory. (From Amberg, J., Industry 4.0 and Cyber Physical Systems—
Classification and Practical Example, Managing Director of halstrup-walcher GmbH, Format Change in Machine Building,
Kirchzarten, Germany, 2015.)
Every participant in production has a virtual image and can be networked to interact with other pro-
duction participants; this is the CPS we have been discussing in the previous sections. “Cyber” refers to
the virtual image, and “physical” refers to the object that can be perceived.
As shown in Figure 3.15, CPS interact among each other; information is provided, and high-level
recipients and decision-makers, from local machine operators to external customers and suppliers, are
integrated. For example, a tool itself may notice the first signs of wear and tear and order its own replace-
ment from external tool suppliers (Amberg, 2015).
3.6.1 Building Blocks of Industry 4.0: Cyber-Physical Systems

Cyber-physical systems are building blocks in Industry 4.0 and part of the Industry 4.0 vision.
They are combinations of intelligent physical components, objects and systems with embedded com-
puting and storage possibilities; these are connected through networks and are the enablers of the smart
factory concept of Industry 4.0 in the IoT. Simply put, CPS refer to the bridging of digital (cyber) and
physical in an industrial context (i-SCOOP (a)).
3.6.2 Cyber-Physical Systems (CPS) in Industry 4.0 Vision

Cyber-physical systems in the Industry 4.0 vision are based on the latest control systems, embedded soft-
ware systems and an IP address. In the Industry 4.0 context of mechanics, engineering and so on, CPS
are the next stage in an ongoing integration of functions. More specifically, the ongoing improvement-
driving Industry 4.0 started with mechanical systems, moved to mechatronics (e.g., controllers, sensors,
actuators) and adaptronics (i.e., active and adaptive mechanical systems) and is now entering the CPS
stage (see Figure 3.16a and b) (i-SCOOP (a)).
Cyber-physical system essentially enables us to make industrial systems able to communicate and
network, adding to existing manufacturing possibilities. New possibilities are emerging in areas such as
structural health monitoring, track and trace, remote diagnosis, remote services, remote control, condi-
tion monitoring, systems health monitoring and so forth. With networked and communicating cyber-
physical modules and systems, connected or smart factories, smart health, smart cities, smart logistics
and so on have become a real possibility (i-SCOOP).
FIGURE 3.16 Industry 4.0: organization and control in the lifecycle of products (a) CPS as a basis and enabler/CPS with
new capacities and smart x; (b) CPS: a system, an evolution (i-SCOOP (a)).
It is noted that there is a difference between CPS and cyber-physical manufacturing systems or cyber-
physical production systems (CPSS), as the latter two are more technological and have a less important
process and application dimension (i-SCOOP (a)).
3.6.3 Cyber-Physical Systems: Summary of Key Characteristics

In 2010, Professor Edward A. Lee from the University of California, Berkeley, defined CPS as follows:
“Cyber-Physical Systems (CPS) are integrations of computation and physical processes. Embedded com-
puters and networks monitor and control the physical processes, usually with feedback loops where physi-
cal processes affect computations and vice versa.” On his page on the Berkeley website, Lee shows the CPS
concept in the form of a mind map (see https://www2.eecs.berkeley.edu/Faculty/Homepages/lee.html).
To sum up, the key characteristics of CPS are the following (i-SCOOP (a)):
• CPS represent an evolution in manufacturing, mechanics and engineering. The essential dimen-

sions are the bridging of digital and physical worlds, made possible by Internet technology and
the bridging or convergence of IT and operational technology (OT).
• CPS can communicate. They have intelligent control systems, embedded software and com-
munication capabilities and can be connected in a network of other cyber-physical systems.
• CPS can be uniquely identified. They have an IP (Internet protocol) address; they use Internet
technology and are part of an Internet of Everything in which they can be uniquely addressed
(each system has an identifier).
• CPS have controllers, sensors and actuators. Although this was already the case before CPS
(see earlier discussion of mechatronics and adaptronics), the IoT increases their importance.
• CPS are the basic building blocks of Industry 4.0 and the enablers of additional capabilities in
manufacturing (and beyond) such as track and trace and remote control.
• CPS enable smart factories, smart logistics (Logistics 4.0) and other smart areas of applica-
tions, among others.
• CPS include simulation and twin models, smart analytics and self-awareness (self-configuration).
3.7 Operational Technology and Information Technology

3.7.1 OT Support
The term has only recently come into relatively widespread use and does not have an agreed-upon defi-
nition. Gartner refers to OT as “hardware and software that detect or cause a change through the direct
monitoring and/or control of physical devices, processes and events in the enterprise” (Gartner, 2011).
This seems to have come from an effort to understand OT from an IT point of view.
Many OT systems often depend on the same server, network and operating system technology as IT
systems, leading some to consider that IT and OT are on converging trajectories. However, the drivers of
the systems’ designs tend to be prioritized differently. Simply stated, OT is the application of computers
to monitor and/or control some aspect of the physical world. Put otherwise, OT systems have additional
attributes allowing them to control or monitor physical processes. Thus, their design parameters are
often very different from IT systems.
Examples of OT systems include supervisory control and data acquisition (SCADA) systems used by
grid companies and building management systems used in the facilities management industry. Other
examples include robots, CCTV, energy management and fire alarm systems. These require a network
and server architecture that enables interoperability, provides resilience and offers security.
Cost pressures have led to progressive technology convergence, and an increase in the number of OT
systems and devices developed using commercial off-the-shelf operating systems and network protocols.
The requirement for increased uptime has led to the demand for 24/7 support, often fulfilled via some
form of remote access.
3.7.2 IT Support
Software tools are crucial to operating the Industry 4.0 smart factory. Figure 3.17 depicts the well-known
pyramid structure of modern production systems (Rojko, 2017), each with its own software support.
The ERP tool is implemented on the business level, at the top of the pyramid. Enterprise resource plan-
ning supports enterprise-wide planning such as business planning, SCM, sales and distribution, account-
ing, human resource management and so on. Usually, commercially available solutions are implemented.
A leading solution is Systems, Applications and Products in data processing (SAP), developed by the
German company SAP SE. Most available ERP solutions do not support fast adaptation in production
planning when unplanned events occur (Rojko, 2017).
FIGURE 3.17 Pyramid structure of modern production systems and accompanying software. (Form Rojko, A., Industry 4.0
Concept: Background and Overview, ECPE European Center for Power Electronics e. V., Nuremberg, Germany, 11, 2017.)
An MES is used on the second level of the pyramid. These software applications support production
reporting, scheduling, dispatching, product tracking, maintenance operations, performance analysis,
workforce tracking, resource allocation and so on. Manufacturing execution system covers aspects such
as management of the shop floor and communication with the enterprise (business) systems. Most of the
software solutions available on the market are centralized and not distributed to the shop floor. This is a
major limiting factor when flexibility is needed because of the dynamics of customers’ orders and/or the
changing production environment, including shop floor configuration.
The next operative level is the process level control; here SCADA control system software is
common.
The bottom level of the pyramid is the machine or device level. Unlike the top two layers, this level
has a naturally distributed control level (Rojko, 2017). Software includes PLCs, robot controllers and
other controllers.
Enterprise resource planning and MES tools represent basic software in the company and have been
used for many years. They typically have a modular structure and are centralized in their operation; thus,
they have limited capability for dynamic adaptation of the production plan (Bratukhin and Sauter, 2011).
Nevertheless, already implemented conventional ERP and MES systems should not be seen as obstacles
to the introduction of the Industry 4.0 concept. In fact, the introduction of a common MES tool requires
an advanced IT infrastructure on the shop floor level, and this is a precondition for further development
toward smart factory (Rojko, 2017).
The next important issue is the integration of information available in ERP, MES and other soft-
ware tools used in the company, such as customer–relationship management or business intelligence.
Problems such as database integration and communication protocols still need to be resolved (Bratukhin
and Sauter, 2011).
In short, for Industry 4.0, the classic pyramid structure is not flexible enough to adapt to dynamic
changes. A distributed MES solution, where most of the functions are decentralized, may be more suit-
able for reconfigurable production systems (see Figure 3.18). For full support of reconfigurable systems,
however, a continuous flow of information (vertical and horizontal integration) between all elements
must be realized (Rojko, 2017).
FIGURE 3.18 Industry 4.0 structure of IT support and operative level control. (Form Rojko, A., Industry 4.0 Concept:
Background and Overview, ECPE European Center for Power Electronics e. V., Nuremberg, Germany, 11, 2017.)
3.8 IT and OT Convergence in Industrial IoT

Information technology or operational technology convergence is the integration of IT systems used for
data-centric computing with OT systems used to monitor events, processes and devices and make adjust-
ments in enterprise and industrial operations.
Information technology includes any use of computers, storage, networking devices and other physical
devices, infrastructure and processes to create, process, store, secure and exchange all forms of elec-
tronic data. Operational technology, traditionally associated with manufacturing and industrial environ-
ments, includes ICS such as SCADA.
While IT covers communications as a part of its information scope, OT has not traditionally been a
networked technology. Many devices for monitoring or adjustment were not computerized, and those
with computing resources generally used closed, proprietary protocols and PLCs rather than technolo-
gies affording full computer control.
Sensors and connected systems, such as wireless sensor and actuator networks, are being integrated
into the management of industrial environments, such as those for water treatment, electric power and
factories. The integration of automation, communications and networking in industrial environments
is an integral part of the growing IoT. Information technology or operational technology convergence
enables more direct control and more complete monitoring, with easier analysis of data from complex
systems anywhere in the world.
Operational technology’s modernization through IT integration brings concerns of security. Many OT
systems were never designed for remote accessibility and, as a result, the risks of connectivity were
not considered. Such systems may not be regularly updated. The vulnerabilities of OT systems can leave
organizations and critical infrastructure at risk of industrial espionage and sabotage (Rouse, 2016).
IT and OT are converging in numerous important industries, such as health care, transportation,
defense, energy, aviation, manufacturing, engineering, mining, oil and gas, natural resources and utilities.
Information technology leaders who are impacted by the convergence of IT and OT platforms should
consider the value and risk of pursuing alignment between IT and OT, as well as the potential to integrate
the people, tools and resources used to manage and support both technology areas.
3.8.1 IT and OT: A Disappearing Distinction

The convergence of IT and OT in IoT has been going on for a while, and there isn’t a strict division
between them in the real world. In many businesses with lots of heavy machinery or other forms of OT,
IT departments will often be closely involved because of the critical role of the technology, as well as the
ongoing technological convergence.
However, in some areas, the distinction is still clear. An IT worker won’t repair a high-tech oil drill
and an engineer won’t take care of the technologies to assemble cars or sit in a meeting on using predic-
tive analytics to protect the corporate network from cyber threats. Nonetheless, the lines are blurring
(i-SCOOP (b)).
3.8.2 How Does IoT Bring IT and OT Together?

The link between the IoT and IT or OT is clear. The IoT is mainly about automating processes using con-
nected devices with a capacity to gather, receive and send information, embed intelligence and connec-
tivity into devices and set up processes and applications that open up a realm of new possibilities with the
proper tools to analyze data, automate and write applications, putting these devices to work (i-SCOOP
(b)). Figure 3.19 shows how IT and OT are converging in utilities.
The convergence of IT and OT is inevitable in the industrial Internet of Things (IIoT). Convergence
is about technology but it is also about new ways of thinking. This is a challenge when two worlds,
which have worked separately and with completely different systems, technologies and vendors meet in
the context of IIoT (i-SCOOP (b)). Figure 3.20 shows the various components of IT and OT and their
convergence in IIoT.
3.8.2.1 When Worlds Collide—Industrial Internet of Things

As mentioned above, until recently, IT and OT have had fairly separate roles within an organization.
However, with the emergence of the Industrial Internet and the integration of complex physical machin-
ery with networked sensors and software, the lines are blurring.
FIGURE 3.19 IT and OT in utilities (i-SCOOP (b)).

FIGURE 3.20 IT and OT meet and converge in industrial Internet of Things (i-SCOOP (b)).
The scope of Industrial Internet has exploded into more general Internet connectivity, as opposed to
the historically closed systems that relied on physical security to ensure integrity. With the shift from
closed to open systems comes an even greater interdependence and overlap between OT and IT, along
with new security concerns (Desai, 2016).
3.8.2.2 New Concerns for Both Sides

Greater connectivity and integration are obviously beneficial for smart analytics and control, but more
connections and networked devices mean more opportunities for security holes. While security has
always been a priority for IT and OT in traditional systems, these networked systems are presenting new
scenarios and risk profiles to both sides. Information technology currently needs to start thinking like
OT and vice versa (Desai, 2016).
3.8.2.2.1 New Concerns for IT

Greater scope of impact: A security incident in a more traditional enterprise environment will
have detrimental results, but the effects of an incident on an industrial system are on a com-
pletely different scale. Consider the repercussions if an electricity grid goes offline, or if a car’s
engine control system is hacked and the driver is no longer in complete control.
Physical risks and safety: Unlike more traditional enterprise systems, networked industrial sys-
tems bring an element of physical risk to the table that IT teams have not had to consider. An
interruption in service or machine malfunction can result in injury to plant floor employees or
the production of faulty goods, potentially harming end users.
Outdated systems or custom configurations: IT is used for frequent and consistent software
patches and upgrades, but industrial environments tend to be more systemic, and one small
change can trigger a domino effect. As a result, many legacy plant control systems may be run-
ning outdated operating systems that cannot easily be swapped out or a custom configuration
that isn’t compatible with standard security packages (Desai, 2016).
3.8.2.2.2 New Concerns for OT

Physical risks and safety: OT teams have been implementing safety measures into industrial
systems for decades, but are currently facing threats potentially outside their control. Taking
machines and control systems out of a closed system brings the threat of hacked machines, and
this could potentially injure employees (e.g., overheating, emergency shut-offs overridden, etc.).
Productivity and quality control: Losing control of the manufacturing process or any related
devices is a major problem for OT. Consider the ramifications if a malicious party shut down
a plant, halting production entirely, or reprogrammed an assembly process to skip a few steps,
resulting in a faulty product that could injure end users.
Data leaks: Data breaches are a long-standing concern for traditional IT teams, but OT teams
are used to working with closed systems. Given the nature of the types of industrial systems
that are coming online, such as utilities, aviation and automobile manufacturing, ensuring the
privacy of transmitted data is critical.
Working with IT: While many in OT see the benefits of moving away from closed systems and
increasing connectivity, the perceived lack of IT experience and potential solutions for their
security concerns is causing some to resist integration (Desai, 2016).
3.8.2.3 Finding Common Ground

While OT and IT may have different backgrounds framing their concerns about the transformation
caused by the IIoT, the main underlying concern for both parties is retaining control of systems and
machines and ensuring the safety of their employees and customers. To make both sides happy, key
components of any security solutions should include the following:
• Identifying and authenticating all devices and machines within the system, both in manufac-
turing plants and in the field, to ensure only approved devices and systems are communicating
with each other. This would mitigate the risk of a hacker inserting a rogue, untrusted device
into the network and taking control of any systems or machines.
• Encrypting all communications between devices to ensure the privacy of the data being transmitted.
• Ensuring the integrity of the data generated from these systems. Smart analytics are a major
driver in the adoption of the industrial Internet, but those analytics are worthless if the data are
inaccurate.
• Enabling the ability to perform remote upgrades down the road, if the manufactured goods
contain software or firmware themselves, and ensuring the integrity of those updates.
The separation of OT and IT will continue to disappear. In the meantime, each side must consider the
other’s expertise and point of view and work together to achieve the ultimate goal—a secure, productive
Industrial Internet (Desai, 2016).
3.9 Data and Optimization across the Value Chain: IT, OT

and Cyber-Physical Systems in “Smart Anything”
The CPS used by Industry 4.0 enable new capabilities in areas such as product design, prototyping
and development, remote control, services and diagnosis, condition monitoring, proactive and predic-
tive maintenance, track and trace, structural health and systems health monitoring, planning, innovation
capability, agility, real-time applications and so on. Cyber-physical system offers Industry 4.0 person-
alization capabilities, real-time alerts and interventions, innovative service models, dynamic product
improvement, increased productivity, higher uptime and new business models.
The new capabilities of Industry 4.0 lead to the “smart anything” phenomenon: from smart grids to smart
energy, smart logistics, smart facilities, including smart buildings and smart plants, and smart services.
Industry 4.0 builds upon data models and data mapping across the product lifecycle and value stream.
All the technologies in Industry 4.0 need to be integrated. As discussed in previous sections, the first
integration (or convergence) is IT and OT. Without IT and OT convergence, there is no industrial trans-
formation. The essence of IT and OT convergence revolves around data and data systems, processes and
people or teams.
The IoT is an essential part of this process. In fact, it is safe to say that Industry 4.0 is only pos-
sible because of IoT, as the convergence of IT, OT and their backbones essentially boils down to an
advanced and enhanced application of Internet, IT technologies and IT infrastructure impacted by IoT
data (cloud infrastructure, server infrastructure, storage and edge infrastructure, etc.) (i-SCOOP (a)) (see
Figure 3.21).
FIGURE 3.21 Industry 4.0: the convergence of IT, OT and cyber-physical systems (i-SCOOP (a)).
3.10 Industry 4.0 Principles: Horizontal and Vertical Integration

There is a difference between horizontal and vertical integration, but the goal is the same: ecosystem-
wide data information is shared between various systems and across all processes, using data transfer
standards and creating the basis for an automated supply and value chain.
3.10.1 Horizontal Integration in Industry 4.0

Horizontal integration refers to the integration of IT systems for and across the various production and
business planning processes. Between these various processes, there are flows of materials, energy and
information. They concern internal and external partners, suppliers, customers and other ecosystem
members, from logistics to innovation, and stakeholders.
In other words, horizontal integration requires digitization across the full value and supply chain with
an emphasis on data exchanges and connected information systems. This can be difficult, because many
organizations still have disconnected IT systems. When we add seamless integration and data exchange with
suppliers, customers and other external stakeholders, the picture becomes even more complex (Figure 3.22).
FIGURE 3.22 Horizontal integration in Industry 4.0 (i-SCOOP (a)).

This type of thinking is still in its infancy; whether it concerns product data or information about other
processes across the horizontal value chain (e.g., the path from supplier and production to end customer
and/or other stakeholders or partners), there is still work to do. Nevertheless, it is critical for Industry 4.0
and for business overall.
The benefits and drivers of horizontally connected information systems are comparable to those in
information management, as are the disadvantages if systems are not integrated. Both are concerned with
customer service and satisfaction (with many customers in supply chains), planning, employee productiv-
ity and satisfaction, speed and so forth. Consider the information management challenges in an insurance
scenario: if back-office information on, for instance, a claims process, is not connected with the front
end, customer service agents can’t help the customer fast enough if he or she seeks information or help
on the status of the process. It’s exactly the same in Industry 4.0 and manufacturing. We just have more
stakeholders, more highly interdependent processes and stakeholders, far more processes and data.
Horizontal integration helps with horizontal coordination, collaboration, cost savings, value creation,
speed as an enabler of smooth service and operations, faster time to market and worker efficiency, and
helps to create horizontal ecosystems of value, based on information (Figure 3.23).
3.10.2 Vertical Integration in Industry 4.0

Whereas horizontal integration is about IT systems and flows in the supply or value chain and the various
processes happening across it, vertical integration has a hierarchical level component. In other words,
it’s about the integration of IT systems at various hierarchical production and manufacturing levels into
one comprehensive solution.
These hierarchical levels are: the field level interfaces with the production process via sensors and
actuators; the control level regulates both machines and systems; the process line level or actual pro-
duction process level needs to be monitored and controlled; the operations level includes production
FIGURE 3.23 Horizontal integration in Industry 4.0/Horizontal ecosystems of value, based on information (i-SCOOP (a)).
FIGURE 3.24 Vertical integration in Industry 4.0 across hierarchical levels (i-SCOOP (a)).
planning, quality management and so on; the enterprise planning level includes order management and
processing, bigger overall production planning and so on (Figure 3.24).
Typical solutions and technologies in vertical integration include PLCs, which control manufacturing
processes at the control level; SCADA, which enables various production process level and supervisory
tasks in ICS; MES at the management level; intelligent ERP at the enterprise level, the highest level in the
hierarchy. As mentioned earlier, MES plays a central role in the first stages of Industry 4.0 transforma-
tion as the digital hub of information and connectivity.
3.11 Basic Functions and Uses of CPS

Because CPS have the required decentralized intelligence, they are themselves able to assess situations,
make decisions and prompt other CPS to perform actions when necessary. These behaviors are pro-
grammed, and CPS are ideally able to change and adapt themselves, thus revising, if not replacing, the
hierarchical and vertical decision path, a hallmark of everyday manufacturing for decades.
In the past, components (especially sensors) recorded the actual state of the process and reported all
relevant information to the central control unit. The state was analyzed at the control unit level and/or at
the higher-ranking control system level, decisions were made, and the process was intervened, with the
aid of actuators or manual actions.
This hierarchical and vertical communication is not meant to be replaced with the aid of CPS, but
supplemented.
The three subsystems enable CPS to assume its new role include sensors, actuators and embedded sys-
tems and a microprocessor-based, decentralized intelligence. The CPS can record its current situation in
the environment with the aid of integrated sensors. For example, a machine’s optical sensors can supply
comprehensive information about the type and state of the workpieces to be processed. Actuators are
used to execute actions. For example, a grappler that picks the selected workpieces is extended. At the
same time, the decentralized intelligence evaluates the sensor information, as well as information flow-
ing in from other CPS. Based on this, it makes its decisions and passes these on to its own actuators.
At the same time, it contacts other CPS and prompts these to action.
The virtual image of CPS is not simply a snapshot of the current status and links. It also includes
information about the entire lifecycle.
Even in the design phase, information emerges on geometry, mechanical properties, logical connec-
tions and sets of parameters. All other life cycle phases such as engineering, start-up and operation,
including maintenance and service, provide additional information. Based on all this information, CPS
can react to situations independently. Ideally, it can also use past information to be able to adapt decision
rules to the new situation each time.
Based on this, each CPS can now have knowledge about its integration into the entire production
facility. That can be used by the CPS to configure itself during start-up, automatically establish com-
munication with its production partners (other CPS) and thus greatly reduce the costly start-up time.
The optimization phase can be performed during the day-to-day production. In the process, the various
CPS can optimize themselves due to their intelligence. In the simplest case, this can be an independent
discovery of the optimum operating point. In more complex cases, it can be a choice between predefined
or even newly determined procedure scenarios. If problems occur at one time in the production sequence,
for instance, if a machine has malfunctioned or required material is missing, alternative strategies that
“heal” the process and keep it running can be developed.
However, such problems should be avoided or at least made visible with good lead time by CPS gen-
erating early warning information, making preventive maintenance possible by supporting condition
monitoring. In decentralized communication between various CPS, it is not absolutely necessary for
this to be directly between one CPS and another. Rather, a multitude of communicative CPS platforms
will use their services and applications to network people, external systems and CPS with each other.
Two communication channels, i.e., direct CPS exchange and the path via CPS platforms, complement
each other (see Figure 3.25). To give an example, a CPS transport container can immediately enter into
FIGURE 3.25 CPS platforms linking individual CPS, external systems and the operator. (From Amberg, J., Industry
4.0 and Cyber Physical Systems—Classification and Practical Example, Managing Director of halstrup-walcher GmbH,
Format Change in Machine Building, Kirchzarten, Germany, 2015.)
a communication exchange at some stages of production, because it can technically do this. All other
stages of production that do not have CPS functionality are controlled via a CPS platform. The CPS
transport container can thus make decentralized requests for supplies in all production areas relevant to
it and locally trigger operations (Amberg, 2015).
3.12 Practical Example of a Cyber-Physical System:

The Self-Modifying Machine
The machines of the future will act as CPS themselves and will be a combination of cyber-physical
subsystems. Consider the example of positioning systems. With their sensors (absolute encoders for posi-
tioning) and actuators (gearbox, motor, engine control) for moving positioning objects, they will have
all the components required to represent an independent CPS, together with decentralized intelligence
(embedded system).
A CPS positioning system can naturally be conventionally integrated into machine procedures as
shown in Figure 3.26. At this juncture, the positioning system automatically navigates to the new position
according to the specification of the next target position (because of the machine control) and in doing
so, independently minimizes “drag errors” (deviation from the designated position during navigation). If
drag errors are very large, high-quality positioning systems will decide for themselves whether the situa-
tion is a “block movement” (obstacle) they should brake for or whether the positioning movement should
be accelerated due to detected dirt and sluggishness to overcome the contamination. The positioning task
is optimally executed—but it is requested from above by the machine control unit. In terms of Industry
4.0, this optimally supports the machine’s role as a CPS as it establishes contact with the in-house trans-
port systems, the nearby machines and the parts supplier (Amberg, 2015).
FIGURE 3.26 Conventional hierarchical integration of a positioning system into a machine that itself acts as a CPS.
(From Amberg, J., Industry 4.0 and Cyber Physical Systems—Classification and Practical Example, Managing Director of
halstrup-walcher GmbH, Format Change in Machine Building, Kirchzarten, Germany, 2015.)
FIGURE 3.27 Positioning system as independent CPS within the machine. (From Amberg, J., Industry 4.0 and Cyber
Physical Systems—Classification and Practical Example, Managing Director of halstrup-walcher GmbH, Format Change
in Machine Building, Kirchzarten, Germany, 2015.)
As shown in Figure 3.27, the CPS positioning system can be embedded by breaking through the hierar-
chical structures of the machine control unit. Instead of a vertical exchange with the machine control, the
CPS positioning system enters into a direct exchange with decentralized components (Amberg, 2015).
Consider the example of a new format being detected by a sensor. An optical sensor in a packaging
line detects that a shift must be made to a new packaging size because of a new product format. The sen-
sor gives the positioning system a direct decentralized specification of the new target positions; with this
information, the guide rail, packaging tools and if necessary the inspection camera are moved to the new
position. The higher-level machine control and the operator at his or her panel are continuously informed
of the actual position and are notified when target positions are reached. This information is accompanied
by reports that make preventive maintenance possible. Another example is the independent coordination
of two synchronously running positioning systems without the need to incorporate the control unit.
This decentralized embedding of the positioning system as an independent CPS leads to increased
adaptability and responsiveness. The central machine control unit can focus on its own CPS tasks and on
the machine’s integration into the overall production process. The person in charge can intervene via the
control panel if necessary or concentrate on the optimization of the production process instead of having
to trigger simple and regular processes such as format changeovers.
The ability to manage format changes at both levels described above, i.e., modification of the machine
user’s production and modification during machine design, will be a crucial factor in competitiveness.
What mostly concerned industry’s major groups yesterday is currently the focus of medium-sized com-
panies. Everyone involved needs to keep up. To paraphrase Albert Einstein: “Life is like riding a bicycle.
If you stop moving, you will fall off” (Amberg, 2015).
3.13 Digital Platforms

As customer experience moves deeper into the organization ethos, enterprises are looking at making a
higher impact on this “new normal” behavior of their customers. What initially started as front-end, mul-
tichannel play is currently penetrating the IT systems. Digital platforms are turning out to be the pedestal
for digital ecosystems. These platforms are shaping the technology landscape and have the potential to
touch every aspect of human lives. They bridge businesses, influence behaviors, build communities and
can outline an entire ecosystem around themselves.
Needless to say, this paradigm shift has received the interest of technology companies and digital
leaders. They are developing new technology platforms and formulating new business models. While
it may not be imperative for a company to own its own platform ecosystem, it is essential to have a
robust platform strategy and the business know-how to execute it. If harnessed well, this global eco-
nomic revolution will transform the way business is done for many years to come. Enterprises used to
have large monolithic platforms, which served only one or two purposes. With the advent of mobile
and digital, they are building customized platforms to suit their industry process and needs, as well
as delivering personalized and contextual information to their customers. The new platforms need to
touch the consumer via mobile devices, engage in product awareness, monitor campaigns, undertake
loyalty management and analyze data, along with providing personalized offers (Shankavaram and
Gartner, 2016).
3.13.1 Need for a Digital Platform

Systems and services are becoming digitally aware, and enterprises are integrating platforms that can
enable collaboration between businesses. Today, platform technologies are available to orchestrate
heterogeneous channels, systems and services. Context awareness is building on personalization and
localization to throw exciting opportunities at businesses. The innovators have moved on from know-
ing “who” their customers are to “where” they are, “how” are they doing, “what” they did before and
“what” are they likely to do next. As indicated in Figure 3.28, this intelligence enables an organization
to connect with the customer at the right time, right place and at the right price from the right channel.
Organizations need to be ready to remodel their businesses to take advantage of new opportunities
(Shankavaram and Gartner, 2016).
To execute transformation, organizations need to pull together an ecosystem across all their boundar-
ies, aligning marketing, sales, operations, support and all other functions. This capability allows organi-
zations to create and maintain an agile digital platform where innovative products and solutions can be
rolled out in an efficient and adaptive manner (Shankavaram and Gartner, 2016).
FIGURE 3.28 Digital connects everything. (From Shankavaram, D. and Gartner, Travelling to the future with Digital
Platforms, Capgemini, Consulting Technology Outsourcing, Capgemini India Pvt Limited, 2016.)
3.13.2 Digital Platforms

• Provide an integrated service view of businesses and unified workflows.
• Seamlessly incorporate transformations such as context, personalization and proximity.
• Promote constant learning and thinking of customer behaviors.
• Permit real-time decision-making based on the business possibilities exposed by various systems.
• Safeguard user data, user context and user presence.
• Suggest innovations to solve business problems.
• Allow multiple partners to orchestrate an integrated solution.
• Can run and sustain a successful operations model.
• Understand and predict customers.
• Target and reach customers.
• Provide personalized experiences.
• Sense environment and context.
• Rapidly orchestrate workflows.
• Bring synergy between various customer-centric themes (Shankavaram and Gartner, 2016).
3.13.3 Building a Digital Business Technology Platform

A digital business is supported by technology platforms in five areas (Shankavaram and Gartner, 2016):
• Information systems platform: supports the back office and operations, such as ERP and core systems.
• Customer experience platform: contains the main customer-oriented elements, such as cus-
tomer and citizen portals, multichannel commerce and customer apps.
• Data and analytics platform: contains information management and analytical capabilities;
data management programs and analytical applications fuel data-driven decision-making and
algorithms automate discovery and action.
• IoT platform: connects physical assets for monitoring, optimization, control and monetization;
capabilities include connectivity, analytics and integration to core and OT systems.
• Ecosystems platform: supports the creation of, and connection to, external ecosystems, market-
places and communities; application programming interface (API) management, control and
security are its main elements.
3.13.3.1 How to Build a Digital Business Technology Platform

Regardless of the variety of digital business, most enterprises do not have the technology components to
support the new capabilities and models.
A digital business requires much more than technology (e.g., leadership, talent and skills and new business
models). However, from a technology perspective, the chief information officer (CIO) and the IT team are
generally expected to lay out the technology foundation (see Figure 3.29). At a minimum, the IT organization
needs to be able to design the “big picture” of all the new information and technology capabilities required to
support digital business. Information technology can then work with the rest of the organization to define who
will build or fund or support or own these major components (Shankavaram and Gartner, 2016).
When they are building a digital platform, CIOs and IT leaders need to do the following (Shankavaram
and Gartner, 2016):
• Determine which of the five platforms need to be implemented or renovated and when.
• Do a “checklist” exercise to determine what parts are missing or need to be improved and
modernized.
• Start with prototyping and pilots while completing the renovation of the information systems,
customer experience and data and analytics platforms.
Partners
Ecosystems Plaorm
Customers Employees
Data and Analy cs
Customers Plaorm Informa on
Experience Plaorm Systems Plaorm
IoT Plaorm
Things
IoT: Internet of Things
FIGURE 3.29 Digital business technology platform. (From Shankavaram, D. and Gartner, Travelling to the future with
Digital Platforms, Capgemini, Consulting Technology Outsourcing, Capgemini India Pvt Limited, 2016.)
3.13.4 Toward Digital Platforms

If enterprises are to generate value in the digital world, they must operate closer to the market, deeply
integrating customers, partners and physical products in their business model. This means transforming
the technology landscape, with technology seen as a platform to digitally connect people, businesses and
physical products into value-creating networks.
This requires an outside-in perspective, integrating customers, products, partners and other stakehold-
ers in a value ecosystem in a digital way. Interaction and engagement layers must connect the different
participants. At the same time, however, organizations still need to connect this to an inside-out perspec-
tive, aligning internal operational processes with the customer experience and managing enterprise data.
Some major cross-cutting concerns in the move toward digitalization, as shown in Figure 3.30, are
security, integration, insights and analytics, reporting and collaboration (Merckx, 2016).
Customers Things Partners Employees
Interacon Layer
Portals Apps APIs
Customer Engagement Layer

Cross Cung Concerns
Outside in + Customer Customer Customer

service
Inside out service service
Customer Informaon
Employees
Enterprise Operaons Layer
Products & Sales & Customers &

services markeng contracts
FIGURE 3.30 Cross-cutting concerns. (From Merckx, J., Digital transformation: From application thinking to platform
thinking, https://www.ae.be/blog-en/digital-transformation-from-application-thinking-to-platform-thinking/, 2018.)
As organizations cannot predict and control technological developments, they need to experiment,
measure and learn, to be able to adapt a platform in an agile way to accommodate trends in the outside
world (Merckx, 2016).
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4
Cloud Computing, Data Sources and Data Centers
CONTENTS
4.1 IT vs. OT........................................................................................................................................121
4.1.1 New Concerns for Both Sides.......................................................................................... 122
4.1.1.1 New Concerns for IT........................................................................................ 122
4.1.1.2 New Concerns for OT....................................................................................... 122
4.1.2 Finding Common Ground................................................................................................ 123
4.1.3 Differences between IT and OT Applications................................................................. 123
4.1.4 Technological Needs........................................................................................................ 123
4.1.5 Conditions of Conservation.............................................................................................. 124
4.1.6 Security............................................................................................................................. 124
4.1.7 Regulations and Protocols................................................................................................ 124
4.1.8 Data vs. Processes............................................................................................................ 124
4.1.9 Update Frequency............................................................................................................. 124
4.1.10 Internet of Things (IoT) Devices in Industry 4.0............................................................. 124
4.1.11 What Industrial Processes Will Improve with IT/OT Integration?.................................. 125
4.2 CMMS, ERP, MES, PLM and Other Actors................................................................................ 125
4.2.1 PLM.................................................................................................................................. 125
4.2.2 ERP................................................................................................................................... 126
4.2.3 MES.................................................................................................................................. 126
4.2.4 PLM-ERP-MES................................................................................................................ 127
4.2.5 PLM + MES + ERP = Closed-Loop Product Lifecycle................................................. 127
4.2.6 CMMS.............................................................................................................................. 129
4.2.6.1 Computerized.................................................................................................... 129
4.2.6.2 Maintenance...................................................................................................... 129
4.2.6.3 Management...................................................................................................... 129
4.2.6.4 System............................................................................................................... 130
4.2.7 What Does CMMS Stand For?........................................................................................ 130
4.2.8 The Value of CMMS........................................................................................................ 130
4.3 Cloud Computing Taxonomies..................................................................................................... 130
4.3.1 The Need for a Taxonomy................................................................................................ 130
4.3.2 Existing Taxonomies.........................................................................................................132
4.3.2.1 NIST’s Software, Platform, and Infrastructure (SPI) Model............................132
4.3.2.2 Youseff’s Five-Layer Ontology..........................................................................132
4.3.2.3 Sam Johnston’s Six-Layer Stack........................................................................133
4.3.2.4 Dave Linthicum’s 10-Layer Taxonomy..............................................................135
4.3.3 Comparison and Limitations of Existing Taxonomies......................................................135
4.3.4 A Proposed Taxonomy..................................................................................................... 136
4.4 Cloud Services.............................................................................................................................. 138
4.4.1 Cloud Services Basics...................................................................................................... 138
4.4.2 Six Advantages and Benefits of Cloud Computing.......................................................... 138
4.4.3 Cloud Computing Services Features and Benefits........................................................... 139
4.4.4 Types of Cloud Computing Services................................................................................ 139
4.4.4.1 Software as a Service (SaaS)............................................................................ 139
119
4.4.4.2 Infrastructure as a Service (IaaS)..................................................................... 140

4.4.4.3 Platform as a Service (PaaS).............................................................................142
4.4.4.4 PaaS vs. SaaS vs. IaaS.......................................................................................143
4.4.5 Everything as a Service.................................................................................................... 144
4.4.6 Public Cloud-Based Services vs. Private Cloud-Based Services......................................145
4.4.7 Cloud Services as Professional Services...........................................................................145
4.4.8 Cloud Services vs. Web Services......................................................................................145
4.4.9 Why You Need to Know about Cloud-Based Services.....................................................145
4.5 Data Repositories and Data Centers............................................................................................. 146
4.5.1 Data Repository................................................................................................................ 146
4.5.1.1 Examples of Data Repositories......................................................................... 146
4.5.1.2 Benefits of Data Repositories............................................................................ 146
4.5.1.3 Disadvantages of Data Repositories................................................................. 146
4.5.1.4 Best Practices for Working with Data Repositories..........................................147
4.5.2 Data Center........................................................................................................................147
4.5.2.1 Data Center Consolidation and Colocation.......................................................148
4.5.3 Data Center Tiers...............................................................................................................148
4.5.3.1 Data Center Architecture and Design................................................................149
4.5.3.2 Energy Consumption and Efficiency.................................................................149
4.5.3.3 Data Center Security and Safety........................................................................149
4.5.3.4 Data Center Infrastructure Management and Monitoring.................................149
4.5.3.5 Data Center vs. Cloud....................................................................................... 150
4.5.4 Security and Privacy in the Era of Cloud Computing...................................................... 150
References............................................................................................................................................... 150
LIST OF FIGURES
Figure 4.1 OT vs. IT............................................................................................................................121

Figure 4.2 K
enandy partnered with Arena Solutions to integrate their cloud-based ERP and
PLM systems..................................................................................................................... 128
Figure 4.3 T
he cloud serves as the glue to stitch together MES/PLM/ERP in Oracle’s
comprehensive suite.......................................................................................................... 129
Figure 4.4 Youseff’s five-layer ontology............................................................................................. 133
Figure 4.5 S
am Johnston’s six-layer stack. Taxonomy that organizes the cloud ecosystem in six
layers................................................................................................................................. 134
Figure 4.6 S
am Johnston’s six-layer stack. Categories and the examples used to contextualize
the six layers...................................................................................................................... 134
Figure 4.7 A service-based instance of the proposed taxonomy model............................................. 136
Figure 4.8 IaaS.....................................................................................................................................141
Figure 4.9 Service models for cloud computing................................................................................. 144
LIST OF TABLES
Table 4.1 Comparison of taxonomies using SPI model as reference.................................................. 136

Table 4.2 Classification of existing services using proposed taxonomy............................................ 138
Cloud Computing, Data Sources and Data Centers 121
4.1 IT vs. OT
In the industrial sector, information technology (IT) and operation technology (OT) are usually under-
stood separately. Information technology and OT are two different concepts, but they can be combined.
However, we must know their differences to understand their convergence.
Although the technologies can work together to enhance their separate functionalities, their uses are
very different, as are the environments in which they must be maintained. Knowing the differences is
important to ensure a responsible and functional convergence in Industry 4.0 (Diferencias Entre It Y Ot
Y Su Convergencia, 2018) (Figure 4.1).
MARITIME
Impaired propulsión or
navigaon systems
AUTOMOBILE
Interference with car assembly PHARMACEUTICAL & CHEMICAL
process, tampering with PLANTS
autonomous vehicles. Changed drug/chemical composion,
palnt operaons disrupon
NUCLEAR
Environmental RAIL
disaster, loss of life, Malfucons in rails and
power disrupon
OT
jucons witching, mismed
signaling, and train crashing
AVIATION ELECTRIC GRIDS

Changing flight plans/GPS Shu ng down power,
coordinates, loss of life. disrupon of health care,
and traffic controls.
OFF SHORE PLATFORMS WATER

Oil spills, explosions, loss Poisoning, failure of reverse
of life. osmosis
ACCOUNT & BILLING
CRM SYSTEMS 0100 KNOWLEDGE BASE

0001
0100 0100
0100
0001 0001
0100 0100
ERP SYSTEMS FINANCIAL RECORD
0100 0100
0001 0001
0100 0100
0100
0001
IT 0100
0001
0100 0100
INFORMATION TECHNOLOGY MANAGEMENT
FIGURE 4.1 OT vs. IT. (From Infographic: OT vs. IT cybersecurity. https://waterfall-security.com/ot-vs-it-cybersecurity

-infographic.)
Operational technology (OT) can be defined as “hardware and software that detects or causes a change
through the direct monitoring and/or control of physical devices, processes and events in the enterprise.”
(Gartner, 2019).
Information technology can be defined as “an entire spectrum of technologies for information pro-
cessing, including software, hardware, communications technologies and related services. In general, IT
does not include embedded technologies that do not generate data for enterprise use.” (Gartner, 2019).
Traditionally, IT and OT have had fairly separate roles within an organization, but with the emergence
of the Industrial Internet and the integration of complex physical machinery with networked sensors and
software, the lines are blurring. With the shift from closed to open systems comes interdependence and
overlap, along with new security concerns.
4.1.1 New Concerns for Both Sides

Greater connectivity and integration are beneficial for smart analytics and control, but more connec-
tions and networked devices mean more opportunities for security holes. While security has always
been a priority for both IT and OT in traditional systems, these networked systems are presenting
new scenarios and risk profiles. Information technology currently needs to start thinking like OT
and vice versa.
4.1.1.1 New Concerns for IT

• Greater scope of impact
There’s no downplaying the obvious detrimental results of a security incident in a more tra-
ditional enterprise environment, but the effects of an incident on an industrial system are on
a completely different scale. Consider the repercussions if an electricity grid went offline,
or if a car’s engine control system was hacked and drivers were no longer within complete
control.
• Physical risks and safety
Unlike more traditional enterprise systems, networked industrial systems bring an element of
physical risk to the table that IT teams have not had to think about. An interruption in service
or machine malfunction can result in injury to plant floor employees or the production of faulty
goods, which could potentially harm end users.
• Outdated or custom systems
Information technology is used for frequent and consistent software patches and upgrades, but
industrial environments tend to be more systemic, as one small change can trigger a domino
effect. As a result, many legacy plant control systems may be running outdated operating sys-
tems that cannot easily be swapped out or a custom configuration that isn’t compatible with
standard IT security packages.
4.1.1.2 New Concerns for OT

• Physical risks and safety
Threats to physical safety are not a new concern to OT teams; they’ve been implementing
safety measures into industrial systems for decades. However, they’re currently facing threats
that are potentially outside of their control. Taking machines and control systems out of a
closed system brings the threat of hacked machines and the potential to injure employees (e.g.,
overheating, emergency shut-offs overridden, etc.).
• Productivity and quality control
Losing control of the manufacturing process or any related devices is any OT team’s worst
nightmare. Consider a scenario where a malicious party can shut down a plant, halting
production entirely, or reprogram an assembly process to skip a few steps, resulting in a

faulty product that could injure end users down the road.
• Data leaks
While data breaches have long been a top concern for traditional IT teams, they are new
territory to OT teams used to working with closed systems. Given the nature of the types of
industrial systems that are coming online, such as utilities, aviation and automobile manu-
facturing, ensuring the privacy of transmitted data is critical.
• Working with IT
One of the more unexpected concerns of OT teams is how to work with IT to solve the secu-
rity threats discussed above. Information technology teams generally have little experience
with industrial systems, and their traditional security solutions typically aren’t compatible
with legacy control systems. While many on the OT side see the benefits of moving away
from closed systems and increasing connectivity, the perceived lack of IT experience and
potential solutions for their security concerns is a problem.
4.1.2 Finding Common Ground

While OT and IT have different backgrounds framing their concerns about the transformation caused
by the Industrial Internet of Things (IIoT), a common underlying concern is retaining control of sys-
tems and machines and, ultimately, the safety of employees and customers. To make both sides happy,
the key components of any potential security solutions should include:
• Identifying and authenticating all devices and machines within the system, both within manufac-
turing plants and in the field, to ensure only approved devices and systems are communicating
with each other. This would mitigate the risk of a hacker inserting a rogue, untrusted device into
the network and taking control of any systems or machines.
• Encrypting all communications between these devices to ensure the privacy of the data being
transmitted.
• Ensuring the integrity of the data generated from these systems. Smart analytics are a major
driver in the adoption of the Industrial Internet, but these analytics are worthless if the data are
inaccurate.
• Assuming the manufactured goods contain software or firmware themselves, enabling
the ability to perform remote upgrades down the road and ensuring the integrity of these
updates.
Over time, the separation between OT and IT will fade. In the meantime, each needs to consider the
other’s expertise and point of view. The two must work together toward the ultimate goal: a secure, pro-
ductive Industrial Internet (Nisarg, 2019).
4.1.3 Differences between IT and OT Applications

Information technology is characterized by the application of telecommunication equipment such as
computers to process data. In contrast, OT is dedicated to detecting or changing physical processes
through the monitoring and control of physical devices, such as pipes or valves.
4.1.4 Technological Needs

The first factor to consider is the needs of both technologies. In IT, the number of technological compo-
nents is usually similar to the number of professionals active in an office or a plant, for example. However,
OT deploys a large number of widely distributed devices and fewer people. Simply stated, an IT device
requires a professional to control it, while OT technology is more autonomous.
4.1.5 Conditions of Conservation

Another difference between IT and OT is the conditions under which their respective devices are found.
Operational technology environments tend to be much harsher, with high temperatures, high humidity
levels and weather issues. Information technology devices are generally much more fragile and require
constant care. Accordingly, they are usually located in controlled environments with few changes.
4.1.6 Security
Operational technology prioritizes the operation of machines and devices generating data through
sensors. Information technology prioritizes the confidentiality of the data generated. In this sense, one
of the differences between IT and OT is clear: security. Operational technology is a more pragmatic
sector and stresses the functionality of machinery. Integrity remains the second most important objec-
tive and confidentiality ceases to be prioritized in these cases.
4.1.7 Regulations and Protocols

In OT, regulations are adapted to each industrial sector in a specific way. However, IT can be used
in several sectors regardless of the scope. Therefore, the regulations tend to be much less exhaustive
and more open. Information technology is usually regulated by international organizations, while OT
follows specific procedures agreed upon by independent regulators depending on the sector.
4.1.8 Data vs. Processes

In IT systems, communication routes are often congested because of the large amounts of information
sent and received. In contrast, in OT, the information infrastructure is secondary and simple. In fact,
OT organizations often deploy a small set of control applications to manage and maintain systems.
In addition, this environment remains relatively static. The priorities are different: IT seeks to analyze
data to make optimal decisions and OT objective seeks to ensure the quality of physical processes.
4.1.9 Update Frequency

There is a gap between the time it takes to update an IT system and an OT system. Information technol-
ogy is more vulnerable and therefore needs constant updates. As IT environments are more dynamic,
it is easy to find errors and solve them. However, OT systems must remain running for long periods of
time; they cannot be patched often, as this would require a reboot. If these systems are deactivated,
all production processes will stop, with all the economic losses this entails. Unfortunately, this often
results in obsolete OT systems being used (Diferencias Entre It Y Ot Y Su Convergencia, 2018).
Industries are increasing the number of projects related to machine-to-machine (M2M) technology and
IoT, as Industry 4.0 continues to make mark. This presents an opportunity to unite OT and IT to improve
productivity and business competitiveness, through intelligent devices that allow the operation of the IIoT.
4.1.10 Internet of Things (IoT) Devices in Industry 4.0

Although the industrial sector is already highly automated, IoT has great potential because:
• It allows the direct management of production processes when all the devices are connected to
each other and to a control center.
• IoT devices are not simple sensors, but have autonomy within their configuration or previous
programming.
• IoT devices can keep the information if there is a problem in the communications and send it
later; thus, data are never lost.
• A management center collects all data and transforms data into indicators and scorecards that
improve decision-making.
4.1.11 What Industrial Processes Will Improve with IT/OT Integration?

• Energy: Through the devices, production can be increased in those hours when energy is
cheaper and reduced when energy is more expensive.
• Environment: Smart devices can measure meteorological, energetic data so that the plant can meet
environmental pollution levels established by law and adapt production to these devices.
• Production: Production can be adapted to the customer’s demand, optimizing production and
saving costs.
• Quality control: It allows precision without affecting the production rate.
• Maintenance: It is possible to perform predictive maintenance, reducing breakdowns and sav-
ing costs (Integración Ot E It Para Una Industria 4.0, 2017).
4.2 CMMS, ERP, MES, PLM and Other Actors

The number one challenge of manufacturing is getting the right product, at the right time, at the right
price. Competitive advantage used to come from automation and more recently digitalization, but
this has currently become the norm with the advent of new technologies and modern apps. Enterprise
resource planning (ERP) and manufacturing execution systems (MES) are essential but not sufficient
to make manufacturing organizations competitive; they are basically “must-have” solutions for effec-
tive and efficient processes.
Prior to reaching the shop floor, products are designed and engineered in the product development and
engineering departments. The product creation lifecycle is managed from the advanced product concept
to start of production, using product lifecycle management (PLM) apps to design, engineer, simulate,
virtually build and assemble products digitally before they reach the shop floor.
The enterprise data flow within and across the conjunction of PLM-ERP-MES, with different levels
of integration, at different phases of the product lifecycle, against multiple data model and structures.
The core principles of this integration include master data management (MDM), product and enter-
prise data alignment across the product lifecycle and collaboration across the extended enterprise.
Broadly speaking, PLM knows “what” (technical decisions), ERP knows “why” (strategic decisions)
and MES knows “how to” (operational decisions).
It is difficult to define or assess the “right level” of integration, however, as not enough of it can create
business gaps and redundancies, while too much integration can compromise the purpose and capabili-
ties of these three platforms or ecosystems.
4.2.1 PLM
Product lifecycle management provides the upstream platform for product creation and engineering
data management. At the concept phase, product creation processes allow flexibility and creativity with
limited or no change management and the ability to reuse data from past or other products. As products
mature, the data management process becomes tighter; change management kicks in, as more organi-
zational functions are required to collaborate to make things happen. Product lifecycle management
addresses the following questions (non-exhaustive list):
• What attributes will define the new product introduction?

• What technologies will be identified and selected to define the product design?
• What engineering metrics will define and validate the product and/or platform?
• What PLM data will be fed to ERP, and how will it be used downstream?
• What technical decisions are made at the PLM level and what are the implications
upstream?
Data traceability in PLM relates to the ability to reuse data, to manage historical information and new
ideas. Some data are released into new products, but the majority of data are not passed to manufacturing
and the wider enterprise.
As PLM feeds data downstream to ERP, product and business information combine, while data are
restructured to allow the extended enterprise to operate and collaborate above and beyond the engineer-
ing teams. At this stage, various departments and functions interact across the enterprise, controlling and
managing supply chain data, customer data, financial data, procurement data, HR data, planning data,
multiple metrics and key performance indicators (KPIs).
4.2.2 ERP
Enterprise resource planning regroups the core business data backbone where strategy and operations
converge. The ERP data model cannot follow the PLM data structure because it is not meant to manage
such levels of creativity and product prototypes. The ERP data must be structured so that they can feed the
downstream functions (manufacturing, supply chain, sales and marketing, etc.) in a transactional manner.
Data traceability in ERP relates to planning, strategic alignment, operations, compliance and upstream
and downstream coordination. Due to their transactional nature, ERP data have a clear status and align-
ment within the relevant business processes. In a nutshell, ERP addresses the following questions (non-
exhaustive list):
• Why does the organization exist, and what is its product strategy?
• How does the business plan to achieve long-term sustainable growth?
• Why (and what) engineering data cascade from PLM into ERP to feed the “business engine,”
and what is relevant to top floor decision-making?
• How does the strategy translate into operations across all business functions?
• What strategic (and business-related operational) decisions are made at the ERP level, and what
are the implications upstream and downstream?
• How can the business prevent incidents, protect its workforce and ensure products meet standards?
Enterprise resource planning data are fed back upstream to PLM to allow integrated change manage-
ment processes, including supplier and cost data, material and compliance data and product and platform
configuration data.
Enterprise resource planning data are fed downstream to MES to provide reference product informa-
tion, production demand, master schedules, master data, bills of materials (BOMs), standard operating
procedures (SOPs), change orders, inventories, planned resources, target performance metrics and so on.
4.2.3 MES
Manufacturing execution system is the de facto shop floor performance and operations management
engine behind the most mass-production control activities. It regroups all plant-wide manufacturing
decisions, focusing on rapid actions, detailed planning, forecasting, continuous improvement, planned
and actual metric analysis and ongoing adjustments.
Data traceability in MES relates to “live” operations, performance, upstream feedback on results
and required input (materials, resources, etc.). By default, MES is the most transactional system of the
manufacturing organization, with the highest level of reactiveness needed to anticipate, align and adjust
production and business parameters. Manufacturing execution system addresses the following questions
(non-exhaustive list):
• How can technology be optimized for the organization to become more efficient?
• How can the organization effectively manage risks and safeguard performance issues?
• How can operational excellence objectives be implemented and achieved on the shop floor?
• How can planning, execution and control information be combined into a continuous feedback
loop to align and optimize production and business operations?
Manufacturing execution system feds data back upstream to ERP with order status, resource usage
(labor, equipment, materials), as-built genealogy yields, time events and so on.
4.2.4 PLM-ERP-MES
Most of the ERP data fed to MES contain evolutions or restructured PLM data. Product lifecycle man-
agement systems allow production, shop floor and logistics simulation, digital and virtual optimization.
Hence, the need for the MES-ERP feedback loop to extend further upstream to PLM for “closed-loop
validation” and ongoing earning, as explained by design for manufacturing and assembly principles.
Product lifecycle management, ERP and MES are coming together to create a foundation for a
modern-day interpretation of lean manufacturing. As part of the product-to-production platform, there
are direct connections from PLM to the shop floor, such as work instructions, routing information and
vice versa from the shop floor to PLM with nonconformance results. The PLM-MES direct link has the
potential to deliver agility through shop floor execution excellence.
Downstream PLM-MES interfaces include BOM and bills of process, components, process lists, work
instructions, engineering change orders, work certification, resource types, control resources and so on.
Upstream MES-PLM interfaces include closed-loop product and process data, change requests with
mark-up, updated work instructions, selected and evaluated KPIs, nonconformance failure modes and
so on.
Product lifecycle management-manufacturing execution system integration allows continuous response
to shifting demands by distributing the latest product designs and assembly methods to a more connected,
more efficient and more effective production value chain.
The three important questions must be answered to achieve an integrated PLM-ERP-MES holistic
landscape:
• What MES data need to be integrated back upstream to ERP and PLM?
• How much data are to be fed upstream from MES to PLM via ERP vs. directly from MES to
PLM?
• What level of data and process visibility is required in the ERP platform and how can a certain
level of agility and consistency be maintained across each PLM-ERP-MES layer?
This again relates to key MDM considerations and assumptions when integrating the three platforms.
Finally, collaboration is the new norm; being able to collaborate is currently a basic matter of survival
(mandatory but not sufficient to compete). The level of integration and how lean the organization can be
constituting a paradigm of the new competitive advantage. For example, too much integration can dam-
age the ability of the organization to operate swiftly and/or compromise the purpose of the enterprise
platforms (PLM-ERP-MES); alternatively, not enough integration might hinder its ability to execute and
optimize (Grealou, 2017).
4.2.5 PLM + MES + ERP = Closed-Loop Product Lifecycle

Manufacturers are starting to integrate their core enterprise systems in an effort to evolve lean strategies
and to build a foundation for a digital enterprise. Enterprise resource planning, PLM and MES have
traditionally been three distinct pillars of manufacturing technology. However, in today’s world—where
timely product delivery and top-notch quality are the hallmarks of success—they are coming together to
create a foundation for a modern-day interpretation of lean manufacturing.
By closing the loop between PLM, MES and ERP systems, manufacturers are hoping to facilitate data
sharing between the functional areas of engineering, the shop floor and the front office. The goal is to
deliver visibility that will help streamline product delivery cycles, eliminate redundant manual processes
and waste and proactively pinpoint and correct quality issues before they become too costly and pose
barriers to customer satisfaction.
ERP-to-MES integration is a bit further along, almost standard practice for synchronizing the system
of record for customers, order and inventory data with the shop floor to meet production requirements
and reconcile material consumption for better planning. PLM-to-MES integration, a more recent phe-
nomenon, is catching on, as manufacturers look to accelerate product ramp-up times and establish a
feedback loop between product design and production as part of ongoing quality efforts. Creating link-
ages between all the three systems remains a long-term vision for most, but experts contend it will be a
necessary goal for manufacturers moving forward.
Without such integration, data sharing is manual, introducing errors, bottlenecks and delays, while
making it harder to analyze and achieve complete visibility into core business processes. In contrast,
an integrated MES-PLM-ERP platform creates a closed loop that enables manufacturers to be more
responsive and agile.
Looking even further, MES-PLM-ERP integration is crucial to the notion of a digital enterprise,
where the real-world environment—from concept design to physical production of a product through
customer usage in the field—is connected and simulated in a virtual world. By weaving a digital thread
throughout all phases of a product’s lifecycle and by connecting core systems, manufacturers can gain
insights to help optimize the product and key processes to achieve higher levels of productivity.
Despite the huge upside, integration of these core enterprise systems is relatively immature for a very
simple reason: it’s historically been too complex. Closed systems coupled with proprietary networks and
communication protocols have been huge technical hurdles preventing data from flowing easily between
core enterprise platforms to create a closed-loop system (Figure 4.2).
Even a one-off integration is no guarantee of success. Traditionally, there’s been much reliance on cus-
tom code to integrate MES and PLM or MES and ERP, but these can break with subsequent upgrades,
thus requiring constant maintenance and rework.
The rise of virtualization and the cloud are changing the nature of such integrations. The cloud, in par-
ticular, is rewriting the rules, reducing reliance on middleware and custom programming and facilitating
real-time integration between systems such as ERP and PLM (Figure 4.3).
Product Record Email Handlers

(Items, BOMs, Exported XML is (Process XML into
Changes, etc.) transferred via Kenandy Objects)
Emailer services
Objects
Item
Item Specificaon
ERP EXCHANGE Component
FIGURE 4.2 Kenandy partnered with Arena Solutions to integrate their cloud-based ERP and PLM systems.
SMC Cloud:
An End-to-End Closed Loop
Cost planning Work execuon/

MES/ Orderless
Supply compleon
orchestraon Work order cosng
Demand and Performance analysis

supply planning
Product
PLAN MAKE OPTIMIZE
planning/MDM Financial reporng
The cloud serves as the glue to stch together

MES/PLM/ERP in Oracle’s comprehensive suite.
FIGURE 4.3 The cloud serves as the glue to stitch together MES/PLM/ERP in Oracle’s comprehensive suite.
The cloud can join MES/PLM/ERP. Easy connectivity and a common data model across systems
greatly simplify integration while keeping manufacturers’ extended teams on the same release cycle,
eliminating the need to maintain existing one-off integrations.
4.2.6 CMMS
CMMS stands for computerized maintenance management system (or software) and is sometimes
referred to as enterprise asset management. Broadly stated, a CMMS is computer software designed to
simplify maintenance management.
4.2.6.1 Computerized
Computerized refers to the fact that with a CMMS, maintenance data are stored on a computer.
Before the 1980s, maintenance data were generally recorded with a pencil and paper. Because of this,
maintenance was largely reactive rather than proactive, performed only when something went wrong.
Preventive maintenance was less common because it was unrealistic to track that assets needed routine
maintenance when all maintenance records were kept in a filing cabinet.
When CMMS solutions came into fruition in the late 1980s and early 1990s, organizations began to
migrate from pencil/paper to computers. Suddenly, organizations could track work orders, quickly gen-
erate accurate reports, and instantly determine which of their assets required preventive maintenance.
This led to extended asset lifespans, improved organization, reduced costs and increased profits.
4.2.6.2 Maintenance
Maintenance is what users of CMMS software do every day, whether responding to an on-demand work
order for a broken window or performing a routine inspection on a generator.
Computer software cannot accomplish the work of a skilled technician. What it can do, however, is
ensure tasks are prioritized correctly and that everything is in place (inventory, labor) to ensure success.
Computerized maintenance management system solutions give technicians the freedom to focus less on
paperwork and more on hands-on maintenance.
4.2.6.3 Management
Managing maintenance is the most essential role of a CMMS solution. Maintenance management
software is designed to give users immediate insight into the state of their maintenance needs with
comprehensive work order schedules, accurate inventory forecasts and instant access to hundreds of
invaluable reports. Computerized maintenance management system solutions make maintenance man-
agement easier by empowering managers with information so that they can make the most informed
decisions possible.
4.2.6.4 System
A system can be thought of as the overall combination of features and capabilities within a CMMS.
Different CMMS solutions offer different types of systems. The best CMMS system is one that allows
users to accomplish their existing maintenance practices more effectively while introducing time-saving
features that lead to a reduction of costs and a savings of time.
A maintenance CMMS makes it easy to manage work orders, preventive maintenance tasks, assets,
purchase orders, fleet, inventory levels and so on (What is a CMMS? 2018).
4.2.7 What Does CMMS Stand For?

• CMMS is the antidote to manual processes that slow the business down and fritter away team
productivity.
• It takes the tedious tasks associated with maintenance and automates their management and
reporting.
• It centralizes the information about an asset—where it is, what it needs, who worked on it and
when. It makes critical asset management data automated, accessible and auditable.
4.2.8 The Value of CMMS

Computerized maintenance management system doesn’t have to be complicated or expensive. For small-
to-medium businesses vulnerable to inefficient operations and equipment failures, making the transition
to a cloud and mobile-enabled solution is a worthwhile investment. CMMS can help a company do the
following:
Increase availability: Keep equipment maintained and available, reduce downtime and extend the
life of assets.
Maintain compliance: Ensure safety, track incidents, adhere to proper processes, stay ahead of
regulations and be prepared with a clear audit trail.
Control costs: Manage planned and unplanned maintenance, warranties, inventory and spare parts
costs.
Boost productivity: Improve scheduling, vendor management, workflow and financial reporting
(What does CMMS stand for?).
4.3 Cloud Computing Taxonomies

4.3.1 The Need for a Taxonomy
Cloud computing is sometimes considered the natural evolution of Internet (Velte et al., 2009), offering
services that can replace hardware and software purchased and maintained by companies and customers
at their own risk and expense. A main advantage of this approach is the clearer distinction between the
business itself (e.g., selling multimedia content) and the tools required by the business (e.g., data centers
and computer programs) (Coombe, 2009). Cloud services allow customers to focus on their projects,
leaving all unrelated aspects to the service provider.
However, cloud computing is an evolving concept. Even core aspects such as possible structures,
architectures and application scenarios are the topic of discussion (Armbrust et al., 2009). Cloud
computing solutions are being developed and becoming available for users, despite the lack of clear
classifications and while new features are still under research (IDC, 2010). A recurring issue is
the free and unrestrained creation of definitions and classification categories by service providers,
who are commonly promoting their solutions’ features rather than following a technical perspective
(Willis, 2009).
Motivated by this concern, the UN National Institute of Standards and Technology (NIST) and the
European Community have started the process of standardizing the key aspects of cloud computing,
aiming to unify existing concepts and to simplify the task of identifying the main purposes of each cloud
solution (Hoover, 2009).
National Institute of Standards and Technology’s efforts to standardize the basic cloud computing
concepts are associated with the increasing use of cloud computing solutions by US government agen-
cies. Most of the Institute’s work focuses on US government requirements for cloud computing, from
both technical and legal points of view. National Institute of Standards and Technology defines cloud
computing as follows:
“Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of
configurable computing resources (e.g., networks, servers, storage, applications, and services) that can
be rapidly provisioned and released with minimal management effort or service provider interaction.
This cloud model promotes availability and is composed of five essential characteristics, three service
models, and four deployment models” (Mell and Grance, 2009).
According to NIST, the main characteristics of cloud computing are the following:
• On-demand self-service: The resources provided are easily scaled; thus, the customer can
allocate or free them automatically whenever needed, without human interaction with
providers;
• Broad network access: Services are available through Internet using standardized interfaces
(such as browsers or remote console control) and are accessible from any device able to connect
and use these interfaces;
• Resource pooling: Provider infrastructure is organized to offer services to multiple customers
using the concept of multi-tenancy, according to which resources are managed according to the
demand, while resource management is transparent to users;
• Rapid elasticity: Cloud capabilities are promptly and easily scaled to satisfy the customers’ needs
in such a manner that the cloud resources appear to be unlimited from the users’ point of view;
• Measured service: Services are automatically controlled and optimized to offer metering capa-
bilities according to the type of service (Mell and Grance, 2009).
In comparison, the European Union Agency for Network and Information Security (ENISA) defines
cloud computing as an on-demand service model for IT provision, based on virtualization and distrib-
uted computing technologies (ENISA, 2009). According to the Agency, the key characteristics of cloud
computing are:
• Highly abstracted resources: Virtualized infrastructures are the core of cloud computing, either
by directly offering a virtualized platform or delivering services based on these structures;
• Scalability and flexibility: Clouds are highly scalable, provisioning customers with the required
resources; they are also flexible enough to conform itself to the customers’ needs;
• Instantaneous provisioning: The resources appear to the customers as unlimited and promptly
provisioned as necessary;
• Shared resources: The provider infrastructure (including hardware, database and memory) is
shared by customers; this has security implications, as the logical layers can be separated but
the hardware cannot;
• Service on demand with “pay as you go” billing systems: The elasticity of the cloud enables the
precise definition of what resources the customer needs, and when they are needed;
• Programmatic management: Web services programming interfaces allow the management of
the cloud infrastructure and the integration of local software and cloud resources.
It should be noted that both definitions (and others (CPNI, 2010; CSA, 2009) highlight the “pay as you go”
feature for highly abstracted resources, provided by the same shared infrastructure that, as such, must achieve
a minimum level of scalability and CSA (2009)) high to adapt itself to the demand from multiple tenants.
It is important to understand how cloud services interact with other services, as well as the mecha-
nisms that can (or must) be used to assure communication between them. This task requires a robust
model capable of classifying the services according to their types, which has led to the creation of several
taxonomies, described in the following section (Jaekel and Luhn, 2009).
4.3.2 Existing Taxonomies

4.3.2.1 NIST's Software, Platform, and Infrastructure (SPI) Model
National Institute of Standards and Technology’s SPI model is currently one of the most well-accepted
taxonomies for cloud computing (CSA, 2009; Marks and Lozano, 2010). Its main objective is to encom-
pass all cloud approaches (models, vendors and market niches) in order to standardize concepts (Mell
and Grance, 2009). The SPI model classifies cloud solutions into three categories:
• Software as a Service (SaaS): Cloud services that are developed, deployed, run and maintained
by the provider and are accessible through a Web browser. The customer does not manage or
control the underlying infrastructure that supplies the required resources while securing the
assets involved and guaranteeing service level agreements;
• Platform as a Service (PaaS): Services that provide a platform to develop and deploy web
applications. The customer does not have control over the cloud infrastructure but can directly
access and use its resources, commonly made available through the use of specialized applica-
tion programming interfaces (APIs);
• Infrastructure as a Service (IaaS): Cloud solutions able to offer infrastructural utilities and
tools, such as processing, storage, virtual machines (VMs) or other computing basic resources.
The customer has considerable control over the infrastructure, even though there is no direct
access to the physical hardware itself.
This taxonomy presents a succinct but comprehensive classification of cloud services, abstracting three
main possibilities:
• Offering online browser-ready applications running over a virtualized infrastructure (SaaS);

• Providing platforms for the deployment of applications which use the underlying resources
from the provider’s infrastructure (PaaS);
• Delivering the virtualized infrastructure itself (IaaS) (Gonzalez et al., 2011).
4.3.2.2 Youseff’s Five-Layer Ontology

Youseff et al. (2008) conducted research on cloud computing aiming at a final and consolidated taxon-
omy to be used for general purposes. The proposed taxonomy features five layers containing six different
categories depicted in Figure 4.4 and described as follows:
• SaaS: Aggregates all software-oriented solutions, e.g. salesforce customer relationship man-
agement (CRM) (Salesforce, 2010b), Google Apps (Google, 2010d) and so on;
• PaaS: Application development platforms, e.g., Google App Engine (Google, 2010a), Salesforce
Apex (Salesforce, 2010a), Hadoop (Borthakur, 2007), Yahoo Pig! (Olston et al., 2008) and so on;
Cloud Applicaon
(e.g. SaaS)
Cloud Soware Environment

(e.g. PaaS)
Cloud Soware Infrastructure
Computaonal Communicaons
Storage (DaaS)
Resources (IaaS) (CaaS)
Soware Kernel
Firmware / Hardware (HaaS)
FIGURE 4.4 Youseff’s five-layer ontology. (From Youseff, L. et al., Toward aunified ontology of cloud computing, Grid
Computing Environments Workshop, GCE’08, 1–10, 2008.)
• IaaS: Computational resources that can be moved to the cloud, mainly represented by virtual-
ization, e.g., Amazon EC2 (Amazon, 2010b), Enomalism (Enomaly, 2010), Eucalyptus (Nurmi
et al., 2009), OpenNebula (Fontán et al., 2008) and so on;
• Data as a Service: Refers to remotely managed solutions for data storage, e.g., Google FileSystem
(Google, 2010b), Bayou (Demers et al., 1994), Dynamo (DeCandia et al., 2007), Amazon S3
(Amazon, 2010e), EMC (2010) and so on;
• Communication as a Service (CaaS): Solutions providing service-oriented communication
for cloud users, including Voice over Internet Protocol (VoIP) systems, instant messaging
and audio or video conferencing, e.g., Microsoft Connected Services Framework (Microsoft,
2010a; Hofstader, 2007);
• Hardware as a Service: Services where the provider operates, manages and upgrades the hard-
ware used by the customer, e.g., Morgan Stanley IBM utility computing (Hines, 2004), PXE
(Johnston, 1999), UBL (UBOOT, 2010), IBM Kittyhawk (Appavoo et al., 2008) and so on.
The five layers abstract computing environments, starting from the application (top layer), going through
the environment (which provides the resources to the application to run), software infrastructure (the
resources enabled by the operating system), kernel and hardware.
4.3.2.3 Sam Johnston’s Six-Layer Stack

Judging that the SPI classification based on three layers or categories was over-simplified, Johnston cre-
ated a cloud computing taxonomy focusing on the software for the final users (Johnston, 2010). The result-
ing taxonomy organizes the cloud ecosystem in six layers, illustrated in Figure 4.5 and detailed as follows:
• Clients: Computer hardware and/or software that rely on the cloud to deliver services and
applications, e.g., browsers in general, cloud operating systems, Cirtas (2010), g-Eclipse
(Gjermundrod et al., 2008), StorSimple (2010) and so on;
• Services: Web services that allow direct interaction between customers and providers’ solutions;
• Application: Solutions that eliminate the need to install or run software on local machines,
e.g., Google Apps (Google, 2010d), Zoho (2010) and so on;
• Platform: Computing platform to deploy applications without having to purchase the required
infrastructure, e.g., Force.com (SalesForce, 2010), Google App Engine (Google, 2010a), Heroku
(2010), OrangeScape (2010), Rackspace (2010) and so on;
Clients
Services
Applicaon
Plaorm
Storage
Infrastructure
FIGURE 4.5 Sam Johnston’s six-layer stack. Taxonomy that organizes the cloud ecosystem in six layers.
• Storage: Delivering storage as a service, either in the form of raw storage or database utili-
ties, e.g., Amazon S3 (Amazon, 2010e), Amazon SimpleDB (Amazon, 2010f), Dropbox (2010),
Evernote (2010), Mozy (Decho, 2010), Windows Live Skydrive (Microsoft, 2010b) and so on;
• Infrastructure: Services that offer virtualization solutions for customers, allowing direct access
to the cloud infrastructure, e.g., Amazon EBS (Amazon, 2010a), Amazon MI (Amazon, 2010c),
AppNexus (2010), Cloudera (2010), ElasticHosts (2010), GoGrid (2010), Hadoop (Borthakur,
2007), RightScale (2010) and so on (Figure 4.6).
The resulting stack shares many similarities with the one used by Youseff et al. but includes the “Clients”
layer, which represents elements that use the services from the adjacent layer. The same taxonomy is
presented in Figure 4.6; the figure shows the categories and the examples used to contextualize them.
Sam Johnston’s 6-layer stack
Clients Services Applicaons Plaorm Storage Infrastructure
Cirtas Google Apps Google App Amazon S3 Hadoop

Engine
g-Eclipse Zoho Force.com Amazon Amazon EBS

SimpleDB
Amazon
StorSimple Heroku Dropbox Machine
Imagines
Orangescape Evernote AppNexus
Rackspace Mozy Cloudera
Windows ElascHosts
Skydrive
GoGrid
RightScale
FIGURE 4.6 Sam Johnston’s six-layer stack. Categories and the examples used to contextualize the six layers.
4.3.2.4 Dave Linthicum’s 10-Layer Taxonomy

Linthicum’s taxonomy aggregates all possible services into 10 categories on the same level (Linthicum,
2009). These categories are described as follows:
• Storage as a Service: Has ability to leverage storage handled by the customer; thus, it becomes
physically remote but logically local, e.g., Amazon S3 (Amazon, 2010e), Box.net (2010), Google
Base (Google, 2010c) and so on;
• Database as a Service (DBaaS): Follows the same principle as Storage, but focuses exclusively
on databases, offering the space needed for storing the data and offering interfaces to use the
database tools, e.g., Amazon SimpleDB (Amazon, 2010f), Trackvia (2010) and so on;
• Information as a Service: Offers APIs and interfaces to access remotely hosted information,
such as stock prices, address validation, credit reporting or meteorology;
• Process as a Service: Provides structures able to bind other resources together, creating business pro-
cesses that are easily changeable, e.g., Appian Anywhere (Appian, 2010), Itensil (2010) and so on;
• Application as a Service: Software accessible through a browser, e.g., Salesforce CRM
(Salesforce, 2010b), Google Apps (Google, 2010d) and so on;
• Platform as a Service: Includes the application development platform, interfaces to access the
cloud infrastructure (including database utilities), raw storage and testing, e.g., Google App
Engine (Google, 2010a), Heroku (2010) and so on;
• Integration as a Service: An integration stack that includes application interfaces, flow con-
trol and integration designs, allowing intercommunication between different programs or pro-
cesses, e.g., Amazon SQS (Amazon, 2010d) and so on;
• Software as a Service: Mainly related to identity management, e.g., Ping Identity (Identity, 2010);
• Management as a Service: On-demand services that provide resources and structure to manage
other cloud services in terms of topology, resource utilization, virtualization and task manage-
ment, e.g., RightScale (2010);
• Testing as a Service: Services able to test other cloud services, eliminating performance issues
and bugs during development, deployment and production, e.g., SOASTA (2010).
This taxonomy introduces many categories to divide the cloud ecosystem, but it lacks some important
aspects, as the IaaS set of services is not entirely covered (there is not a clear category for virtualization
services) and there are no clear interrelationships between different categories.
4.3.3 Comparison and Limitations of Existing Taxonomies

The main difference between the four taxonomies is the number of categories: the most succinct is the
SPI model with only three categories, followed by Youseff’s five-layer ontology, then by Johnston’s six-
layer stack and finally by Linthicum’s taxonomy with 10 categories.
Despite this difference, they have a similar organization and assume a linear or flat structure. Hence, it
is plausible to use the SPI model as reference to compare the other taxonomies, as depicted in Table 4.1.
This table helps to identify the main points where each layer can be subdivided.
One of the most important requirements when specifying cloud taxonomies is to permit an easier
identification of interrelationships between different services; this allows the services to be studied sepa-
rately, and it allows the creation of new services by composing simpler ones.
The straightforward approach proposed in the SPI model is helpful when a simple and direct classifica-
tion is needed, but it encumbers the identification of interrelationships between services. In comparison,
the other models have more categories in a flat distribution; however, they rely basically on existing ser-
vices to create the categories, in such a manner that the categories themselves usually do not have clear
connections. One of the main disadvantages is that the resulting categories are likely unable to fully or
properly cover future services, or even existing services that were not considered when the taxonomy was
first designed.
TABLE 4.1
Comparison of Taxonomies Using SPI Model as Reference
Taxonomy SaaS PaaS IaaS
Youseff’s five-layer Software Platform Computer resources
Storage
Communications
Johnston’s six-layer Services Application Platform Storage Infrastructure
Linthicum’s 10-layer Application Testing Security Platform Integration Storage Database
Information Process Management
One example is the Amazon EC2 (Amazon, 2010b); it does not fit into any of Linthicum’s taxonomy
(Linthicum, 2009) categories: even though it is a storage service, it also offers virtualization and database
features.
Despite their importance, the abovementioned taxonomies are either too broad—not providing
the granularity needed for deeper and more complex comparisons between distinct services—or too
narrow—lacking the flexibility to add new, more complex services—and do not offer an explicit connec-
tion between the different categories.
4.3.4 A Proposed Taxonomy

We argue for the need to build a model based on the widely accepted SPI, but adopting a hierarchical
organization rather than a flat one. This would permit a more structured taxonomy, conserving the sim-
plicity of the SPI model, while enabling a deeper analysis of cloud services. One of the most interesting
features of the SPI model is its ability to offer an overview of services and to initially categorize them; the
proposed taxonomy model extends this property with a finer-grained structure, enabling the development
of the more sophisticated analyses that are not possible with the SPI model alone (Gonzalez et al., 2011).
The result is a tree-like structure that aggregates cloud solutions, favoring the identification of similar-
ities, dependencies and complementary points between these services. Figure 4.7 illustrates the proposed
model, showing a taxonomy based on existing services. The specific categories depicted are:
• Software:
• e-Commerce: Services that enable the creation of online stores and catalogs for local physi-
cal products and application stores for mobile platforms;
• Software management: Services that communicate with other software (hosted or not in a
cloud) with management purposes, such as a hosted web application or an antivirus server.
This category can be further divided into monitoring services (e.g., for checking service uptime,
performance, security or service level agreement (SLA) compliance), controlling (for creating,
starting and stopping other services) and integrating (for data synchronization and conversion);
• Financial management: Financial transactions, such as payment and billing services;
FIGURE 4.7 A service-based instance of the proposed taxonomy model.

• Communication: General-purpose types of communication tied to an online event

(e.g., VoIP, webcasts, webinars, web conferencing solutions);
• Office tools: Word processors, spreadsheets, presentation software, file conversion, calen-
dars, and so on;
• Entertainment: Online games, video or audio streaming, which demand specific quality of
service (QoS) requirements;
• Business management: Corporate applications, such as CRM and business process
management.
• Platform:
• Developing: Hosted environment for software development, such as integrated develop-
ment environment, versioning and bugtracking systems;
• Deploying: Services that offer an environment to deploy applications, from static to
dynamic web pages and web services;
• Testing: Solutions for automated tests of new applications.
• Infrastructure:
• Processing: Virtualized processing resources (e.g., VM execution);
• Storage: Virtualized storage, including database, file storage and disk storage;
• Networking: Virtualized networks and services on top of an existing network infrastruc-
ture, such as wireless clouds.
With this format, we can classify a service not only using specific categories (represented by the leaves),
but also using more generic levels—this is especially recommended when a service is very complex or
when it aggregates different solutions.
Some Amazon web services are interesting examples to contextualize both situations. The Amazon
S3 (Amazon, 2010e) is a storage service, which is initially classified as an IaaS; using the proposed
model, this service is classified as Infrastructure-Storage. The Amazon EC2 (Amazon, 2010b), which
is related to virtualization, offers a complete platform to run software over a virtualized infrastructure;
it is classified as an Infrastructure service, because it offers resources related to its leaves. It should be
noted that both services would be simply classified as IaaS by the SPI model—which is correct and
adequate if a simple analysis is required, but insufficient if we require a comparison between various
IaaS providers, each of which offers different solutions.
We emphasize, however, that the categories enumerated above are not necessarily exhaustive. Instead,
the taxonomy instance depicted in the figure is better regarded as an application of the proposed model
for common cloud services; as such, this taxonomy can be easily extended without losing its main
characteristics, as long as the SPI root is kept untouched. This extensibility feature also enables a clear
evolution path, similar to the way networking standards are created and maintained by standardization
entities such as IEEE and IETF (for instance, using tags to identify the taxonomy version).
It is important to emphasize that the combinations between services may be very complex. For example,
while using Heroku to develop a dynamic website for an enterprise, the service consumer may decide to
include Netsuite Ecommerce to integrate local products to an online store, to use Amazon S3 or SimpleDB
to store any information related to business processes, customers and commercial transactions, and finally,
to adopt SOASTA to improve the website performance. This example illustrates that classifying services
into more complex categories while keeping a solid foundation enables swift and useful identification of
potential services that, when combined, can create a complete toolkit for developing the desired business.
Table 4.2 shows the classification of some existing services according to this taxonomy.
The proposed model is an extension of (rather than a replacement for) the SPI model, empowering
the latter with an organization that allows a finer-grained analysis to be performed whenever needed.
Its instances should not be regarded as fixed and absolute taxonomies, however, but as evolving struc-
tures that can follow the cloud computing evolution itself. Future studies on criteria and other functional
aspects of the cloud may improve the model, reorganizing the services to facilitate the development of
more sophisticated cloud computing solutions (Gonzalez et al., 2011).
TABLE 4.2
Classification of Existing Services Using Proposed Taxonomy
Service Main Category Subdivision
Amazon EC2 (Amazon, 2010b) Infrastructure –
Amazon EC2 (Amazon, 2010e) Infrastructure Storage—Database
Amazon SimpleDB (Amazon, 2010d) Software Software management—Integration
Appian Anywhere (Appian, 2010) Software Business management—BPM
Boomo (Boomi, 2010) Software Software management—Integration
Box.net (Box.net, 2010) Infrastructure Storage
Elastra (Das et al., 2010) Software Software management
EMC SMS (EMC, 2010) Infrastructure Storage
Enomaly WCP (Enomaly, 2010) Infrastructure –
Google App Engine (Google, 2010d) Platform Deploying
Heroku (Heroku, 2010) Platform Developing, deploying
Netsuite Apps (Netsuite, 2010) Software Financial management
OpSource Connect (OpSource, 2010) Software Business management—Integration
Oracle OnDemand (Oracle, 2010) Software Business management—CRM
RightScale (RightScale, 2010) Software Cloud management
rPath (rPath, 2010) Software Cloud management
Salesforce CRM (Salesforce, 2010b) Software CRM
SOASTA (SOASTA, 2010) Platform Testing
Trackvia (Trackvia, 2010) Infrastructure Database
4.4 Cloud Services

Cloud computing is the on-demand delivery of compute power, database storage, applications and other
IT resources through a cloud services platform via Internet.
4.4.1 Cloud Services Basics

A cloud services platform provides rapid access to flexible and low-cost IT resources. Cloud computing
does not require large upfront investments in hardware and or management of that hardware. Instead,
companies can provision exactly the right type and size of computing resources, accessing as many
resources as they require, almost instantly, and only pay for what they use.
Cloud computing provides a simple way to access servers, storage, databases and a broad set of appli-
cation services over Internet. A cloud services platform such as Amazon Web Services (AWS) owns and
maintains the network-connected hardware required for these application services, while companies
provision and use what they need via a web application.
4.4.2 Six Advantages and Benefits of Cloud Computing

1. Trade capital expense for variable expense: Instead of investing heavily in data centers and
servers before they know how they will use them, companies only pay when they consume
computing resources, and only pay for how much they consume.
2. Benefit from massive economies of scale: Cloud computing leads to lower variable costs.
Because the usage of hundreds of thousands of customers is aggregated in the cloud, providers
can achieve higher economies of scale, which translates into lower pay-as-you-go prices.
3. Stop guessing: Companies can access as much or as little as they need, and scale up and down
as required with only a few minutes notice.
4. Increase speed and agility: In a cloud computing environment, new IT resources are a click
away, reducing the time it takes to make resources available from weeks to just minutes.
This results in a dramatic increase in organizational agility, as the cost and time to experiment
and develop are significantly lower.
5. Stop spending money on running and maintaining data centers: Companies can focus on proj-
ects that differentiate their business, not the infrastructure.
6. Go global in minutes: An application can be deployed in multiple regions around the world.
4.4.3 Cloud Computing Services Features and Benefits

Today cloud services are available to meet most any IT need. Although there’s great variety among cloud
computing services, all such services have certain basic features and benefits in common. From the per-
spective of service users, cloud computing services have these main features:
• Hosted and maintained by the provider: The cloud hosting provider purchases, hosts, and main-
tains the necessary hardware and software in their own facility. Service users avoid capital
expenditures and maintenance costs.
• Self-service through a web interface: Service users can initiate functions of specific service and
increase or decrease their service usage level, though a web interface with little or no interac-
tion with the service provider.
• Pay for use: Service users pay only for the amount of service they use. This can result in
substantial cost savings compared to the traditional approach of developing on-site IT capaci-
ties geared toward maximum usage scenarios, and then having that capacity be under-utilized
much of the time.
• Near-limitless scalability: Cloud computing services providers typically have the infrastructure
to deliver their service at massive scale. For cloud service users, the cloud can easily accom-
modate business growth or periodic spikes in service usage.
4.4.4 Types of Cloud Computing Services

The wide range of services offered by cloud computing companies can be categorized into three basic
types (also see section on taxonomies):
• IaaS: IaaS provides users access to raw computing resources such as processing power, data
storage capacity and networking, in the context of a secure data center.
• PaaS: Geared toward software development teams, PaaS offerings provide computing and stor-
age infrastructure and also a development platform layer, with components such as web servers,
database management systems and software development kits (SDKs) for various programming
languages.
• SaaS: SaaS providers offer application-level services tailored to a wide variety of business
needs, such as CRM, marketing automation or business analytics.
4.4.4.1 Software as a Service (SaaS)

Software as a Service is software distribution model in which a third-party provider hosts applications
and makes them available to customers over the Internet. It removes the need for organizations to install
and run applications on their own computers or in their own data centers. This eliminates the expense
of hardware acquisition, provisioning and maintenance, as well as software licensing, installation and
support. The other benefits of the SaaS model include:
• Flexible payments: Rather than purchasing software to install, or additional hardware to sup-
port it, customers subscribe to a SaaS offering. Generally, they pay for this service on a monthly
basis using a pay-as-you-go model. Transitioning costs to a recurring operating expense allows
many businesses to exercise better and more predictable budgeting. Users can also terminate
SaaS offerings at any time to stop these recurring costs.
• Scalable usage: Cloud services such as SaaS offer high scalability, giving customers the option
to access more, or fewer, services or features on-demand.
• Automatic updates: Rather than purchasing new software, customers can rely on a SaaS pro-
vider to automatically perform updates and patch management. This further reduces the burden
on in-house IT staff.
• Accessibility and persistence: As SaaS applications are delivered over the Internet, users can
access them from any Internet-enabled device and location.
However, SaaS also has some potential disadvantages. Businesses must rely on outside vendors to pro-
vide the software, keep that software up and running, track and report accurate billing and facilitate
a secure environment for the business’ data. Providers who experience service disruptions impose
unwanted changes to service offerings, experience a security breach or any other issue can have a pro-
found effect on the customers’ ability to use their SaaS offerings. As a result, users should understand
their SaaS provider’s service-level agreement and make sure it is enforced.
Software as a Service is closely related to the application service provider and on-demand computing
software delivery models. The hosted application management model of SaaS is similar to ASP: the
provider hosts the customer’s software and delivers it to approved end users over the Internet. In the
software on-demand SaaS model, the provider gives customers network-based access to a single copy of
an application that the provider has created specifically for SaaS distribution. The application’s source
code is the same for all customers, and when new features and functionalities are rolled out, they are
rolled out to all customers. Depending upon the SLA, the customer’s data for each model may be stored
locally, in the cloud or both locally and in the cloud.
Organizations can integrate SaaS applications with other software using application programming
interfaces (APIs). For example, a business can write its own software tools and use the SaaS provider’s
APIs to integrate those tools with the SaaS offering.
There are SaaS applications for fundamental business technologies, such as email, sales management,
CRM, financial management, human resource management, billing and collaboration. Leading SaaS
providers include Salesforce, Oracle, SAP, Intuit and Microsoft (Rouse and Casey, 2016).
4.4.4.2 Infrastructure as a Service (IaaS)

This form of cloud computing provides virtualized computing resources over Internet. In an IaaS model,
a cloud provider hosts the infrastructure components traditionally present in an on-premises data center,
including servers, storage and networking hardware, as well as the virtualization or hypervisor layer.
The IaaS provider also supplies a range of services to accompany those infrastructure components.
These can include detailed billing, monitoring, log access, security, load balancing and clustering, as well
as storage resiliency, such as backup, replication and recovery. These services are increasingly policy-
driven, enabling IaaS users to implement greater levels of automation and orchestration for important
infrastructure tasks. For example, a user can implement policies to drive load balancing to maintain
application availability and performance.
Infrastructure as a Service customers access resources and services through a wide area network, such
as Internet, and can use the cloud provider’s services to install the remaining elements of an application
stack. For example, the user can log in to the IaaS platform to create VMs; install operating systems in
each VM; deploy middleware, such as databases; create storage buckets for workloads and backups; and
install the enterprise workload into that VM. Customers can then use the provider’s services to track
costs, monitor performance, balance network traffic, troubleshoot application issues, manage disaster
recovery and more.
Any cloud computing model requires the participation of a provider. The provider is often a third-
party organization that specializes in selling IaaS. Amazon Web Services and Google Cloud Platform
(GCP) are examples of independent IaaS providers. A business might also opt to deploy a private cloud,
becoming its own provider of infrastructure services.
Organizations choose IaaS because it is often easier, faster and more cost-efficient to operate a work-
load without having to buy, manage and support the underlying infrastructure. With IaaS, a business can
simply rent or lease that infrastructure from another business.
Infrastructure as a Service is an effective model for temporary or experimental workloads or work-
loads that change unexpectedly. For example, if a business is developing a new software product, it might
be more cost-effective to host and test the application using an IaaS provider. Once the new software is
tested and refined, the business can remove it from the IaaS environment for a more traditional, in-house
deployment. Conversely, the business could commit that piece of software to a long-term IaaS deploy-
ment, where the costs of a long-term commitment may be less.
In general, IaaS customers pay on a per-use basis, typically by the hour, week or month. Some IaaS
providers also charge customers based on the amount of VM space they use. This pay-as-you-go model
eliminates the capital expense of deploying in-house hardware and software (Figure 4.8).
The advantages of IaaS include the following:
• Development and tests: Teams can quickly set up and unmount development and testing envi-
ronments, reducing the time to market for new applications. With IaaS, scaling and vertically
reducing development and testing environments is faster and cheaper.
• Hosting websites: Running websites with IaaS can be cheaper than traditional web hosting.
• Storage, backup and recovery: Organizations avoid the capital outlay necessary to obtain stor-
age and the complexity of managing it, for which it is usually necessary to have qualified
personnel to administer the data and meet a series of legal requirements. Infrastructure as a
Service is very useful to control unpredictable demand and the increasing need for storage.
It can also simplify the planning and administration of backup and recovery systems.
• Web applications: IaaS provides all the necessary infrastructure to support web applications,
such as storage, web and application servers and network resources. Organizations can imple-
ment web applications quickly in IaaS, as well as vertically scale or reduce the infrastructure,
without difficulty, when the demand for applications is unpredictable.
FIGURE 4.8 IaaS. (From Rouse M, and Bigelow S., https://searchcloudcomputing.techtarget.com/definition/Platform-

as-a-Service-PaaS?int=off, 2017a.)
• High-performance computing (HPC): HPC in supercomputers, PC meshes or PC clusters helps

solve complex problems involving millions of variables or calculations, e.g., simulations of
earthquakes and protein folding, climatic and meteorological predictions, creation of financial
models and evaluation of product designs.
• Big data analysis: “Big data” refers to huge data sets that contain patterns, trends and associa-
tions with strong potential. The mining of data to find or extract these hidden patterns requires
a huge processing capacity that IaaS offers economically.
There are some potential problems, however:
• Cloud billing is extremely granular, and it is broken out to reflect the precise usage of ser-
vices. It is common for users to experience sticker shock—or finding costs to be higher than
expected—when reviewing the bills for every resource and service involved in an application
deployment. Users should monitor their IaaS environments and bills closely to understand how
IaaS is being used and to avoid being charged for unauthorized services.
• Insight is another common problem for IaaS users. Because IaaS providers own the infrastruc-
ture, the details of their infrastructure configuration and performance are rarely transparent to
IaaS users. This lack of transparency can make systems management and monitoring more
difficult for users.
• IaaS users are also concerned about service resilience. The workload’s availability and performance
is highly dependent on the provider. If an IaaS provider experiences network bottlenecks or any
form of internal or external downtime, the users’ workloads will be affected. In addition, because
IaaS is a multi-tenant architecture, the noisy neighbor issue can negatively impact users’ workloads.
There are many IaaS vendors offering a range of products and services:
• AWS offers storage services such as Simple Storage Services (S3) and Glacier, as well as com-
pute services, including its Elastic Compute Cloud (EC2).
• GCP offers storage and compute services through Google Compute Engine.
• Microsoft Azure also offers storage and compute services.
• Smaller or niche players in the IaaS marketplace include Rackspace Managed Cloud,
CenturyLink Cloud, DigitalOcean and more.
Services can include serverless functions, such as AWS Lambda, Azure Functions or Google Cloud
Functions, database access, big data compute environments, monitoring, logging, and more. Users will
need to carefully consider the services, reliability and costs before choosing a provider—and be ready to
select an alternate provider and to redeploy to the alternate infrastructure if necessary (Rouse et al., 2018).
4.4.4.3 Platform as a Service (PaaS)

In this cloud computing model, a third-party provider delivers hardware and software tools—usually
those needed for application development—to users over Internet. A PaaS provider hosts the hardware
and software on its own infrastructure. As a result, PaaS frees users from having to install in-house
hardware and software to develop or run a new application.
Platform as a Software does not typically replace a business’s entire IT infrastructure. Instead, a busi-
ness relies on PaaS providers for key services, such as application hosting or Java development. A PaaS
provider builds and supplies a resilient and optimized environment on which users can install applica-
tions and data sets. Users can focus on creating and running applications rather than constructing and
maintaining the underlying infrastructure and services.
Many PaaS products are geared toward software development. These platforms offer compute and
storage infrastructure, as well as text editing, version management, compiling and testing services that
help developers create new software more quickly and efficiently. A PaaS product can also enable devel-
opment teams to collaborate and work together, regardless of their physical location.
The principal benefit of PaaS is simplicity and convenience for users—the PaaS provider supplies
much of the infrastructure and other IT services, which users can access anywhere via a web browser.
Platform as a Software providers then charge for that access on a per-use basis—a model that many
enterprises prefer, as it eliminates the capital expenses they traditionally have for on-premises hardware
and software. Some PaaS providers charge a flat monthly fee to access their service, as well as the apps
hosted within it.
There are some potential concerns, however:
• Service availability or resilience can be a concern with PaaS. If a provider experiences a ser-
vice outage or other infrastructure disruption, this can adversely affect customers and result in
costly lapses of productivity.
• Provider lock-in is another common concern, as users cannot easily migrate many of the
services and much of the data produced through one PaaS product to another competing
product. Users must evaluate the business risks of service downtime and lock-in before they
commit to a PaaS provider.
• Internal changes to a PaaS product is a final potential issue. For example, if a PaaS provider
stops supporting a certain programming language or opts to use a different set of develop-
ment tools, the impact on users can be difficult and disruptive. Users must follow the PaaS
provider’s service roadmap to understand how the provider’s plans will affect its environment
and capabilities.
Many PaaS providers supply the tools and services needed to build enterprise applications in the
cloud.
• Google App Engine supports distributed web applications using Java, Python, PHP and Go.
• Red Hat OpenShift is a PaaS offering for creating open source applications using a wide variety
of languages, databases and components.
• Heroku PaaS offers Unix-style container computing instances that run processes in isolated
environments, while supporting languages such as Ruby, Python, Java, Scala, Cloture and
Node.js.
• Microsoft Azure supports application development in .NET, Node.js, PHP, Python, Java
and Ruby, and allows developers to use SDKs and visual studio to create and deploy
applications.
• AWS Elastic Beanstalk allows users to create, deploy and scale web applications and services
developed with Java, .NET, PHP, Node.js, Python, Ruby, Go and Docker on common servers,
such as Apache, Nginx, Passenger and IIS.
While many PaaS providers offer similar services, each provider can pose unique nuances and limita-
tions. It is important for users to test prospective providers to ensure their services meet any business or
technical requirements, such as languages supported and service availability.
4.4.4.4 PaaS vs. SaaS vs. IaaS

With IaaS, a provider supplies the basic compute, storage and networking infrastructure along with
the hypervisor (the virtualization layer). Users must then create VMs, install operating systems, sup-
port applications and data and handle all of the configuration and management associated with these
tasks.
With PaaS, a provider offers more of the application stack than IaaS providers, adding operating sys-
tems, middleware (such as databases) and other runtimes into the cloud environment.
With SaaS, a provider offers an entire application stack. Users simply log in and use the application
that runs completely on the provider’s infrastructure (Figure 4.9).
FIGURE 4.9 Service models for cloud computing. (From Rouse M, and Bigelow S., https://searchcloudcomputing.tech-
target.com/definition/Platform-as-a-Service-PaaS?int=off, 2017a.)
4.4.5 Everything as a Service

Everything as a Service (XaaS) refers to the delivery of anything as a service. It recognizes the vast
number of products, tools and technologies that vendors currently deliver to users as a service over a
network—typically Internet—rather than provide locally or on-site within an enterprise.
There are countless examples of XaaS, but the most common encompass the three general cloud com-
puting models discussed above: SaaS, PaaS and IaaS.
Other examples include:
• Software as a Service (SaaS) provides application, data and backup storage systems in the cloud,
• DBaaS provides access to a database platform through the cloud. Public cloud providers such
as AWS and Azure have DBaaS offerings.
• Disaster Recovery as a Service (DRaaS),
• CaaS,
• Network as a Service, and
• Malware as a Service (MaaS) uses the public cloud to help organizations guard against com-
mon attacks, such as ransomware and distributed denial of service. VMware AppDefense is
one emerging example of MaaS.
Organizations often choose XaaS because the as-a-service model can cut costs and simplify IT deploy-
ments. With every additional cloud service, an organization can shed pieces of its in-house IT infra-
structure, leading to fewer servers, hard drives, network switches, software deployments, and more. Less
on-premises IT means less physical overhead—such as equipment space, power and cooling. This trans-
lates to reductions in IT staffing and firefighting or allows IT staff to focus on more important, value-
added projects for the business. In addition, using an outside service rather than on-premises technology
shifts many capital expenses (Capex) to operational expenses (Opex) for the business.
Despite their benefits, XaaS offerings sometimes contend with issues of resilience and Internet
reliability. Some enterprises also want more visibility into their service provider’s environment and
infrastructure so that they can better gauge service health and assume a more proactive role. In addition,
a service provider who goes out of business, gets acquired, discontinues a particular service or alters its
feature roadmap can have a profound impact on XaaS users.
The combination of cloud computing and ubiquitous, high-bandwidth, global Internet access provides
a fertile environment for XaaS growth. Some organizations have been tentative to adopt XaaS because
of security, compliance and business governance concerns. However, service providers increasingly
address these concerns, allowing organizations to bring additional workloads into the cloud (Rouse and
Bigelow, 2017b).
4.4.6 Public Cloud-Based Services vs. Private Cloud-Based Services

Cloud services offered by a service provider to multiple customers through Internet are referred to as pub-
lic cloud services. Software as a Service, PaaS and IaaS providers all provide public cloud-based services.
Private cloud services, in contrast, are not made generally available to individual or corporate users or
subscribers. Private cloud-based services use technologies and approaches associated with public clouds,
such as virtualization and self-service. However, private cloud services run on an organization’s own
infrastructure and are dedicated to internal users, rather than multiple, external customers.
4.4.7 Cloud Services as Professional Services

Cloud services include professional services that enable customers to deploy the various types of cloud
services. Consulting firms, systems integrators and other channel partners may offer such services to
help their clients adopt cloud-based technology.
In this context, cloud services might include any or all of the following offerings: cloud-readiness
assessment, application rationalization, migration, deployment, customization, private and public cloud
integration—hybrid clouds—and ongoing management. Companies specializing in cloud services have
become an attractive acquisition target for large IT services providers—Accenture, IBM and Wipro, for
instance—who seek expertise in cloud consulting and deployment.
4.4.8 Cloud Services vs. Web Services

Cloud services are sometimes deemed synonymous with web services. The two fields, although related,
are not identical. A web service provides a way for applications or computers to communicate with each
over the World Wide Web. Thus, web services are generally associated with M2M communications, while
cloud services are generally associated with scenarios in which individuals or corporate customers con-
sume the service—users accessing office productivity tools via a SaaS-based application, for example.
4.4.9 Why You Need to Know about Cloud-Based Services

There is a disconnect between the hype surrounding the uptake of cloud-based services and the number
of enterprises actually embracing the new business model. To make enterprises comfortable enough to
make the move, cloud providers must be ready to address any issue that enterprises see as negative.
They have to embrace IT services including the security and regulatory compliance aspects. They have
to be able to guarantee network access, end-to-end security, SLAs and QoS.
The need to provide seamless end-to-end cloud services that cross networking and IT expertise may
lead providers to partner with one other to be more credible with enterprises rather than trying to do it
all themselves. Each type of provider in the emerging cloud business has its own core competency, but
providing enterprise-class controls is an across-the-board requirement; thus, customers have the right
tools to monitor and manage resources in cloud environments.
Enterprises may prefer to move to a cloud environment in clearly defined phases where they can
measure each step with hard metrics such as return on investment (ROI), total cost of ownership, lower
energy costs and increased utilization. If cloud services have cost savings, providers need to be able to
quantify savings for customers (Wait, what are cloud services, 2010).
4.5 Data Repositories and Data Centers

4.5.1 Data Repository
Data repository is a general term used to refer to a destination designated for data storage. However, many
IT experts use the term more specifically to refer to a particular kind of setup within an overall IT structure,
such as a group of databases, where an enterprise or organization has chosen to keep various kinds of data.
Some experts refer to a data repository as a partitioning of data, where partitioned data types are stored
together (Data Repository). A data repository is also known as a data library or data archive. This is a
general term to refer to a data set isolated to be mined for data reporting and analysis. The data repository
is a large database infrastructure—several databases that collect, manage, and store data sets for data
analysis, sharing and reporting.
4.5.1.1 Examples of Data Repositories

The term data repository can be used to describe several ways to collect and store data:
• A data warehouse is a large data repository that aggregates data usually from multiple sources
or segments of a business, without the data being necessarily related.
• A data lake is a large data repository that stores unstructured data that are classified and tagged
with metadata.
• Data marts are subsets of the data repository. These data marts are more targeted to what the
data user needs and easier to use. Data marts are also more secure because they limit autho-
rized users to isolated data sets. These users cannot access all the data in the data repository.
• Metadata repositories store data about data and databases. The metadata explains where the
data source is, how it was captured, and what it represents.
• Data cubes are lists of data with three or more dimensions stored as a table—as you may find
in a spreadsheet.
4.5.1.2 Benefits of Data Repositories

There is value to storing and analyzing data. Businesses can make decisions based on more than anec-
dote and instinct. Using data repositories as part of data management is another level of investment that
can improve business decisions:
• Isolation allows easier and faster data reporting or analysis because the data are clustered together.
• Database administrators have an easier time-tracking issues because data repositories are
compartmentalized.
• Data are preserved and archived.
4.5.1.3 Disadvantages of Data Repositories

Data repositories have several vulnerabilities that enterprises must manage to mitigate potential data
security risks:
• Growing data sets could slow down systems; therefore, it is necessary to ensure that the data-
base management systems can scale with data growth.
• A system crash could affect all the data; databases must be backed up and access to applications
must be isolated to restrain system risk.
• Unauthorized users can access all sensitive data more easily than if they were distributed across
several locations.
NOTE: As difficult as it is to secure one source of data, distributing the data in several locations makes
them more difficult to secure. This risk must be addressed when planning data repository management.
4.5.1.4 Best Practices for Working with Data Repositories

When creating and maintaining data repositories, there are many hardware and software decisions to
make. Establishing some data warehousing best practices will inform the technical decisions and keep
the data repository useful:
• Enlist a high-level business champion to engage all stakeholders during the project develop-
ment and during its use, not a developer but someone who can work across departments, engag-
ing people who will use the data repository.
• The data repository will need to grow. Treat it as an ongoing system.
• Hire experts who can build and maintain the data repository.
• In the beginning, keep the scope of the data repository modest. Collect smaller sets of data
and restrict the number of data subjects. Build complexity as data users learn the system and
discover ROI.
• Use Extract-Transformation-Load tools to migrate data to the data repository. These tools
ensure data quality in the transfer.
• Build a data warehouse first; then build the data marts.
• Decide how often the data warehouse will load new data. This often depends on the volume
of data.
• Metadata are necessary for quality data analysis and reporting.
• Data users need to have access to education and support.
• The data repository will need to evolve. The types of data it collects and the uses for them will
change. Having flexible plans will allow for changes in technology.
As more organizations adopt data repositories to store and manage their ever-growing volume of
data, a secure approach is pertinent to an enterprise’s overall security posture. Adopting sound
security practices, such as developing comprehensive access rules to allow only authorized users
with a legitimate business need to access, modify or transmit data, are crucial. Combined with a
digital signature approach or multifactor authentication, access rules go a long way toward keeping
sensitive data stored in a data repository secure. These and other security measures enable today’s
enterprises to fully leverage large volumes of data without introducing unnecessary security risks
(Aldorisio, 2018).
4.5.2 Data Center

A data center is a facility that centralizes an organization’s IT operations and equipment and where it
stores, manages and disseminates its data. Data centers house a network’s most critical systems and are
vital to the continuity of daily operations. Consequently, the security and reliability of data centers and
their information are top priorities for organizations.
Although data center designs are unique, they can generally be classified as Internet-facing or enter-
prise (or “internal”) data centers. Internet-facing data centers usually support relatively few applications,
are typically browser-based, and have many users, typically unknown. In contrast, enterprise data cen-
ters service fewer users, but host more applications that vary from off-the-shelf to custom applications.
Data center architectures and requirements can differ significantly. For example, a data center built for
a cloud service provider such as Amazon® EC2 satisfies facility, infrastructure and security requirements
that significantly differ from a completely private data center, such as one built for the Pentagon that is
dedicated to securing classified data.
Regardless of classification, effective data center operation is achieved through a balanced investment
in the facility and equipment housed. The elements of a data center break down as follows:
• Facility: The location and “white space” or usable space available for IT equipment. Providing
round-the-clock access to information makes data centers some of the most energy-consuming
facilities in the world. A high emphasis is placed on the design to optimize white space and
environmental control to keep equipment within manufacturer-specified temperature or humid-
ity range.
• Support infrastructure: Equipment contributing to securely sustaining the highest level of
availability possible. Some components for supporting infrastructure include:
• Uninterruptible power sources—battery banks, generators and redundant power sources.
• Environmental control—computer room air conditioners (CRAC), heating, ventilation,
and air conditioning systems and exhaust systems.
• Physical security systems—biometrics and video surveillance systems.
• IT equipment—actual equipment for IT operations and storage of the organization’s data.
This includes servers, storage hardware, cables and racks, as well as a variety of informa-
tion security elements, such as firewalls.
• Operations staff—to monitor operations and maintain IT and infrastructural equipment
around the clock.
Data centers have evolved significantly, adopting technologies such as virtualization to optimize resource
utilization and increase IT flexibility. As enterprise IT needs continue to evolve toward on-demand ser-
vices, many organizations are moving toward cloud-based services and infrastructure. A focus has also
been placed on initiatives to reduce the enormous energy consumption of data centers by incorporating
more efficient technologies and practices in data center management. Data centers built to these stan-
dards have been coined “green data centers.” (What is a Data Center?)
4.5.2.1 Data Center Consolidation and Colocation

There is no requirement for a single data center, and modern businesses may use two or more data center
installations across multiple locations for greater resilience and better application performance, which
lowers latency by locating workloads closer to users.
Conversely, a business with multiple data centers may opt to consolidate data centers, reducing the num-
ber of locations to minimize the costs of IT operations. Consolidation typically occurs during mergers and
acquisitions when the majority business doesn’t need the data centers owned by the subordinate business.
Alternatively, data center operators can pay a fee to rent server space and other hardware in a colo-
cation facility. Colocation is an appealing option for organizations who want to avoid the large capital
expenditures associated with building and maintaining their own data centers. Today, colocation pro-
viders are expanding their offerings to include managed services, such as interconnectivity, allowing
customers to connect to the public cloud.
4.5.3 Data Center Tiers

Data centers are not defined by their physical size or style. Small businesses may operate successfully
with several servers and storage arrays networked within a convenient closet or small room, while major
computing organizations, such as Facebook, Amazon or Google, may fill an enormous warehouse space
with data center equipment and infrastructure. In other cases, data centers can be assembled in mobile
installations, such as shipping containers, also known as data centers in a box, which can be moved and
deployed as required.
However, data centers can be defined by various levels of reliability or resilience, sometimes referred to as
data center tiers. In 2005, the American National Standards Institute (ANSI) and the Telecommunications
Industry Association (TIA) published standard ANSI/TIA-942, “Telecommunications Infrastructure
Standard for Data Centers,” which defines four tiers of data center design and implementation guidelines.
Each subsequent tier is intended to provide more resilience, security and reliability than the previous tier.
For example, a tier 1 data center is little more than a server room, while a tier 4 data center offers redun-
dant subsystems and high security.
4.5.3.1 Data Center Architecture and Design

Although almost any suitable space could conceivably serve as a “data center,” the deliberate design and
implementation of a data center requires careful consideration. Beyond the basic issues of cost and taxes,
sites are selected based on a multitude of criteria, such as geographic location, seismic and meteorologi-
cal stability, access to roads and airports, availability of energy and telecommunications and even the
prevailing political environment.
Once a site is secured, the data center architecture can be designed with attention to the mechanical
and electrical infrastructure, as well as the composition and layout of the IT equipment. All of these
issues are guided by the availability and efficiency goals of the desired data center tier.
4.5.3.2 Energy Consumption and Efficiency

Data center designs recognize the importance of energy efficiency. A simple data center may need only a few
kilowatts of energy, but an enterprise-scale data center installation can demand tens of megawatts or more.
Today, the green data center, designed for minimum environmental impact through the use of low-emission
building materials, catalytic converters and alternative energy technologies, is growing in popularity.
Organizations often measure data center energy efficiency through a metric called power usage effec-
tiveness (PUE), which represents the ratio of total power entering the data center divided by the power
used by IT equipment. However, the rise of virtualization has allowed for much more productive use of
IT equipment, resulting in much higher efficiency, lower energy use and energy cost mitigation. Metrics
such as PUE are no longer central to energy efficiency goals, but organizations may still gauge PUE and
employ comprehensive power and cooling analyses to better understand and manage energy efficiency.
4.5.3.3 Data Center Security and Safety

Data center designs must implement sound safety and security practices. Safety is often reflected in the
layout of doorways and access corridors, which must accommodate the movement of large, unwieldy IT
equipment and permit employees to access and repair the infrastructure. Fire suppression is another key
safety area, and the extensive use of sensitive, high-energy electrical and electronic equipment precludes
common sprinklers. Instead, data centers often use environmentally friendly chemical fire suppression
systems, which starve a fire of oxygen while mitigating collateral damage to the equipment. As the data
center is also a core business asset, comprehensive security measures, such as badge access and video
surveillance, help to detect and prevent malfeasance by employees, contractors and intruders.
4.5.3.4 Data Center Infrastructure Management and Monitoring

Modern data centers make extensive use of monitoring and management software. Software such as data
center infrastructure management tools allow remote IT administrators to oversee the facility and equip-
ment, measure performance, detect failures and implement a wide array of corrective actions, without
ever physically entering the data center room.
The growth of virtualization has added another important dimension to data center infrastructure
management. Virtualization currently supports the abstraction of servers, networks and storage, allow-
ing every computing resource to be organized into pools without regard to their physical location.
Administrators can then provision workloads, storage instances and even network configuration from
those common resource pools. When administrators no longer need these resources, they can return
them to the pool for reuse. All of these actions can be implemented through software, giving traction to
the term software-defined data center.
4.5.3.5 Data Center vs. Cloud

Data centers are increasingly implementing private cloud software, which builds on virtualization to add
a level of automation, user self-service and billing or chargeback to data center administration. The goal
is to allow individual users to provision workloads and other computing resources on-demand, without
IT administrative intervention.
It is also increasingly possible for data centers to interface with public cloud providers. Platforms such
as Microsoft Azure emphasize the hybrid use of local data centers with Azure or other public cloud
resources. The result is not an elimination of data centers but the creation of a dynamic environment that
allows organizations to run workloads locally or in the cloud or to move those instances to or from the
cloud as desired (Rouse et al., 2017).
4.5.4 Security and Privacy in the Era of Cloud Computing

There are two main issues when talking about security:
• Privacy: the protection and treatment of personal data.

• Information security: confidentiality, integrity and availability.
Although it is generally assumed that data privacy is better protected in central computing environments
as a consequence of the favorable security history of mainframe technology, the apparently controlled
execution of processes and the known location of data, this is not entirely true.
• First, the leading cloud providers have an impressive safety record with no major known
incidents.
• Second, services such as banking are currently offered from diverse locations and are acces-
sible through remote channels. This creates possible attack points to mainframe systems, which
in some cases were not designed to be open to third parties.
• Third, although the location of the data in a public cloud is not always evident, the main cloud
providers provide tools that allow users to establish the geographic area where the data will be
stored and processed, if they wish.
In terms of information security, cloud computing seems to be as well positioned as (or even better than)
mainframe technology when it comes to safeguarding integrity and availability. The services in the cloud
incorporate redundancy, high availability and flexibility because of their distributed nature. In most cases,
cloud providers are more secure than many individual companies can maintain and manage on-site.
Despite the supposed loss of control of data and processes executed in a public cloud, users can choose
the degree of protection or control needed for each type of data. In fact, the providers offer most of the
security options available in traditional technologies adapted to the cloud (encryption, virtualization,
etc.), as well as other security features specific to the cloud and even Software as a Service (SaaS).
In addition, cloud providers are responsible for keeping systems up-to-date. Some of them even design
their own hardware. This makes their systems more difficult to hack, reduces the need to patch the soft-
ware and allows a higher level of automation.
Cloud computing also offers a better response to incidents, because a wide range of clients that oper-
ate simultaneously can identify vulnerabilities and share security information more quickly. As a result,
users can decide on the security approach and make it more harmonized, flexible and adaptive than in a
mainframe environment.
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5
Big Data Analytics as Service Provider
CONTENTS
5.1 Connection: Sensors and Networks.............................................................................................. 156
5.1.1 Wireless Sensor Network................................................................................................. 156
5.1.1.1 Characteristics.................................................................................................. 159
5.1.1.2 Platforms........................................................................................................... 160
5.1.1.3 Unique Features of WSN: Challenges and Requirements.................................162
5.1.1.4 Types of WSNs...................................................................................................163
5.1.1.5 Application Domains and Deployments........................................................... 164
5.1.1.6 Potential Applications of WSN......................................................................... 166
5.1.1.7 Potential Synergies........................................................................................... 166
5.1.2 Software-Defined Networking in a Wide Area Network................................................. 166
5.1.3 Virtual Private Network....................................................................................................167
5.1.4 Software-Defined Networking..........................................................................................168
5.1.5 Low-Power Wide-Area Network.......................................................................................168
5.1.6 Wireless Sensor and Actuator Network............................................................................168
5.1.6.1 Actors vs. Actuator............................................................................................169
5.1.6.2 Peculiarities of Wireless Sensor and Actor Networks.......................................169
5.2 Content or Context.........................................................................................................................170
5.2.1 The Age of Content...........................................................................................................170
5.2.2 The Age of Context...........................................................................................................171
5.3 Data Sharing and Collaboration.....................................................................................................171
5.3.1 Introduction.......................................................................................................................171
5.3.1.1 Background: Understanding the Analyst’s Needs for Collaboration................172
5.3.1.2 Understanding Domain Knowledge..................................................................172
5.3.1.3 Understanding the Data Model..........................................................................173
5.3.1.4 Understanding the Data.....................................................................................173
5.3.1.5 Need for Knowledge Management....................................................................174
5.4 Big Data Analytics.........................................................................................................................175
5.5 Descriptive Analytics.....................................................................................................................176
5.5.1 Definition...........................................................................................................................176
5.5.2 Process of Descriptive Analytics......................................................................................177
5.5.3 Understanding the Data.....................................................................................................177
5.6 Diagnostic Analytics......................................................................................................................178
5.6.1 Predictive Analytics..........................................................................................................178
5.6.1.1 Definition...........................................................................................................178
5.6.1.2 Predictive Analytics Process.............................................................................179
5.7 Prescriptive Analytics....................................................................................................................182
5.7.1 Definition...........................................................................................................................182
5.7.2 Process of Prescriptive Analysis.......................................................................................183
5.7.3 When to Use Prescriptive Analysis...................................................................................183
5.8 What Types of Data Analytics Do Companies Choose?.............................................................. 184
References............................................................................................................................................... 184
155
LIST OF FIGURES
Figure 5.1 (a) Typical architecture of sensor node and (b) typical connection of sensor + node
+ gateway......................................................................................................................... 157
Figure 5.2 Remote services.............................................................................................................. 158
Figure 5.3 Types of networks........................................................................................................... 159
Figure 5.4 Types of WSN..................................................................................................................163
Figure 5.5 Taxonomy of WSN applications......................................................................................165
Figure 5.6 Wireless body area network (WBAN).............................................................................165
Figure 5.7 Examples of WSN applications deployed in a real environment.................................... 166
Figure 5.8 Potential synergies between WSN and other existing and emerging technologies.........167
Figure 5.9 Physical architecture of a WSAN....................................................................................169
Figure 5.10 R
obots designed by several robotics research laboratories: (a) Ground mapping
and air-to-ground cooperation of autonomous robotic vehicles, (b) autonomous
untethered robot, (c) autonomous battlefield robot, (d) sub-kilogram intelligent
tele-robots.........................................................................................................................170
Figure 5.11 Four types of data analytics.............................................................................................175
Figure 5.12 Types of Big Data analytics.............................................................................................176
Figure 5.13 Descriptive analytics........................................................................................................178
Figure 5.14 Predictive analytics value chain...................................................................................... 180
Figure 5.15 Predictive analytics process............................................................................................ 180
Figure 5.16 Predictive analytics process with model monitoring.......................................................181
Figure 5.17 Predictive analytics..........................................................................................................182
LIST OF TABLE
Table 5.1 Challenges vs. required mechanisms in WSN.....................................................................162
5.1 Connection: Sensors and Networks

5.1.1 Wireless Sensor Network
A wireless sensor network (WSN) is a group of specialized transducers with a communications infra-
structure for monitoring and recording conditions at diverse locations. The commonly monitored param-
eters are temperature, humidity, pressure, wind direction and speed, illumination intensity, vibration
intensity, sound intensity, power-line voltage, chemical concentrations, pollutant levels and vital body
functions.
A sensor network consists of multiple detection stations called sensor nodes, each of which is small,
lightweight and portable. Every sensor node is equipped with a transducer, microcomputer, trans-
ceiver and power source. The transducer generates electrical signals based on sensed physical effects
and phenomena. The microcomputer processes and stores the sensor output. The transceiver receives
Big Data Analytics as Service Provider 157
Transceiver
Sensor 1
Power Source
Micro-controller ADC
Sensor 2
External Memory
(a)
Salidas:
Discretas y Analogas
Comunicación:
TCP o Ethernet IP
NODO GATEWAY
Sensor QM42VT1
PLC O HMI
Red Local
(b) Inalambrica
FIGURE 5.1 (a) Typical architecture of sensor node (Wikipedia, 2018) and (b) typical connection of sensor + node + gateway.
(From DAKORA, S.A.S., Supervisión de vibraciones y temperatura, April 2018, http://dakora.com.co/2018/04/26/supervision-
de-vibraciones-y-temperatura-2/, 2018.)
commands from a central computer and transmits data to that computer. The power for each sensor
node is derived from a battery (Rouse Margaret, 2006). Figure 5.1 shows typical architecture of sensor
node and typical connection of sensor + node + gateway. On the other hand, Figure 5.2 shows a system
remote services.
Wireless sensor network refers to a group of spatially dispersed and dedicated sensors for monitoring
and recording the physical conditions of the environment and organizing the collected data at a central
location. Wireless sensor networks measure environmental conditions such as temperature, sound, pol-
lution levels, humidity, wind and so on.
These are similar to wireless ad hoc networks in that they rely on wireless connectivity and the spon-
taneous formation of networks so that sensor data can be transported wirelessly to a main location. The
more modern networks are bidirectional, enabling control of sensor activity. The development of WSNs
was motivated by military applications such as battlefield surveillance; today, such networks are used in
FIGURE 5.2 Remote services. (From AUMI, SICK-REMOTE-SERVICES-GRAFIK-EN, https://aumi.com.vn/

thu-thap-phan-tich-truyen-du-lieu-quan-ly-he-thong-quan-trac-khi-thai-bang-meac/sick-remote-services-grafik-en/.)
many industrial and consumer applications, such as industrial process monitoring and control, machine
health monitoring and so on.
The WSN is built of “nodes,” from a few to several hundreds or even thousands, where each node is
connected to one (or sometimes several) sensors. Each such sensor network node typically has several
parts: a radio transceiver with an internal antenna or connection to an external antenna, a microcontroller,
an electronic circuit for interfacing with the sensors and an energy source, usually a battery or an embed-
ded form of energy harvesting. Sensor nodes vary in size from a shoebox to a grain of dust, although
functioning “motes” with genuine microscopic dimensions have yet to be created. The cost of sensor
nodes is similarly variable, ranging from a few dollars to hundreds of dollars, depending on the com-
plexity of the individual sensor nodes. Size and cost constraints on sensor nodes result in corresponding
constraints on resources, such as energy, memory, computational speed and communications bandwidth.
The topology of WSNs can vary from a simple star network to an advanced multi-hop wireless mesh
network. The propagation technique between the hops of the network can be routing or flooding (Dargie
and Poellabauer, 2010; Sohraby et al., 2007).
In computer science and telecommunications, WSNs are an active research area, with numerous work-
shops and conferences arranged each year, for example, IPSN, SenSys and EWSN (Wikipedia, 2019e).
Figure 5.3 shows types of networks.
A WSN has a processor, a radio interface, an analog-to-digital converter, sensors, memory, and a
power supply. The processor provides the mote management functions and performs data process-
ing. The sensors attached to the mote are capable of sensing temperature, humidity, light and so
on. Due to bandwidth and power constraints, motes primarily support low data units with limited
computational power and a limited sensing rate. Memory is used to store programs (instructions
Bus Star Ring
Mix
Double Ring
Tree Red
FIGURE 5.3 Types of networks. (From Güimi, Redes de comunicaciones, April, 2009, https://guimi.net/monograficos/
G-Redes_de_comunicaciones/G-Redes_de_comunicaciones.pdf, 2009.)
executed by the processor) and data (raw and processed sensor measurements). Motes are equipped
with a low-rate (10–100 kbps) and short-range (less than 100 m) wireless radio, for example, IEEE
802.15.4 radio, to communicate among themselves. As radio communication consumes most of the
power, the radio must incorporate energy-efficient communication techniques. A commonly used
power source is rechargeable batteries. As motes can be deployed in remote and hostile environments,
they must use little power and employ built-in mechanisms to extend network lifetime. For example,
motes may be equipped with effective power harvesting methods such as solar cells, permitting them
to be left unattended for years.
Sensor nodes can be deployed in an ad hoc or a pre-planned manner. An ad hoc deployment is
good for large uncovered regions where a network of a very large number of nodes can be deployed
and left unattended to perform monitoring and reporting functions. Network maintenance, such as
managing connectivity and detecting failures, is difficult in such a WSN because of the large num-
ber of nodes. However, pre-planned deployment is good for limited coverage; when fewer nodes are
deployed at specific locations, the network maintenance and management costs become lower (Rawat
et al., 2013).
5.1.1.1 Characteristics
The main characteristics of a WSN include the following (Wikipedia, 2019e):
• Power consumption constraints for nodes using batteries or energy harvesting; examples of
suppliers are ReVibe Energy (2017) and Perpetuum (PERPETUUM, 2018);
• Ability to cope with node failures (resilience);
• Some mobility of nodes (for highly mobile nodes, see mobile WSNs);
• Heterogeneity of nodes;
• Homogeneity of nodes;
• Scalability to large scale of deployment;
• Ability to withstand harsh environmental conditions;
• Ease of use;
• Cross-layer design (Saleem et al., 2009; Miao et al., 2016; Aghdam et al., 2014).
Cross-layering is becoming an important research topic for wireless networks (Miao et al., 2016), as the
traditional layered approach traditionally used in wired networks has the following three main issues:
• It cannot share different information among different layers; thus, each layer has incomplete
information.
• It cannot guarantee the optimization of the entire network.
• It does not have the ability to adapt to environmental change.
In other words, because of the interference between the different users, access conflicts, fading, and
the change of environment in the WSNs, the traditional layered approach is not applicable to wireless
networks.
A cross-layer approach can be used for optimal modulation to improve the transmission performance,
such as data rate, energy efficiency, and quality of service (QoS) (Miao et al., 2016). Sensor nodes can be
imagined as small computers, which are extremely basic in terms of their interfaces and their components.
They usually consist of a processing unit with limited computational power and limited memory, sensors
or microelectromechanical systems (including specific conditioning circuitry), a communication device
(usually radio transceivers or possibly optical) and a power source usually in the form of a battery. Other
possible inclusions are energy harvesting modules (Magno et al., 2014), secondary application-specific
integrated circuits and secondary communication interfaces (e.g., RS-232 or universal serial bus).
The base stations are one or more components of the WSN with much more computational energy and
communication resources. They act as a gateway between sensor nodes and the end user, as they typi-
cally forward data from the WSN to a server.
Other special components in routing-based networks are routers, designed to compute, calculate and
distribute the routing tables (Wikipedia, 2019e).
5.1.1.2 Platforms
• Hardware
One major challenge in a WSN is to produce tiny, low-cost sensor nodes. An increasing num-
ber of companies are producing WSN hardware, but many nodes are still in the research and
development stage, particularly their software. Another challenge is the use of very low-power
methods for radio communication and data acquisition (Wikipedia, 2019e).
In many applications, a WSN communicates with a local area network (LAN) or wide area net-
work (WAN) through a gateway. The gateway acts as a bridge between the WSN and another
network. This enables data to be stored and processed by devices with more resources, for
example, in a remotely located server. A wireless WAN used primarily for low-power devices
is known as a low-power wide-area network (LPWAN) (Wikipedia, 2019e).
• Standards and solutions for connectivity
There are several wireless standards and solutions for sensor node connectivity. Thread and
ZigBee can connect sensors operating at 2.4 GHz with a data rate of 250 kbit/s. Many use
a lower frequency to increase radio range (typically 1 km); for example, Z-wave operates at
915 MHz, and in the EU, 868 MHz has been widely used, but these have a lower data rate (typi-
cally 50 kbit/s). The IEEE 802.15.4 working group provides a standard for low-power device
connectivity; sensors and smart meters commonly use one of these standards for connectiv-
ity. With the emergence of Internet of Things (IoT), many other proposals have been made to
provide sensor connectivity. LoRa is a form of LPWAN, which provides long-range low-power
wireless connectivity for devices; it has been used in smart meters. Wi-SUN connects devices
at home. NarrowBand IoT and LTE-M can connect up to millions of sensors and devices using
cellular technology (Wikipedia, 2019)e.
• Software
Energy is the scarcest resource of WSN nodes, but it determines the lifetime of WSNs. Wireless
sensor networks may be deployed in large numbers in various environments, including remote
and hostile regions, where ad hoc communications are a key component. For this reason,
algorithms and protocols need to address the following issues (Wikipedia, 2019e):
• Increased lifespan,
• Robustness and fault tolerance,
• Self-configuration and
• Lifetime maximization.
Energy or power consumption of the sensing device should be minimized, and sensor nodes should be
energy efficient as their limited energy resource determines their lifetime. To conserve power, wire-
less sensor nodes normally power off both the radio transmitter and the radio receiver when not in use
(Miao et al., 2016).
• Operating systems
Operating systems (OSs) for WSN nodes are typically less complex than general-purpose OSs.
They more strongly resemble embedded systems, for two reasons. First, WSNs are typically
deployed with a particular application in mind, rather than as a general platform. Second, a
need for low costs and low power leads most wireless sensor nodes to have low-power micro-
controllers ensuring that mechanisms such as virtual memory are either unnecessary or too
expensive to implement.
It is therefore possible to use embedded OSs such as eCos or µC/OS for sensor networks.
Such OSs are often designed with real-time properties (Wikipedia, 2019e).
Operating systems for WSNs include the following (Wikipedia, 2019e):
• TinyOS is perhaps the first (Ranjbaran et al., 2013) operating system specifically designed
for WSNs. It is based on an event-driven programming model instead of multithreading.
Its programs are composed of event handlers and tasks with run-to-completion seman-
tics. When an external event occurs, such as an incoming data packet or a sensor reading,
TinyOS signals the appropriate event handler to handle the event. Event handlers can post
tasks that are scheduled by the TinyOS kernel sometime later.
• LiteOS is a newly developed OS for WSNs; it provides UNIX-like abstraction and support
for the C programming language.
• Contiki is an OS that uses a simpler programming style in C while providing advances such
as 6LoWPAN and Protothreads.
• RIOT (operating system) is a more recent real-time OS including functionality similar to
Contiki.
• PreonVM (VIRTENIO, 2011) is an OS for WSNs, which provides 6LoWPAN based on
Contiki and support for the Java programming language.
• Online collaborative sensor data management platforms
Online collaborative sensor data management platforms are online database services that allow sen-
sor owners to register and connect their devices to feed data into an online database for storage. They
also allow developers to connect to the database and build their own applications based on those data.
Examples include the Xively and Wikisensing platforms.
The Wikisensing system (Silva et al., 2012) includes application programming interface (APIs) and inter-
faces for online collaborators, a middleware containing the business logic needed for the sensor data manage-
ment and processing, and a storage model suitable for the efficient storage and retrieval of large volumes of
data.
Such platforms simplify online collaboration between users over diverse data sets ranging from
energy and environment data to data collected from transport services. Other services include allow-
ing developers to embed real-time graphs and widgets in websites, analyze and process historical data
pulled from the data feeds, and send real-time alerts from any data stream to control scripts, devices
and environments (Wikipedia, 2019e).
5.1.1.3 Unique Features of WSN: Challenges and Requirements

The collaborative nature of WSNs has several advantages over conventional wireless ad hoc networks,
including self-organization, rapid deployment, flexibility, and inherent intelligent-processing capability.
However, the unique features of WSN present new challenges in hardware design, communication pro-
tocols, and application design. A WSN technology must address these challenges to realize the numer-
ous envisioned applications. This requires modifying legacy protocols for conventional wireless ad hoc
networks or designing new communication protocols and algorithms (Dargie and Poellabauer, 2010).
Table 5.1 lists important challenges and corresponding required mechanisms to address them in WSN.
Sensor nodes have resource constraints, including limited energy, limited memory and computational
capacities. The limited energy supplies of the sensor nodes in the network impose lifetime constraints on
the WSN. The problem of limited resources can be addressed by using them efficiently. Energy-efficient
operation is required to maximize the network lifetime by implementing energy-efficient protocols, for
example, energy-aware routing on network layer, energy-saving mode on MAC layer and so on. The
efficient use of limited memory in sensors requires considering the memory consuming issues such as
routing tables, data replication, security and so on.
Dynamic network topologies and harsh environmental conditions may cause sensor node failures and
performance degradation. This requires WSN to support adaptive network operation, including adaptive
signal-processing algorithms and communication protocols to enable end users to cope with dynamic
wireless channel conditions and varying connectivity.
Wireless sensor networks are prone to unexpected node failures for different reasons. For example,
nodes may run out of energy or might be damaged (in extreme environment conditions), or wireless com-
munication between two nodes can be permanently interrupted. This requires WSNs to be robust to node
failures. In a WSN, fault tolerance can be improved through a high level of redundancy by deploying
additional nodes than required if all nodes are functioning properly. In cases of high-density deployment,
sensor observations can be highly correlated in the space domain. Data fusion and localized processing
are required to address the data redundancy so that only necessary information is delivered to the end-
user, and communication overhead can be reduced.
As WSNs may contain a large number of sensor nodes, the employed architectures and protocols must
be able to scale to sizes of thousands or more. In addition, a large-scale deployment of WSN requires
low-cost, small sensor nodes. A WSN should be able to self-organize itself as the network topology
may change because of node failure, mobility and large-scale deployments. New nodes may also need
to join the network, for example, to replace failed nodes; thus, a WSN must be self-reconfiguring. It can
be expensive to have a unique address for each node (address-centric paradigm), especially when thou-
sands of nodes are deployed in the application. Global identification of sensors in a WSN leads to large
overhead. Moreover, because of limited memory and lack of computational power, it is not advisable to
depend on a single sensor node’s contents. Wireless sensor networks are required to use the data-centric
paradigm, which focuses on data generated by a group of sensors (Rawat et al., 2013).
TABLE 5.1
Challenges vs. Required Mechanisms in WSN
Challenges Required Mechanisms
Resource constraints Efficient use of resources
Dynamic and extreme environment Adaptive network operation
conditions
Data redundancy Data fusion and localized processing
Unreliable wireless communication Reliability
No global identification (ID) for sensor Data-centric communication paradigm
nodes
Prone to node failures Fault tolerance
Large scale deployment Low-cost small-sized sensors with self-configuration and self-organization
Source: Rawat, P. et al., J. Supercomput., 4–7, 15–17, 31, 2013.
5.1.1.4 Types of WSNs

WSNs are deployed on land, underground and underwater. They face different challenges and constraints
depending on their environment. In what follows, we discuss five types of WSNs (Saleem et al., 2009) as
shown in Figure 5.4. (Rawat et al., 2013)
• Terrestrial WSN: It consists of a large number (hundreds to thousands) of low-cost nodes deployed
on land in a given area, usually in an ad hoc manner (e.g., nodes dropped from an airplane). In
terrestrial WSNs (Akyildiz et al., 2002) sensor nodes must be able to effectively communicate
data back to the base station in a dense environment. As battery power is limited and usually non-
rechargeable, terrestrial sensor nodes can be equipped with a secondary power source such as
solar cells. Energy can be conserved with multi-hop optimal routing, short transmission range, in-
network data aggregation and low duty-cycle operations. The common applications of terrestrial
WSNs are environmental sensing and monitoring, industrial monitoring and surface explorations.
• Underground WSN: It consists of sensor nodes deployed in caves or mines or underground to
monitor underground conditions (Akyildiz and Stuntebeck 2006; Li and Liu, 2007). In order to
relay information from the underground sensor nodes to the base station, additional sink nodes
are located above ground. They are more expensive than terrestrial WSNs as they require appro-
priate equipment to ensure reliable communication through soil, rocks and water. Wireless com-
munication is a challenge in such an environment because of high attenuation and signal loss.
Moreover, it is difficult to recharge or replace the battery of nodes buried underground, mak-
ing it important to design an energy-efficient communication protocol for prolonged lifetime.
Underground WSNs are used in many applications, such as agriculture monitoring; landscape
management; underground monitoring of soil, water, or mineral; and military border monitoring.
• Underwater WSN: It consists of sensors deployed underwater, for example, in the ocean envi-
ronment (Akyildiz et al., 2004; Heidemann et al., 2006). Because these nodes are expensive,
only a few are deployed, and autonomous underwater vehicles are used to explore or gather
data from them. Underwater wireless communication uses acoustic waves, and this presents
various challenges, including limited bandwidth, long propagation delay, high latency and sig-
nal fading. These nodes must be able to self-configure and adapt to the extreme conditions
of the ocean environment. Nodes are equipped with a limited battery that cannot be replaced
FIGURE 5.4 Types of WSN (Berberidis and Ampeliotis et al., 2009).

or recharged; this requires energy-efficient underwater communication and networking tech-

niques. Applications of underwater WSNs include pollution monitoring, under-sea surveillance
and exploration, disaster prevention and monitoring, seismic monitoring, equipment monitoring
and underwater robotics.
• Multimedia WSN: It consists of low-cost sensor nodes equipped with cameras and microphones,
deployed in a pre-planned manner to guarantee coverage (Akyildiz et al., 2007). Multimedia
sensor devices are capable of storing, processing, and retrieving multimedia data, such as video,
audio and images. They must cope with such challenges as high bandwidth demand, high energy
consumption, QoS provisioning, data processing and compressing techniques, and cross-layer
design. Transmission techniques that support high bandwidth and low energy consumption are
required to deliver multimedia content, such as a video stream. Although QoS provisioning is
difficult in multimedia WSNs because of variable link capacity and delay, a certain level of
QoS must be achieved for reliable content delivery. Multimedia WSNs enhance certain existing
WSN applications such as tracking and monitoring.
• Mobile WSN: It consists of mobile sensor nodes that can interact with the physical environment
(Yick et al., 2008). Mobile nodes can reposition and organize themselves in the network, in addi-
tion to being able to sense, compute and communicate. Thus, a dynamic routing algorithm must
be employed. Mobile WSNs face various challenges, including deployment, mobility manage-
ment, localization with mobility, navigation and control of mobile nodes, maintaining adequate
sensing coverage, minimizing energy consumption in locomotion, maintaining network con-
nectivity and distributing data. Primary examples of mobile WSN applications are monitoring
(environment, habitat, underwater), military surveillance, target tracking, and search and rescue.
A higher degree of coverage and connectivity can be achieved with mobile sensor nodes than
with static nodes.
5.1.1.5 Application Domains and Deployments

Wireless sensor networks have been adopted in many diverse application domains. It is envisioned
that, in the future, everyday objects will be embedded with sensors to make them smart. These smart
objects will explore their environment, communicate with other smart objects, and interact with humans
(Rawat et al., 2013).
A taxonomy of WSN applications is shown in Figure 5.5. In general, there are two types: monitor-
ing and tracking. As shown in the taxonomy (Figure 5.5), the leading application domains of WSNs
include military and crime prevention, environment, health (body area networks), industry and agricul-
ture, and urbanization and infrastructure. Military operations involving force protection with unattended
ground sensors formed into intelligent networks around forward operating bases are receiving much
attention. VigilNet (2006) is an integrated sensor network system for energy-efficient surveillance mis-
sions. Another interesting military example is networked mines called self-healing minefields that auto-
matically rearrange themselves to ensure optimal coverage. Body area networks integrated with soldier
communication systems are also a key application, as vital health functions can be monitored when
soldiers enter hazardous areas. In addition, the homeland security sector is showing great interest in
WSNs for critical infrastructure monitoring (utilities, airports, etc.), border protection, incident detection
and crisis management. In the health sector, BANs for health applications represent an emerging market
for WSNs. Figure 5.6 illustrates a wireless body area network (WBAN) of intelligent sensors for patient
monitoring (Latré et al., 2011; Jovanov et al., 2005; Chen et al., 2011). In environmental applications,
sensor networks are increasingly used to monitor nature. Some examples are including Great Duck Island
(Mainwaring et al., 2007); a sensor network deployment for habitat monitoring, biodiversity mapping; to
observe wildlife, flood detection, forest fire detection and precision agriculture. Finally, in the civil sec-
tor, WSNs have generated interest because of their smart infrastructure applications, such as smart grids,
smart energy metering, smart transport and traffic management, smart roads and so on. Structural health
monitoring enables detecting the health status of structures using a network of accelerometers and strain
gages (Rawat et al., 2013).
FIGURE 5.5 Taxonomy of WSN applications. (From Rawat, P. et al., J. Supercomput., 4–7, 15–17, 31, 2013.)
FIGURE 5.6 Wireless body area network (WBAN). (From Jovanov, E. et al., J. Neuroeng. Rehabil., 2, 6, 2005.)
FIGURE 5.7 Examples of WSN applications deployed in a real environment. (From Rawat, P. et al., J. Supercomput.,
4–7, 15–17, 31, 2013.)
Several applications have been deployed and with the advancement in technology, new application
areas keep emerging. Figure 5.7 shows some examples of WSN applications that have been tested in the
real environment (Rawat et al., 2013).
5.1.1.6 Potential Applications of WSN

Potential applications of sensor networks include (Rouse Margaret, 2006):
• Industrial automation;
• Automated and smart homes;
• Video surveillance;
• Traffic monitoring;
• Medical device monitoring;
• Monitoring of weather conditions;
• Air traffic control;
• Robot control.
5.1.1.7 Potential Synergies

A recent phenomenon in WSN research is to explore the synergy between sensor networks and other
technologies. In this section, we describe how the integration of WSNs with existing wireless and
mobile communication technologies, as well as emerging technologies such as RFID, robotics, vehicu-
lar networks, cloud computing, cognitive radio and content-centric networking, as shown in Figure 5.8,
can help sensor networks achieve their full potential. We look at some literature that explores potential
synergies among WSNs and other technologies to improve their overall performance (Rawat et al.,
2013).
5.1.2 Software-Defined Networking in a Wide Area Network

SD-WAN is an acronym for software-defined networking in a wide area network (WAN). An SD-WAN
simplifies the management and operation of a WAN by decoupling (separating) the networking hard-
ware from its control mechanism. Software-defined networking implements virtualization technology to
improve data center management and operation in a similar manner (Wikipedia, 2019a).
Essentially, an SD-WAN is a higher-performance WAN using lower-cost and commercially avail-
able Internet access, enabling businesses to partially or wholly replace more expensive private WAN
connection technologies such as multiprotocol label switching (MPLS) (Wikipedia, 2019a). Given their
advantages, in the next few years, an increasing number of enterprises will deploy SD-WAN technology.
FIGURE 5.8 Potential synergies between WSN and other existing and emerging technologies. (From Rawat, P. et al., J.
Supercomput., 4–7, 15–17, 31, 2013.)
5.1.3 Virtual Private Network

A virtual private network (VPN) extends a private network across a public network and enables users
to send and receive data across shared or public networks as if their computing devices were directly
connected to the private network. Therefore, applications running across a VPN may benefit from the
functionality, security and management of the private network (Mason, 2002).
Virtual private network technology was developed to allow remote users and branch offices to securely
access corporate applications and other resources. To ensure security, data travels through secure tunnels
and VPN users use authentication methods—including passwords, tokens and other unique identifica-
tion methods—to gain access to the VPN. In addition, Internet users may secure their transactions with
a VPN to circumvent geo-restrictions and censorship, or to connect to proxy servers to protect personal
identity and location to stay anonymous on the Internet. However, some Internet sites block access to
known VPN technology to prevent the circumvention of their geo-restrictions; accordingly, many VPN
providers are developing strategies to circumvent these roadblocks.
A VPN is created by establishing a virtual point-to-point connection through the use of dedicated con-
nections, virtual tunneling protocols or traffic encryption. A VPN available from the public Internet can
provide some of the benefits of a WAN. For example, users can access the resources available within the
private network remotely (Microsoft TechNet, 2001).
Traditional VPNs are characterized by a point-to-point topology; they do not tend to support or con-
nect broadcast domains; thus, services such as Microsoft Windows NetBIOS may not be fully supported
or work as they would on a LAN. Designers have developed VPN variants, such as virtual private LAN
service, and layer 2 tunneling protocols, to overcome this limitation (HARD VPN.NET).
5.1.4 Software-Defined Networking

Software-defined networking (SDN) technology is an approach to cloud computing that facilitates net-
work management and enables programmatically efficient network configuration to improve network
performance and monitoring (Kamal et al., 2016). SDN addresses the fact that the architecture of tra-
ditional networks is static, decentralized and complex, but current networks require flexibility and easy
troubleshooting. SDN centralizes network intelligence in one network component by disassociating the
forwarding process of network packets (data plane) from the routing process (control plane). The control
plane consists of one or more controllers; all intelligence is incorporated here, and so these are considered
the brain of the software-defined networking (Wikipedia, 2019b). However, intelligence centralization
has drawbacks in areas of security (Kamal et al., 2016), scalability and elasticity (Kamal etval., 2016),
and this is the main problem of SDN (Wikipedia, 2019b).
SDN has commonly been associated with the OpenFlow protocol (for remote communication with
network plane elements for the purpose of determining the path of network packets across network
switches), since the latter’s emergence in 2011. However, since 2012 (Gewirtz Little, 2012, 2013), com-
panies using OpenFlow have added proprietary techniques, including Cisco Systems’ Open Network
Environment and Nicira’s network virtualization platform (Wikipedia, 2019b).
5.1.5 Low-Power Wide-Area Network

An LPWAN or low-power wide-area (LPWA) network or low-power network is a type of wireless
telecommunication WAN designed to allow long-range communications at a low bit rate among things
(connected objects), such as sensors operated on a battery (Beser et al., 2008; Schwartzman and
Leano, 2009).
The low power, low bit rate and intended use distinguish this type of network from a wireless WAN
designed to connect users or businesses and carry more data, using more power. The LPWAN data rate
ranges from 0.3 to 50 kbit/s per channel (Adelantado et al., 2017).
An LPWAN may be used to create a private WSN but may also be a service or infrastructure offered
by a third party, allowing the owners of sensors to deploy them in the field without investing in gateway
technology (Wikipedia, 2019c).
5.1.6 Wireless Sensor and Actuator Network

A wireless sensor and actuator network (WSAN) is a group of sensors that gather information about their
environment and actuators, such as servos or motors, that interact with them. All elements communicate
wirelessly; interaction can be autonomous or human-controlled.
Wireless sensor and actuator networks are sometimes referred to as wireless sensor and actor networks
because they can involve more than a single actuator on an actor point. An actor point might involve,
for example, a combination of servomechanisms and multi-geared electric motors organized together to
perform more complex tasks. A WSAN’s distributed sensors allow automated measurement of environ-
mental variables and control of some desired aspects of the environment through autonomous or directly
controllable sensors and actors.
Wireless sensor and actuator networks are built of multiple nodes whose numbers can range into the
thousands, each connected with one or more sensors with sensor hubs, as well as individual actuators or
actors. They are sometimes used in locations where exact measurement and control of an environment
are necessary. In that kind of scenario, autonomous processing of data, response and CPU control allows
actors to input changes immediately.
The initial development of WSANs was motivated by military and government agencies’ desire to
better monitor battlefields and other environments, as well as organizations and persons of interest.
Today, WSANs are increasingly used for commercialized applications, such as monitoring and control
of industrial settings, telemedicine and scientific development.
Sensors and sensor hubs in smartphones could be used to improve consumer services through loca-
tion awareness. Smartphones may soon enable location awareness calculated to a centimeter, even inside
FIGURE 5.9 Physical architecture of a WSAN. (From BWN-LAB, Wireless Sensor and Actor Networks (WSAN),
Broadband & Wireless Networking Laboratory Personnel, http://bwn.ece.gatech.edu/actors/.)
buildings. That accuracy is expected to be enabled through the combined use of the sensors in the device.
The applications of that capability are varied. For example, numerous individuals using smart devices
could, in effect, form a WSAN to monitor entire populations (Rouse Margaret, 2015a).
Wireless sensor and actuator networks are part of the increasing trend toward the IoT, in which any
entity imaginable can be outfitted with a unique identifier (UID) and have the ability to transmit data over
the network. As with many other elements of the IoT, however, WSANs raise privacy and security issues.
The physical architecture of the WSAN is shown in Figure 5.9. In such a network, sensors gather
information about the physical world; based on that information, actors make decisions and then perform
appropriate actions. This allows remote, automated interaction with the environment (BWN-LAB).
5.1.6.1 Actors vs. Actuator

In this context, the meaning of the term actor differs from that of actuator. An actuator is a device to
convert an electrical control signal to physical action and constitutes the mechanism by which an agent
or actor acts upon the physical environment. An actor, besides being able to act on the environment by
means of one or several actuators, is also a network entity that performs networking-related functional-
ities, i.e., receive, transmit, process and relay data. For example, a robot may interact with the physical
environment by means of several motors and servo-mechanisms (actuators). However, from a network-
ing perspective, the robot constitutes a single entity, which is referred to as actor. Hence, the term actor
embraces heterogeneous devices including robots, unmanned aerial vehicles and networked actuators
such as water sprinklers, pan or tilt cameras and robotic arms. Applications of wireless sensor and actor
networks may include a team of mobile robots that perceive the environment from multiple disparate
viewpoints based on the data gathered by a sensor network, a smart parking system that redirects driv-
ers to available parking spots, or a distributed heating, ventilating, and air conditioning system based on
wireless sensors (BWN-LAB).
5.1.6.2 Peculiarities of Wireless Sensor and Actor Networks

Because of the presence of actors, WSANs have some differences from WSNs (BWN-LAB):
• While sensor nodes are small, inexpensive devices with limited sensing, computation and wire-
less communication capabilities, actors are usually resource-rich devices equipped with better
processing capabilities, stronger transmission powers and longer battery life.
• In WSANs, depending on the application there may be a need to rapidly respond to sensor
input. Moreover, to provide right actions, sensor data must be valid at the time of acting. The
issue of real-time communication is very important in WSANs, as actions are performed on the
environment after sensing occurs.
• The number of sensor nodes deployed in studying a phenomenon may be in the order of hun-
dreds or thousands. However, such a dense deployment is not necessary for actor nodes because
of the different coverage requirements and physical interaction methods. Hence, in WSANs,
the number of actors is much lower than the number of sensors.
• A distributed local coordination mechanism is necessary among sensors and actors to provide
effective sensing and acting.
FIGURE 5.10 Robots designed by several robotics research laboratories: (a) Ground mapping and air-to-ground
cooperation of autonomous robotic vehicles, (b) autonomous untethered robot, (c) autonomous battlefield robot, (d)
sub-kilogram intelligent tele-robots. (From BWN-LAB, Wireless Sensor and Actor Networks (WSAN), Broadband &
Wireless Networking Laboratory Personnel, http://bwn.ece.gatech.edu/actors/.)
In many real applications, robots are used as actor nodes. The robots designed by several robotics
research laboratories are shown in Figure 5.10. The low-flying helicopter platform shown in Figure 5.10a
provides ground mapping and air-to-ground cooperation of autonomous robotic vehicles. However, it
is likely that in the near future, more actuation functionalities, such as water sprinkling or disposing
of gas, will be supported by this helicopter platform. Possibly, the world’s smallest autonomous unte-
thered robot (1/4 cubic inch and weighing less than an ounce) is being developed in Sandia National
Laboratories and is shown in Figure 5.10b. Although it is not yet capable of performing difficult tasks
that are done with much larger robots, it is very likely that it will be the robot of the future. The
Robotic Mule, an autonomous battlefield robot, is shown in Figure 5.10c. In the United States, several
autonomous battlefield robot projects are sponsored by Space and Naval Warfare Systems Command
and Defense Advanced Research Projects Agency. These battlefield robots can detect and mark mines,
carry weapons, and function as tanks; in the future, they totally replace soldiers on the battlefield.
Finally, the sub-kilogram intelligent tele-robots shown in Figure 5.10d are networked tele-robots with a
radio turret enabling communication over ultra-high frequencies at 4800 kbit/s. These robots can coor-
dinate with each other by exploiting their wireless communication capabilities and perform the tasks
determined by the application (BWN-LAB).
5.2 Content or Context

5.2.1 The Age of Content
In the age of Big Data, information is collected from everywhere, including enterprise systems, docu-
ments, social interactions, e-mail and collaboration services. Data collection points are increasingly por-
table and personal, including mobile phones and wearable sensors, resulting in a data mining gold rush
that will soon have companies and organizations accruing Yottabytes (1024) of data (Lorentz et al., 2018).
To put things into perspective, 1 Exabyte (1018) of data is created on the Internet daily, amounting to
roughly the equivalent of data in 250 million DVDs. Humankind produces in two days the same amount
of data it took from the dawn of civilization until 2003 to generate, and as the IoT becomes a reality and
more physical objects become connected to the Internet, we will enter the Brontobyte (1027) era.
The issue is no longer one of content, i.e., accumulating data; rather, it is context, i.e., interpreting those
data.
5.2.2 The Age of Context

Big Data has limited value if we do not know the context. When looking at unstructured data, for
instance, we may encounter the number “31” and have no idea what that number means, whether it is the
number of days in the month, the amount of dollars a stock increased over the past week or the number of
items sold today. The number “31” could mean anything, without the layers of context that explain who
stated the data, what type of data is it, when and where it was stated, what else was going on in the world
when these data were stated and so forth. Clearly, data and knowledge are not the same thing.
Take the example of a company that has invested heavily in business intelligence (BI) software that
organizes internal data. In an increasingly connected world, this company has not leveraged its data
to its potential because the company’s internal data are isolated from the rest of the data universe,
including news, social media, blogs and other relevant sources. That company needs to find the hidden
connections.
Using an application that pulls in information from the entire data universe would help the company
answer questions such as “Why did our sales plummet last month?” as opposed to just “What happened
to our sales figures last month?” The company could further question, “Did our slip in sales have any-
thing to do with the recent elections and uncertainty?” and “How can we make sure our sales do not slip
next time there is a shift in the political landscape?” Identifying potential causality is key in spotting
patterns that enable prediction.
For organizations and businesses to survive today, they must contextualize their data. Contextualization
is crucial in transforming senseless data into real information—information that can be used as action-
able insights to enable intelligent corporate decision-making (Lorentz et al., 2018).
However, how do we extract real intelligence from data? Besides cross-referencing internal data with
a plethora of other sources, we need algorithms to remove the noise and extract the signals, or real
human meaning, from the data (Lorentz et al., 2018). Modern day examples include adaptive technolo-
gies such as Google Now, which tracks online behavior and uses these data to predict the informa-
tion that you will need, such as local traffic or weather updates. Similarly, “learning thermostat” Nest
self-adjusts your home’s temperature based on your activity, saving energy usage and bills. Pervasive
technologies mean they are everywhere and nowhere at the same time—an invisible layer observing
actions to be more helpful.
5.3 Data Sharing and Collaboration

5.3.1 Introduction
How can we expedite or automate the multisource data analytics lifecycle? In other words, how can the
domain and data understanding of an analyst working for Company A be transferred effectively in digital
form to another analyst requesting the data in Company B?
Scenarios that require active collaborative knowledge management tools occur in both the industry
and government sectors—for example, the Census Bureau working with the Centers for Disease Control
after a natural disaster or two health care companies that have recently merged looking to find common
patient diagnoses to streamline their operations. The critical actionable insight of value in either case
is enabled only after the analyst from one agency educates the analyst at the other agency. Today, the
data analytics lifecycle of finding the right data, getting access to the data, exploring or learning about
the data, analyzing the data, and publishing and sharing the insights gained after analysis, although a
collaborative effort, is often tedious and improperly documented. How can we make the collaborative
process of knowledge discovery from multi-enterprise data more productive? How can we make it easy
for any analyst to learn about datasets he or she has never seen before? How can we enable analysts or
companies to share knowledge with their peers and make multiagency or multicompany interactions a
productive experience—not just for the analysts employed today but also for the analysts in the future?
(Sukumar and Ferrell, 2013).
5.3.1.1 Background: Understanding the Analyst’s Needs for Collaboration

The next-generation analyst who faces the challenge of discovering actionable knowledge from data
stored across enterprise data warehouses begins work with the following question: how should data
sources be staged for analysis? More specifically, how can one data source from one agency or company
be conveniently posed in context to a different data source from another agency or company to answer
a specific question?
To an analyst, the process of answering this question often translates to (1) learning about new data
stores (Oracle, Postgres, Greenplum, Hive on Hadoop, Cassandra, etc.), (2) developing expertise in a new
query language (SQL, SPARQL, etc.), (3) obtaining query and data access to new interfaces for data, (4)
installing and configuring tools he or she is comfortable with (MATLAB, SAS, etc.) and (5) engaging
in conversations with another analyst (or a data custodian) with whom he or she is collaborating. If the
analyst’s role is data retrieval (analysis for enterprise hindsight), exploratory analysis expertise (analysis
for enterprise insight), or predictive model building (analysis for enterprise foresight), the complexity and
thereby the need for collaboration increases. Today, this cumbersome, iterative process of knowledge
exchange toward understanding the domain and the data before proceeding to the multisource data inte-
gration and analysis is the most time-consuming aspect of Big Data analysis.
The collaboration lifecycle has three dimensions: (1) understanding domain knowledge, (2) under-
standing the data model and (3) understanding the data (Sukumar and Ferrell, 2013).
5.3.1.2 Understanding Domain Knowledge

Understanding domain knowledge and mapping it to the data of interest to the analyst is the most criti-
cal but time-consuming aspect of multi-source data integration and analysis. It is the process of under-
standing the facts, procedures and processes involved in generating the data. A sound understanding of
domain knowledge helps the analyst control the search by writing smarter queries. Lack of understand-
ing makes it difficult to identify the key views or columns and navigate through definitions in the data
that contribute to resolving business problems of interest to the enterprise. When analysts collaborate to
understand domain knowledge and when they exchange data dictionaries, they exchange notes on “why”
and “how” a particular data element is being collected or measured. Understanding the “why” ensures
that important information about the processes and systems that generated the original data is not lost
or subsumed in the integration process. Understanding the “how” ensures that accurate summaries or
comparisons across data assets do not lead to poor conclusions resulting from a lack of key information
about different processes involved in generating the original data.
For example, when two health care insurance companies are sharing their data, the analysts would
exchange notes about the different entities in the system: beneficiaries, providers, policy and insur-
ance plans, and transaction claims. They would explain the process of how beneficiaries become eli-
gible for a service, how they seek service from a provider, how the provider files a transaction claim
for a particular cost based on the coverage defined under the beneficiaries insurance plan, and how
claims are adjudicated and later archived. They would then discuss the attributes or data elements
associated with a beneficiary, the provider, the insurance plan and so on. They would also discuss
the rules and business logic under which such transactions are made within their respective domains.
Even though the two companies may have many of the same kinds of data entities and business
transactions in their respective data domains, their naming conventions, the basis of their data struc-
tures, and their relationships between data structures will be unique. Each company’s perspective on
business and data transactions will be different from the other’s. The discussion to understand the
domain begins when the analysts have shared data dictionaries but do not yet have access to the data
records. Understanding the domain is an iterative learning process that progresses as analysts spend
more time exploring the data (Sukumar and Ferrell, 2013).
5.3.1.3 Understanding the Data Model

An analyst must have a strong understanding of the data structure (i.e., how fields within the structure
relate to each other and how the process being measured or described by the data is collected) to ensure
that a dataset is accurately analyzed. When analysts collaborate, the first pieces of information to be
exchanged are as follows (Sukumar and Ferrell, 2013):
1. Which table is the starter table?

2. What fields join within tables?
3. What database normalization form is the model?
4. What fields have to be indexed and pre-joined?
5. What is the business logic applied within tables to capture the domain processes?
The data model generally encodes much information about the domain. While some of this information
is revealed by careful study of the data structures specified and their relationships, other highly useful
information may not be as readily apparent. With extremely large datasets, seemingly simple calcula-
tion queries that compute sums and averages can take more time, and a simple query may return reli-
able data that is grossly inaccurate due to an incomplete understanding of the construction of the data
model. Sometimes, the lack of a good understanding can stem from the fact that relational databases
go through many changes in real-world deployments. For example, mistakes may have been made in
the initial schema. These mistakes need to be corrected, and at times, these corrections do not happen
until long after the system is deployed. Sometimes, business needs change; new data elements have
to be added, or old ones have to be removed, and even if the database was designed correctly in the
beginning, it becomes vital from an analyst’s perspective to track the schema evolution. In addition,
analysts and developers may add new datasets and create relational linkages between these data and the
original data structure. Finding and exploring potential data links between similar or related systems
can greatly expand understanding of the business and may provide new ways of exploring and utilizing
data already available at no additional cost. As new actionable data are added to a data repository and
linkages can be made between the original data and the enhanced information, new queries will be
generated to analyze the impact of considering the old data in light of the added information. These new
queries may lead to a new understanding of data relationships and result in the generation of further
relational data (Sukumar and Ferrell, 2013).
Continuing with the health insurance example given above, the data model would pose questions such
as the following (Sukumar and Ferrell, 2013):
1. What are the primary keys and foreign keys in the data model?
2. What are the UIDs for a beneficiary (customer ID, name, address, etc.)?
3. What are the UIDs for the providers (provider ID, license number, name, etc.)?
4. How do we differentiate between a physician and a hospital based on the data?
5. Why does the data model have separate tables for provider practice location and billing
location?
6. What are the one-to-one relationships and one-to-many relationships in the data model?
5.3.1.4 Understanding the Data

An examination of the data structure may yield other important clues as to what combinations of field
values might indicate particular groupings of related data or what conditions indicate a particular type of
action has occurred. In addition, when insight into data relationships is combined with business process
knowledge of the data collection and representation, a greatly enhanced capability to analyze and under-
stand data begins that is often expanded upon while querying.
Understanding the data before beginning to execute queries and generating reports is important, not only to
ensure completeness or cohesiveness of the reports, but also to discover data quality and provenance issues.
While data quality issues can plague any dataset, such issues may be more problematic with Big Data.
A significant subset of “bad” data easily hides undetected in a large data repository, particularly in fields
with less structure or in architectures such as Hadoop, where adherence to the data model is not mandated
before retrieval. Although understanding the process and the model may confirm the importance of a data
element, the assumption that the data element is actually filled in correctly can be incorrect. Missing data,
corrupt data and/or data filled with default or miscellaneous characters that hamper interpretation of anal-
ysis results often shows up in the real world. Knowing about these fields is important to be able to prune
the data elements of value to the analyst. This not only saves query execution time but also contributes to
the accuracy of the analyst’s reports. Certain business rules that were not implemented during the design
of the schema will have to be implemented while querying as well. Such queries are difficult to design
without understanding the aspects of the domain and the model, along with the data. However, once the
query is constructed, it will capture the results of the analyst’s knowledge about the data and the domain,
and there is significant business value in sharing the logic and code with fellow analysts.
As an analyst’s knowledge of a dataset and the processes of the domain grows in completeness, the value
of his or her analytic extractions increases as well. The value of the analyst’s knowledge often translates
into value to the enterprise in terms of cost savings and actionable intelligence (Sukumar and Ferrell, 2013).
5.3.1.5 Need for Knowledge Management

Today’s data warehouses evolve over time and typically hold numerous tables with many elements in
each table. In addition, in today’s corporate world, where business entities both merge and divide, data
changes made to accommodate or adapt to these transitions have an impact on the structures and types
of data stored. Furthermore, as today’s typical worker tends to have a shorter tenure at any one job,
institutional knowledge and memory are frequently lost. This also occurs as older workers retire, and
their trainees move on to other positions. Any one of these factors can have a detrimental effect on data
analysis and full utility of data warehouse resources. When some or all of these factors occur together
(large, complex data sources, changing business models and/or shortlived employee tenures), a major gap
can result in knowing and understanding undocumented links and commonalities between data systems
and warehouses (Sukumar and Ferrell, 2013).
In a study integrating and querying 30 or more diverse, disparate databases, with each database host-
ing 30 or more tables, and each table having 50 or more data elements and billions of records in each of
those tables, researchers tracked the evolution of a schema over an 18-month period, studying the interac-
tions of knowledge workers with Big Data to extract the requirements for an automatic knowledge trans-
fer mechanism for collaboration within and across enterprise warehouse systems. The authors observed
the following trends (Sukumar and Ferrell, 2013):
• As more data were received and analysts began to bring their individual interests and experi-
ence to the project, there was a proliferation of new third-party reference information and data
sources that all analysts were eager to utilize. In addition, several new data sources were arriv-
ing, but limited or no metadata was provided to elaborate on exactly what kind of information
was in each data set, how it was generated and how it might relate to datasets already received.
The complex combination of table data and the sheer volume of data to retrieve for business
user requirements frequently strained the client system’s capability to manage such requests.
• To manage short-term needs for proof of concept or for testing theories, new data silos were
being developed to facilitate difficult or complex analysis concepts. Unfortunately, important
metadata about the limitation of the data extracted for these silos was often lost, but these data
silos became popular for their simplicity and speed. In addition, they had the potential to hold
stale data because no mechanism was in place to support their maintenance or upkeep.
• Power users who accessed the multi-tenant data warehouses directly through SQL query inter-
faces, or analysis tools such as SAS/EG found the disparate data models too complex and/or
difficult to integrate and use. They were interested in a metadata search capability and data
dictionary management system. They sought commonly used queries and BI tools to help
understand the complex data sources to which they had access.
Analysts were requesting insulation from the underlying complexities of the data model, as well as an
easier way to navigate through the data structure to retrieve the data they needed. They were also inter-
ested in using both the results and the historical queries made to improve their own query capability and
speed of analysis (Sukumar and Ferrell, 2013).
5.4 Big Data Analytics

There are four types of data analytics: descriptive, diagnostic, predictive and prescriptive
(Bekker et al., 2018). The simplest is descriptive and the most sophisticated is prescriptive. Not surpris-
ingly, the most complex analysis brings the most value. Figures 5.11 and 5.12 show these analytics.
Briefly stated, the four types answer the following questions (Rouse Margaret, 2015b):
• Descriptive analytics: What happened?

• Diagnostic analytics: Why did it happen?
• Predictive analytics: What could happen in the future?
• Prescriptive analytics: How should we respond to those potential future events?
In recent years, the attention paid to Big Data, BI, analytics, performance management, data lakes and
AI have diverted attention from the real reason for them—decision support. Implementing all these tools
is meant to help humans make better decisions, to augment the ability of a person to decide with the
assistance of information.
These decisions, ranging from high-level strategic to operational to customer-facing tactical, are made
by executives, managers and operational employees, respectively. In all cases, decision-making is a pro-
cess. In addition, decision support is not simply information delivery or reporting or creating a dashboard
or a spreadsheet. It is a series of steps that enable a person to make the best possible decision based on
the best information available at that moment (Dan Vesset et al., 2018a).
FIGURE 5.11 Four types of data analytics (https://www.scnsoft.com/blog/4-types-of-data-analytics). (From Bekker, A.,

4 types of data analytics to improve decision-making, https://www.scnsoft.com/blog/4-types-of-data-analytics, 2018.)
FIGURE 5.12 (a, b) Types of Big Data analytics. (From Pyne, S., and Rao, P., Big Data Analytics: Methods and Applications,
https://books.google.es/books?id=_xhADQAAQBAJ&printsec=frontcover&dq=big+data+analytics&hl=en&sa=X&
ved=0ahUKEwiB3_fVps_dAhULyYUKHaEDDUgQ6AEIOzAD#v=onepage&q=big%20data%20analytics&f=false,
2016; BSD, Descriptive, predictive, and prescriptive analytics explained, September 2017, https://forums.bsdinsight.com/
threads/descriptive-predictive-and-prescriptive-analytics-explained.41558/, 2017.)
The different types of decisions have different characteristics such as (Dan Vesset et al., 2018a):
• Decision risk: What is the risk involved if the wrong decision is made? Is the decision correct-
able, or is it not easily reversed?
• Time window: How much time is there to make a decision or resolve an issue? How firm is the
decision deadline?
• Variability: To what extent is the issue routine or ad hoc? Is this a frequently made decision or
an exception?
5.5 Descriptive Analytics

5.5.1 Definition
Descriptive analytics describe or summarize raw data and make them into something interpretable
by humans. These analytics describe the past. The past refers to any point of time that an event has
occurred, whether one minute ago or one year ago. Descriptive analytics allow companies to learn from
past behaviors and understand how they might influence future outcomes (Halo, 2019).
Descriptive analytics show at an aggregate level what is going on in a company; they can summarize
and describe different aspects of the business. Descriptive analytics mines massive data repositories
to extract potential patterns existing in the data, such as variations in operating costs, sales of differ-
ent products and customer buying preferences. Most of the statistical analysis used in day-to-day BI
on a company’s production, financial operations, sales, inventory and customers come under descrip-
tive analytics (Wolpin, 2006). Descriptive analytics involve simple techniques such as performing
regression analyses to determine the correlation among various variables to identify trends in the
data or drawing charts to visualize data in a meaningful and understandable way. For example, Dow
Chemicals used descriptive analytics to identify under-utilized space in its offices and labs. As a
result, they were able to increase space utilization by 20% and save approximately $4 million annually
(Watson IoT - IBM, 2013).
5.5.2 Process of Descriptive Analytics

• Define business metrics: Determine which metrics are important for evaluating performance
against business goals. Goals include to increase revenue, reduce costs, improve operational
efficiency and measure productivity. Each goal must have associated key performance indica-
tors (KPIs) to help monitor achievement.
• Identify data required: Data are located in many different sources within the enterprise, includ-
ing systems of record, databases, desktops and shadow IT repositories. To measure data accu-
rately against KPIs, companies must catalog and prepare the correct data sources to extract the
needed data and calculate metrics based on the current state of the business.
• Extract and prepare data: Data must be prepared for analysis. Deduplication, transformation
and cleansing are a few examples of the data preparation steps that need to occur before analy-
sis. This is often the most time-consuming and labor-intensive step, requiring up to 80% of an
analyst’s time, but it is critical for ensuring accuracy.
• Analyze data: Data analysts can create models and run analyses such as summary statistics,
clustering and regression analysis on the data to determine patterns and measure performance.
Key metrics are calculated and compared with stated business goals to evaluate performance
based on historical results. Data scientists often use open source tools such as R and Python to
programmatically analyze and visualize data.
• Present data: Results of the analytics are usually presented to stakeholders in the form of charts
and graphs. This is where data visualization comes into play. Business intelligence tools give
users the ability to present data visually in a way that non-data analysts can understand. Many
self-service data visualization tools also enable business users to create their own visualiza-
tions and manipulate the output (Dan Vesset et al., 2018b).
5.5.3 Understanding the Data

The success of modern descriptive analytics hinges on KPI governance. In today’s business environment
of constant change, enterprises must be able to establish and evaluate a portfolio of changing KPIs. There
must be a willingness to challenge the status quo and to ask new questions.
Proper KPI governance is also the foundation of trust in data. Coming to agreement on the meaning
of data and the subsequent need to train end users on what the data represent are key to the diffusion of
analytics solutions. Without governance, there may not be consensus on what the data mean, and analyt-
ics will have only a marginal role in decision-making.
When decision-making is based on unarticulated data and metrics, decisions are made in an envi-
ronment of strategic ambiguity. Decision makers understand each other less than they think they do.
In data-intensive decision-making, coordination is accomplished through consistent interpretation of
the data.
Although data science- and AI-enabled predictive and prescriptive analytics are important, without
knowing what happened, it is impossible to proceed to the next steps of identifying why something
FIGURE 5.13 Descriptive analytics. (From DeZyre, Types of Analytics: descriptive, predictive, prescriptive analytics,
February 08, 2016, https://www.dezyre.com/article/types-of-analytics-descriptive-predictive-prescriptive-analytics/209, 2016.)
happened, what might happen next and what to do about it. All other analytics depend on descriptive
analytics to establish a common language grounded in business metrics and a roadmap for applying the
other types of analytics (see Figure 5.13) (Dan Vesset et al., 2018b).
5.6 Diagnostic Analytics

At this stage, historical data can be measured against other data to answer the question of why something
happened. Thanks to diagnostic analytics, there is a possibility to drill down, to find out dependencies
and to identify patterns. Companies go for diagnostic analytics, as it gives a deep insight into a particular
problem. At the same time, a company should have detailed information at their disposal, otherwise data
collection may turn out to be individual for every issue and time-consuming.
Let’s take another look at the examples from different industries: a healthcare provider compares
patients’ response to a promotional campaign in different regions; a retailer drills the sales down to
subcategories. Another flashback to our BI projects: in the healthcare industry, customer segmentation
coupled with several filters applied (like diagnoses and prescribed medications) allowed measuring the
risk of hospitalization (Bekker, 2018).
5.6.1 Predictive Analytics

5.6.1.1 Definition
Predictive analytics encompasses a variety of statistical techniques including data mining, predictive
modeling and machine learning, that analyze current and historical facts to make predictions about
future or otherwise unknown events (Nyce, 2007; Eckerson et al., 2007). In business, predictive models
exploit patterns found in historical and transactional data to identify risks and opportunities. Models
capture relationships among many factors to allow assessment of risk or potential associated with a par-
ticular set of conditions, guiding decision-making for candidate transactions (Coker et al., 2014).
The defining functional effect of these technical approaches is that predictive analytics provides a
predictive score (probability) for each individual (customer, employee, health care patient, product
stock-keeping unit (SKU), vehicle, component, machine or other organizational unit) to determine, inform
or influence organizational processes that pertain to large numbers of individuals, including those in mar-
keting, credit risk assessment, fraud detection, manufacturing, health care, government operations and law
enforcement. Predictive analytics is used in actuarial science (Conz et al., 2008) marketing (Fletcher et
al., 2011), financial services (Korn et al. 2011), telecommunications (Barkin et al. 2011), retail (Das and
Vidyashankar, 2006), travel (McDonald et al., 2010), mobility (Moreira et al., 2016), health care (Stevenson
et al., 2011), child protection (Lindert et al., 2014; Cabrera et al., 2016), pharmaceuticals, (McKay et al.,
2009), social networking (De et al., 2017), maintenance and other fields (Wikipedia, 2019d).
One of the best-known applications is credit scoring (Nyce, 2007) which is used throughout finan-
cial services. Scoring models process a customer’s credit history, loan application, customer data
and so on to rank-order individuals by their likelihood of making future credit payments on time
(Wikipedia, 2019d).
Predictive analytics provide estimates about the likelihood of a future outcome, but it is important
to remember that no statistical algorithm can “predict” the future with 100% certainty. Companies
use these statistics to forecast what might happen in the future because the foundation of predictive
analytics is based on probabilities. These statistics take the data and fill in the missing data with
best guesses. They combine historical data found in computerized maintenance management system
(CMMS), enterprise resource planning (ERP), customer relationship management (CRM), human
resources (HR) and point of sale (POS) systems to identify patterns in the data and apply statistical
models and algorithms to capture relationships between various data sets. Predictive analytics can
be used throughout the organization, from forecasting customer behavior and purchasing patterns to
identifying trends in sales activities or forecasting demand from the supply chain, operations, and
inventory (Halo, 2019).
For example, industries use predictive analytics to predict machine failures using streaming sensor
data. In the United States, Southwest Airlines has partnered with the National Aeronautics and Space
Administration to work on a Big Data mining project. They apply text-based analysis on data from sen-
sors in the planes to identify patterns that indicate potential malfunction or safety issues.
Purdue University uses Big Data analytics to predict academic and behavioral issues. For each student,
the system predicts and generates a risk profile indicating how far a student will succeed in a course and
labels the risk levels as green (high probability of success), yellow (potential problems) and red (risk of
failure) by using data from various sources, such as student information and course management systems
for this analytics.
e-Commerce applications apply predictive analytics on customer purchase history, customer behavior
online, like page views, clicks, and time spent on pages, and from other sources. Retail organizations
want to predict customer behavior so that they can target appropriate promotions and recommenda-
tions. They use predictive analysis to determine the demand for inventory and maintain the supply chain
accordingly. Predictive analysis also helps to change price dynamically to attract consumers and maxi-
mize profits (Pyne and Rao, 2016).
In short, predictive analytics allows organizations to become proactive, forward-looking, antici-
pating outcomes and behaviors based upon the data, not on a hunch or assumptions (see Figure 5.14)
(PAT RESEARCH).
5.6.1.2 Predictive Analytics Process

Figure 5.15 shows the predictive analytics process which define by step to step to continue
(PAT RESEARCH):
1. Define project: It defines the project outcomes, deliverables, scoping of the effort, business
objectives and identifies the data sets to be used.
2. Data collection: Data mining for predictive analytics prepares data from multiple sources for
analysis.
3. Data analysis: Data analysis is the process of inspecting, cleaning, transforming and modeling
data with the objective of discovering useful information and arriving at conclusions.
Predicve Analycs
TIME
Reporng/ Predicve
Data Analysis
Monitoring
Analycs
What What is
What is
happened? going to
happening
Why that happen in
now?
happened? future?
ACTION
FIGURE 5.14 Predictive analytics value chain. (From PAT RESEARCH, What is predictive analytics? https://www.
predictiveanalyticstoday.com/what-is-predictive-analytics/.)
FIGURE 5.15 Predictive analytics process (https://www.predictiveanalyticstoday.com/what-is-predictive-analytics/).

(From PAT RESEARCH, What is predictive analytics? https://www.predictiveanalyticstoday.com/what-is-predictive-
analytics/.)
4. Statistics: Statistical analysis validates the assumptions and hypotheses and tests them using
standard statistical models.
5. Modeling: Predictive modeling provides the ability to automatically create accurate predictive
models about the future. There are also options to choose the best solution with multi-model
evaluation.
6. Deployment: Predictive model deployment provides the option to deploy the analytical results
in the everyday decision-making process to obtain results, reports and output by automating the
decisions based on the modeling.
7. Model monitoring: Models are managed and monitored to review the model performance to
ensure they are providing the results expected (see Figures 5.16).
On the other hand, Figure 5.17 shows a predictive analytics.
FIGURE 5.16 Predictive analytics process with model monitoring. (From Wikipedia, Predictive analytics,
https://en.wikipedia.org/wiki/Predictive_analytics#cite_note-16, 2019d.)
FIGURE 5.17 Predictive analytics. (From DeZyre, Types of Analytics: descriptive, predictive, prescriptive analytics,
February 08, 2016, https://www.dezyre.com/article/types-of-analytics-descriptive-predictive-prescriptive-analytics/209, 2016.)
5.7 Prescriptive Analytics

5.7.1 Definition
Prescriptive analytics use optimization and simulation algorithms to advise on possible outcomes and
answer: “What should we do?”
This relatively new field allows users to “prescribe” possible actions and guide them toward a solution.
Prescriptive analytics attempt to quantify the effect of future decisions to advise on possible outcomes
before decisions are actually made. At their best, prescriptive analytics predicts not only what will hap-
pen, but also why it will happen, providing recommendations on actions that will take advantage of
the predictions. It can suggest decision options to take advantage of a future opportunity or mitigate a
future risk and illustrate the implications of each decision option. In practice, it can continually and auto-
matically process new data to improve the accuracy of predictions and provide better decision options.
Essentially, they predict multiple futures and allow companies to assess a number of possible outcomes
based upon their actions (Halo, 2019).
Prescriptive analytics use a combination of techniques and tools, such as business rules, algorithms,
machine learning and computational modeling procedures. These techniques are applied against input
from many different data sets, including historical and transactional data, real-time data feeds and Big
Data. Consequently, prescriptive analytics are relatively complex to administer, and most companies are
not yet using them in their daily business (Halo, 2019). According to Gartner, only 3% of companies cur-
rently use prescriptive analytics in their decision-making. When implemented correctly, however, they
can have a large impact on how companies make decisions and on their bottom line.
Some larger companies are already successfully using prescriptive analytics to optimize production,
scheduling, and inventory in the supply chain to make sure they are delivering the right products at the
right time and optimizing the customer experience.
Oil and gas exploration industries use prescriptive analytics to optimize the exploration process.
Explorers are using massive data sets from different sources in the exploration process and use prescrip-
tive analytics to optimize drilling location. They use earth’s sedimentation characteristics, temperature,
pressure, soil type, depth, chemical composition, molecular structures, seismic activity, machine data
and others to determine the best possible location to drill. This helps to optimize the selection of drilling
location and avoid the cost and effort of unsuccessful drills.
Health care is another sector benefiting from applying Big Data prescriptive analytics. Prescriptive
analytics can recommend diagnoses and treatments to a doctor by analyzing a patient’s medical history,
medicines, environmental conditions, stage of cure and so on (Pyne and Rao, 2016).
Prescriptive analytics is not failproof, however; it is subject to the same distortions that can upend
descriptive and predictive analytics, including data limitations and unaccounted for external forces. The
effectiveness of predictive analytics also depends on how well the decision model captures the impact of
the decisions being analyzed (Rouse Margaret, 2012).
5.7.2 Process of Prescriptive Analysis

• Build a business case: Prescriptive analytics are best used when data-driven decision-making
goes beyond human capabilities, such as when there are too many input variables, or data
volumes are high. A business case will help identify whether machine-generated recommenda-
tions are appropriate and trustworthy.
• Define rules: Prescriptive analytics require rules to be codified that can be applied to generate
recommendations. Business rules thus need to be identified and actions defined for each pos-
sible outcome. Rules are decisions that are programmatically implemented in software. The
system receives and analyzes data, then prescribes the next best course of action based on pre-
determined parameters. Prescriptive models can be very complex to implement. Appropriate
analytic techniques need to be applied to ensure that all possible outcomes are considered to
prevent missteps. This includes the application of optimization and other analytic techniques
in conjunction with rules management.
• Test, Test, Test: As the intent of prescriptive analytics is to automate the decision-making
process, testing the models to ensure that they are providing meaningful recommendations is
imperative to prevent costly mistakes.
While prescriptive analytics are dependent on rules, the most transformative power of prescriptive ana-
lytics along with the other four types of analytics is to “break the rules”—to use machine learning to
identify new rules, monitor them over time and adjust the rules as needed (Dan Vesset et al., 2018c).
5.7.3 When to Use Prescriptive Analysis

Advancements in the speed of computing and the development of complex mathematical algorithms
applied to data sets have made prescriptive analysis possible. Specific techniques used in prescriptive
analytics include optimization, simulation, game theory and decision-analysis methods (Dan Vesset et
al., 2018c). This state-of-the-art type of data analytics requires not only historical data, but also external
information due to the nature of statistical algorithms. Prescriptive analytics uses sophisticated tools and
technologies, such as machine learning, business rules and algorithms, which make it sophisticated to
implement and manage. That is why, before deciding to adopt prescriptive analytics, a company should
compare required efforts vs. an expected added value (Bekker et al., 2018).
Prescriptive analytics is best suited for situations where constraints are precise. This usually happens
with tactical choices, where many decisions need to be made within a given period. Examples of this
include programmatic advertising buys, stock trading and fraud detection. However, the universe of situ-
ations where prescriptive analytics are being applied continues to expand and will eventually permeate
many types of decision-making processes.
Broader adoption of prescriptive analytics is often hindered not by the functionality of prescriptive
analytics solutions, but by external factors such as government regulation, market risk or organizational
behavior. This is the situation in health care, for example, where there are some early successes, but
broad adoption of prescriptive analytics will still take years. Regardless of the timeframe for pervasive
adoption of prescriptive analytics, every enterprise should begin to assess the applicability of this type
of analytics for its own operations (Dan Vesset et al., 2018c).
5.8 What Types of Data Analytics Do Companies Choose?

At different stages of a company’s development, there is a need for one or the other type of analytics.
Companies are free to choose how deep they need to dive into data analysis to satisfy their business
needs. While descriptive and diagnostic analytics offers a reactive approach, predictive, and prescriptive
analytics makes users proactive. In today’s work environment, more and more companies need advanced
data analysis and choose to adopt it (Bekker et al., 2018).
Analytics is an iterative process. In the foreseeable future, the combination of the five types of
analytics will cause a fundamental change in processes for software development, BI, analytics,
data integration and data management. The movement will be away from the deterministic, rules-
dominated paradigm that has existed for decades, toward a paradigm that is constantly and auto-
matically adapting based on continuous detection, analytics, decision and action loops (Dan Vesset
et al., 2018c).
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6
IoT and the Need for Data Rationalization
CONTENTS
6.1 Internet of Things (IoT)..................................................................................................................191
6.1.1 Introduction......................................................................................................................191
6.1.2 Internet of Things Definition.......................................................................................... 192
6.1.3 IoT Architecture.............................................................................................................. 193
6.1.4 Future of IoT.................................................................................................................... 193
6.1.4.1 Internet of Everything...................................................................................... 193
6.1.4.2 Industrial IoT.................................................................................................... 195
6.1.4.3 Smartness in IoT.............................................................................................. 195
6.1.4.4 Growth of IoT................................................................................................... 195
6.1.4.5 Humans in the Loop......................................................................................... 196
6.1.5 History of Internet of Things.......................................................................................... 196
6.2 Internet of Things: Vision and Possibilities.................................................................................. 197
6.2.1 IoT Technologies............................................................................................................. 198
6.2.2 Dangers of IOT................................................................................................................ 200
6.3 Internet of Things Framework....................................................................................................... 200
6.4 Architecture of Internet of Things................................................................................................ 201
6.4.1 Security Architectures.................................................................................................... 201
6.4.2 Reference Architectures.................................................................................................. 202
6.4.2.1 Service-Oriented Architecture-Based Architectures...................................... 203
6.4.2.2 API-Oriented Architecture.............................................................................. 204
6.5 How IoT Works.............................................................................................................................. 204
6.6 Essential Technologies of the Internet of Things.......................................................................... 206
6.6.1 Hardware......................................................................................................................... 206
6.6.2 Middleware...................................................................................................................... 206
6.6.3 Software.......................................................................................................................... 207
6.6.3.1 Cloud Computing............................................................................................. 207
6.7 Key Technologies Involved in Internet of Things......................................................................... 207
6.7.1 Identification Technology................................................................................................ 208
6.7.2 IoT Architecture Technology.......................................................................................... 208
6.7.3 Communication Technology........................................................................................... 208
6.7.4 Networking Technology...................................................................................................210
6.7.5 Network Discovery Mechanisms.....................................................................................211
6.7.6 Software and Algorithms.................................................................................................211
6.7.7 Hardware..........................................................................................................................211
6.7.8 Data and Signal Processing Technology: XML...............................................................212
6.7.9 Discovery and Search Engine Technologies....................................................................212
6.7.10 Relationship Network Management Technologies...........................................................212
6.7.11 Power and Energy Storage Technologies.........................................................................213
6.7.12 Security and Privacy Technologies..................................................................................213
6.7.13 Standardization................................................................................................................213
189
6.8 Enablers of IoT..............................................................................................................................214

6.8.1 Near-Field Communication..........................................................................................214
6.8.2 Quick Response Code and Optical Tag........................................................................215
6.8.3 Structured Tags.............................................................................................................215
6.8.4 Beacons.........................................................................................................................215
6.8.5 Bluetooth.......................................................................................................................215
6.9 IoT and Telecommunications........................................................................................................216
6.9.1 Growth of Telecommunications...................................................................................216
6.9.2 New Transitions............................................................................................................217
6.10 IoT Is Transforming Industry and Society....................................................................................218
6.10.1 “Datafication”...............................................................................................................218
6.10.2 Forecasting IoT Growth................................................................................................218
6.10.3 Key Impacts of IoT on Industry....................................................................................219
6.11 Types of Services of IoT.............................................................................................................. 220
6.11.1 Identity-Related Services............................................................................................. 220
6.11.2 Information Aggregation Services.............................................................................. 220
6.11.3 Collaborative Aware Services...................................................................................... 220
6.11.4 Ubiquitous Services..................................................................................................... 221
6.12 Internet of Things Applications................................................................................................... 221
6.12.1 Smart Infrastructure.................................................................................................... 221
6.12.2 Health Care.................................................................................................................. 222
6.12.3 Supply Chains or Logistics.......................................................................................... 222
6.12.4 Social Applications...................................................................................................... 222
6.12.5 Personal and Home...................................................................................................... 223
6.12.6 Enterprise..................................................................................................................... 223
6.12.7 Cities............................................................................................................................ 224
6.12.8 Utilities......................................................................................................................... 224
6.12.9 Video-Based Applications........................................................................................... 224
6.12.10 Water Apps................................................................................................................... 225
6.12.11 Transportation.............................................................................................................. 225
6.13 Internet of Things Today............................................................................................................. 226
6.14 Internet of Things Tomorrow...................................................................................................... 226
6.15 Internet of Things Ecosystem...................................................................................................... 227
6.15.1 Defining an IoT Ecosystem.......................................................................................... 228
6.15.1.1 IoT Ecosystem............................................................................................ 229
6.15.2 IoT Ecosystems vs. IoT Platforms................................................................................ 229
6.15.3 Key Elements and Enablers for Developing an IoT Ecosystem................................... 229
6.15.4 Envisioning the Future of IoT Ecosystems...................................................................231
6.15.5 Realizing the Promise of IoT........................................................................................231
References............................................................................................................................................... 232
LIST OF FIGURES
Figure 6.1 Growth of IoT in the 2000s............................................................................................... 192

Figure 6.2 IoT basic architecture........................................................................................................ 194
Figure 6.3 IoT trend forecast.............................................................................................................. 195
Figure 6.4 Convergence of consumer, business, and Industrial Internet........................................... 198
Figure 6.5 Future communication challenges.................................................................................... 199
Figure 6.6 Internet-connected devices and their evolution................................................................ 199
IoT and the Need for Data Rationalization 191
Figure 6.7 Six-layered architecture of IoT........................................................................................ 202

Figure 6.8 Reference architecture for IoT........................................................................................ 203
Figure 6.9 Major components of IoT................................................................................................ 205
Figure 6.10 4 As and 4 Cs of IoT........................................................................................................ 205
Figure 6.11 SOA-based architecture for IoT middleware................................................................... 209
Figure 6.12 Enablers of IoT.................................................................................................................215
Figure 6.13 Fast-growing telecommunications...................................................................................216
Figure 6.14 Data outstrips voice..........................................................................................................217
Figure 6.15 IoT market over time........................................................................................................219
Figure 6.16 Aggregate network diagram with sensor network and access gateways......................... 221
Figure 6.17 Internet of Things schematic showing end-users and application areas......................... 223
Figure 6.18 Cycle of emerging technologies...................................................................................... 225
Figure 6.19 Elements and enablers of an IoT ecosystem.................................................................... 229
LIST OF TABLES
Table 6.1 Wired vs. wireless networking............................................................................................ 199

Table 6.2 Potential IoT applications in Melbourne............................................................................. 224
Table 6.3 Examples of IoT ecosystem cores....................................................................................... 228
6.1 Internet of Things (IoT)

6.1.1 Introduction
In today’s world, humans are surrounded by physical electronic devices, from automated vehicles to
smart devices and smart buildings. These devices are embedded with software that enables them to
provide special services and facilities.
Communication with these physical devices is possible in the virtual world through the Internet.
However, very little interaction occurs between them. They can interact and exchange only device-
specific information, and they can be controlled only to a limited extent through technologies such as
Bluetooth or mobile file sharing apps (Gupta and Gupta, 2016).
IoT is the term coined to enable interactions between physical devices at any remote location on earth
(Evans, 2011). IoT establishes machine-to-machine (M2M) communication irrespective of the protocol,
domain, or application (Vermesan and Friess, 2013). The participating entities must be equipped with
device-specific embedded software, sensors, and network supporting components (Gupta and Gupta, 2016).
The embedded software provides device-specific functionalities, sensors sense the presence of other physi-
cal entities and gather information, and the Internet acts as a communication medium and is responsible
for remote management and access control of the devices (Kortuem et al., 2010). The increasing number of
smart devices and connections are depicted in Figure 6.1 (Evans, 2011).
The technology is embodied in a wide spectrum of networked products, systems, and sensors, which take
advantage of advancements in computing power, electronics miniaturization, and network interconnections
to offer new capabilities not previously possible. While IoT new market opportunities and business models,
among other things, it also creates concerns about security, privacy, and technical interoperability.
SERVICE MANUFACTURING SALES &

DESIGN OPERATIONS TRAINING
MARKETING
Manuals & Product displays & Collaborave Job-specific

Quality assurance Heads-up displays
instrucons demos engineering training
Service inspecons Maintenance work Logiscs, retail Inspecon of Digital product Safety & security
& verificaons instrucons space opmizaon digital prototypes controls training
Remote expert Performance Augmented brand Augmented Augmented

Expert coaching
guidance dashboards experience interface operator manuals
Improved service Assembly work Augmented Augmented

Error diagnosis
and self-service instrucons adversement interface
FIGURE 6.1 Growth of IoT in the 2000s. (From Evans, G.D., The Internet of Things—How the Next Evolution of the
Internet is Changing Everything, Cisco Internet Business Solutions Group (IBSG), White paper, 2011.)
For consumers, new IoT products such as Internet-enabled appliances, home automation components,
and energy management devices are moving us toward the “smart home,” offering more security and
energy efficiency. Other personal IoT devices such as wearable fitness and health monitoring devices and
network-enabled medical devices are transforming the way health care services are delivered. This tech-
nology promises to be beneficial for people with disabilities and the elderly, enabling improved levels of
independence and quality of life at a reasonable cost. IoT systems such as networked vehicles, intelligent
traffic systems, and sensors embedded in roads and bridges move us closer to the idea of “smart cities,”
which help minimize congestion and energy consumption. IoT technology also offers the possibility to
transform agriculture, industry, and energy production and distribution by increasing the availability of
information along the value chain of production using networked sensors (Rose et al., 2015).
Some observers see the IoT as a revolutionary fully interconnected “smart” world of progress, effi-
ciency, and opportunity, with the potential to add billions in value to industry and the global economy
(Thierer and Castillo, 2015). Others warn that the IoT represents a darker world of surveillance, privacy
and security violations, and consumer lock-in. Some fear Internet-connected automobiles will be hacked
(Greenberg, 2015), while others voice surveillance concerns because of the voice recognition features in
“smart” TVs (CBSN, 2015). Still, others fear the potential misuse of IoT data (Bradbury, 2015). IoT will
likely have varying consequences in different economies and regions, bringing a diverse set of opportuni-
ties and challenges across the globe (Rose et al., 2015).
6.1.2 Internet of Things Definition

The term Internet of Things, also called the Internet of Everything (IoE) or the Industrial Internet, refers
to a heterogeneous network of physical and virtual objects embedded with electronics, software, sen-
sors, and connectivity to enable objects to achieve greater value and service by exchanging data with
other connected objects via the Internet (McEwen and Cassimally, 2013). “Thing” may be a person with
a heart monitor implant, a farm animal with a biochip transponder, a field operation robot that assists in
a search and rescue mission, or any other natural or man-made object that can be assigned an Internet
protocol (IP) address, can transfer data, and can interoperate within the existing Internet infrastructure
(Stankovic, 2014).
The true value of the IoT for enterprises can be fully realized when connected devices can communi-
cate with each other and integrate with vendor-managed inventory systems, customer support systems,
business intelligence applications, and business analytics (Lee and Lee, 2015).
The adoption of this technology is rapidly gaining momentum, as technological, societal, and com-
petitive pressures push firms to innovate and transform themselves. As IoT technology advances and
increasing numbers of firms adopt the technology, IoT cost-benefit analysis will become a subject of
great interest. Because of the potential but uncertain benefits and high investment costs of the IoT, firms
need to carefully assess every IoT-induced opportunity and challenge to ensure that their resources are
spent judiciously (Lee and Lee, 2015).
6.1.3 IoT Architecture

Figure 6.2 shows the basic IoT system architecture. The physical sensing layer contains embedded
devices that make use of sensors to gather real-world data. The gateway layer provides the mechanism
and protocols for devices to expose their sensed data to the Internet (e.g., Wi-Fi, Ethernet, Global System
for Mobile Communications (GSM), etc.). The middleware layer facilitates and manages the communi-
cation between the real-world-sensed activities and the application layer. The application layer maps onto
applications that can be used by the consumer to send commands to real word objects over the Internet
via mobile applications, web apps, and so on (Uviase and Kotonya, 2018).
6.1.4 Future of IoT

IoT is a rapidly growing trend in major industries. In 2015, Samsung anticipated that 90% of its products
would be IoT-enabled by 2017 and its entire product range would be IoT-enabled by 2020 (Samsung
Newsroom, 2015). Gartner predicted that the IoT would reach 26 billion units by 2020, up from 0.9 billion
in 2009, impacting the information available to supply chain partners and the way the supply chain
operates (Gartner, 2014). Gartner also envisioned an accelerated increase in IoT devices, estimating about
21 billion of devices would be IoT-enabled by 2020 (Gartner, 2015).
From production lines and warehousing to retail delivery and store shelving, IoT is transforming busi-
ness processes by providing more accurate and real-time visibility of the flow of materials and products.
Firms are investing in IoT to redesign factory workflows, improve tracking of materials, and optimize
distribution costs. For example, both John Deere and UPS are using IoT-enabled fleet tracking technolo-
gies to cut costs and improve supply efficiency (Lee and Lee, 2015).
The size and heterogeneity of the predicted growth add extra complexity and urgency to the extant
connection and integration problem (Buyya and Dastjerdi, 2016). Furthermore, IoT systems are likely to
be distributed across different application domains and geographical locations, creating hidden depen-
dencies across domains, platforms, and services. This has serious implications for how IoT systems are
developed and evolved. Thus, the need for an intelligent, connection-aware framework has become a
necessity (Uviase and Kotonya, 2018).
Service-oriented architecture (SOA) offers a powerful framework for supporting the connectivity, interop-
erability, and integration in IoT systems; it forms the backbone of present-day IoT frameworks. While
SOA goals are to primarily enhance IoT application interoperability, its monolithic usage in recent IoT frame-
works amplifies the problem of scalability, especially with the enormous number of predicted “things.” IoT
systems tend to expand, and with time, a capable SOA framework becomes too immovable to handle system
extensibility. Micro service aims to fragment different IoT systems based on the system of systems paradigm
to accommodate system evolution and extensibility (Uviase and Kotonya, 2018).
6.1.4.1 Internet of Everything

Internet of Everything refers to people, things, and places that can expose their services to other entities
(Lopez Research LLC, 2013).
194
Depth
Stereo CCD Hand- Spaal
sensor
based
Desktop- devices
based HCI HHD HMD
devices
CAMERA
VIDEO DIGITAL IMAGE INTERACTION INFORMATION

TRACKING RENDENDING DISPLAY
CAPTURE PROCESSING HANDLING MANAGEMENT
Vision- Sensor-
based based
FIGURE 6.2 IoT basic architecture. (From Uviase, O., Kotonya, G., IoT Architectural Framework: Connection and Integration Framework for IoT Systems, School of Computer Science
and Communication, Lancaster University, Lancaster, UK, 2018.)
6.1.4.2 Industrial IoT

Industrial Internet (Vilajosana, 2015) or Industrial IoT (IIoT) is a form of IoT applications favored by
big high-tech companies. The fact that machines can perform specific tasks, such as data acquisition
and communication, more accurately than humans has boosted IIoT’s adoption. Machine-to-machine
communication, Big Data analysis, and machine learning techniques are major building blocks when it
comes to the definition of IIoT. These data enable companies to detect and resolve problems faster, thus
resulting in overall money and time savings. For instance, in a manufacturing company, IIoT can be used
to efficiently track and manage the supply chain, perform quality control and assurance, and lower the
total energy consumption (Buyya and Dastjerdi, 2016).
6.1.4.3 Smartness in IoT

A characteristic of IoT is “smartness.” This distinguishes IoT from similar concepts such as sensor
networks, and it can be further categorized into “object smartness” and “network smartness.” A smart
network is a communication infrastructure characterized by the following functionalities:
• Standardization and openness of the communication standards used, from layers interfacing
with the physical world (i.e., tags and sensors) to the communication layers between nodes and
with the Internet;
• Object addressability (direct IP address) and multifunctionality (i.e., the possibility that a net-
work built for one application (e.g., road-traffic monitoring) would be available for other pur-
poses (e.g., environmental pollution monitoring or traffic safety) (Da Xu et al., 2014).
6.1.4.4 Growth of IoT

IoT growth rate is depicted in Figure 6.3 (Business Insider Intelligence, 2015). The increase of invest-
ment in IoT by developed and developing countries hints at the gradual change in the strategy of
governments, as they recognize IoT’s impact and try to keep themselves updated. For example, the
IoT European Research Cluster (IERC) has conducted and supported several projects on fundamental
IoT research by considering special requirements from end-users and applications. For example, the
UK government has initiated a five million pound project on innovations and recent technological
advances in IoT (Wang et al., 2015). Similarly, in the United States (Ortutay, 2015), IBM has plans
to spend billions of dollars on IoT research and its industrial applications. Singapore has announced
its intention to be the first smart nation by investing in smart transport systems, developing the
e-government structure, and using surveillance cameras and other sensory devices to obtain data and
extract information from them (Yu, 2014).
Internet of Everything
35.000.000
Esmated number of devices
30.000.000
25.000.000
20.000.000
15.000.000
10.000.000
5.000.000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
PCs Smartphones Tablets IoT
FIGURE 6.3 IoT trend forecast. (From Business Insider Intelligence, Research for the digital age, https://intelligence.
businessinsider.com/, 2015.)
6.1.4.5 Humans in the Loop

IoT is an enabler of M2M, human-to-machine and human-with-environment interactions. With the
increase in the number of smart devices and the adoption of new protocols such as Internet protocol ver-
sion 6 (IPv6), the trend of IoT is expected to shift toward the fusion of smart and autonomous networks
of Internet-capable objects equipped with the ubiquitous computing paradigm. Involving humans in the
loop offers numerous advantages to a wide range of applications, including emergency management,
health care, and so on (Dastjerdi et al., 2015). Therefore, an essential role of IoT is to build a collabora-
tive system capable of responding to an event captured via sensors, by the discovery of crowds and by
successful communication of information across discovered crowds of different domains (Buyya and
Dastjerdi, 2016).
6.1.5 History of Internet of Things

While the term Internet of Things is relatively new, the concept of combining computers and networks
to monitor and control devices has been around for decades. By the late 1970s, for example, systems
for remotely monitoring meters on the electrical grid via telephone lines were already in commercial
use (Rose et al., 2015). In the 1990s, advances in wireless technology allowed M2M enterprise and
industrial solutions for equipment monitoring and operation to become widespread. Many of these early
M2M solutions, however, were based on closed purpose-built networks and proprietary or industry-
specific standards (Polsonetti and Chantal, 2014), rather than on IP-based networks and Internet stan-
dards (Rose et al., 2015).
The first Internet “device”—an IP-enabled toaster that could be turned on and off over the
Internet—was featured at an Internet conference in 1990. Over the next several years, other “things”
were IP-enabled, including a soda machine at Carnegie Mellon University in the United States and
a coffee pot in the Trojan Room at the University of Cambridge in the UK (it remained Internet-
connected until 2001) (Fraser and Quentin, 1995; Carnegie Mellon University, 1998). From these
beginnings, a robust field of research and development into “smart object networking” (Thaler
et al., 2015) laid the foundation for today’s IoT (Rose et al., 2015).
From a broad perspective, the confluence of several technology and market trends is making it pos-
sible to interconnect more and smaller devices cheaply and easily. These trends include the following:
• Ubiquitous connectivity: Low-cost, high–speed, pervasive network connectivity, especially

through licensed and unlicensed wireless services and technology, makes almost everything
“connectable.”
• Widespread adoption of IP-based networking: IP has become the dominant global standard for
networking, providing a well-defined and widely implemented platform of software and tools
that can be incorporated into a broad range of devices easily and inexpensively.
• Computing economics: Driven by industry investment in research, development, and manu-
facturing, we are seeing greater computing power at lower price points and lower power
consumption.
• Miniaturization: Manufacturing advances allow cutting-edge computing and communications
technology to be incorporated into very small objects. Coupled with greater computing eco-
nomics, this has fuelled the advancement of small and inexpensive sensor devices, which drive
many IoT applications.
• Advances in data analytics: New algorithms and rapid increases in computing power, data stor-
age, and cloud services enable the aggregation, correlation, and analysis of vast quantities of
data; these large and dynamic datasets provide new opportunities for extracting information
and knowledge.
• Rise of cloud computing: Cloud computing, which leverages remote, networked computing
resources to process, manage, and store data, allows small and distributed devices to interact
with powerful back-end analytic and control capabilities.
From this perspective, the IoT represents the convergence of a variety of computing and connectivity
trends that have been evolving for many decades. At present, a wide range of industry sectors, includ-
ing automotive, health care, manufacturing, home and consumer electronics, and others, are consider-
ing the potential for incorporating IoT technology into their products, services, and operations (Rose
et al., 2015).
6.2 Internet of Things: Vision and Possibilities

The IoT will do the following (Lopez Research LLC, 2013):
• Connect inanimate and living things: Early trials and deployments of IoT networks began with
connecting industrial equipment. Today, the vision of IoT has expanded to connect everything
from industrial equipment to everyday objects. The types of items range from gas turbines to
automobiles to utility meters. It can also include living organisms such as plants, farm animals,
and people. For example, the Cow Tracking Project in Essex uses data collected from radio
positioning tags to monitor cows for illness and track behavior in the herd. Wearable comput-
ing and digital health devices, such as Nike + Fuel band and Fitbit, are examples of how people
are connecting in the IoT landscape. A US-based company, Cisco Systems, refers to the IoE, a
concept which includes people, places, objects, and things. Basically, anything you can attach a
sensor and connectivity to can participate in the new connected ecosystems.
• Use sensors for data collection: The physical objects that are being connected will possess
one or more sensors. Each sensor will monitor a specific condition such as location, vibration,
motion, and temperature. In IoT, these sensors will connect to each other and to systems that
can understand or present information from the sensor’s data feeds. These sensors will provide
new information to a company’s systems and to people.
• Change what types of items communicate over an IP network: In the past, people communi-
cated with people and with machines. IoT-enabled objects will share information about their
condition and the surrounding environment with people, software systems, and other machines.
This information can be shared in real-time or collected and shared at defined intervals. Going
forward, everything will have a digital identity and connectivity, which means humans will
identify, track, and communicate with objects.
• Change the nature of data required: Data will be small in size and frequent in transmission.
• Change the number of devices: The number of devices or nodes that are connecting to the net-
work will be much greater in IoT than in traditional PC computing.
As IoT becomes ubiquitous, M2M communications and intelligence drawn from the devices and the net-
work will allow businesses to automate certain basic tasks without depending on central or cloud-based
applications and services (Lopez Research LLC, 2013).
In the future, storage and communication services will be pervasive and distributed: people, smart
objects, machines, platforms, and the surrounding space (e.g., with wireless or wired sensors, M2M
devices, radio-frequency identification (RFID) tags, etc.) will create a highly decentralized common pool
of resources (up to the very edge of the “network”) interconnected by a dynamic network of networks.
The new “communication language” will be based on interoperable protocols, operating in hetero-
geneous environments and platforms. IoT in this context is a generic term, and all objects will play an
active role because of their connection to the Internet by creating smart environments. This powerful
communication tool will provide access to information, media, and services, through wired and wireless
broadband connections.
The convergence of consumer, business, and Industrial Internet, as shown in Figure 6.4, will create
an open, global network connecting people, data, and things, leveraging the cloud to connect intelligent
things that sense and transmit a broad array of data, helping to create services that would not be obvious
without this level of connectivity and analytical intelligence.
FIGURE 6.4 Convergence of consumer, business, and Industrial Internet. (From Vermesan, O. and Friess P., Internet
of Things: Converging Technologies for Smart Environments and Integrated Ecosystems, River Publishers, Gistrup,
Denmark, 2013.)
IoT is driven by transformative technologies such as cloud, things, and mobility. The cloud will
enable a global infrastructure to generate new services, allowing anyone to create content and appli-
cations for global users. Networks of things will connect things globally and maintain their identity
online. Mobility will allow connection to this global infrastructure anytime, anywhere. The result
will be a globally accessible network of things, users, and consumers, who are available to create
businesses, contribute content, generate and purchase new services (Vermesan and Friess, 2013).
6.2.1 IoT Technologies

Enabling technologies for the IoT such as sensor networks, RFID, M2M, mobile Internet, semantic data
integration, semantic search, or IPv6 can be grouped into three categories (Naur and Randell, 1968):
1. Technologies that enable “things” to acquire contextual information,

2. Technologies that enable “things” to process contextual information, and
3. Technologies to improve security and privacy.
The first two categories can be jointly understood as functional building blocks required to turn “intel-
ligence” into “things,” the features that differentiate IoT from Internet. The third category is not a
functional but a de facto requirement, without which IoT penetration would be severely reduced.
IoT developments imply that the environments, cities, buildings, vehicles, clothing, portable devices, and
other objects have more information associated with them and/or the ability to sense, communicate, network,
and produce new information. Thus, network technologies have to cope with new challenges, such as very
high data rates, dense crowds of users, low latency, low energy, low cost, and a massive number of devices
(METIS, 2015). In addition, we can include non-sensing things: things that may have functionality, but do
not provide information or data (Weiser, 1995). Communications challenges are summarized in Figure 6.5.
Table 6.1 shows the differences between wired and wireless networking.
The installed base for the IoT will grow to approximately 212 billion devices by 2020, a number that
includes 30 billion connected devices (Figure 6.6). IDC sees this growth driven largely by intelligent systems
that will be installed and collecting data—across both consumer and enterprise applications (IDC, 2013).
FIGURE 6.5 Future communication challenges. (From METIS, Mobile and wireless communications Enablers for
the Twenty-twenty (2020), Information Society, https://www.chalmers.se/en/projects/Pages/Mobile-and-wireless-
communications-Enablers-for-Twenty-twenty.aspx, 2015.)
TABLE 6.1
Wired vs. Wireless Networking
Wired Wireless
Capacity Abundant Scarce
Topology Point-to-point Broadcast
Reliability Reliable Unreliable
Mobility Fixed Mobile
Source: Lehr, W.H. and Chapin, J.M., On the conver-

gence of wired and wireless access network
architectures, Published in Information
Economics and Policy, 2010.
FIGURE 6.6 Internet-connected devices and their evolution. (From Vermesan, O. and Friess P., Internet of Things:
Converging Technologies for Smart Environments and Integrated Ecosystems, River Publishers, Gistrup, Denmark, 2013.)
6.2.2 Dangers of IOT

As the IoT becomes established in smart factories, both the volume and the level of detail of the corporate
data generated will increase. Business models will no longer involve just one company, but will comprise
highly dynamic networks of companies and completely new value chains. Data will be generated and
transmitted autonomously by smart machines, and these data will inevitably cross company boundaries.
A number of specific dangers are associated with this new context.
• Data that were initially generated and exchanged to coordinate manufacturing and logistics
activities between different companies could, if read in conjunction with other data, suddenly
provide third parties with highly sensitive information about one of the partner companies that
might, for example, give them an insight into its business strategies.
• New instruments will be required if companies wish to pursue the conventional strategy of
keeping such knowledge secret to protect their competitive advantage.
• New regulated business models will also be necessary; the raw data generated may contain infor-
mation valuable to third parties, and companies may wish to make a charge for sharing them.
• These new models will require legal safeguards (predominantly in the shape of contracts) to
ensure that the value added created is shared out fairly, e.g., through the use of dynamic pricing
models (Platiform INDUSTRIE 4.0, 2013).
6.3 Internet of Things Framework

For an IoT framework to be reliable and dependable, a minimal set of measures should be satisfied to
achieve integration and interoperability (Uviase and Kotonya, 2018). These are:
• Contract decoupling: An IoT system contains heterogeneous devices with disparate commu-
nication protocols. An integration framework should efficiently handle contract decoupling,
i.e., the ability of service consumers and service producers to independently evolve without
terminating the contract between them (Richards, 2016). For example, a service might be in a
JavaScript Object Notation (JSON) format but the service consumer needs input in Extensible
Markup Language (XML). The framework should provide support to transform the message to
the format that fulfills the contract (Uviase and Kotonya, 2018).
• Scalability: Given the evolving nature of IoT, an efficient integration framework should be scal-
able and evolvable enough to support the billions of things soon to be connected to the Internet
(Uviase and Kotonya, 2018).
• Ease of testing: An integration framework should support ease of testing and debugging.
It should provide support for debugging defects and failures, integration testing, component
testing, system testing, compatibility testing, installation test, functional and nonfunctional
testing, performance testing, and security testing.
• Ease of development: An IoT integration framework should provide a means of easy development for
developers. Without being complex, it should provide proper documentation for non-developers and
developers with basic programming knowledge to easily understand the internals of the framework.
• Fault tolerance: An IoT system must be dependable and resilient. An intelligent integration
framework should handle faults as IoT devices can eventually toggle between offline and online
states. The framework should provide self-healing mechanisms for transient faults (network
faults, node level faults, etc.), unauthorized access errors, server crash failures, omission fail-
ures (when the server does not receive incoming requests from client), timing faults, and so on.
• Lightweight implementation: Integration frameworks should have a lightweight overhead both
in its development and deployment stage. It should be lightweight and easy to install, uninstall,
activate, deactivate, update, versioning, and adaptable.
• Service coordination or service choreography: Service coordination is the orchestration and

choreography of multiple services by a mediator acting as a centralized component. Service
choreography is the chaining of services together to execute a particular transaction. Integration
frameworks should support at least either or both to achieve reliability.
• Inter-domain operability: The framework should be extensible to support inter-domain com-
munication. For example, in a smart car domain, an integration framework should provide sup-
port for communication and interaction with traffic lights, road closures, and so on belonging
to a smart city domain.
Regardless of the research community or disparity in research, a common goal is extensibility, flexibility,
scalability, design reuse, and implementation reuse (Uviase and Kotonya, 2018).
6.4 Architecture of Internet of Things

Architectures are needed to represent, organize and structure the IoT in a way that enables it to func-
tion effectively. In particular, the distributed, heterogeneous nature of the IoT requires the application
of hardware or network, software, and process architectures capable of supporting these devices, their
services, and the workflows they will affect (Whitmore et al., 2014).
6.4.1 Security Architectures

The existing architecture of Internet with transmission control protocol (TCP) or IP adopted in 1998
(Hauben, 1998) cannot handle a network as big as IoT. There is a need for a new open architecture to
address security and quality of service (QoS) issues. It must also be able to support the existing network
applications using open protocols (An et al., 2012). Without privacy assurance, IoT is not likely to be
adopted by many (Li, 2012), making protection of data and privacy of users key challenges (International
Telecommunication Union (IUT), 2005).
For further development of IoT, a number of multilayered security architectures have been proposed.
Chen (2012) describes a three-level architecture, but Suo et al. (2012) prefer a four-level architecture.
Wu et al. (2010) propose a five-layered architecture using the best features of the architectures of
Internet and telecommunication management networks (TMNs) based on TCP/IP and TMN models,
respectively. A six-layered architecture has also been proposed based on the network hierarchical struc-
ture, as shown in Figure 6.7 (Cheng et al., 2012). The latter is most commonly used (Farooq et al., 2015).
The following are the six layers of IoT:
1. Coding layer
The coding layer is the foundation of IoT; it identifies the objects of interest. In this layer, each
object is assigned a unique ID, making it easy to discern objects (Cheng et al., 2012).
2. Perception layer
This is the device layer of IoT; it gives a physical meaning to each object. The layer consists
of data sensors in different forms such as RFID tags, infrared sensors, or other sensor net-
works, which sense the temperature, humidity, speed and location, and so on of the objects
(Bandyopadhyay and Sen, 2011). This layer gathers useful information on objects from the sen-
sor devices linked with them and converts the information into digital signals, which are then
passed on to the network layer for further action (Farooq et al., 2015).
3. Network layer
This layer receives the useful information in the form of digital signals from the perception
layer and transmits it to the processing systems in the middleware layer through the transmis-
sion mediums such as Wi-Fi, Bluetooth, WiMAX, Zigbee, GSM, and 3G with protocols such
as Internet protocol version 4 (IPv4), IPv6, message queuing telemetry transport (MQTT), and
data distribution service (DDS) (Zhang, 2011).
Coding Layer
Percepon Layer
Netwok Layer
Middleware Layer
Applicaon Layer
Business Layer
FIGURE 6.7 Six-layered architecture of IoT. (From Farooq, M.U. et al., Int. J. Comput. Appl., (0975 8887), 113, 1–7, 2015.)
4. Middleware layer
This layer processes the information received from the sensor devices (Shen and Liu, 2011).
It includes technologies such as cloud computing or ubiquitous computing, which ensures a
direct access to the database to store all the necessary information in it. Using intelligent pro-
cessing equipment, the information is processed and a fully automated action is taken based on
the results (Farooq et al., 2015).
5. Application layer
This layer realizes the applications of IoT for all kinds of industry, based on the processed
data. Applications promote the development of IoT, so this layer is very helpful in the large-
scale development of an IoT network (Wu et al., 2010). IoT-related applications could be smart
homes, smart transportation, and so on (Farooq et al., 2015).
6. Business layer
This layer manages the applications and services of IoT and is responsible for all the research related
to IoT. It generates different business models for effective business strategies (Khan et al., 2012).
6.4.2 Reference Architectures

Several research groups have proposed reference architectures for IoT (Bauer et al., 2013; Fremantle,
2015). The IoT-A focuses on the development and validation of an integrated IoT network architecture
and supporting building blocks in Europe (Bauer et al., 2013). The IoT-i project, related to the IoT-A proj-
ect, focuses on the promotion of IoT solutions, requirements, and interests. IoT-i aims to achieve strategic
objectives, such as creating a joint strategic and technical vision for the IoT in Europe that encompasses
the currently fragmented sectors of the IoT domain holistically and contributes to the creation of an
economically sustainable and socially acceptable environment for IoT technologies and respective R&D
activities (Buyya and Dastjerdi, 2016).
Deshboard/ Web Portal API Mangement
Event Processing and Analycs
Security and Privacy Enforcement

Service Repository and
Identification, Authorization, and Resource Mangement
Discovery
Enterprise Shared Bus and Message

Access Control
Broker
Device Mangement
Communicaons Layer
Devices, Sensors, Human Operators
FIGURE 6.8 Reference architecture for IoT. (From Buyya, R. and Dastjerdi, A.V., Internet of Things: Principles and
Paradigms, Elsevier, Amsterdam, the Netherlands, 2016.)
Reference architectures and models give a bird’s eye view of the whole system; hence, their advantage
over other architectures relies on providing a better and greater level of abstraction, but this hides spe-
cific constraints and implementation details (Buyya and Dastjerdi, 2016).
Figure 6.8 depicts an outline of an extended version of a reference architecture for IoT (Fremantle,
2015). Service layers include event processing and analytics, resource management, and service discov-
ery, as well as message aggregation and enterprise service bus services built on top of the communica-
tion and physical layers. Application programming interface (API) management, essential for defining
and sharing system services, and web-based dashboards (or equivalent smartphone applications) for
managing and accessing these APIs are included in the architecture. Because of the importance of device
management, security and privacy enforcement in different layers and the ability to uniquely iden-
tify objects and control their access level, these components are stressed independently (Buyya and
Dastjerdi, 2016).
6.4.2.1 Service-Oriented Architecture-Based Architectures

In IoT, service-oriented architecture (SOA) might be imperative for both service providers and users
(Castellani et al., 2010; Ishaq et al., 2014.). The service-oriented architecture ensures interoperability
among heterogeneous devices (Guinard et al., 2010; Stirbu, 2008). A generic SOA consisting of four lay-
ers has the following functionalities (Buyya and Dastjerdi, 2016):
• Sensing layer: is integrated with available hardware objects to sense the status of things.
• Network layer: has the infrastructure to support wireless or wired connections.
• Service layer: creates and manages services required by users or applications.
• Interface layer: consists of the interaction methods with users or applications.
Generally, in such architectures, a complex system is divided into subsystems that are loosely coupled
and can be reused later (modular decomposability feature), providing an easy way to maintain the whole
system by taking care of its individual components (Guinard et al., 2011). Thus, in the case of a com-
ponent failure, the rest of the system (components) can still operate normally. This is of immense value
for effective design of an IoT application architecture, where reliability is the most significant parameter
(Buyya and Dastjerdi, 2016).
Service-oriented architecture has been intensively used in wireless sensor network (WSN) because of
its appropriate level of abstraction and the advantages of its modular design (Li and Yu, 2011; Su et al.,
2011). Bringing these benefits to IoT, SOA has the potential to augment the level of interoperability and
scalability among the objects in IoT. Moreover, from the user’s perspective, all services are abstracted
into common sets, removing extra complexity because the user does not have to deal with different layers
and protocols (Dohr et al., 2010). Finally, the ability to build diverse and complex services by composing
different functions of the system (i.e., modular composability) through service composition suits the het-
erogeneous nature of IoT, where accomplishing each task requires a series of service calls on all entities
spread across multiple locations (Valipour et al., 2009).
6.4.2.2 API-Oriented Architecture

Conventional approaches to service-oriented solutions use SOAP and remote method invocation for
describing, discovering, and calling services; however, because of the overhead and complexity imposed
by these techniques, Web APIs and representational state transfer (REST)-based methods have been
introduced as promising alternative solutions. The required resources range from network bandwidth to
computational and storage capacity and are triggered by request-response data conversions happening
regularly during service calls. Lightweight data-exchange formats such as JSON can reduce the over-
head, especially for smart devices and sensors with a limited amount of resources, by replacing large
XML files used to describe services. This helps in using the communication channel and processing the
power of devices more efficiently (Buyya and Dastjerdi, 2016).
Building APIs for IoT applications helps the service provider attract more customers while focusing on
the functionality of its products rather than on presentation. In addition, it is easier to enable multitenancy
by the security features of modern Web APIs such as OAuth, APIs are capable of boosting an organiza-
tion’s service exposition and commercialization. They also provide more efficient service monitoring and
pricing tools than previous service-oriented approaches (Datta et al., 2014).
Some research describes devices, sensors, humans, and their available services using Web API nota-
tion and API definition languages (Khodadadi et al., 2015). A two-phase discovery approach has been
proposed to find sensors that provide desirable services and match certain features, such as being in a
specific location. Other work suggests a service-broker layer (named FOKUS) that exposes a set of APIs
to enable shared access to the OpenMTC core (Elmangoush et al., 2012).
Novel approaches for defining and sharing services in distributed and multiagent environments such as
IoT can reduce the sophistication of service discovery in the application development cycle and diminish
service-call overhead in runtime (Buyya and Dastjerdi, 2016). Shifting from service delivery platforms
toward web-based platforms is another possibility (Manzalini et al., 2009).
Developers and business managers are advised to focus on developing and sharing APIs from the early
stage of their application development lifecycle, so that eventually, by properly exposing data to other
developers and end-users, an open-data environment will facilitate collaborative information gathering,
sharing, and updating (Buyya and Dastjerdi, 2016).
6.5 How IoT Works

As noted in the preceding sections, IoT comprises sensors, network-communicating devices, web stor-
age, and data processing, as well as applications (Figure 6.9).
Sensors sense and collect the required data. Network components transmit and store the information
on cloud servers. Web storage tools apply data mining techniques on voluminous data to extract valu-
able information. This processed information is then utilized by the applications running on the physical
devices (Gupta and Gupta, 2016).
For ease of understanding, Gupta and Gupta (2016) say the information provided by IoT works on the
concept of “4 As” and “4 Cs,” where the former represent anywhere, anytime, any network, any device
and the latter represent convergence, connectivity, computing power, and collective valuable information.
Web Data
Network
Applicaons Storage and Sensor
Components
Processing
FIGURE 6.9 Major components of IoT. (From Gupta, R. and Gupta, R., ABC of Internet of Things: Advancements,
Benefits, Challenges, Enablers and Facilities of IoT. 2016 Symposium on Colossal Data Analysis and Networking (CDAN),
Pune, India, 2016.)
Anyme
Connecvity
* Anywhere
* Any
* Network
Covergence Internet of Collecons

Any
Network * Any Time Things * Any Service
Any device
* Any Device * Any Business
Compung
* Anybody
* Any
* Sensor
Anywhere
FIGURE 6.10 4 As and 4 Cs of IoT. (From Gupta, R. and Gupta, R., ABC of Internet of Things: Advancements, Benefits,
Challenges, Enablers and Facilities of IoT, 2016 Symposium on Colossal Data Analysis and Networking (CDAN), Pune,
India, 2016.)
Figure 6.10 depicts the concept. For this to happen, however, IoT requires identification, network compat-
ibility and large storage space (Gupta and Gupta, 2016).
First, a unique identity is required to set up communication over the network. Next, the diverse
devices must be compatible with the underlying network architecture. Once the connection is estab-
lished, the storage servers can deliver web right information to the right place at the right time (Gupta
and Gupta, 2016).
6.6 Essential Technologies of the Internet of Things

At the core of the idea of the IoT is the notion that every day “things” will be equipped with tracking
and sensing capabilities. When this vision is fully actualized, “things” will also contain more sophis-
ticated processing and networking capabilities that will enable these smart objects to understand their
environments and interact with people. Like any information system, the IoT will rely on a combination
of hardware, software, and architectures (Whitmore et al., 2014).
6.6.1 Hardware
Much of the hardware upon which the IoT is being built already exists and is currently in wide-
spread use. Critical hardware infrastructure includes: RFID, NFC, and Sensor Networks (Whitmore
et al., 2014).
• RFID: Radio-Frequency Identification (RFID) is a short range communication technology

where an RFID tag communicates with an RFID reader via radio-frequency electromagnetic
fields. Tags may contain different forms of data, but the data form most commonly used for IoT
applications is the Electronic Product Code, or EPC. An EPC is a universally unique identifier
for an object. These unique identifiers ensure that objects tracked with RFID tags have indi-
vidual identities in the IoT.
RFID is not a new technology designed specifically for the IoT. RFID’s usefulness in terms
of tracking objects has been well established. The technology has applications in the areas of
logistics and supply chain management, aviation, food safety, retailing, public utilities and
others.
• NFC: A newer technology that builds on the RFID standard is Near Field Communication
(NFC). NFC is a short-range communication standard where devices are able to engage in radio
communication with one another when touched together or brought into close proximity to one
another. Each NFC tag contains a Unique Identification (UID) that is associated with the tag.
The NFC technology is frequently integrated into smart phones which are able to exchange
data with one another when brought together. NFC devices are also able to make connections
with passive, unpowered NFC tags that are attached to objects. One common use for NFC is in
smart posters. Smart posters contain readable NFC tags that transmit data to the user’s smart
phone which reads the data from the tag.
• Sensor networks: Sensors are devices that monitor characteristics of the environment or other
objects such as temperature, humidity, movement, and quantity. When multiple sensors are
used together and interact, they are referred to as a wireless sensor network (WSN). Wireless
sensor networks contain the sensors themselves and may also contain gateways that collect data
from the sensors and pass it on to a server.
While sensors “sense” the state of an environment or object, actuators perform actions to affect the
environment or object in some way. Actuators can affect the environment by emitting sound, light, radio
waves or even smells. These capabilities are one way that IoT objects can communicate with people.
Actuators are frequently used in combination with sensors to produce sensor-actuator networks. One
example of the use of actuators in such a network would be the use of a sensor to detect the presence
of carbon monoxide in a room and the use of an actuator to produce a loud noise altering people to the
detection of the harmful gas. Thus, the combination of sensors and actuators can enable objects to simul-
taneously be aware of their environment and interact with people, both goals of the IoT.
6.6.2 Middleware
Middleware is a software layer interposed between software applications to make it easier for software
developers to perform communication and input/output. Its feature of hiding the details of different
technologies is fundamental to free IoT developers from software services that are not directly relevant
to the specific IoT application. Middleware gained popularity in the 1980s due to its major role in sim-
plifying the integration of legacy technologies into new ones. It also facilitated the development of new
services in the distributed computing environment.
A complex distributed infrastructure of the IoT with numerous heterogeneous devices requires simpli-
fying the development of new applications and services; thus, the use of middleware is an ideal fit with
IoT application development. IoT middleware sits between the IoT hardware and data and the applica-
tions that developers create to exploit the IoT. Thus, IoT middleware helps bring together a multitude of
devices and data in a way that enables developers to create and deploy new IoT services without having
to write different code for each kind of device or data format.
For example, Global Sensor Network is an open source sensor middleware platform enabling the
development and deployment of sensor services with almost zero programming effort. Most middleware
architectures for the IoT follow a service-oriented approach to support an unknown and dynamic net-
work topology (Lee and Lee, 2015).
Many researchers have proposed the use of semantic middleware to interoperate the different classes
of devices communicating through different communication formats. The semantic model typically
uses XML and ontologies to establish the metadata and meaning necessary to support interoperability
(Aberer, 2006; Gómez and López, 2010; Huang and Li, 2010; Song et al., 2010). Like the semantic web,
semantic middleware seeks to create a common framework that enables data sharing and exchange
across distributed devices, applications, and locations (Whitmore et al., 2014).
6.6.3 Software
While the IoT may rely upon the existing hardware infrastructure to a large extent, new software must be
written to support the interoperability between numerous heterogeneous devices and searching the data
generated by them (Whitmore et al., 2014).
6.6.3.1 Cloud Computing

Cloud computing is a model for on-demand access to a shared pool of configurable resources (e.g.,
computers, networks, servers, storage, applications, services, software) that can be provisioned as
Infrastructure as a Service or Software as a Service. One of the most important outcomes of the IoT is an
enormous amount of data generated from devices connected to the Internet (Gubbi et al., 2013). Many IoT
applications require massive data storage, huge processing speed to enable real-time decision-making,
and high-speed broadband networks to stream data, audio, or video. Cloud computing provides an ideal
back-end solution for handling huge data streams and processing them for the unprecedented number of
IoT devices and humans in real time (Lee and Lee, 2015).
6.7 Key Technologies Involved in Internet of Things

Some of the key technology areas that enable IoT are:
• Identification technology,
• IoT architecture technology,
• Communication technology,
• Network technology,
• Network discovery technology,
• Software and algorithms,
• Hardware technology,
• Data and signal processing technology,
• Discovery and search engine technology,
• Relationship network management technology,

• Power and energy storage technology,
• Security and privacy technologies and
• Standardization (Bandyopadhyay and Sen, 2011).
6.7.1 Identification Technology

The function of identification is to map a unique identification or UID (globally unique or unique within
a particular scope), to an entity to make it identifiable and retrievable. Unique identifiers may be built as
a single quantity or out of a collection of attributes such that the combination of their values is unique.
In the vision of IoT, things have a digital identity (described by UIDs), are identified with a digital name,
and the relationships among things can be specified in the digital domain. IoT deployment will require
the development of new technologies to address the global ID schemes, identity management, identity
encoding or encryption, authentication and repository management using identification and addressing
schemes, and the creation of global directory lookup services and discovery for IoT applications with
various UID schemes (Bandyopadhyay and Sen, 2011).
6.7.2 IoT Architecture Technology

See Section 6.4 for a more extensive discussion of IoT architectures. The middleware (a software layer
interposed between the technological and application levels) architectures proposed in the last couple of
years for IoT often follow the SOA approach. The adoption of the SOA principles allows the decompos-
ing of complex and monolithic systems into applications consisting of ecosystem of simpler and well-
defined components. The use of common interfaces and standard protocols gives a horizontal view of an
enterprise system. Therefore, the development of business process of designing workflows of coordinated
services, which eventually are associated with objects actions. An SOA approach also allows for software
and hardware reuse, because it does not impose a specific technology for service implementation (Pasley,
2005). Figure 6.11 presents a generic SOA-based architecture for IoT middleware.
In SOA, it becomes imperative for the providers and requestors to communicate meaningfully with each
other, despite the heterogeneous nature of the underlying information structures, business artifacts, and
other documents. This requirement is termed semantic interoperability (Bandyopadhyay and Sen, 2011).
Technology is often perceived as the biggest impediment to collaboration between and the integration
of requestors and providers, and semantic interoperability is generally the root cause. On one extreme, the
development of comprehensive shared information models can facilitate semantic interoperability among
the participant applications and businesses. The problem with this approach is its rigidity. On the other
extreme, semantic interoperability can be achieved by providing appropriate semantic mediators (transla-
tors) at each participant’s end to facilitate the conversion to the information format which the participant
understands. Most systems use a combination of context-independent shared information models coupled
with context-specific information specialization approaches to achieve semantic interoperability.
Scalability, modularity, extensibility, and interoperability among heterogeneous things and their
environments are the key design requirements for IoT. Industry practitioners have suggested leverag-
ing work in the semantic web to devise comprehensive and open ontologies to address the issue of
semantic interoperability for dynamic binding-based SOA for IoT application design and development
(Bandyopadhyay and Sen, 2011).
6.7.3 Communication Technology

The applications of IoT form an extensive design space with many dimensions that include several issues
and parameters, including the following:
• Deployment: onetime, incremental, or random;

• Mobility: occasional or continuous, performed by either selected or all things in the selected
environment;
Automac Vehicle
Locaon (AVL)
SCADA
Outage Management
Advanced Metering System (OMS)
Infrastructure (AMI)
Service Order History

Line Patrol & Pole
Tesng Records GIS
Customer Informaon
System (CIS)
Mobile Maps
Substaon, Regulator, &

Other Records
Workorder History
FIGURE 6.11 SOA-based architecture for IoT middleware. (From Bandyopadhyay, D. and Sen J., Wirel. Pers. Commun.,
58, 49–69, 2011.)
• Cost, size, resources, and energy: resource-constrained or unlimited resources;

• Heterogeneity: a single type of thing or diverse sets of different properties and hierarchies.
• Communication modality: single-hop or multi-hop communication;
• Infrastructure: different applications exclude, allow, or require the use of fixed infrastructure;
• Network topology: single hop, star, multi-hop, mesh, or multitier;
• Coverage: sparse, dense, or redundant;
• Connectivity: continuous, occasional, or sporadic;
• Network size: from tens of nodes to thousands;
• Lifetime: few hours, several months to many years;
• QoS requirements: real-time constraints, tamper resistance, unobtrusiveness, and so on.
Such an extensive design space makes IoT application development a complicated process. One approach
may be to design the most restrictive point in the design space, e.g., minimum thing capabilities, high
mobility, and so on. However, there is frequently no such global minimum and it may be desirable to
exploit the characteristics of the various points in the design space. This implies that no single hardware
and software platform will be sufficient to support the whole design space. Complex and heterogeneous
systems will be a natural requirement (Bandyopadhyay and Sen, 2011).
Wireless personal area networks (WPANs) enable energy-efficient wireless access and data transfer
to smart objects over a short distance (1–100 m). Examples of WPANs are Bluetooth and ZigBee.
Bluetooth defines a complete WPAN architecture, including a security layer. However, the main dis-
advantage of Bluetooth is its relatively high energy consumption. Therefore, Bluetooth is not usually
used by sensors powered by a battery. Zigbee is a corresponding technology but simpler and less
expensive. Additionally, it has low power consumption and is more energy efficient (Kopetz, 2011;
Wang et al., 2014).
6.7.4 Networking Technology

IoT deployment requires developments of suitable network technology for implementing the vision of
IoT to reach out to objects in the physical world and to bring them into the Internet. Technologies such
as RFID, short-range wireless communication, and sensor networks are means to achieve the network
connectivity, while IPv6, with its expanded address space, enables addressing, connecting, and tracking
things.
In IoT paradigm, security, scalability, and cross-platform compatibility between diverse networked
systems will be essential requirements. In this context, the network technologies have to offer solutions
that can offer the viability of connecting almost anything to the network at a reduced cost. The ubiquity
of network access will also change the way information is processed. Today, IP provides end-to-end
communication between devices without any requirement of an intermediate protocol translation gate-
way. Protocol gateways are inherently complex to design, manage, and deploy and with the end-to-end
architecture of IP; there are no protocol translation gateways involved.
New scalable architectures designed specifically for the ubiquitous sensor networks communications
will allow for networks of billions of devices. Improvements in techniques for secure and reliable wire-
less communication protocols will enable mission-critical applications for ubiquitous sensor networks
based on wireless identifiable devices (Bandyopadhyay and Sen, 2011).
RFID allows automatic identification and data capture using radio waves, a tag, and a reader.
The tag can store more data than traditional barcodes. The tag contains data in the form of the
Electronic Product Code (EPC), a global RFID-based item identification system developed by the
Auto-ID Center.
Three types of tags are used. Passive RFID tags rely on radio-frequency (RF) energy transferred from
the reader to the tag to power the tag; they are not battery-powered. Applications of these can be found in
supply chains, passports, electronic tolls, and item-level tracking. Active RFID tags have their own bat-
tery supply and can instigate communication with a reader. They can contain external sensors to monitor
temperature, pressure, chemicals, and other conditions. They are used in manufacturing, hospital labo-
ratories, and remote-sensing IT asset management. Semi-passive RFID tags use batteries to power the
microchip while communicating by drawing power from the reader. Active and semi-passive RFID tags
cost more than passive tags (Lee and Lee, 2015).
WSNs consist of spatially distributed autonomous sensor-equipped devices to monitor physical or
environmental conditions; they can cooperate with RFID systems to better track the status of things,
such as their location, temperature, and movements (Atzori et al., 2010). Wireless sensor networks allow
different network topologies and multi-hop communication. Recent technological advances in low-power
integrated circuits and wireless communications have made efficient, low-cost, low-power miniature
devices available for use in WSN applications (Gubbi et al., 2013).
Wireless sensor networks have primarily been used in cold chain logistics that employ thermal and
refrigerated packaging methods to transport temperature-sensitive products (Hsueh and Chang, 2010;
White and Cheong, 2012). Wireless sensor networks are also used for maintenance and tracking systems.
For example, General Electric (GE) deploys sensors in its jet engines, turbines, and wind farms. By ana-
lyzing data in real time, GE saves time and money associated with preventive maintenance. Likewise,
American Airlines uses sensors capable of capturing 30 terabytes of data per flight for services such as
preventive maintenance (Lee and Lee, 2015).
While sensors “sense” the state of an environment or object, actuators perform actions to affect the
environment or object in some way. Actuators can affect the environment by emitting sound, light, radio
waves, or even smells. These capabilities are one way that IoT objects can communicate with people.
Actuators are frequently used in combination with sensors to produce sensor-actuator networks. One
example of the use of actuators in such a network would be the use of a sensor to detect the presence
of carbon monoxide in a room and the use of an actuator to produce a loud noise altering people to
the detection of the harmful gas. Thus, the combination of sensors and actuators can enable objects to
simultaneously be aware of their environment and interact with people, both goals of the IoT (Whitmore
et al., 2014).
6.7.5 Network Discovery Mechanisms

In the IoT paradigm, the networks will dynamically change and continuously evolve. In addition, the
things will have varying degrees of autonomy. New things will possibly be added and the network topolo-
gies will be changing rapidly. In this scenario, automated discovery mechanisms and mapping capabili-
ties are essential for efficient network and communication management. Without an automated discovery
mechanism, it is impossible to achieve a scalable and accurate network management capability. Moreover,
an automated network discovery mechanism can dynamically assign roles to devices based on intelligent
matching against preset templates and attributes, automatically deploy and start active, passive, or perfor-
mance monitors based on assigned roles and attributes, start, stop, manage, and schedule the discovery
process, and make changes to any role or monitoring profile at any time or create new profiles as required
(Bandyopadhyay and Sen, 2011).
Dynamic network discovery mechanisms enable interaction between devices that are not preconfig-
ured and hard-coded as far as the addresses or service endpoints are concerned. Instead, they allow
dynamic, run-time configuration of connections, thereby enabling mobile devices to form collaborative
groups and adapt to changing contexts.
Both passive and dynamic discovery mechanisms exist today, and technologies are being developed to
implement mechanisms’ real-time and dynamic discovery of network data. All discovery services must be
based on authentication mechanisms to address privacy or security issues (Bandyopadhyay and Sen, 2011).
6.7.6 Software and Algorithms

One of the most promising micro operating systems for constrained devices is Contiki (Contiki, 2003).
It provides a full IP stack (both IPv4 and IPv6), supports a local flash file system, and features a large
development community and a comprehensive set of development tools. One challenge in building IoT
applications is designing a common underlying software fabric for different environments and build-
ing a coherent application out of a large collection of diverse software modules. A substantial amount
of research and development effort is currently focused on service-oriented computing to develop dis-
tributed and federated applications to support interoperable M2M and thing-to-thing interaction over a
network (Bandyopadhyay and Sen, 2011).
6.7.7 Hardware
Hardware research is focused on miniaturization, low cost, and increased functionality in wireless iden-
tifiable systems.
Silicon IC technology will be used to design systems with increased functionalities and enhanced
nonvolatile memory for sensing and monitoring ambient parameters.
Further research is needed in many areas, including ultra-low power, low-voltage, and low-leakage
designs in submicron RF complementary metal-oxide-semiconductor (CMOS) technologies, high-
efficiency DC-DC power-management solutions, ultra-low power, low-voltage controllable nonvolatile
memory, integration of RF microelectromechanical system (MEMS) and MEMS devices, and so on.
Research on highly miniaturized integrated circuits will include:
1. Multi RF, adaptive, and reconfigurable front ends,

2. High frequency (HF) / ultra high frequency (UHF) / super high frequency (SHF) / extremely
high frequency (EHF),
3. Memory-electrically erasable programmable read only memory (EEP-ROM)/ferroelectric ran-
dom access memory (FRAM)/Polymer,
4. Multi-communication protocols,
5. Digital processing, and
6. Security, including tamper-resistance countermeasures, and technology to thwart side-channel
attacks.
6.7.8 Data and Signal Processing Technology: XML

Industrial bodies from different domains have realized the utility of XML as the underlying language
for the standardization of business artifacts, but each industry has developed XML standards for its own
purpose. The primary objective is to develop a standardized way to express the contract, trust, process,
workflow, message, and other data semantics in terms of XML nodes and attributes for the nodes. These
XML vocabularies are then published as generalized document type definition (DTD) or XML schema
for consumption by members of that specific industry. As all members follow the same standardized
DTD or schema, semantic interoperability is achieved.
Initiatives such as International Standard for Metadata Registries (ISO/IEC 11179) and its implemen-
tation, e.g. the Universal Data Element Framework from OpenGroup, aim to support semantic interop-
erability between structured data that are expressed using different schema and data dictionaries of
vocabularies, by providing globally unique cross-reference identifiers for data elements that are semanti-
cally equivalent, even though they may have different names in different XML markup standards (ISO
55000 (E), 2014).
Finally, semantic web-based standards from W3C such as Darpa Agent Markup Language, Resource
Description Framework, and Ontology Working Language are useful in providing semantic foundations
for dynamic situations involving dynamic discovery of businesses and services.
Intelligent decision-making algorithms will need to trigger activities not on the basis of a single event
(such as an individual observation or sensor reading). Often these algorithms will have to consider cor-
relation among events which may possibly require transformation of raw sensor data. Appropriate tool-
kits and frameworks already exist for complex event processing, such as ESPER and DROOLS, and are
likely to play useful roles in formulating machine-readable rules for determining the trigger sequences
of events for a particular activity or process (Bandyopadhyay and Sen, 2011).
6.7.9 Discovery and Search Engine Technologies

In the IoT paradigm, information and services about things will be fragmented across many entities and
may be provided at the class level (i.e., common information and services for all instances of things in
the same class) or at the serial level (i.e., unique to an individual thing) and provided by the creator of the
thing or contributed by other entities such as those who have interacted with an individual thing in the past.
IoT will also require the development of lookup or referral services to link things to information and
services and to support secure access to information and services in a way that satisfies both the privacy
of individuals and the confidentiality of business information. Such a matching between requesters and
providers of information services can be based on trust relationships. As a smart thing moves through
the real world, it will encounter new environments, and both the smart thing and other agents monitor-
ing the thing will require lookup mechanisms to discover what capabilities are available within the local
environment of the thing. Such capabilities may include the availability of sensors and actuators, network
communication interfaces, facilities for computation, and processing of data into information as well as
facilities for onward transportation, handling, physical processing, or alerting a human operator about
problems (Bandyopadhyay and Sen, 2011).
6.7.10 Relationship Network Management Technologies

IoT will require managing networks that contain billions of heterogeneous things, with a wide variety
of software, middleware, and hardware devices. Network management technologies will have to address
several important issues including, security, performance, and reliability.
Network management involves managing distributed databases, repositories, auto-polling of network
devices, and real-time graphical views of network topology changes and traffic. The network manage-
ment service employs a variety of tools, applications, and devices to assist in monitoring and maintain-
ing the networks involved in IoT applications. Similar to the social network services that are flourishing
today on the web, there would be a need for things in the network to form relationships with each other.
These relationships can be formal, such as membership within a federation, or they could be loosely
based alliances occasioned by an incident or an event (Bandyopadhyay and Sen, 2011).
6.7.11 Power and Energy Storage Technologies

The autonomous things operating in the IoT applications and performing either sensing or monitoring
need power and energy to perform the required job. As the environments have wide variations depend-
ing on where and how the thing is used, the power collection methods may vary, e.g., RF, solar, sound,
vibration, heat, and so on. In situations and locations where it is reasonable to have a large number of
things with sensing capabilities, the use of mesh networks is a good proposition for increasing the com-
munication and power efficiency by including the ability to forward transmissions from the closest thing.
The reader then only needs to be in the range of the edge of the network.
Power and energy storage technologies are enablers for the deployment of IoT applications. These
technologies have to provide high power-density energy generation and harvesting solutions which, when
used with today’s low-power nanoelectronics, will enable us to design self-powered intelligent sensor-
based wireless identifiable device (Bandyopadhyay and Sen, 2011).
6.7.12 Security and Privacy Technologies

Two major issues in IoT are privacy of humans and confidentiality of data. Because of the scale of
deployment, their mobility, and often their relatively low complexity, things are hard to control.
Many standard encryption technologies can be used to ensure confidentiality. However, the main chal-
lenge is to make encryption algorithms faster and less energy-consuming. Moreover, an efficient key
distribution scheme should be in place if an encryption scheme is used.
For small-scale systems, key distribution can happen in the workplace or at the time of deployment, but
for ad-hoc networks, novel key distribution schemes have only been proposed in recent years. For privacy,
the situation is more serious; one problem is the ignorance of the general public. In addition, privacy-pre-
serving technology is still in its infancy: the systems that do work are not designed for resource-restricted
devices, and a holistic view of privacy is still to be developed (e.g., privacy throughout one’s life). The het-
erogeneity and mobility of things in the IoT add further complexity to the situation. Moreover, from a legal
point of view, some issues remain unclear and need legal interpretation; examples include the impact of
location on privacy regulation and the issue of data ownership in collaborative clouds of things.
Network and data anonymity can provide a basis for privacy, but at the moment, these technologies
are mainly supported by powerful equipment, in terms of computing power and bandwidth. A similar
argument can be made for authenticating devices and establishing trust (Bandyopadhyay and Sen, 2011).
6.7.13 Standardization
Standards should be designed to support a wide range of applications and address common require-
ments from a wide range of industry sectors; they should also address the needs of the environment,
society, and individual citizens. Through consensus processes involving multiple stakeholders, it should
be possible to develop standardized semantic data models and ontologies, common interfaces, and pro-
tocols, initially defined at an abstract level, then with example bindings to specific cross-platform, cross-
language technologies such as XML, ASN.1, web services, and so on. The use of semantic ontologies
and machine-readable codification should help to overcome ambiguities resulting from human error or
differences and misinterpretation due to different human languages in different regions of the world and
also assist with cross-referencing to additional information available through other systems.
Standards are required for bidirectional communication and information exchange among things, their
environment, their digital counterparts in the virtual cloud, and entities with an interest in monitoring,
controlling, or assisting the things. In addition, the design of standards for IoT needs to consider efficient
and judicial use of energy and network capacity, as well as respecting other constraints such as those exist-
ing regulations that restrict permitted frequency bands and power levels for RF communications. As IoT
evolves, it may be necessary to review such regulatory constraints and investigate ways to ensure sufficient
capacity for expansion, such as seeking additional radio spectrum allocation as it becomes available.
A particular challenge in this regard is ensuring global interoperability, particularly for things and
devices that make use of radio spectrum. Historically, various bands of radio spectrum have been allocated
for various purposes, such as broadcast communications (AM, FM, digital audio broadcasting, analog ter-
restrial television, digital terrestrial television), mobile telephony, citizen-band radio, emergency services
communications, wireless Internet, and short-range radio. Unfortunately, the frequency band allocations
are not harmonized across all regions of the world, and some bands that are available for a particular pur-
pose in one region are not available for the same purpose in another region, often because they are being
used for a different purpose.
Reallocation of radio spectrum is a slow process, involving government agencies, regulators, and
international bodies such as the International Telecommunications Union (ITU) and regional bodies
such as the European Telecommunications Standards Institute (ETSI) or the Federal Communications
Commission (ETSI, 2018). Careful discussions are needed to minimize disruption to existing users of
radio spectrum and to plan for future needs. In the meantime, many IoT devices using radio spectrum
will need to be capable of using multiple protocols and multiple frequencies. An example of this is the
ISO 18000-6C/EPCglobal UHF Gen2 standard, which is implemented using slightly different frequen-
cies within the 860–960 MHz band, depending on the region of operation, as well as different power
levels and different protocols (at least initially in Europe, where the Listen-Before-Talk protocol was
required) (Bandyopadhyay and Sen, 2011).
As for the larger IoT paradigm, a very interesting standardization effort has currently started in ETSI,
the producer of globally applicable information and communication technology (ICT)-related standards.
The M2M Technical Committee was formed within ETSI to conduct standardization activities relevant
to M2M systems and sensor networks. The goals of the ETSI M2M committee include: developing and
maintaining an end-to-end architecture for M2M and strengthening the standardization efforts for M2M,
including sensor network integration, naming, addressing, location, QoS, security, charging, manage-
ment, application, and hardware interfaces (ETSI Technical Committee M2M, 2018; Shelby, 2009).
The Internet Engineering Taskforce (IETF) recently formed a group for IPv6 networks, 6LoWPAN
(i.e., Low-Power Wireless Personal Area Networks) (Kushalnagar et al., 2009). 6LoWPAN has defined
a set of protocols that can be used to integrate sensor nodes into IPv6 networks. The core protocols for
6LoWPAN architecture have already been specified and some commercial products implementing this
protocol suite have been launched (Bandyopadhyay and Sen, 2011).
Another working group in IETF, this one on routing over low power and lossy (ROLL) networks, has
recently produced an routing protocol for low-power and lossy networks (RPL) routing protocol draft.
This will be the basis for ROLL networks, including 6LoWPAN (Bandyopadhyay and Sen, 2011).
An emerging idea is to consider IoT standardization as an integral part of the future Internet defini-
tion and standardization process. For example, a cluster of European research and development projects
on IoT (CERP-IoT) reports that the integration of different things into wider networks, either mobile or
fixed, will allow their interconnection with the future Internet (Santucci, 2009).
6.8 Enablers of IoT

The techniques listed below are used to identify the devices in IoT (see Figure 6.12; Gupta and Gupta, 2016).
6.8.1 Near-Field Communication

A new technology is near-field communication (NFC), a short-range communication standard where
devices can engage in radio communication with one another when touched together or brought into
close proximity to one another. Each NFC tag contains a Unique Identification (UID) that is associated
with the tag. The NFC technology is frequently integrated into smartphones to exchange data when
brought together. Near-field communication transceivers could be built into smartphones to enable them
to read passive NFC tags. Thus, NFC could be an efficient choice for tagging object identity as it is cheap,
small, thin, and attachable to almost anything (Gupta and Gupta, 2016).
NFC devices can also make connections with passive, unpowered NFC tags attached to objects. One
common use of NFC is in smart posters. Smart posters contain readable NFC tags that transmit data to
the user’s smartphone, which reads the data from the tag.
Enablers of IoT
NFC
QR
Structured
Data
Beacons
Bluetooth
FIGURE 6.12 Enablers of IoT. (From Gupta, R. and Gupta, R., ABC of Internet of Things: Advancements, Benefits, Challenges,
Enablers and Facilities of IoT, 2016 Symposium on Colossal Data Analysis and Networking (CDAN), Pune, India, 2016.)
6.8.2 Quick Response Code and Optical Tag

To implement low-cost tagging, an optical or printed tag could be used. The 2D optical standard Quick
Response (QR) codes are one of the best choices. Using image processing techniques, a QR code is
extracted that outputs a number, text, or Uniform Resource Identifier. However, QR codes have two
drawbacks (Phil Tien and Aggarwal, 2015; Kato and Tan, 2007):
• They require a pre-installed application capable of reading the QR Code.

• It can be difficult positioning the camera so that it can focus and accurately decode the image.
6.8.3 Structured Tags

For human-to-human interactions across the globe, web pages are used, but in IoT, most of the use cases
involve machine-to-machine interactions. By using structured data in embedded formats, user agents and
cloud services can intelligently parse data and process them interactively and proactively.
Another advantage of using structured datatype is that it allows the creation of uniform user interfaces.
Thus, once an interface is learned for an application, it does not need to be relearned for the application
(Gupta and Gupta, 2016).
6.8.4 Beacons
Asynchronous JavaScript and XML (AJAX), Hypertext Markup Language, and other open source
web technologies, in combination with structured datatype, can provide good support for IoT.
However, the limitation of open source technologies is that they do not have the capability to iden-
tify objects.
Beacons attached to objects could be used to overcome the gap between the physical and virtual world.
Compared to NFC and QR Codes, beacons have better utility; they can broadcast a uniform resource
locator along with other information that can help with ranging (Gupta and Gupta, 2016).
6.8.5 Bluetooth
Another good option for tagging is Bluetooth low energy (BLE) (Heydon, 2013; Oliveira and Matos,
2016). Most mobile smartphones are embedded with BLE hardware, providing various capabilities with
the help of operating system support (Gupta and Gupta, 2016).
Bluetooth low energy could make object identity known by transmitting one advertisement packet per
second; this requires a very low-power supply and can operate for up to one year on a lithium coin cell
battery (Gupta and Gupta, 2016).
6.9 IoT and Telecommunications

The creation of the IoT will permit the connection of everyday objects and devices to all kinds of net-
works, e.g. company intranets, peer-to-peer networks, and global Internet. For this reason, its develop-
ment is of great significance to the telecommunication industry. It will challenge existing structures
within established companies and form the basis for new opportunities and business models.
The IoT builds upon the revolutionary success of mobile and Internet networks by expanding the
world’s network of networks even further through the application of key technological enablers, includ-
ing RFID, wireless sensor technologies, smart technologies, and nanotechnology. The expanded
Internet will be able to detect and monitor changes in the physical status of connected things in real-
time. Developments in miniaturization will enable technological ubiquity. Networks and the objects
they connect are also becoming increasingly intelligent, through developments in “smart technologies.”
The impact of a combination of such technologies on telecommunications cannot be underestimated
(International Telecommunication Union (ITU), 2005).
6.9.1 Growth of Telecommunications

The global telecommunication market is showing healthy growth. The overall market tripled in value
from USD 374 billion in 1990 to USD 1.124 billion in 2003, with a growth rate of 8.8% (Figure 6.13).
Developing countries, although starting from a much smaller base, have been growing at almost twice the
rate of their developed counterparts. In fact, by 2003, the developing world accounted for one-fifth of the
global market for telecommunication revenue. The most remarkable growth has occurred in mobile com-
munications, which had increased from just 2% of the market, by value, in 1990 to 43% in 2003. Currently,
revenues from mobile services are higher than those from fixed-line operations. This is a remarkable trans-
formation in a long-established industry (International Telecommunication Union (ITU), 2005).
The main reason for the slower growth in the fixed-line sector is that those developed countries that
built their telecommunication networks in the 1970s and 1980s have long since reached near-universal
service, i.e., most households needing a telephone line already have one. Although in the late 1980s
FIGURE 6.13 Fast-growing telecommunications. (From International Telecommunication Union (ITU), The Internet of

Things, ITU Internet Reports, Geneva, Switzerland, 2005.)
and 1990s, it briefly looked as if there would be potential for installing additional lines, e.g., for fax and
dial-up Internet, the arrival of copper-based broadband Internet connections (e.g., x Digital Subscriber
Line [xDSL]) ended this possibility.
Not only can the telecommunication industry profit from the enabling technologies for the IoT by
exploiting their benefits internally (e.g., by optimizing internal processes), but it can also foster active
players in the field by providing communication infrastructure and developing new hardware and ser-
vices. With millions of smart objects communicating with each other, the income generated by data traffic
might continue to grow at a faster rate than spending for voice traffic. As illustrated in Figure 6.14, global
revenues for data are growing at a much faster rate than for voice. As mobile markets reach saturation,
there is increased data use among users and a much keener interest in providing data-enabled devices
(International Telecommunication Union (ITU), 2005).
6.9.2 New Transitions

The hope is that thing-to-thing communications will provide an important new growth market, and
the home of the future—or the car of the future—will have a number of computing or communicating
devices embedded within it.
The significance of the IoT is that it stands at the middle of two convergent processes of technological
and commercial push:
• A number of new technologies, such as RFID in combination with advanced wireless services
(e.g., 3G mobile and wireless broadband technologies), have enhanced the ubiquity of the Internet
(i.e., it is accessible from almost any point) and its mobility (i.e., it is accessible from small, por-
table hand-held devices). This coincides with the availability of much higher speeds for Internet
access.
• Operators and equipment vendors are running out of consumers to whom they can sell current
telecommunication services and equipment. The new emerging market for thing-to-thing com-
munications will sustain future growth prospects.
The missing element from the convergence of these two forces of technological and commercial push is
demand-pull. Do consumers really want fridges that order the groceries or vacuum cleaners that com-
municate with their makers to report faults? More importantly, what types of applications are consumers
willing to pay for? (International Telecommunication Union (ITU), 2005).
FIGURE 6.14 Data outstrips voice. (From International Telecommunication Union (ITU), The Internet of Things, ITU
Internet Reports, Geneva, Switzerland, 2005.)
6.10 IoT Is Transforming Industry and Society

The IoT is transforming and redefining virtually all markets and industries in fundamental ways.
Previously fragmented efforts to connect machines and sensors in industry-specific ways are now coalesc-
ing into a comprehensive vision of connectivity permeating the global physical environment.
This is a shift from the narrow development of new ICT systems for specific industries toward a broad
view of pervasive interconnectivity of the global physical environment. This includes a continually
increasing focus on integrating the massive, new flows of data from machines and sensors with existing
and emerging data sources, including enterprise resource planning (ERP) systems, open government
databases, and social media feeds, to produce novel and actionable new insights.
An important signpost of the fundamental importance of the IoT concept is the strategic activity of most
major CT vendors in developing IoT offerings. Companies at the heart of the telecom, networking, indus-
trial infrastructure, enterprise system, and cloud computing sectors are offering IoT platforms to facilitate
the broader economy’s transformation to pervasive connectivity. Examples of leading ICT firms that have
introduced IoT platforms include: Amazon Web Services, AT&T, Cisco, Deutsche Telekom, Ericsson,
Fujitsu, General Electric, Huawei, IBM, Salesforce.com, and Vodafone, among others. Huawei’s Ocean
Connect IoT Platform is an example of a leading IoT platform strategy (Lucero, 2016).
6.10.1 “Datafication”
Although IoT entails universal connectivity, including personal computers and smartphones, the
focus of most observers when discussing IoT is the opportunity to connect existing machines that
were not previously connected (e.g., aircraft engines) and dramatically expand the number of con-
nected points in the environment through sensors, actuators, and devices that would never have been
developed or deployed without the underlying infrastructure to connect them into a pervasive ICT
infrastructure.
Some view the current push to IoT as analogous to the transformation of electrical infrastructure
from specialized and isolated point systems to a commoditized and essential building block of the mod-
ern industrialized world. From the 1880s to the early 1900s, companies did not have access to an all-
encompassing electrical grid. Those needing electricity deployed local generators and hired managers to
oversee the very specialized infrastructure.
Today, electricity is essentially a commodity service available everywhere in the industrialized world.
The pervasive, standardized electrical grid delivers power comparatively easily. This type of abstrac-
tion, having access to power without having to devote extraordinary resources to sourcing and manag-
ing that power, was a catalyst of the enormous economic growth of the twentieth century. Individuals,
companies, organizations, and governments could focus on innovating without the need to focus on the
fundamentals of powering their innovations.
Similarly, through a number of initiatives (including IoT platforms, standards development, regulatory
actions, and ecosystem formation), connectivity will become ubiquitous and, more importantly, data from
connected machines and sensors will be available as a fundamental service, almost like a commodity.
Data are much more varied and complex than electricity. “Datafication” and “electrification” are
not perfectly correlated, but the analogy captures the core idea of isolated, complex, and limited
systems transforming into a pervasive utility. Electrification had a fundamental impact on most
industries and markets in the twentieth century. Datafication may have a similar impact in this cen-
tury (Lucero, 2016).
6.10.2 Forecasting IoT Growth

Some predict the IoT market will grow from an installed base of 15.4 billion devices in 2015 to 30.7 bil-
lion devices in 2020 and 75.4 billion in 2025, as shown in Figure 6.15 (Lucero, 2016).
FIGURE 6.15 IoT market over time. (From Lucero, S., IHS Technology. IoT Platforms: Enabling the Internet of Things,
Sr. Principal Analyst, M2M and IoT, Whitepaper, 2016.)
6.10.3 Key Impacts of IoT on Industry

Three of the most important areas in which the pervasive connectivity of IoT will affect the economy and
society are automation, integration, and servitization. These three features are interrelated in the sense
that automation and integration are often employed in tandem to enable servitization. These three factors
are explained in more detail below (Lucero, 2016):
• Automation: Connecting machines, sensors, and actuators to computing systems enables a

large degree of process automation. For example, fleet management systems enable auto-
matic logging of driving parameters such as hours in motion, removing the need for drivers
to manually submit this information. Automation facilitates dramatically larger scales of
data utilization as well. For example, jet aircraft engines typically produce several terabytes
of data per flight on operating parameters. Proactively monitoring this data feed enables
faster resolution times in instances of performance faults and minimizes unnecessary main-
tenance services.
• Integration: There are more benefits than simply connecting a machine and automating its per-
formance. Integrating the data from a machine with data from other sources, such as ERP sys-
tems, open government databases, and social media feeds, greatly enhances the value derived
from connecting the machine. For example, Salesforce.com enables the integration of machine
performance and condition data, collected automatically from the machine, to be combined
with traditional customer relationship management data and social media feeds to improve the
organization’s customer service by working proactively.
• Servitization: Together, automation and integration help organizations move from primarily
product-centered business models to service-oriented business models, also known as servitiza-
tion. Many traditionally product-centered companies are realizing the revenue opportunities
offered by developing an ongoing, service-oriented relationship with customers, e.g., organiz-
ing a customer relationship on the basis of a service contract whereby the customer is paying
for a negotiated business outcome rather than a piece of equipment. In fact, automakers are
increasingly talking about “mobility as a service” as a result of connected, and increasingly
autonomous, vehicles as opposed to the traditional vehicle sales model.
6.11 Types of Services of IoT

An exceptional number of applications can make use of the IoT, from home and office automation to
production line and retail product tracking. The number of applications is endless. For each appli-
cation, a particular IoT service can be applied to optimize application development and speed up
application implementation. It should be noted that the following categorizations come from Xing
et al. (2010).
6.11.1 Identity-Related Services

Identity-related services can be divided into two categories, active and passive (see Section 6.6.6), and
can serve either individuals or enterprise; this leads to a number of different kinds of applications (Gigli
and Koo, 2011).
The general identity-related service consists of two major components (Gigli and Koo, 2011):
1. The things, all of which are equipped with some kind of identification identifier, such as an RFID tag;
2. The read device which reads the identity of the thing based on its label, e.g. reading the infor-
mation encoded into an RFID tag. The read device would then make a request to the name
resolution server to access more detailed information about that particular device.
Active identity-related services broadcast information and are usually associated with having constant
power, or at least are under battery power. Passive identity-related services are services that have no
power source and require some external device or mechanism to pass on its identity. For example, an
active RFID tag is battery-powered and can transmit signals once an external source has been identi-
fied. A passive RFID tag has no batteries and requires an external electromagnetic field to initiate a
signal transmission. In general, active identity services can transmit or actively send their information to
another device, whereas passive services must be read from (Gigli and Koo, 2011).
6.11.2 Information Aggregation Services

Information aggregation services refer to the process of acquiring data from various sensors, processing
the data, and transmitting and reporting those data via IoT to the application. These types of services can
be thought of, more or less, as the following: information is collected and sent via the network to the
application for processing.
Information aggregation services do not have to implement a single type of communication chan-
nel to work together. With the use of access gateways (see Figure 6.16), an information aggregation
service could make use of different types of sensors and network devices and share their data via a
common service to the application. For example, an application could make use of RFID tags to be
aware of the identity of some devices, while also using a Zigbee network to collect data from sensors,
and then use a gateway device to relay this information to the application under the same service,
say a Web Service such as JSON or XML. Not only would this allow a developer of an application to
incorporate a number of different technologies into the application, but it could also allow the applica-
tion to access various IT and enterprise services that may already be in place (Gigli and Koo, 2011).
6.11.3 Collaborative Aware Services

Collaborative aware services are services that use aggregated data to make decisions and based on
those decisions, perform an action. As IoT takes shape, it should bring about the development of com-
plicated services that make use of all data that can be retrieved from an extensive network of sensors.
This will require being able not only to retrieve information, but also to relay back responses to the
collected information to perform actions. These services will thus require “terminal-to-terminal”
as well as “terminal-to-person” communication. By providing collaborative aware services, the IoT
FIGURE 6.16 Aggregate network diagram with sensor network and access gateways. (From Gigli, M. and Koo, S., Adv.
IoT, 1, 27–31, 2011.)
infrastructure naturally requires higher reliability and speed and will require the terminals to either
have more processing power or be linked with some other device that does (Gigli and Koo, 2011).
6.11.4 Ubiquitous Services

Ubiquitous services are the epitome of the IoT. A ubiquitous service is not just a collaborative aware
service; it is also a collaborative aware service for everyone, everything, at all times. For IoT to reach
the level of providing ubiquitous services, it must overcome the barrier of protocol distinctions among
technologies and unify every aspect of the network.
There is no particular system architecture for IoT, but there have been numerous papers written about
the use of Web Services or REST APIs to unite loosely coupled things on the Internet under a single
application so that they can be reused and shared. Internet protocol version 6 is also a protocol that could
greatly benefit the increase in ubiquitous services (Gigli and Koo, 2011).
6.12 Internet of Things Applications

IoT applications are limited only by our imagination at this point but can be roughly categorized as the
following: smart infrastructure, health care, supply chains or logistics, and social applications (Whitmore
et al., 2014).
6.12.1 Smart Infrastructure

Integrating smart objects into physical infrastructure can improve flexibility, reliability and efficiency
in infrastructure operation. These benefits can reduce cost and manpower requirements, as well as
enhance safety.
Smart grids use IoT technology to collect data about energy consumption and make the data available
online. The data are typically incorporated into reports showing patterns of use and include recommen-
dations on how to reduce energy consumption and cost (Liu et al., 2011). IoT technologies are also being
used inside homes and offices. They are being equipped with sensors and actuators that track utility
consumption, monitor, and control building infrastructure such as lights and heating, ventilation, and air
conditioning (HVAC) systems, and conduct surveillance to meet security needs (Darianian and Michael,
2008; Li et al., 2011). On a broader scale, IoT technologies can be employed to make cities more efficient.
The goal of smart cities is to leverage IoT to improve the lives of citizens by improving traffic control,
monitoring the availability of parking spaces, evaluating air quality, and even providing notification
when trash containers are full (Schaffers et al., 2011; Vicini et al., 2012).
6.12.2 Health Care

IoT may improve the quality of human life by automating some of the basic tasks that humans must perform.
In that sense, monitoring and decision-making can be moved from the human side to the machine side. One
of the main applications of IoT in health care is in assisted living scenarios. Sensors can be placed on health
monitoring equipment used by patients. The information collected by these sensors is made available on the
Internet to doctors, family members, and other interested parties to improve treatment and responsiveness
(Dohr et al., 2010). IoT devices can also be used to monitor a patient’s current medicines and evaluate the
risk of new medications in terms of allergic reactions and adverse interactions (Jara et al., 2010).
IoT gives a perfect platform to realize the vision of ubiquitous health care using body area sensors and
IoT back end to upload the data to servers. For instance, a smartphone can be used for communication,
along with several interfaces such as Bluetooth, for interfacing sensors measuring physiological param-
eters. To date, there are several applications available for Apple iOS, Google Android, and Windows
Phone operating systems that measure various parameters. However, it is yet to be centralized in the
cloud for general physicians to access.
An extension of the personal body area network is creating a home monitoring system allowing the
doctor to monitor patients and the elderly in their homes, thereby reducing hospitalization costs through
early intervention and treatment.
6.12.3 Supply Chains or Logistics

RFID and sensor networks already have established roles in supply chains. Sensors have long been used
in assembly lines in manufacturing facilities, and RFID is frequently used to track products through the
part of the supply chain controlled by a specific enterprise. While the use of these technologies in supply
chains is not new, the pervasiveness and ubiquity promised by IoT will enable their use across organiza-
tional and geographic boundaries. Specifically, IoT can improve logistics and supply chain efficiency by
providing information that is more detailed and up-to-date (Flügel and Gehrmann, 2009) than currently
available, mitigating the bullwhip effect, reducing counterfeiting, and improving product traceability
(Zhengxia and Laisheng, 2010).
6.12.4 Social Applications

Given that IoT devices are likely to be connected to many objects and even to people themselves, examining
the potential societal and personal impacts of IoT is essential. IoT devices enable a number of functionalities
that can promote social interaction and personal needs. One possible application of IoT in a social context is
the interaction of IoT devices with existing social networking services such as Facebook or Twitter (Vazquez
and Lopez-de-Ipina, 2008). Using IoT devices to provide information about an individual’s activities and loca-
tion can save the user time. Further, applications automatically collecting and integrating this information can
inform individuals when they are in proximity to friends, social events or other activities that may interest them
(Guo et al., 2011). IoT-enabled mobile phones may connect directly to other mobile phones and transfer contact
information when predefined dating or friendship profiles are compatible (Guo et al., 2012) (see Figure 6.17).
FIGURE 6.17 Internet of Things schematic showing end-users and application areas. (From Gubbi, J. et al., Future
Gener. Comp. Sy., 29, 1645–1660, 2013.)
6.12.5 Personal and Home

Control of home equipment such as air conditioners, refrigerators, and washing machines will allow
better home and energy management. This will see consumers become involved in IoT revolution in
the same manner as the Internet revolution itself. Sensor information is used only by the individuals
who directly own the network. Usually, Wi-Fi is used as the backbone, enabling higher bandwidth data
(video) transfer and higher sampling rates (sound).
An interesting development will be using a Twitter-like concept where individual things in the house
can periodically tweet the readings that can be easily followed from anywhere creating a TweetOT.
Although this will provide a common framework using the cloud for information access, a new security
paradigm will be required for this to be fully realized (Gubbi et al., 2013).
6.12.6 Enterprise
IoT can be used within a work environment as an enterprise-based application. Information collected
from such networks is used only by the owners, and the data may be released selectively.
Environmental monitoring is a common application implemented to keep track of the number of occu-
pants and manage the utilities within the building (e.g., HVAC, lighting) (Gubbi et al., 2013).
Sensors have always been an integral part of security, automation, climate control, and so on. These
will eventually be replaced by wireless systems giving the flexibility to make changes whenever
required.
TABLE 6.2
Potential IoT Applications in Melbourne
Citizens
Health care triage, patient monitoring, personnel monitoring, disease spread modeling and
containment—real-time health status and predictive information to assist
practitioners in the field, or policy decisions in pandemic scenarios
Emergency services, defense remote personnel monitoring (health, location): resource management and distribution,
response planning; sensors built into building infrastructure to guide first responders
in emergencies or disaster scenarios
Crowd monitoring crowd flow monitoring for emergency management; efficient use of public and retail
spaces; workflow in commercial environments
Transport
Traffic management Intelligent transportation through real-time traffic information and path optimization
Infrastructure monitoring Sensors built into infrastructure to monitor structural fatigue and other maintenance;
accident monitoring for incident management and emergency response coordination
Services
Water Water quality, leakage, usage, distribution, waste management
Building management Temperature, humidity control, activity monitoring for energy usage management:
heating, ventilation, and air conditioning (HVAC)
Environment Air pollution, noise monitoring, waterways, industry monitoring
Source: Gubbi, J. et al., Future Gener. Comp. Sys., 29, 1645–1660, 2013.
6.12.7 Cities
An area currently drawing attention is Smart Environment IoT (Gluhak et al., 2011; Li et al., 2011).
Several testbeds are being implemented and many more are planned for the coming years.
The applications or use-cases within the urban environment that can benefit from the realization of a
smart city WSN capability are shown in Table 6.2. These applications are grouped according to their impact
areas. This includes the effect on citizens’ health and well-being; the impact of transport on mobility, pro-
ductivity, and pollution; and critical community services managed by local government (Gubbi et al., 2013).
6.12.8 Utilities
The information from the networks in this application domain is usually for service optimization rather
than consumer consumption. IoT applications are already being used by utility companies (electricity
supply companies use smart meters) for resource management to optimize cost vs. profit. These are made
up of very extensive networks (on regional and national scales) to monitor critical utilities and efficient
resource management. The backbone network used can vary between cellular, Wi-Fi, and satellite com-
munication (Gubbi et al., 2013).
Smart grid and smart metering are potential IoT applications and are being implemented around the
world (Yun and Yuxin, 2010). Efficient energy consumption can be achieved by continuously monitor-
ing every electricity point within a house and using this information, to modify the way electricity is
consumed. This information at the city scale is used for maintaining the load balance, within the grid
ensuring high QoS (Gubbi et al., 2013).
6.12.9 Video-Based Applications

Video-based IoT (Akyildiz et al., 2007) integrates image processing, computer vision, and networking
frameworks. It will help develop a new challenging scientific research area at the intersection of video,
infrared, microphone, and network technologies. Surveillance, the most widely used camera network
Expectaons
Internet TV
NFC Payment
Acvity Streams
Private Cloud Compung
Wireless Power Augmented Reality
Social Analycs Cloud Compung
Group Buying Media Tablet
Gamificaon Virtual Assistants
3D Prinng In-Memory Database Management Systems
Image Recognion
Context-Enriched Services Gesture Recognion
Speech-to-Speech Translaon
Internet of Things Machine-to-Machine Communicaon Services
Natural Lenguage Quesons Answering Locaon-Aware
Mobile Robots Applicaons
Mes Networks: Sensor
“Big Data” and

Cloud/Web
Extreme Informaon
Plaorms Biometric
Processing and
Management Authenficaon Methods
Consumerizaon Predicve Speech Recognion

Social TV Analycs
Hosted
Mobile Applicaon Store
Video Analycs for Virtual
Customer Service Desktops Idea Management
Computer-Brain Interface QR/Color Code
Quantum Compung E-book Readers
Human Augementaon Virtual Worlds
3D Bioprinng
As of July 2011
Peak of
Truogh of Slope of Plateau of
Technology Trigger inflated
disillusionment enlightenment producvity
expectaons
Time
Years to mainstream adopon:
Less than 2 years 5 to 10 years Obsolete before plateau
2 to 5 years More than 10 years
FIGURE 6.18 Cycle of emerging technologies. (From Gartner, Gartner’s Hype Cycle Special Report for 2011, Gartner Inc
https://www.gartner.com/doc/1758314/gartners-hype-cycle-special-report, 2011.)
application, already helps track targets, identify suspicious activities, detect left luggage, and monitor
unauthorized access. Automatic behavior analysis and event detection (as part of sophisticated video
analytics) are in its infancy, and breakthroughs are expected in the next decade (see Figure 6.18) (Gubbi
et al., 2013).
6.12.10 Water Apps

Water network monitoring and quality assurance of drinking water are another critical application
that is being addressed using IoT. Sensors measuring critical water parameters are installed at impor-
tant locations to ensure high supply quality. This avoids accidental contamination among stormwater
drains, drinking water, and sewage disposal. The same network can be extended to monitor irriga-
tion in agricultural land. It can also be extended to monitor soil parameters to permit informed
decision-making about agriculture (Jun-Wei et al., 2011).
6.12.11 Transportation
Despite being part of the urban use of IoT, smart transportation and smart logistics can be placed in a
separate domain because of the nature of data sharing and backbone implementation required.
Urban traffic is the main contributor to traffic noise pollution and a major contributor to urban air qual-
ity degradation and greenhouse gas emissions. Traffic congestion imposes significant costs on economic
and social activities in most cities. Supply chain efficiencies and productivity, including just-in-time
operations, are severely impacted by congestion causing freight delays and delivery schedule failures.
Dynamic traffic information will positively affect freight movement, allow better planning, and lead to
improved scheduling.
Transport-related IoT will enable the use of large scale WSNs for online monitoring of travel times,
origin-destination (O-D) route choice behavior, queue lengths, and air pollution and noise emissions.
IoT is likely to replace the traffic information provided by the sensor networks of inductive loop vehi-
cle detectors employed at the intersections of existing traffic control systems. They will also under-
pin the development of scenario-based models for planning and designing mitigation and alleviation
plans, as well as improved algorithms for urban traffic control, including multi-objective control systems.
Combined with information gathered from the urban traffic control system, valid and relevant informa-
tion on traffic conditions can be presented to travelers (Kumar et al., 2005).
The prevalence of Bluetooth technology (BT) devices reflects the current IoT penetration in a number of
digital products such as mobile phones, car hands-free sets, and navigation systems. BT devices emit signals
with a unique Media Access Identification (MAC-ID) number that can be read by BT sensors within the
coverage area. Readers placed at different locations can be used to identify the movement of the devices.
Complemented by other data sources, such as traffic signals or bus GPS, problems that can be addressed
include vehicle travel time on motorway and arterial streets, dynamic (time-dependent) O-D matrices on the
network, identification of critical intersections, and accurate and reliable real-time transport network state
information (Lin et al., 2005). There are many privacy concerns by such usages, however, and digital forget-
ting is an emerging domain of research in IoT (Mayer-Schönberger, 2011).
Another important application is efficient logistics management (Lin et al., 2005). This includes moni-
toring the items being transported and efficient transportation planning. The monitoring of items is car-
ried out locally, but transport planning is carried out using a large-scale IoT network (Gubbi et al., 2013).
6.13 Internet of Things Today

The IoT is defined by ITU and IERC as a dynamic global network infrastructure with self-configuring
capabilities based on standard and interoperable communication protocols, where physical and virtual
“things” have identities, physical attributes, and virtual personalities, use intelligent interfaces, and are
seamlessly integrated into the information network.
IoT has moved from being a futuristic vision to a market reality. Significant business decisions have
been made by major ICT players such as Google, Apple, and Cisco to position themselves in the IoT
landscape. For telecom operators, M2M and the IoT are a core business focus, and they report signifi-
cant growth in the number of connected objects in their networks. Device manufacturers, e.g. wearable
devices, anticipate a new business segment with the wider adoption of IoT.
The EU has already invested in supporting research and innovation in the field of IoT, notably in the areas
of embedded systems and cyber-physical systems, network technologies, semantic interoperability, operat-
ing platforms and security, and generic enablers. The research results are currently feeding into innovation,
and a series of components are available, which could usefully be exploited and enhanced by the market.
In line with this development, the majority of the governments in Europe, Asia, and the Americas
consider the IoT, an area of innovation and growth. Although larger players in some application areas
still do not recognize the potential, many more pay attention or even accelerate the pace by coining
new terms for IoT and adding components to it. In addition, end-users in private and business domains
have acquired a significant competence in dealing with smart devices and networked applications.
6.14 Internet of Things Tomorrow

As IoT continues to develop, further potential is estimated with the development of related technology
approaches and concepts such as Cloud computing, Future Internet, Big Data, Robotics, and Semantic
technologies. The idea is not new as such but, as these concepts overlap in some parts (technical and
service architectures, virtualization, interoperability, automation), genuine innovators prefer comple-
mentarity to defending individual domains (Vermesan and Friess, 2013).
The assimilation of ICT concepts and their constituencies is pivotal as is integrating them in smart
environments and ecosystems across specific application domains. The overall challenge is to extend
the current IoT into a dynamically configured web of platforms for connected devices, objects, smart
environments, services, and persons.
Numerous industrial analyses (Acatech, Cisco, Ericsson, IDC, Forbes) have identified the evolution
of the IoT embedded in Smart Environments and Smart Platforms forming a smart web of everything
as one of the next big concepts to support societal changes and economic growth. Dozens of connected
devices per human being on the planet are conservatively anticipated in the next decade.
On the way toward “Platforms for Connected Smart Objects” the biggest challenge will be to overcome
the fragmentation of vertically oriented closed systems and architectures and application areas and move
toward open systems and integrated environments and platforms, which support multiple applications of
social value by bringing contextual knowledge of the surrounding world and events into complex busi-
ness or social processes. The task is to create and master innovative ecosystems beyond smartphones and
device markets.
To specify challenges for IoT in deployment, technological and business model validation, and accept-
ability, large-scale pilots could play an important role, addressing security and trust issues in an inte-
grated manner and contributing to certification and validation ecosystems in the IoT arena.
A non-exhaustive list of objectives for IoT large-scale pilots would address the following topics:
• Solving remaining technological barriers, with a strong focus on security. In addition, some
engineering issues need to be solved to speed up the engineering process for conceiving,
designing, testing, and validating IoT-based systems. It is also important to manage a very high
number of IoT devices that cannot be controlled individually but need be run automatically, and
this calls for advances in software.
• Exploring the integration potential of IoT architectures and components together with Cloud
solutions and Big Data approaches. This conceptual novel approach needs to be substantiated
in more depth. Moreover, the actors in the field are continuing to develop and exploit their own
domains, e.g., IoT, Cloud, and Big Data.
• Validating user acceptability, focusing on applications, which are not operational today and still
require research. One such example could be car-to-car communication or enhanced assisted
living to relay safety-critical information. These kinds of applications also come with regula-
tory issues, e.g., in terms of liability.
• Promoting innovation on sensor or object platforms. Future Internet pilot activities have fos-
tered this type of pilot by giving the power to a set of users to develop innovative applications
out of data collected from the sensors. More innovation is certainly also needed in the way
non-experienced users could communicate with smart objects.
• Demonstrating cross-use case issues to validate the concepts of generic technologies that can
serve a multiplicity of environments and imply the cooperation of incumbents, e.g., for Smart
Homes, Smart manufacturing, dedicated Smart City areas, Smart Food Value Chain or Digital
social communities, creative industries, city and regional development. In addition, it is essen-
tial to run pilots deploying agent-driven applications and to test system of systems in physical
spaces in relation to the human scale (Vermesan and Friess, 2013).
6.15 Internet of Things Ecosystem

IoT is one of today’s most widely discussed technology topics. From smart agriculture through smart
cities to smart factories, the expectation is that IoT will be transformative, the fourth industrial revolution.
However, the reality is that IoT still remains a promise. More significantly, IoT remains fragmented.
Indeed, most existing applications are vertical solutions that do not represent the dynamic, interconnected
world that the name, IoT, would suggest. One key cause is the lack of true IoT ecosystems (Valdez-de-
Leon, 2017).
6.15.1 Defining an IoT Ecosystem

An ecosystem emerges around a core, representing assets commonly used by the ecosystem members.
As the essence of IoT is the interconnection of the physical world of things with the virtual world of
Internet, the software and hardware platforms, as well as the standards commonly used for enabling such
interconnection, may become a core of an IoT ecosystem. More specifically, such a core may focus on
(Mazhelis et al., 2011):
• Connected devices and gateways, including hardware platforms (Arduino prototyping plat-
form, T-Mote Sky, Zolertia Z1, and other platforms based on Texas Instruments MSP430) and
software platforms (TinyOS, Contiki OS) and the related standards (such as the gateway speci-
fications by Home Gateway Initiative [2018]);
• Connectivity between the devices and the Internet, that may be implemented, e.g., through a
mobile wireless modem or a Wi-Fi router, or through a WPAN gateway device, on hardware
platforms (e.g., single-chip modems by RMC [Renesas Mobile Corporation, 2019]), on the stan-
dards and protocols governing the communication (e.g., IETF 6LoWPAN, ROLL, and CoAP
protocols promoted by IPSO Alliance, WPAN standards by ZigBee Alliance), or on the software
platforms to support the connectivity (e.g., Californium Java CoAP framework (Kovatsch et al.,
2012), Erbium CoAP framework for Contiki (Kovatsch et al., 2011));
• Application services built on top of this connectivity with the help of common software plat-
forms and standards governing the service composition and data format compatibility (EPC,
JSON, SOA) (Mazhelis et al., 2011);
• Supporting services needed for the provisioning, assurance, and billing of the application ser-
vices (e.g., NSN M2M software suite; Harjula, 2011; Ericsson Device Connection Platform,
Blockstrand et al., 2011), as well as M2M optimized network elements (e.g., the Gateway GPRS
Support Node [GGSN]-enabling network initiated Packet Data Protocol [PDP] context) and
related standards (e.g., the standards developed by ETSI M2M technical committee).
These common assets with a potential to serve as a core for an IoT ecosystem are shown in Table 6.3,
where they are categorized as hardware platforms, software platforms, or standards. This categorization
is not exclusive, as, for example, the standards for the application services are likely to concern the con-
nected devices (Mazhelis et al., 2011).
Thus, deriving from the definitions of Moore (1996), Iansiti and Levien (2004), and Talvitie (2011), an
IoT business ecosystem can be defined as a community of interacting companies and individuals, along
with their socioeconomic environment, where the companies are competing and cooperating by utiliz-
ing a common set of core assets related to the interconnection of the physical world of things with the
virtual world of Internet. These assets may be in a form of hardware and software products, platforms,
or standards that focus on the connected devices, on the connectivity thereof, on the application services
TABLE 6.3
Examples of IoT Ecosystem Cores
Core Hardware Platform Software Platform Standards
Connected device Arduino, T-Mote Sky TinyOS, TinyOS, Processing, Home gateway initiative
Processing, Contiki OS
Connectivity Wi-Fi or Zigbee systems-on-chip Californium, Erbium IPSO Alliance, Zigbee Alliance
Application services Cloud infrastructure Pachube SOA, JSON, EPC
Supporting services M2M-optimized GGSN NSN M2M suite, ETSI M2M TC
Ericsson Device
Connection Platform
Source: Mazhelis, O. et al., Defining an Internet of Things Ecosystem, Springer-Verlag, Berlin, Germany, 2011.
built on top of this connectivity, or on the supporting services needed for the provisioning, assurance,
and billing of the application services (Mazhelis et al., 2011).
6.15.1.1 IoT Ecosystem

Clearly, no company has the capabilities and resources to do it all in IoT. Instead, businesses targeting
this opportunity must be part of an ecosystem. This means ecosystems are ultimately the competitive
unit in IoT, not individual companies. Moreover, there will not be single but many interlinked ecosys-
tems. An ecosystem of ecosystems if you want.
Notably, an ecosystem is more than a set of arms-length partnerships. It is a network of independent
contributors who interact closely to create mutual value. This, in turn, creates interdependency among
partners in the ecosystem. All partners share the same fate—individual partners will be successful only if
the ecosystem is successful. This complex dynamic presents a challenge for businesses trying to figure out
an IoT strategy. A better understanding of how ecosystems are created is required (Valdez-de-Leon, 2017).
6.15.2 IoT Ecosystems vs. IoT Platforms

Platforms are middleware used to connect the systems and components that make up individual IoT prod-
ucts; some can also be used to connect multiple IoT products. In IoT, there are three different types of
platforms: application enablement platforms are used to develop IoT products (systems or environments);
connectivity platforms are used to develop connected products; provisioning platforms are used to set up
SIM cards for cellular-based IoT deployments and low power wide area (LPWA) IoT deployments.
An IoT ecosystem is a community of vendors and enterprises linked through data and monetary flows.
Ecosystems bring together vendors and enterprises to monetize IoT products. They are often centered
around a platform, technology, or consortia. Over time, all leading IoT companies will be either part of
an ecosystem or will be offering the platform and ecosystem (Sinclair, 2018).
6.15.3 Key Elements and Enablers for Developing an IoT Ecosystem

As shown in Figure 6.19, three main elements make up a successful IoT ecosystem: an IoT platform, the
market expectation, and the network effects (Valdez-de-Leon, 2017).
Supporting an ecosystem requires more than just having a platform and making APIs available to third
parties. Companies offering platforms need to be able to create the right incentives (financial and other
kinds), support systems for partners, and define how they—and not competing players—will create more
value for their partners.
Key building block of the ecosystem;
the enebler upon which ecosystem
partners build their services
Plaorm
The self-perpetuang cycle of user- How prospecve users perceive the

partner recruitment; more partners and Network Market creator of a plaorm & Its potencial
applicaons on the plaorm lead to
more users aracted to it
Effects Expectaon to become the leading player in
the long term
Own branded Ecosystem support Ecosystem

APIs Communies Revenue model
services funons Governance
FIGURE 6.19 Elements and enablers of an IoT ecosystem. (From Valdez-de-Leon O., Key Elements and Enablers for
Developing an IoT Ecosystem, https://iot.ieee.org/newsletter/may-2017/key-elements-and-enablers-for-developing-an-iot-
ecosystem.html, 2017.)
There are a number of key enablers that enterprises should focus on when developing their IoT ecosys-
tems. These are briefly discussed below.
• Enabling platforms: As mentioned above, platforms are the foundation of the ecosystem.
Businesses need to deploy IoT platforms that fulfill the expectations of both customers and
partners in terms of functionality, reliability, security, and flexibility. The platform needs to
enable not only vertical solutions, but a true ecosystem in the form of a marketplace for IoT
products and services.
• APIs: APIs are the basic building blocks of an IoT ecosystem, and businesses must therefore
develop a strong API strategy. This strategy should be based on a deep understanding of the
IoT markets that the business intends to target. Designing and supporting APIs for everyone is
impractical, so a focused approach is recommended. The business should also develop an API
roadmap that is in line with its overall IoT strategy, while the API pricing and support model must
be aligned with the business’ ecosystem revenue model. The application programming interface
can ultimately foster—or discourage—network effects. If using a company’s APIs is too onerous
or does not create sufficient value, ecosystem partners will be reluctant to invest time or effort.
It is therefore vital that businesses define their API strategies with market and partner needs in
mind.
• Communities: For ecosystems to be true ecosystems, communities of partners need to
exist. These partners should be able to develop products and services based on the company
resources (via APIs), as well as those of other ecosystem participants. The benefits to busi-
nesses can be immense. By enabling others to invest and create new products and services,
the business can boost innovation. This is achieved without incurring every cost and risk
involved, but by sharing these with the ecosystem partners. Companies like IBM, Amazon,
and Microsoft are very active in this area, sponsoring hackathons and university research
programs and incubators.
• Revenue models: Revenue models are a key aspect of the successful development of IoT
ecosystems. Businesses looking to attract ecosystem partners need to define the right rev-
enue generation and sharing model—one that incentivizes partners to join the ecosystem,
reduces risks for partners to innovate, and fits with the business model of the individual
partners. Some partners will be attracted to a revenue sharing model, while others will prefer
a licensing or fixed royalty-based model. Models like “freemium” can be good to encour-
age experimentation and early adoption in IoT communities. This means firms will need to
support several revenue and partnership models; this, in turn, will require new decision and
management systems.
• Ecosystem support functions: The final (and perhaps most overlooked) enabler is the inter-
nal organization and the related support functions. A critical function is partner management,
which not only means being able to recruit but also to incentivize and support ecosystem part-
ners throughout the partnership lifecycle. This capability goes beyond basic reseller agree-
ments. Businesses will also require dedicated teams to support the ecosystem. This support
includes technical (e.g., how to use an API), marketing (e.g., sell your apps on our marketplace),
and operational (e.g., “fulfilled by Amazon”).
Moreover, a governance model that establishes clear “ecosystem rules” is critical to maintain harmony
among members and a healthy cooperative ecosystem.
In the battle to establish leadership, the ecosystem will ultimately be the competitive unit. At the same
time, building an IoT ecosystem is a complex undertaking that requires many interconnected factors
to be balanced. The challenge for businesses is to establish an IoT ecosystem strategy that is holistic,
considering all the elements described above, and to adopt an ecosystem mindset that moves away from
vertical value chains with one set of customers at the end of it. When it comes to developing an IoT eco-
system, businesses need to take the view that they have customers not only in the form of end-customers;
they also have intermediate customers in the form of partners who need attracting, supporting, and
delighting just as much as an end customer (Valdez-de-Leon, 2017).
6.15.4 Envisioning the Future of IoT Ecosystems

IoT ecosystems are currently in an early development phase (Sundmaeker et al., 2010). Nevertheless,
some useful insights into the likely future of the IoT ecosystems could be gained by comparing them to the
structure of and the developments within the business ecosystems present in the domain of cloud comput-
ing. In cloud computing ecosystems, the vendors are producing services combining computing capacity,
infrastructure software platforms, and application, which all are delivered over Internet (Mell and Grance,
2011). To this end, there is a similarity in the general structure of the cloud and IoT ecosystems, as both
exhibit roles related to devices or hardware, connectivity, and services (Mazhelis et al., 2011).
Owing perhaps to the maturity of the hardware and software technologies, the cloud ecosystems
have been forming relatively rapidly. Marston et al. (2011) recognize Amazon, Apache, Google, IBM,
Microsoft, and Salesforce.com as key players who have succeeded or are striving to create an ecosys-
tem around their platform offerings. These platform providers create and capture most of the value of
cloud computing. In addition, they are driving the growth of the cloud computing market. Projecting
this trend to the IoT domain suggests that they will eventually be creating most of the end-user value
in IoT ecosystems (Schlautmann et al., 2011) and are likely to be the key players (Mazhelis et al.,
2011).
Another similarity between the cloud and IoT ecosystems is their dependency on connectivity. In cloud
computing, the capacities of hardware and application services are usually provided to end-users as a
bundle, but the bandwidth needs to be bought separately. A similar possibility can be seen in IoT where
the end-user is required to contract with two suppliers. The connectivity to Internet is nevertheless a fairly
standard offering, and, as the communication service providers’ capabilities in producing new service
have generally declined, they are less likely to drive the cloud or IoT ecosystem developments (Mazhelis
et al., 2011).
There are some aspects, however, in which IoT ecosystems are notably different from their counterparts
in cloud computing. In particular, the cloud computing ecosystems are relatively horizontal, i.e., different
layers of the cloud computing solutions are provided by different vendors. Furthermore, as the examples
of Amazon, Salesforce.com, and other key players show, the same elements of a cloud computing solution
are often used “as is” in different vertical applications. This is not the case in IoT, at least not yet, as it is
dominated by integrated solutions targeting certain verticals or application domains. This can be attributed
to the specific physical constraints and other requirements present in vertical application domains, such as
health care devices, in-vehicle telematics solutions, and home automation products, wherein the need for
reliability, power efficiency, throughput of the communication link, and other characteristics may differ
significantly.
Unlike the standardized hardware applied in cloud computing, the heterogeneity of requirements in
IoT results in the heterogeneity of application-specific hardware platforms and interfaces, and a multi-
tude of communication protocols and data formats (Tschofenig and Arkko, 2012), and consequently, a
general lack of a software platforms applicable across different verticals (Batten and Wills-Sandford,
2011). Whereas, in the long term, generic platforms with standardized interfaces are likely to emerge, in
the short term, this heterogeneity creates business opportunities for small vendors who are able to enter
the market by targeting an application domain with specific requirements and by offering products and
complementary services to meet these specific requirements (Mazhelis et al., 2011).
6.15.5 Realizing the Promise of IoT

As connected devices have proliferated, and networks have penetrated into remote regions, the potential
for IoT solutions and growth in the IoT ecosystem have increased. If IoT solutions can improve enterprise
adopters’ fundamental business values, not just savings and risk management, but revenue growth and
innovation, demand and new uses for connected devices will grow. At a higher level, IoT has a role to
play in helping companies create more sustained value by moving from a one-time transaction focus to
a continuous, relationship focus with customers, suppliers, workers, and assets.
While technical issues that affect reliable connectivity and performance still exist, enterprises will
be more willing to adopt IoT solutions if they can see significant, lasting benefits to the business that
outweigh the real and perceived risks of connection. Participants in the IoT ecosystem will need to work
together to create solutions that improve enterprise adopters’ business performance, not just in the short
term but over time. In so doing, they will unlock the business value for enterprise adopters and grow the
IoT market for everyone. The potential for the next stage of IoT is unbounded and it will be shaped by the
decisions that participants in the IoT ecosystem make today (Deloitte, 2014).
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7
OPERATOR 4.0
CONTENTS
7.1 Augmented Reality for O&M....................................................................................................... 242
7.1.1 Augmented Reality (AR).................................................................................................. 242
7.1.1.1 Essential Parts of an AR System...................................................................... 244
7.2 Wearable Devices.......................................................................................................................... 246
7.2.1 Wearable Robots............................................................................................................... 246
7.2.2 Wearable Computers........................................................................................................ 248
7.2.3 Wearable Health Care Devices......................................................................................... 250
7.2.3.1 Wireless Blood Pressure Monitor..................................................................... 250
7.2.3.2 Quell Relief........................................................................................................251
7.2.3.3 Heart Monitor....................................................................................................251
7.2.3.4 Google Smart Contact Lenses...........................................................................251
7.2.3.5 Stress Relief Monitor.........................................................................................251
7.3 Wearables and Localization Devices.............................................................................................251
7.3.1 Demographic Preference Research...................................................................................251
7.3.2 Strings and Speech........................................................................................................... 252
7.3.2.1 Strings............................................................................................................... 252
7.3.2.2 Speech............................................................................................................... 252
7.3.3 Quality Assurance............................................................................................................ 252
7.3.4 Localization Devices........................................................................................................ 252
7.3.4.1 Geographic Information Systems (GIS)........................................................... 253
7.3.4.2 Global Positioning System (GPS)..................................................................... 254
7.3.4.3 Radio-Frequency Identification (RFID)........................................................... 257
7.3.4.4 Wireless Local Area Network (WLAN).......................................................... 262
7.4 Intelligent Health and Safety Devices for Operators.................................................................... 263
7.4.1 Types of Safety Devices................................................................................................... 263
7.4.1.1 SmartCap.......................................................................................................... 263
7.4.1.2 Smartwatch....................................................................................................... 263
7.4.1.3 Connected Worker............................................................................................ 264
7.4.1.4 Smart Helmet.................................................................................................... 264
7.4.1.5 Training for Work in a Hazardous Environment: SafeScan............................. 265
7.4.2 Sensors Used in Wearable Devices.................................................................................. 265
7.4.2.1 Environmental Sensors..................................................................................... 265
7.4.2.2 Biosensors......................................................................................................... 266
7.4.2.3 Position and Location Tracking Sensors.......................................................... 267
7.4.2.4 Other Sensors.................................................................................................... 268
7.4.3 A Multibillion Dollar Market........................................................................................... 268
7.4.4 Research and Innovation to Unlock the Full Potential of Wearables.............................. 269
7.5 Collaborative Robotics in Industry 4.0......................................................................................... 270
7.5.1 Characteristics of Cobots................................................................................................. 270
7.5.2 How Cobots Are Used in Operations............................................................................... 272
7.5.2.1 Hand Guiding.................................................................................................... 272
7.5.2.2 Power and Force Limiting................................................................................ 272
239
7.5.2.3 Safety Monitored Stop...................................................................................... 272

7.5.2.4 Speed and Separation Monitoring.................................................................... 272
7.5.3 Cobots as the Workforce of the Future............................................................................ 272
7.5.4 Some Applications for Cobots.......................................................................................... 275
7.5.4.1 Pick and Place................................................................................................... 275
7.5.4.2 Machine Tending.............................................................................................. 275
7.5.4.3 Packaging and Palletizing................................................................................. 276
7.5.4.4 Process Tasks.................................................................................................... 276
7.5.4.5 Finishing Tasks................................................................................................. 277
7.5.4.6 Quality Inspection............................................................................................ 277
7.6 Human Factors in Industry 4.0: Ergonomic and Psychological Issues and Challenges............... 278
7.6.1 Interfaces of Industry 4.0 and Humans............................................................................ 278
7.6.1.1 Complex Systems Communicating with Humans............................................ 278
7.6.1.2 System Users..................................................................................................... 279
7.6.1.3 System Designers.............................................................................................. 279
7.6.1.4 Clients............................................................................................................... 279
7.6.2 Inclusion of the Human Factor......................................................................................... 279
7.6.2.1 Needs and Motivations..................................................................................... 279
7.6.2.2 Neglecting Basic Needs Results in Conflicts.................................................... 280
7.6.2.3 Empowerment and Ownership Create Acceptance.......................................... 280
7.6.3 Human Factor Specialist: A Mediator?............................................................................ 281
7.6.3.1 Mediation.......................................................................................................... 281
7.6.3.2 Mediators.......................................................................................................... 281
7.6.3.3 Adapted Mediation........................................................................................... 281
7.6.3.4 Adapted Mediation and Industry 4.0................................................................ 282
References............................................................................................................................................... 282
LIST OF FIGURES
Figure 7.1 Value of AR across the industry...................................................................................... 243

Figure 7.2 A video-mixed display..................................................................................................... 245
Figure 7.3 Simplified AR pipeline.................................................................................................... 245
Figure 7.4 Two-dimensional shop floor plans and 3D pipe model superimposed on an
industrial pipeline............................................................................................................ 246
Figure 7.5 Different types of wearable technology.......................................................................... 248
Figure 7.6 Wearable gloves............................................................................................................... 248
Figure 7.7 Ekso Bionics.................................................................................................................... 249
Figure 7.8 The HX2.......................................................................................................................... 250
Figure 7.9 Wearable device integration............................................................................................ 250
Figure 7.10 Application areas and product categories for wearables................................................. 253
Figure 7.11 Integrated application of GIS.......................................................................................... 254
Figure 7.12 Real-world overview: GIS world model.......................................................................... 255
OPERATOR 4.0 241
Figure 7.13 Three core segments of a GPS........................................................................................ 255

Figure 7.14 Application of a GPS receiver to identify the position of a moving object. (a) One
satellite will only provide limited information about the position of a moving object
within a certain circumference. (b) Application of two satellites will help to map out
a precise location of a moving object because the receiver can only be in one of two
predicted locations within an area. (c) By measuring the distance to three individual
satellites, the GPS can provide information on the exact location of a moving object
from all the three satellites......................................................................................................256
Figure 7.15 RFID basics..................................................................................................................... 257
Figure 7.16 RFID in asset management............................................................................................. 258
Figure 7.17 RFID in laundry automation........................................................................................... 259
Figure 7.18 RFID in defense.............................................................................................................. 259
Figure 7.19 Use of RFID tags in apparel manufacturing................................................................... 259
Figure 7.20 RFID-based asset tracking solutions.............................................................................. 260
Figure 7.21 R
eal-life example of integrated production, packaging, warehousing and shipping,
using scanning to track processes and direct steps......................................................... 260
Figure 7.22 Document tracking...........................................................................................................261
Figure 7.23 Library RFID management system..................................................................................261
Figure 7.24 Integrated traceability system for agricultural products................................................. 262
Figure 7.25 WLAN............................................................................................................................. 262
Figure 7.26 Devices for employee safety............................................................................................ 263
Figure 7.27 Smartwatch...................................................................................................................... 264
Figure 7.28 Connected worker technology......................................................................................... 264
Figure 7.29 Smart helmet................................................................................................................... 265
Figure 7.30 Virtual reality training.................................................................................................... 265
Figure 7.31 E
nvironmental sensors: (a) light sensor; (b) sound sensor; (c) humidity sensor;
(d) flame sensor; (e) fume sensor..................................................................................... 266
Figure 7.32 O
ptical biosensors: (a) electrocardiogram (ECG) heart-monitoring sensor;
(b) finger-clip heart rate sensor........................................................................................ 267
Figure 7.33 L
ocation-tracking sensors: (a) global positioning system (GPS) module;
(b) six-axis accelerometer and compass; (c) digital compass.......................................... 267
Figure 7.34 Wearable technology market forecast....................................................................... 268
Figure 7.35 Relative healthcare market size by wearable sensor type in 2020.................................. 269
Figure 7.36 Compound annual growth rate (CAGR) by sensor type: 10 year forecast (2015–2025)........ 269
Figure 7.37 History of cobots............................................................................................................. 271
Figure 7.38 C
ollaborative robot working with a human to install shock absorbers
in a Ford Fiesta................................................................................................................ 273
Figure 7.39 Amazon cobot..................................................................................................................274
Figure 7.40 Cobots moving shelves at Amazon’s fulfillment center in Manchester...........................274
Figure 7.41 Ocado’s automated Hatfield HQ...................................................................................... 275

Figure 7.42 Robo Packer: an integrated module with a six-axis arm................................................. 276
Figure 7.43 Cobot palletizing a handling unit with its respective packaging units........................... 276
Figure 7.44 CAD of welding cobot..................................................................................................... 277
Figure 7.45 CAD model of component inspection............................................................................. 278
Figure 7.46 Maslow motivational model............................................................................................ 280
LIST OF TABLE
Table 7.1 Classification of wearable technologies.............................................................................. 247
7.1 Augmented Reality for O&M

Operations and maintenance (O&M) programs traditionally are formulated plans for training, clean-
ing, work practices and surveillance to maintain equipment and buildings in good condition. The goal
is to effectively and efficiently support the life cycle of the facility and its assets. A robust O&M
plan can help eliminate unplanned shutdowns, maximize system operation and reduce costs over the
life cycle of each piece of equipment and building system. Successful O&M programs don’t only
save money and time, but they can be also the difference between a safe facility and a hazardous
one—critical systems’ degradation or part failures can create unacceptable safety risks and accompa-
nying legal liabilities.
A robust O&M process includes:
• Preventive maintenance schedules and procedures;

• Corrective maintenance, including comprehensive repair requirements;
• Equipment and system surveys and audits;
• Performance modeling and benchmarking of systems, equipment and parts;
• Identification of potential risks and development of corresponding troubleshooting strategies;
• Development and execution of O&M plans for each piece of equipment;
• Improvements and capital investments to reduce costs over time.
Modern O&M has evolved with technology to include advanced systems that provide insight into
data that previously were simply estimated. These systems may track, supply and manage energy in
commercial buildings and facilities; they may include interconnected Wi-Fi sensor networks embed-
ded within equipment to monitor operating parameters or the life span of parts. Understanding mod-
ern real-time O&M data can be a challenge, especially for the multidisciplinary groups that often
are tasked with evaluating O&M data and implementing recommendations (https://acensium.com/
protect-facility-armar-augmented-reality-maintenance-repair/).
7.1.1 Augmented Reality (AR)

Augmented reality (AR) links real and virtual worlds. Both coexist in the same place. In other words,
as Kelly and Zack Weinersmith (2017) say, with AR, you can take the real world and overlay virtual ele-
ments onto it. One way to think about it is to visualize yourself as a brain connected to a bunch of sensors
for things such as taste, touch, sight, motion, balance and so on. All these sensors are constantly taking
information from the environment around you.
OPERATOR 4.0 243
Azuma (1997) says an AR system has the following properties:
• It combines real and virtual objects in a real environment;

• It runs interactively, and in real time;
• It registers (aligns) real and virtual objects with each other.
To give one example of how this could work, Dr. Gerhard Schall at the Graz University of Technology has
created an AR system in which city workers can get an “X-ray vision” of city infrastructure. For instance,
they can look down at the street and see the electrical and plumbing systems underground. Systems like
this have many potential applications, not only for maintenance, but also for situations such as disaster
relief. By having a virtual projection of how things are supposed to be, a relief worker should be able
to assess damage more quickly. For example, a metric to decide whether a building is badly damaged is
“interstory drift,” or how much a building is leaning. This may be difficult, especially in the aftermath
of an earthquake, when equipment is scarce and the time to assess each building is limited. An AR
system could project what the building should look like over what the building does look like, allowing
inspectors to make a rapid accurate judgment (Azuma, 1997).
In general, AR may allow us to quickly acquire skills that formerly required a huge amount of training.
This could dramatically increase efficiency and may save lives in situations where the job being done is
dangerous if mistakes are made.
Figure 7.1 summarizes some industrial tasks and sectors where AR could bring value.
One of the most common applications of industrial AR (IAR) is assistance to workers in main-
tenance or repair or control tasks through instructions with textual, visual or auditory information
(Alesky et al., 2014). Such information is rendered ubiquitously, so that the worker perceives the
instructions with less effort, thus avoiding the change from a real context to a virtual one where the
relevant data are accessed.
Remote assistance is also key when companies have machines installed in remote locations. Such
machines need to be monitored, operated and repaired with the minimum amount of people on-site.
Industrial AR can help by easing remote collaboration between workers (Reddy et al., 2015; Smparounis
et al., 2008). Augmented communications can also be used for collaborative visualization in engineering
processes during stages related to design or manufacturing (Schneider et al., 2017). Likewise, IAR can
help workers in decision-making, as it can combine physical experience with information extracted in
real time from databases (Moloney, 2006). Industrial AR can also provide quick access to documentation
such as manuals, drawings or three-dimensional (3D) models (Henderson and Feiner, 2011; Qi, 2010;
Zollmann et al., 2014).
Well-trained operators are essential for productive factories. Industrial AR can help during the train-
ing process by giving step-by-step instructions to develop specific tasks. This is especially useful
SERVICE MANUFACTURING SALES & DESIGN TRAINING

OPERATIONS
MARKETING
Manuals & Product displays & Collaborave Job-specific

Quality assurance Heads-up displays
instrucons demos engineering training
Service inspecons Maintenance work Logiscs , retail Inspecon of Digital product Safety & security
& verificaons instrucons space opmizaon digital prototypes controls training
Remote expert Perfomance Augmented brand Augmented Augmented

Expert coaching
guidance dashboards experience inteface operator manuals
Improved service Assembly work Augmented Augmented

Error diagnosis
and self-service instrucons adversement interface
FIGURE 7.1 Value of AR across the industry. (From, https://ieeexplore.ieee.org/document/8298525/references#references.)

when training workers to operate machinery like that used for assembly in sequence, as it reduces the
time and effort required to check manuals (Hořejší, 2015). Thus, IAR can reduce the training time for
new employees and lower the skill requirements for new hires. In addition, it is possible to adjust the
instructions to the experience of the worker, accelerating the learning process by focusing on acquiring
skills.
The 3D models provided by IAR are a useful tool for engineers who are creating or evaluating designs
and products (Nee et al., 2012; Ong et al., 2008). Industrial AR makes it possible to place a virtual object
anywhere and observe at full scale whether it fits or not in a specific scenario. Moreover, IAR enables
on-site computer-aided design (CAD) model corrections, thus improving accuracy, alignment and other
details of the model (Naik et al., 2015; Wuest et al., 2016). Finally, during the different product manufac-
turing stages, IAR can help with quality assurance (QA) controls and performance dashboards (Vassell
et al., 2016).
In manufacturing, IAR can deliver the right information at the right time to avoid mistakes and increase
productivity (Loch et al., 2016). This is critical in dangerous manufacturing tasks, where a mistake may
mean a worker gets injured or that costly equipment is damaged. In such situations, an IAR solution
could be used as a monitoring and diagnosis tool capturing the information provided by control and
management systems and sensors (Shin et al., 2014). Frigo et al. (2016) show some cases in aerospace
manufacturing processes.
The following are essential in the development of a successful IAR application:
• Cases and applications selected must provide value-added services.

• Discontinuities or gaps in the operating modes that may affect functionality should be avoided.
• Cognitive discontinuities or differences between old and new work practices should be reduced,
as learning new procedures may hinder the adoption of the technology.
• Physical side-effects caused by the devices on users in the short and long term (e.g., headaches,
nausea or loss of visual acuity) should be reduced.
• Unpredicted effects of the devices on users unfamiliar with the technology, such as distrac-
tions, surprises or shocks, should be avoided.
• User perception of ergonomic and aesthetic issues should be considered.
• User interaction should be as natural and user-friendly as possible, without lapses or inconsistencies.
7.1.1.1 Essential Parts of an AR System

Augmented reality involves a set of technologies that make use of an electronic device to view, directly
or indirectly, a real-world physical environment that is combined with virtual elements. The elements
that make up an AR system are:
• An element to capture images, for example, a charge-coupled device, stereo or depth-sensing camera.
• A display to project the virtual information onto the images acquired by the capture element.
There are two types of display technologies: video-mixed (Figure 7.2) and optical see-through
displays (Benko et al., 2015) (e.g., projection-based systems). There is a growing interest in
retinal projection, but its use is rare in industrial environments. In a video-mixed display, the
virtual and real information previously acquired with a camera are digitally merged and repre-
sented on a display. This technology has the disadvantage of providing limited fields of vision
and reduced resolution. In contrast, in an optical see-through display, virtual information is
superimposed on the user’s field of view by using an optical projection system. The hardware
used by these two display technologies can be classified as:
• Hand-held displays (HHD): HHDs embed a screen that fits into a user’s hand (e.g., tablets,
smartphones).
• Spatial displays: Digital projectors show graphic information about physical objects.
These displays ease collaborative tasks among users, as they are not associated with a
single user.
OPERATOR 4.0 245
FIGURE 7.2 A video-mixed display.
• Head-mounted displays (HMDs): HMDs are included in devices such as smart glasses and
smart helmets, which allow users to see the entire environment that surrounds them.
• Processing unit: This unit outputs the virtual information to be projected.
• Activating elements: These include images, GPS positions, QR markers or sensor values
from accelerometers, gyroscopes, compasses, altimeters or thermal sensors that trigger the
display of virtual information.
An AR system is essentially composed of the functional modules shown in Figure 7.3. The device

camera captures a frame, which is then processed by the AR software to estimate the camera posi-
tion with respect to a reference object (e.g., an AR marker). Such an estimation can also make use of
internal sensors, which help to track the reference object. Accurate camera positioning is essential
to display AR content, as the camera has to be rotated and scaled to fit the scenario. The image
is usually rendered for the appropriate perspective and presented to the user on the display of a
device. It should be noted that the interaction with the image is possible through the interaction
handling module; when certain local or remote information is required, the information manage-
ment module is responsible for obtaining it (figure 1, https://ieeexplore.ieee.org/document/8298525/
references#references).
Curtis (1998) describe the verification of an AR system for assembling aircraft wire bundles. Although
limited by tracking and display technologies, their tests on actual assembly-line workers prove that
their AR system enables workers create wire bundles that work as well as those built by conventional
approaches. They emphasize the need for iterative design and user feedback.
In their research, Navab and his colleagues (Navab et al., 1999) take advantage of two-dimensional fac-
tory floor plans and the structural properties of industrial pipelines to generate 3D models of the pipelines
FIGURE 7.3 Simplified AR pipeline.

FIGURE 7.4 Two-dimensional shop floor plans and 3D pipe model superimposed on an industrial pipeline. (From
Azuma, http://www.dtic.mil/dtic/tr/fulltext/u2/a606245.pdf, 1997.)
and register them with the user’s view of the factory, obviating the need for a general-purpose tracking
system (Figure 7.4). Similarly, they take advantage of the physical constraints of a C-arm X-ray machine to
automatically calibrate the cameras with the machine and register the X-ray imagery with the real objects.
7.2 Wearable Devices

A wearable device is a technology worn on the human body. This type of device has become a more common
part of the tech world as companies have started to evolve more types of devices that are small enough to
wear and include powerful sensor technologies that can collect and deliver information about their surround-
ings. Wearable devices are also known as wearable gadgets, wearable technologies or simply wearables.
A wearable device is often used for tracking a user’s vital signs or pieces of data related to health and
fitness, location or even his or her biofeedback indicating emotions. Wearable device models may rely on
short-range wireless systems such as Bluetooth or local Wi-Fi setups.
Examples of wearable devices include various types of computerized wristwatches, fitness tracking
devices and the revolutionary Google Glass, the first device of its kind to be embedded in a pair of
glasses. Some issues include privacy, the extent to which wearables change social interactions, how users
look when wearing them and various issues with user-friendly design (Wearable Device, https://www.
techopedia.com/definition/31206/wearable-device).
Wearable devices can be classified based on their function, appearance, proximity to the human body
and other parameters (Chatterjee et al., 2016; International Electrotechnical Commission, http://www.
iec.ch/about/brochures/pdf/ technology/printed_electronics_lr.pdf), as shown in Table 7.1. Figure 7.5
shows some industrial applications.
7.2.1 Wearable Robots

A wearable robot is a specific type of wearable device used to enhance a person’s motion and/or
physical abilities. They are also known as bionic robots or exoskeletons. One of the general prin-
ciples of a wearable robot is that it involves physical hardware to assist with human motion. Some
models of wearable robots can help individuals to walk and may be used for post-surgery or reha-
bilitation purposes.
OPERATOR 4.0 247
TABLE 7.1
Classification of Wearable Technologies
Type Properties Capabilities Applications
Smartwatch • Low operating power • Displays specific • Business, administration
• User-friendly interface information • Marketing, insurance
with both touch and • Payment • Professional sport,
voice commands • Fitness/activity tracking training
• Communication • Education
• Navigation • Infotainment
Smart eyewear • Controlled by touching • Visualization • Surgery
the screen, head • Language interpretation • Aerospace and defense
movement, voice • Communication • Logistics
command, and hand • Task coordination • Education
shake • Infotainment
• Low operating power
• Sends sound directly to
the ear
Fitness tracker • High accuracy • Physiological wellness • Fitness
• Waterproof • Navigation • Healthcare
• Lightweight • Fitness/activity tracking • Professional sport
• Wireless communication • Heart rate monitor • Outdoor/indoor sport
Smart clothing • No visual interaction • Heart rate, daily • Professional sport-fitness
with user via display or activities, temperature, • Medicine
screen and body position • Military
• Data are obtained by tracking • Logistics
body sensors and • Heating or cooling the
actuators body automatic payment
Wearable camera • Making first-person • Captures real-time • Defense
capture attachable on first-person photos and • Fitness
clothes or body videos • Industry
• Smaller dimensions • Live streaming • Education
• Night vision • Fitness/activity tracking
Wearable • Pain management • Cardiovascular diseases • Fitness
medical device • Physiological tracking • Physiological disorders • Cardiovascular medicine
• Glucose monitoring • Chronic diseases; • Psychiatry
• Sleep monitoring diabetes • Surgery
• Brain activity monitoring • Surgery • Oncology
• Neuroscience • Dermatology
• Dermatology • Respirology
• Rehabilitation
Source: Mardonova, M. and Choi, Y., Review of wearable device technology and its applications to the mining industry,
https://www.mdpi.com/1996-1073/11/3/547/htm, 2018.
A particular characteristic of the wearable robot interface is that these pieces of hardware can be pro-
grammed in a variety of ways. Sensors or devices can take in verbal, behavioral or other input to facilitate
specific types of movement. These kinds of resources represent an exciting application of new technology
to medical use, where paralyzed (see Figure 7.6) or disabled individuals may benefit. These wearable
robots feature the junction of sophisticated new hardware, big data and wireless technologies (Wearable
Robot, https://www.techopedia.com/definition/15325/wearable-robot).
Ekso Bionics (Figure 7.7) is a life-changing technology. It consists of mechanized legs that work on
their own power. The development of Ekso (also known as eLEGS) will allow wheelchair users to stand
and walk (Techgrown1, Ekso Bionics, 2014).
FIGURE 7.5 Different types of wearable technology. (From Rodrigues, J.J. et al., IEEE Access, 6, 13129–13141, 2018.)
FIGURE 7.6 Wearable gloves. (Form Open source arduino UNO somatosensory wearable Robot Gloves, https://www.
bidorbuy.co.za/item/366104069/Open_Source_Arduino_UNO_Somatosensory_Wearable_Robot_Gloves.html, 2018.)
7.2.2 Wearable Computers

A wearable computer is a digital device that is either strapped to or carried on a user’s body. It is used
most often in research focusing on behavioral modeling, health monitoring systems, IT and media devel-
opment, where the person wearing the computer actually moves or is otherwise engaged with his or her
OPERATOR 4.0 249
FIGURE 7.7 Ekso Bionics. (From Techgrown1, Ekso Bionics, https://suggest10.wordpress.com/2014/10/24/10-most-

technically-advanced-robots-in-the-world/, 2014.)
surroundings. Wearable computers provide constant computer and user interaction. In extreme cases, they
serve much like a prosthetic, in that device use does not require users to cease other activities.
Wearable computers designed for commercial use may provide:
• A unique user interface design;

• Augmented reality;
• Pattern recognition;
• Electronic textiles and fashion design.
In 1961, mathematician Edward O. Thorp designed the first modern-day wearable computer as an analog
computer used to predict roulette wheels. During the 1970s, other prototypes were created, including the
CMOS 6502 microprocessor, which was a shoe computer used for radio communications between data
gatherers and gamblers. A camera-to-tactile vest for the blind and Hewlett-Packard’s algebraic calculator
watch were also invented in this decade.
The 1980s delivered bicycles with onboard computers. Later, electronic notebooks, keyboards and
other belt-attached devices were developed. Over the years, many other wearable computing products
have been marketed, but few have been adopted on a widespread level.
In 2002, Kevin Warwick’s Project Cyborg crossed the line of wearable into the realm of implanted
devices, which monitored or were activated by the human nervous system.
Wearable computer technology has many benefits but raises some concerns, including:
• Whether it is desirable to have users constantly plugged in;

• Privacy concerns over devices that continuously gather and log visual and other data;
• Technological dependence created by AR and automatic processing.
In addition, there are technological hurdles, including:

• Power management and heat dissipation;
• Software architectures and interfaces;
FIGURE 7.8 The HX2. (From HX2 wearable computer, https://www.varinsights.com/doc/hx2-wearable-computer-0002.)
• Management of wireless and personal area networks;

• Security (Wearable Computer, https://www.techopedia.com/definition/16339/wearable-computer).
The HX2, shown in Figure 7.8, is an example of a wearable computer. It is designed for a fast high-volume
picking environment; it is voice-directed, using voice recognition technology (HX2 Wearable Computer,
https://www.varinsights.com/doc/hx2-wearable-computer-0002).
7.2.3 Wearable Health Care Devices

Today’s IOT makes health care smarter by integrating smart wearable medical devices to Internet to show
individual health in real time. Some health care devices and applications are shown in Figure 7.9. The top
wearable devices in health care are explained below (Healthcare Technology, 2016).
7.2.3.1 Wireless Blood Pressure Monitor

Hypertension is a chronic problem throughout the world. To manage or control high or low blood pressure,
patients and clinicians can use blood pressure monitors to check level anytime at any place. In the market,
one of the most demandable connected devices is Withings wireless blood pressure monitor. An app con-
nects through Bluetooth to the blood pressure monitor. It measures individual blood pressure and heart
rate and counts the steps the user takes weekly. It takes three measurements simultaneously and reports the
average result, along with a medical recommendation. It also alerts users about their medication.
FIGURE 7.9 Wearable device integration. (From Wearable devices integration, http://techno-soft.com/devices-and-
wearables.html.)
OPERATOR 4.0 251
7.2.3.2 Quell Relief

Various devices have been designed for pain relief. For example, Quell relief is designed for those with
knee pain. It is Bluetooth-compatible, with inbuilt sensors that collect the user’s data, and it accesses
these data via the app. To alleviate painful muscle spasms associated with knee ailments, it includes a
pain relief button feature.
7.2.3.3 Heart Monitor

Devices are used to track, access and analyze our heart health with a view to predicting a heart attack.
AliveCor Heart monitor comprises three main sections: a section for electrocardiogram (ECG) record-
ing, one for collecting data and one explaining the data. It easily detects the early symptoms of a heart
attack and alerts the physician or user.
7.2.3.4 Google Smart Contact Lenses

These lenses are specially designed for diabetic patients who wear glasses and are used to measure their
glucose level. These lenses measure glucose level through tears’ composition and display or analyze data
through the app.
7.2.3.5 Stress Relief Monitor

Stress leads to various problems such as diabetes, headaches, obesity, heart disease, anxiety, gastroin-
testinal problems, asthma and so on. Various wearable devices can detect stress level. Picture in picture
(PIP), a tiny device, provides immediate feedback on stress level. If high stress is detected, its app gives
suggestions on how to reduce stress (Healthcare Technology, 2016).
7.3 Wearables and Localization Devices

A big challenge in wearable technology is getting the technology to work on a global level. Some coun-
tries do not allow products with unsupported languages, and non-English-speaking consumers can be
alienated, thus making it difficult to develop a global friendly wearable. Localization is the key to success.
Enabling a wearable device to work with different languages, accents and conditions can make or break
a product.
Localizing is more than just changing a language. It includes aspects of user preference, interactive
text, speech and motion and the overall usability of the wearable.
7.3.1 Demographic Preference Research

There are few data for consumer preferences on wearable devices, and different regions are likely to have
different preferences. For example, preferences for voice gender vary by region. A masculine voice is
commonly associated with authority and may work better as a voice coach in cultures that desire a more
authoritative voice. A feminine voice is often associated with comfort, which could be more motivational
in a different geographic region.
“Fluff” is a subjective value in each culture. Some people enjoy it when a voice assistant asks “How
are you?,” or motivationally says “Are you ready for today?” North American consumers enjoy more
intimate interactions, but German consumers prefer straightforward interaction.
There are also differences in preferences for text messaging or audio messaging. Chinese consum-
ers have a preference for voice messaging as it is simpler, quicker and more personal than typing.
This could mean a decreased barrier to entry and a more receptive market, if a product is ready for the
Chinese market.
In other words, demographics are important, and compiling survey data can be helpful in determining
the probable success of a device.
7.3.2 Strings and Speech

7.3.2.1 Strings
Strings are any text in software read as text, and not a number or computational operation.
The basics of wearable technology localization start with translating strings to their appropriate lan-
guage. On a phone application, translation needs to be carefully done to avoid truncation. Spacing and
length of words and characters vary between languages. Care and attention are needed for wearable
technology localization, as there are more limitations.
For example, some smartphones have screens around 5.5″, and smart watches have screens of 1.5″–1.65″
Less screen real estate means less space for text, and currently the application is being localized to both
the new languages, and specifically adjusted for the screen size. The change in screen size makes trunca-
tion a more important topic and leads to changing how words are used to communicate similar ideas from
the smartphone app to the smartwatch app. This could be using different terminologies, such as changing
“heart rate” to “bpm.” That simple change is a difference of seven characters.
In different languages where words may extend longer, translators need to get creative in their use of
terms and their synonyms. This limitation is one of the driving factors of “iconization” where we see
less text and more icons in user interfaces. Fortunately, the icons created by digital technology seem to
be universal, and this simplifies wearable technology localization.
7.3.2.2 Speech
Wearables often use voice as the main or supporting communication tool with the user. A sports wear-
able headset can have many different lines recorded with a virtual coach. This coach does a few things,
including prompting the user to take a drink, responding when she asks for her heart rate, and telling her
how far she has run. The coach requires a database of sentences to be created so that it understands what
the user is saying. This database requires different considerations.
Some sentences may be too long for a runner to reasonably say during exercise, as it interferes with
his breathing. This may prove more difficult in different languages as word and sentence lengths vary.
The same commands could be spoken in different ways. “What is my heart rate?” and “What is my
bpm?” would prompt the same answer. Different languages might have more ways to say the same thing.
These variations make ranking voice commands an important part of the localization and voice data
collection process. For example, “What is my heart rate?” would hold a higher rank than “How fast is
my heart beating?” Both would lead to the same answer, but the first would be a more common way to
ask. A user-friendly device requires much research and development to get this interaction right. Does a
device have a persona? Can that persona be used in both China and Canada?
7.3.3 Quality Assurance

Quality assurance testers are needed for each step of the translation QA process. Field testing is an essen-
tial part of any wearable device and should not be taken lightly. A common misconception is skipping the
field testing for localization if the device passed the field tests in its original language with flying colors.
This assumption ignores the fact that the global positioning system (GPS) signal, noise conditions, peo-
ple’s behavior, the speed of driving, and essentially everything, will differ from one country to another.
If a wearable is to travel across cultures, its technology must be evaluated with real users on the
ground and in the field to avoid unexpected surprises once it hits the market in a new geography
(Figure 7.10).
7.3.4 Localization Devices

Localization is not a single technology. Rather, it is the convergence of several technologies that can be
merged to create systems that track inventory, livestock or vehicle fleets. Similar systems can be created
to deliver location-based services to wireless devices. Current technologies being used to create location-
tracking and location-based systems include the following.
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FIGURE 7.10 Application areas and product categories for wearables. (From Application areas and product categories for
wearables, http://www.beechamresearch.com/article.aspx?id=20.)
7.3.4.1 Geographic Information Systems (GIS)

For large-scale location-tracking systems, it is necessary to capture and store geographic information.
Geographic information systems (GIS) can capture, store, analyze and report geographic information
(Bonsor, 2018).
One area making use of GIS is the utility sector. A GIS will store and map a vast amount of informa-
tion about the utility’s electric, gas and water systems, as well as outside plants. For maximum value,
the GIS should become an integrated application. Many business processes or systems are impacted by
FIGURE 7.11 Integrated application of GIS. (From Geographic Information Systems [GIS], http://www.powersystem.org/
mapping-and-gis.)
and dependent on a reliable GIS, including field design or staking, outage management systems, outage
management prediction, line personnel maps, system planning, electric system modeling, inventory sys-
tems, asset accounting and others (see Figure 7.11). On the other hand, Figure 7.12 shows the real-world
overview: GIS world model.
7.3.4.2 Global Positioning System (GPS)

There is a constellation of 27 Earth-orbiting satellites (24 in operation and three extras in case one fails).
A GPS receiver, like those in mobile phones, can locate four or more of these satellites, figure out the
distance to each and deduce a user’s location through trilateration. For trilateration to work, it must have
a clear line of sight to these four or more satellites.
Global positioning system is ideal for outdoor positioning, such as surveying. The earliest use of GPS
dates back to 1970s and was developed by the US Department of Defense. The main purpose was to
aid military groups by providing them positioning and timing information. Today, applications for GPS
include commercial use, agriculture, robotics and clock synchronization (Bonsor, 2018).
The GPS system has three segments: the satellite segment, the ground control segment, and the GPS
receiver. Figure 7.13 illustrates these three segments.
A functional principle of the space segment (an orbital plane consisting of four or five satellites)
involves the transmission of a signal by each of the four satellites as two sine waves, two digital codes,
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FIGURE 7.12 Real-world overview: GIS world model. (From Geographic Information System [GIS] Mapping, https://
www.balchspringslibrary.org/news-events/lib-cal/geographic-information-system-gis-mapping.)
FIGURE 7.13 Three core segments of a GPS. (Image adapted from Hinch, S.W., Outdoor Navigation with GPS,
Wilderness Press Keen Communications, Birmingham, AL, 2010.)
and a message on navigation (i.e., position and direction). The carrier frequency described as the two
sine waves and the digital codes help measure the distance between the GPS receiver and the trans-
mitting satellites. The navigation message compliments the tracking system by providing information
on the exact location of a satellite based on timing. The movement of the space segment involves a
circular orbit of a GPS, each one taking approximately 11 hours and 1 minute. Each orbital plane is
positioned at a 55° tilt to the Earth’s equator. To visualize this system, no less than six satellites are
always within electromagnetic transmission (i.e., line of sight) aided by a transmitting antenna and a
receiving antenna.
By determining the position of the receiver, a display map is presented, along with information about
direction, speed and position of the moving object. Figure 7.14a–c demonstrates exactly how the user
segment works as part of a GPS network.
Satellite 1
Distance from
Satellite 1
(a)
Satellite 1
Distance from
Satellite 1
Satellite 2
Distance from
Satellite 2
(b)
Satellite 3
Distance from
Satellite 3
Satellite 1
Distance from
Satellite 1
Satellite 2
Distance from
Satellite 2
(c)
FIGURE 7.14 Application of a GPS receiver to identify the position of a moving object. (a) One satellite will only provide
limited information about the position of a moving object within a certain circumference. (b) Application of two satellites
will help to map out a precise location of a moving object because the receiver can only be in one of two predicted locations
within an area. (c) By measuring the distance to three individual satellites, the GPS can provide information on the exact
location of a moving object from all the three satellites. (Image adapted from Hinch, S.W., Outdoor Navigation with GPS,
Wilderness Press Keen Communications, Birmingham, AL, 2010.)
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7.3.4.2.1 GPS Accuracy

A continuous recalculation of exactly where a receiver is positioned is likely to be affected by many
parameters. A GPS device will provide the most accurate reading when in clear view of transmitting
satellites, locations where there is high signal strength (e.g., mountains and islands). Circumstances that
will affect signal strength to a GPS device include dense buildings and trees surrounding the location
where the device is positioned. These will interfere with the line-of-sight signal being transmitted from
the satellite in view (i.e., signal from three of the four satellites will be blocked).
7.3.4.2.2 Common GPS Applications
Global positioning systems have the following main applications:
• Self-navigation for automated machines that work by integrating information on latitude,

longitude, time, distance and speed;
• Aircraft tracking;
• Clock synchronization;
• Vehicle tracking systems;
• Military units for tracking a target;
• Motion measurements of earthquakes and volcanoes (Kaur, 2012).
7.3.4.3 Radio-Frequency Identification (RFID)

RFID tags are small, battery-less microchips that can be attached to consumer goods, cattle, vehicles and
other objects to track their movements. RFID tags are passive and only transmit data if prompted by a reader.
The reader transmits radio waves that activate the RFID tag. The tag then transmits information via a pre-
determined radio frequency. This information is captured and transmitted to a central database. One use of
RFID tags is to replace traditional universal product code (UPC) bar codes (see Figure 7.15) (Bonsor, 2018).
FIGURE 7.15 RFID basics. (From RFID Basics, http://scrumium.net/our_products/rfid/.)

FIGURE 7.16 RFID in asset management. (From RFID in asset management, http://elrons.co.ke/images/productsservices/

RFIDSolutions/RFID_Solutions_.jpg.)
7.3.4.3.1 RFID in Asset Management

RFID enables better control of assets by permitting increased visibility into their location and reducing
the cost of replenishing stolen, lost or broken items. Improved visibility leads to better asset allocation
and utilization; it also decreases unnecessary inventory and lowers capital costs (see Figure 7.16) (What
Are RFID Applications and Uses in Real Business World, 2016).
7.3.4.3.2 RFID in Laundry Automation

Large companies such as casinos often manage thousands of employee uniforms. With an RFID laundry
management system, operations can track which uniforms were assigned to specific employees, the age
of uniforms, and the number of times washed and identify missing uniforms. RFID laundry tags provide
a new level of visibility for laundry management (see Figure 7.17) (What Are RFID Applications and
Uses in Real Business World, 2016).
7.3.4.3.3 RFID in Defense

RFID is used in the military in many ways, including tracking weapon movement and soldier movement.
RFID provides real-time information; thus, it is very easy to track movement and identify the location
(see Figure 7.18) (What Are RFID Applications and Uses in Real Business World, 2016).
7.3.4.3.4 RFID in Retail

RFID provides retailers and brands valuable information about the supply chain and inventory, as well
as product consumption and cycle speed. It reduces employee theft and shoplifting through improved
monitoring of inventory movement. It improves the accuracy of picking and packing operations, and this
translates into proper filling of purchase orders. RFID technology significantly improves supply chain
transparency. It helps retailers avoid out-of-stock merchandise and better satisfy customers. Figure 7.19
shows how this works in the retail garment industry (What Are RFID Applications and Uses in Real
Business World, 2016).
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FIGURE 7.17 RFID in laundry automation. (Form Fujitsu UHF RFID tag adopted by shinkansai linen supply in their linen
supply system: First case of implementation in Japan’s textile rental industry, http://www.fujitsu.com/jp/group/frontech/en/
resources/news/press-releases/2011/0216.html, 2011.)
FIGURE 7.18 RFID in defense. (From Department of Defense Radio Frequency Identification [RFID], https://www.
slideshare.net/PeterSam67/department-of-defense-radio-frequency-identification-rfid.)
FIGURE 7.19 Use of RFID tags in apparel manufacturing. (From RFID: Has its time finally come for retail? https://www.
fungglobalretailtech.com/research/rfid-time-finally-come-retail/.)
7.3.4.3.5 RFID in Asset Tracking

Data centers can leverage RFID-based asset tracking solutions to complete inventory audits and to track
equipment moving in and out of locations in real time (see Figure 7.20) (What Are RFID Applications
and Uses in Real Business World, 2016).
7.3.4.3.6 RFID in Automation and Manufacturing Tracking

RFID tags can reorganize industrial manufacturing processes to increase productivity, safety and
security. Its transponders regulate and track equipment use, repair and maintenance efficiently.
This enhances equipment life cycle management and enables backward traceability to ensure compli-
ance (see Figure 7.21) (What Are RFID Applications and Uses in Real Business World, 2016).
FIGURE 7.20 RFID-based asset tracking solutions. (Wireless case study: How cisco tracks RFID with active RFID and
Wireless LANs, https://www.cisco.com/c/en/us/about/cisco-on-cisco/enterprise-networks/wireless-rfid-asset-tracking-web.
html.)
FIGURE 7.21 Real-life example of integrated production, packaging, warehousing and shipping, using scanning to
track processes and direct steps. (From Further automate processes and synchronize manufacturing operations with
DELMIA apriso RFID, http://www.apriso.com/products/machine_integrator/rfid.php.)
OPERATOR 4.0 261
7.3.4.3.7 RFID in Document Tracking

RFID enables high-speed identification of documents, tracking and tracing of documents, increased
workforce productivity and reduced operational costs (see Figure 7.22) (What Are RFID Applications
and Uses in Real Business World, 2016).
7.3.4.3.8 RFID in Library Automation

RFID library solution makes life easier for visitors and librarians through faster checkout, easier returns,
simpler inventory and extra security. RFID tags can be read from multiple angles; thus, the checkout and
check-in process is significantly faster. As shown in Figure 7.23, an RFID library solution improves the
efficiency of circulation operations (What Are RFID Applications and Uses in Real Business World, 2016).
7.3.4.3.9 RFID in Agriculture

RFID can be used to track the movement of farm animals. This type of farm management system can be
expensive but it is a smart way to monitor animals. For example, it can ensure that each individual among
thousands is eating the correct amount of food. If done manually two or three times a day, this process can
be time-consuming and costly. With the help of RFID, it can be achieved automatically and cost-effectively
(What Are RFID applications and Uses in Real Business World, 2016).
Detecon of
relocaons
Documents not
Posion Informaon
to be taken out
Tracking
DTS
RFID tags Documents not
RFID Tag Reader to be copied
Invesgaon tracking
Administrator
Server
Document
History
FIGURE 7.22 Document tracking. (From http://www.trackseal.com/products/document-tracking/.)
CHECK IN/ SELF CHECK

TAGGING
CHECK OUT IN/ OUT
Library RFID Management System
SHELF ANTI-THEFT
BOOK DROP
MANAGEMENT DETECTION
FIGURE 7.23 Library RFID management system. (From RFID library system for schools, http://schoolpixa.com/rfid/library.)
FIGURE 7.24 Integrated traceability system for agricultural products. (From Sugahara, K., Traceability system for
agricultural products based on RFID and mobile technology, http://www.fftc.agnet.org/library.php?func=view
&id=20110721154120& type_id=2, 2007.)
The use of RFID technology in agriculture can be extended beyond an individual farm and an indi-
vidual farmer. Figure 7.24 shows the concept of an integrated traceability system for agricultural products
to record and store data on the production and distribution processes using RFID and network computing
(Sugahara, 2007).
7.3.4.4 Wireless Local Area Network (WLAN)

A wireless local area network (WLAN) is a network of devices that connect via radio frequency.
These devices pass data over radio waves and provide users with a network with a range of 70–300 feet
(21.3–91.4 meters) (Bonsor, 2018). Figure 7.25 shows some typical uses of WLAN.
FIGURE 7.25 WLAN. (From Wireless router connectivity, http://cromwellitsolutions.com/?attachment_id=72, 2011.)

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7.4 Intelligent Health and Safety Devices for Operators

Every day, 6,300 people die around the world in occupational accidents or from work-related
disease—more than 2.3 million deaths per year, according to the International Labour Organisation
(Figure 7.26).
The use of devices to safeguard staff is gaining in appeal (see Figure 7.26). For those working in
hazardous environments, mines, wind turbines or oil rigs, for example, wearable devices could make
work safer. Helmets, watches and visors can be equipped with sensors and connected via mobile or satel-
lite transmission to supervisors and control centers, alerting employees to hazards while keeping them
focused on the job at hand.
Barriers hindering the wider adoption of health and safety-related wearables include device battery
life and screen size.
7.4.1 Types of Safety Devices

7.4.1.1 SmartCap
One example of a wearable designed for safety is the SmartCap, developed by an Australian company
of the same name. It looks like a baseball cap, but it contains technology that measures brain activity.
Information about how tired workers are can be seen by them on screens and is transmitted to their
supervisors.
7.4.1.2 Smartwatch
In May 2016, the Tata Group announced that it had doubled its number of published patents over two
years, from about 3,500 at the end of 2013 to 7,000 at the end of 2015. Some of these relate to wearables
and, in particular, a smartwatch for factory workers. This has a two-way alarm so that the wearer can
notify or be warned of dangerous situations at the push of a button. It has sensors that monitor health and
environmental risks, such as heart rate and the presence of noxious gases. The watches are being piloted
by crane operators at Tata Steel in Jamshedpur, India, and the company has identified several thousand of
its workers who could benefit from the wearable in the future (see Figure 7.27).
FIGURE 7.26 Devices for employee safety. (From Twentyman, J., Wearable devices aim to reduce workplace accidents,
https://www.ft.com/content/d0bfea5c-f820-11e5-96db-fc683b5e52db, 2016.)
FIGURE 7.27 Smartwatch.
7.4.1.3 Connected Worker

Honeywell Industrial Safety is working with semiconductor producer Intel to make wearables and has
demonstrated its Connected Worker product range (see Figure 7.28). Data from a self-contained breath-
ing apparatus, a clip-on heart rate monitor and wrist-worn gesture devices, among others, are displayed
remotely on a cloud-based dashboard, so that fire chiefs, for example, can anticipate risky situations and
prevent “man down” scenarios among firefighters inside burning buildings.
7.4.1.4 Smart Helmet

Smart helmets (Figure 7.29) tackle two problems facing the oil and gas industry: an aging workforce
and customers who demand power outages be fixed faster. They directly connect field engineers to
more experienced colleagues at headquarters, allowing the former to be guided through complex tasks
by audio and video. Engineers are equipped with two small monitors on the helmet and an iPad. These
enable two-way communications, so high quality (HQ) can see exactly what the engineer in the field is
seeing and share information.
FIGURE 7.28 Connected worker technology. (From Twentyman, J., Wearable devices aim to reduce workplace
accidents, https://www.ft.com/content/d0bfea5c-f820-11e5-96db-fc683b5e52db, 2016.)
OPERATOR 4.0 265
FIGURE 7.29 Smart helmet.
7.4.1.5 Training for Work in a Hazardous Environment: SafeScan

Virtual reality simulations can be used to train operators in a safe environment (see Figure 7.30).
For example, Human Condition Safety’s SafeScan is a fully immersive virtual reality platform. It uses
phone maker HTC’s Vive headset as the basis for safety training for high-risk workers in fields such as
construction and manufacturing.
7.4.2 Sensors Used in Wearable Devices

Various types of sensors are used in wearable devices depending on the intended application. Many
manufacturers around the world produce sensors for individuals or professional developers. The follow-
ing sections describe some of these sensors.
7.4.2.1 Environmental Sensors

Environmental sensors are extensively used in the mining industry for measuring, monitoring and
recording environmental conditions or properties (Healthcare Technology, 2016; Jones, 2008), such as
barometric pressure, relative humidity, luminosity, temperature, dust and water level. However, environ-
mental sensors have widespread application.
FIGURE 7.30 Virtual reality training. (From Twentyman, J., Wearable devices aim to reduce workplace accidents,
https://www.ft.com/content/d0bfea5c-f820-11e5-96db-fc683b5e52db, 2016.)
• Light sensors (see Figure 7.31a) that can be used to detect light are widespread in scientific
applications and everyday consumer products; these include motion light sensors, ambient light
sensors, outside lights, security lights and traffic light sensors.
• Sound sensors or microphones (see Figure 7.31b) are employed to determine the sound inten-
sity of an environment. They come in multiple forms, including condensers, ribbons, carbon
and dynamic microphones (Wearable Devices Integration, http://techno-soft.com/devices-and-
wearables.html; Wild and Hinckley, 2008). The most common type is a dynamic microphone
that measures noise levels in decibels at frequencies to which humans are sensitive.
• A humidity sensor (see Figure 7.31c) measures the relative humidity in the air for use in mois-
ture and temperature measurements (Application areas and product categories for wearables,
http://www.beechamresearch.com/article.aspx?id=20; Yeo et al., 2008). These are sometimes
referred to as humidity or dew sensors, and can be found in heating, ventilation or air condition-
ing systems in buildings.
• Flame sensors (see Figure 7.31d) are used to detect open flames or fire and are more sensitive
and accurate than commonly used smoke or heat detectors. Fume sensors (see Figure 7.31e)
perform a similar function in detecting smoke, alcohol and other harmful airborne gases.
7.4.2.2 Biosensors
The scope of biosensors has expanded with the increasing demand for health monitoring. These sensors
allow people to be aware of their health status at all times and are used by health care professionals in the
early diagnosis and prevention of disease (Bonsor, 2018; Geographic Information Systems (GIS), http://
www.powersystem.org/mapping-and-gis; Monošík et al., 2012; Wang, 2006). Examples include body
temperature sensors, heart-rate monitoring sensors, ECG, electroencephalography, electromyography
sensors, blood pressure sensors and glucose level sensors.
A heart-rate monitoring module (Figure 7.32a) can be used to measure the electrical activity of the heart
and is intended for use in extracting, amplifying and filtering biopotential signals to generate the heart
rate (Geographic Information System (GIS) Mapping, https://www.balchspringslibrary.org/news-events/
lib-cal/geographic-information-system-gis-mapping; Wang et al., 2010). Typically, heart monitors require
the use of biomedical sensor pads and cables. The finger-clip heart rate sensor shown in Figure 7.32b is a
high-performance optical biosensor that measures the change in the movement of blood in the body.
FIGURE 7.31 Environmental sensors: (a) light sensor; (b) sound sensor; (c) humidity sensor; (d) flame sensor; (e) fume
sensor.
OPERATOR 4.0 267
FIGURE 7.32 Optical biosensors: (a) electrocardiogram (ECG) heart-monitoring sensor; (b) finger-clip heart rate sensor.
Biosensors are also common in medical electronics intended for indoor use to monitor the patient’s
health (Fletcher and Kulkarni, 2010; Kaur, 2012).
7.4.2.3 Position and Location Tracking Sensors

Location and position tracking sensors (Kung and Vlah, 2003; RFID Basics, http://scrumium.net/our_
products/rfid/) (i.e., GPS, altimeters, magnetometers, compasses, and accelerometers) are the most com-
mon type of sensors on wearable devices, such as activity trackers, smart watches and even medical
wearables where they are used to check the physical activity and health of patients.
A GPS module (see Figure 7.33a) is a three-axis sensor used in spatial navigation that can determine
location, altitude and speed at any time and in most weather conditions. However, they are not suitable for
indoor or underground use, as in mining, because signals are not available (Department of Defense Radio
Frequency Identification (RFID), https://www.slideshare.net/PeterSam67/department-of-defense-radio-
frequency-identification-rfid; Fujitsu UHF RFID Tag, 2011; Johnson, 1998; Liu et al., 2012; RFID in Asset
Management, http://elrons.co.ke/images/productsservices/RFIDSolutions/RFID_Solutions_.jpg; What Are
RFID Applications and Uses in Real Business World, 2016; Yin et al., 2014; Zheng et al., 2009).
A compass (see Figure 7.33b) is a simple magnetometer that defines the direction of the climatic mag-
netic field. In mining, a magnetometer sensor can be very useful as it can measure the magnetic field at a
specific location. As it can detect ferrous metals, it can be used for tracking metallic vehicles (Wahlström
and Gustafsson, 2014) and human body motions (when jointly used with accelerometer and/or smart-
phones) (Park et al., 2013; Yun and Bachmann, 2006; Zhou et al., 2008).
FIGURE 7.33 Location-tracking sensors: (a) global positioning system (GPS) module; (b) six-axis accelerometer and
compass; (c) digital compass.
Another common type of inertial sensor is an accelerometer, which has an extended range of sensing
capability. They are available in one-, two-, three-, or six-axis implementations (see Figure 7.33c), and
have high capability in fall detection and safety management applications.
7.4.2.4 Other Sensors

Other sensors are available on the market and are usually found in wearable consumer devices. Wearable
cameras and smart glasses are often described together with camera sensors as the main part of these devices.
Communication sensor modules (i.e., Bluetooth, RFID, Wi-Fi, etc.) provide communication and data
exchange features to wearable devices. These sensors are being adopted in the industry for tracking and
other purposes (Baek et al., 2017).
Motion sensors, speed sensors, inertial measurement unit sensors (compound unit of accelerometer,
gyroscope and, sometimes, magnetometers), ultrasonic sensors and infrared receiver sensors (small
microchips with photocells to catch infrared light) are also used as electronic components of wearable
devices (Mardonova and Choi, 2018).
7.4.3 A Multibillion Dollar Market

The wearables market is expected to grow into a multibillion dollar business. Although forecasts by
market intelligence firms diverge, they all agree that body-centered technologies are rapidly penetrating
diverse application areas. Figure 7.34 shows wearable technology market forecast.
A recent estimate (according to Gartner, smart garments will be the fastest growing category in wear-
able technologies in the next 10 years; Alan Anton, https://www.gartner.com/doc/3889472/emerging-
technology-analysis-weaving-smart) says sales of wearables will increase from 275 million units in 2016
to 477 million units in 2020. This represents a $61.7 billion revenue by 2020. According to information
handling services (IHS) forecasts (https://technology.ihs.com/Services/511880/wearable-technology-intel-
ligence-service), unit shipments that are estimated to be at the level of 175 million devices in 2015 will
reach 320 million by 2020, representing more than $40 billion in revenue (https://www.idc.com/getdoc.jsp
?containerId=prUS41100116).
International Data Corporation (IDC) (https://www.idc.com/getdoc.jsp?containerId=prUS41100116)
estimates that watches and bands will dominate the market over the next five years, but other forms, such
as clothing (according to Gartner, smart garments will be the fastest growing category in wearable tech-
nologies in the next 10 years; Alan Anton, https://www.gartner.com/doc/3889472/emerging-technology-
analysis-weaving-smart), eyewear and hearables, will gain importance. Figure 7.35 shows the anticipated
growth in the health care market for wearables.
Forecasts predict over 3 billion sensors in wearable technology devices by 2025, with more than 30%
related to emerging sensor types. Figure 7.36 shows the anticipated growth by type of sensor.
80
Fashion & other
70
Market Suizo/USD billions
Industrial, Commercial, Military

60
Basic Infotainment (including basic
50
earphones and smartwatches)
40
Advanced Infotainment
30
20 Health, Medical, Fitness, Wellness-
UnRegulated
10
Health, Medical, Fitness, Wellness-
0
2016 2019 2022 2025 Regulated
Year
FIGURE 7.34 Wearable technology market forecast. (From IDTechEx, http://www.idtechex.com/research/reports/

wearable-technology-2016-2026-000483.asp, 2015.)
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Other Ineral Measurement

Unit
Sensors
Chemical Biopotenal Sensors

Sensors
Opcal Sensor
Stretch and
Pressure Sensors
FIGURE 7.35 Relative healthcare market size by wearable sensor type in 2020. (From IDTechEx, http://www.idtechex.
com/research/reports/wearable-technology-2016-2026-000483.asp, 2015.)
Inertial Measurement Unit Sensors 9.8%
Biopotential Sensors 10.8%
Optical Sensors 13.0%
Stretch and Pressure Sensors 40.0%
Chemical Sensors 32.0%
Other 12.6%
FIGURE 7.36 Compound annual growth rate (CAGR) by sensor type: 10 year forecast (2015–2025). (From IDTechEx,
http://www.idtechex.com/research/reports/wearable-technology-2016-2026-000483.asp, 2015.)
Most sensors used in wearables today are an adaptation of sensors deployed in automotive or mobile
devices. However, with new properties such as flexibility and washability becoming important, further
sensor developments will be needed. Chemical sensors are expected to take the largest share of this
new market, but the fastest growth is expected in the emerging stretch and pressure sensors, planned to
be used in motion detection and health care monitoring (Smart Wearables: Reflection and Orientation
Paper, http://ec.europa.eu/newsroom/document.cfm?doc_id=40542).
7.4.4 Research and Innovation to Unlock the Full Potential of Wearables

Several factors inhibit the uptake of wearables. These include the limited functionality, the low level of
comfort and body conformability, short battery life, limited connectivity, low interoperability, lack of data
security and high production costs. At the same time, there is a lack of convincing use and strong business
cases.
Research and development efforts in the area of wearables are thus essential to unlock innovation and
bring the “next generation wearables” to consumers and professional users. Multidisciplinary research
and development in enabling technologies (e.g., sensors, materials, energy storage and management,
smart system integration) and in other areas such as microfluidics and micro-nano-bio systems are
needed.
Advances in organic electronics on flexible displays and sensors will allow devices to conform to our
bodies and our clothes. This will solve major design restrictions by reducing the space required for dis-
plays in devices given their thin structure.
Future wearables will have to be shapeable, stretchable and washable or cleanable on-demand, e.g., in
the case of textile and clothing (a wearable should indeed look like natural clothing because of comfort,
breathability and washability). Automated production techniques need to be developed to directly inte-
grate electronics into the yarn during the production of smart textiles.
Experimentation and testing in a real-world environment are needed when developing and validating
the use-cases. Ecosystem building activities (e.g., bringing together the textile and electronic communi-
ties or fashion industry) can address issues such as the compatibility of manufacturing practices or design,
which have an impact on cost and conformability of final products (Smart Wearables: Reflection and
Orientation Paper, http://ec.europa.eu/newsroom/document.cfm?doc_id=40542).
7.5 Collaborative Robotics in Industry 4.0

Collaborative robots (Cobots) are designed to collaborate with human workers in a shared workspace
(“Cobot—collaborative robot.” peshkin.mech.northwestern.edu).
Cobots resulted from a 1994 General Motors initiative led by Prasad Akella of the GM Robotics
Center and a 1995 General Motors Foundation research grant intended to find a way to make robots or
robot-like equipment safe enough to team with people (“Here Come the Cobots!” Industry Week, 2004).
The first cobots assured human safety by having no internal source of motive power. Instead, motive
power was provided by the human worker (Peshkin et al., 2001). The cobot’s function was to allow
computer control of motion by redirecting or steering a payload in a cooperative way with the human
worker. Later, cobots provided limited amounts of motive power as well (“A History of Collaborative
Robots: From Intelligent Lift Assists to Cobots,” Engineering.com, October 28, 2016) (see Figure 7.37
for a summary of the evolution of cobots).
Cobots can have many roles—from autonomous robots capable of working together with humans in
an office environment that can ask for help (“CoBot Robots,” Carnegie Mellon University, Retrieved
March 12, 2013) to industrial robots with their protective guards removed. Collaborative industrial robots
are highly complex machines that can work hand in hand with human beings. They support and relieve
human operators in a conjoint workflow (Cobot, https://en.wikipedia.org/wiki/Cobot).
7.5.1 Characteristics of Cobots

Because of enhancements in sensor and vision technology, cobots do not need to be secured behind a
cage to keep humans in the workplace safe from their rapid movements and heavy bulk (Marr, 2018).
Cobots are robots that:
• Comprise small-footprint robotic arms only;

• Are safe for people to work with and around—no need for protective fencing;
• Are easy for ordinary operators to program, deploy and re-deploy;
• Serve as tools for operators, not as devices that replace human workers;
• Enable companies to keep control of their own automated processes (Østergaard,
The role of cobots in industry 4.0, https://cdn2.hubspot.net/hubfs/2631781/
HQ%20Content%20and%20Enablers/HQ%20Enablers/White%20papers/The%20role%20of
%20cobots%20in%20industry.pdf).
OPERATOR 4.0 271
FIGURE 7.37 History of cobots. (From Universal Robots. History of COBOTS. https://www.universal-robots.com/about-
universal-robots/news-centre/the-history-behind-collaborative-robots-cobots/.)
Cobots have the following characteristics:
• Collaborative: Cobot and operator work together to complete the assigned tasks
(Østergaard, The role of cobots in industry 4.0, https://cdn2.hubspot.net/hubfs/2631781/
HQ%20Content%20and%20Enablers/HQ%20Enablers/White%20papers/The%20role%20of%
20cobots%20in%20industry.pdf).
• Easy to program: No programming expertise is needed to set up and operate cobots quickly.
Often, these simply plug and play or are easily programmed through a tablet or by adjusting
the cobot’s arms.
• Fast to set up: Unlike traditional industrial robots that take weeks to be operational, the setup
time for most cobots is just a few hours.
• Flexible: Traditional robots are often bolted to the floor and deployed for a particular applica-
tion. Cobots are flexible and mobile; they don’t require much space and can be redeployed very
easily to support new and multiple applications.
• Safe: Cobots don’t need safety cages to keep your human workforce safe on the job when they
are working. They can sense obstacles and adjust their speed or reverse to avoid crashing into
humans (or other obstacles) (Marr, 2018).
7.5.2 How Cobots Are Used in Operations

The dirtier, dull and dangerous tasks cobots can take over from humans, the more opportunity people will
have to take on higher-level or creative functions. Cobots are used in the following ways.
7.5.2.1 Hand Guiding

Similar to a traditional industrial robot, a hand guiding cobot has an additional device at the end of its
arm that is pressure-sensitive. This allows the human operator to teach the cobot how to hold an object
or how quickly to move something so that nothing gets damaged.
7.5.2.2 Power and Force Limiting

When a power and force limiting cobot senses something abnormal in its path, it can stop all movement
or reverse movement if necessary to avoid impact. These cobots are designed to regularly collaborate
with humans.
7.5.2.3 Safety Monitored Stop

This operation allows a cobot to work independently, but when a human needs to intervene, the cobot
will sense the presence of the human and stop all motion until the worker has left the safety zone.
7.5.2.4 Speed and Separation Monitoring

This is similar to the safety monitored stop. The cobot operates in a safety zone. Rather than stop when it
senses someone has entered the safety zone, it can slow down and track the location of the human. If the
human gets too close, it will stop (Marr, 2018).
7.5.3 Cobots as the Workforce of the Future

At this point, cobots represent a small portion of the annual sales of industrial robots each year. Several
companies are showing improved efficiencies and lower costs and removed the dull, dirty and dangerous
tasks from humans when they have humans and cobots working together. Here are a few ways they are
currently deployed (Marr, 2018):
• Ford Fiesta plant: In Cologne, Germany, Ford factory workers and cobots are working
together on its assembly lines to install shock absorbers on cars (Marr, 2018). The cobots
and humans team up for accuracy, strength and dexterity. Cobots are used to lift and posi-
tion shock absorbers into a wheel arch. A button is pushed to complete the installation
(see Figure 7.38).
• The cobots, developed by German robot manufacturer KUKA Roboter GmbH, are a bit more
than three feet high and work with workers at two stations. They stop immediately if their sen-
sors detect an arm or finger in the path. To date, the cobots are deployed at two work stations
and are being evaluated on an ongoing basis (Dignan, 2016).
OPERATOR 4.0 273
FIGURE 7.38 Collaborative robot working with a human to install shock absorbers in a Ford Fiesta (Image: Ford).
(From Dignan, L., Ford tests collaborative robots in German Ford Fiesta plant, https://www.zdnet.com/article/ford-tests-
collaborative-robots-in-german-ford-fiesta-plant/, 2016.)
• Amazon fulfillment center: Cobots bring shelves of merchandise to Amazon associates to pre-
pare for shipment. It currently takes 15 minutes to complete an order that used to take an hour
(Marr, 2018). The cobots lift the towers using a large black cylinder that can handle a serious
amount of weight and which locks onto the shelves using a corkscrew action. They navigate
by following barcodes stuck to the warehouse floor and have a front-mounted camera that
ensures they don’t collide with each other. They pause for five minutes of recharging every
hour and get their instructions from software that runs on a cloud server.
• The introduction of cobots to Amazon warehouses in the United States and Europe has
released huge amounts of space once taken up by the storage facilities built around people.
It has also considerably trimmed the time it takes to complete an order. In the very near
future, when Amazon customers receive a package from a center such as this, its prepara-
tion will have involved no more than a minute of human work. Amazon is by no means
alone in its use of cobots to save both time and space (Harris, 2017). Amazon cobots are
shown in Figures 7.39 and 7.40.
• Online supermarket Ocado: Similar to how Amazon uses cobots, the human pickers who fill
orders stay in one place, while the cobots move around to get products (see Figure 7.41).
As well as its own brand, Ocado manages orders for Waitrose and Morrisons. Most online shopping is
still based on distribution centers such as a conventional supermarket; thus, workers pace up and down
endless aisles and fill trolleys. Here, things could not be more different. The systems that run the center
have been in operation since 2012 and, as with Amazon, have steadily moved toward a model in which
human “pickers” stay put, and machines move everything around.
In partnership with a British firm called Oxbotica, Ocado has tested driverless delivery vans, and together
with Disney Corporation, the company is involved in robotics work aimed at approximating the dexterity
of the human hand—trying to crack the same problem Amazon has: how to automate the job of picking,
particularly fruit and vegetables, without causing damage. Its robotics teams are working on a suction-
based picking robot that can move cans, boxes and other products with a uniform shape. It uses a camera
to look into the bin and figure out what and where to pick, and then where to place it (Harris, 2017).
Companies are turning to technology to compete in response to shrinking labor pools as baby boomers
retire, and labor costs increase. Cobots manufactured by companies such as Rethink Robotics, Kuka and
Universal Robots hope to provide solutions to these labor and cost concerns. We can only expect interest
in cobots to continue as the new reality of humans working alongside robotic colleagues becomes the
standard for better performance.
FIGURE 7.39 Amazon cobot. Photograph: Ben Quinton. (From Harris, J., Meet your new cobot: Is a machine coming
for your job? https://www.theguardian.com/money/2017/nov/25/cobot-machine-coming-job-robots-amazon-ocado, 2017.)
FIGURE 7.40 Cobots moving shelves at Amazon’s fulfillment center in Manchester. Photograph: Ben Quinton. (From
Harris, J., Meet your new cobot: Is a machine coming for your job? https://www.theguardian.com/money/2017/nov/25/
cobot-machine-coming-job-robots-amazon-ocado, 2017.)
OPERATOR 4.0 275
FIGURE 7.41 Ocado’s automated Hatfield HQ. Photograph: Ben Quinton for the Guardian. (From Harris, J., Meet your
new cobot: Is a machine coming for your job? https://www.theguardian.com/money/2017/nov/25/cobot-machine-coming-
job-robots-amazon-ocado, 2017.)
7.5.4 Some Applications for Cobots

Collaborative robots or cobots are taking over the robotic market. According to BIS Research, by 2021, the
collaborative-robot market is expected to grow to approximately $2 billion and 150,000 units. Industries
are looking to cobots as a way of introducing automation. Cobots excel because they can function in areas
of work previously occupied only by their human counterparts. They are designed with inherent safety
features such as force feedback and collision detection, making them safe to work beside human operators.
Universal Robots is one of the leaders in the cobot market. The company’s recent white paper listed
the seven most common applications of cobots (Gonzalez, 2018) as follows.
7.5.4.1 Pick and Place

Manual pick and place is one of the most repetitive tasks performed by human workers today. The mun-
dane nature of the task can often lead to mistakes, while the repeated physical motions can lead to strain
or injury. Pick and place applications are a good start for first-time cobot users. A pick and place task is
any in which a workpiece is picked up and placed in a different location. This could mean a packaging
function or a sort function from a tray or conveyor; the latter often requires advanced vision systems.
Pick and place functions typically require an end effector that can grasp the object. It could either be
a gripper or vacuum cup effector (Gonzalez, 2018). Figure 7.42 shows the Robo Packer: an integrated
module with a six-axis arm.
7.5.4.2 Machine Tending

Machine tending requires a person to stand for long hours in front of a computer numerical control
(CNC) machine, injection-modeling machine, or another similar device and tend to its operational
needs. This could be tool changes or raw material replacement. The process is long and tiresome
for the human operator. Not only do cobots free up the human operator, but a single cobot can
also tend to multiple machines, leading to increased productivity. These type of cobot applications
may require the cobot to have input and output (I/O) interfacing hardware specific to the machine.
The I/O hardware indicates to the robot the next cycle or when material needs to be replenished
(Gonzalez, 2018).
FIGURE 7.42 Robo Packer: an integrated module with a six-axis arm. (From Kavanaugh, C., Proco to show cobots
for packaging, palletizing, http://www.plasticsnews.com/article/20180423/NEWS/180429970/proco-to-show-cobots-for-
packaging-palletizing, 2018.)
7.5.4.3 Packaging and Palletizing

A subset of pick and place is the packaging and palletizing of products. Before leaving the factory floor,
products need to be properly prepared for shipment. This may include shrink-wrapping, box assem-
bly and loading, and box collating or placing onto a pallet for shipping. These tasks are repetitive and
involve small payloads, making them ideal for cobots. Rapid product changeover is key for any business
running a high to low mix of volume production. Conveyor tracking is required for this application to
synchronize robotic movement with a conveyor (see Figure 7.43). A vision system may also be needed
for products with a nonuniform shape (Gonzalez, 2018).
7.5.4.4 Process Tasks

A process task is any task that requires a tool to interact with a workpiece. Common examples are glu-
ing, processing, dispensing, cutting or welding. Each requires a tool to go down a fixed path repeatedly.
It takes a significant time to train new employees in these tasks. By using a cobot, the programming can
be performed on one unit and copied to others. The cobot also solves the problem of having a worker
performing precise and repetitive movements.
FIGURE 7.43 Cobot palletizing a handling unit with its respective packaging units. (From Milk crate palletizer, http://
www.robovic.com/en/palletizing/milk-crate-palletizer/.)
OPERATOR 4.0 277
FIGURE 7.44 CAD of welding cobot. (From Generate Robot Welding & Cutting Code from CAD/CAM, http://www.
fabricatingandmetalworking.com/2015/10/generate-robot-welding-cutting-code-from-cadcam/, 2015.)
To give an example of how useful cobots can be, traditional welding robot systems require expertise
in robot programming and welding techniques (see Figure 7.44). A benefit of many cobot systems is the
ease of programming either through place and position record methods or traditional computer-aided
manufacturing (CAD) or CAM programming, easing the robotic programming and allowing anyone
with welding experience to program a cobot (Gonzalez, 2018).
7.5.4.5 Finishing Tasks

Finishing tasks performed by human operators require a manual tool and a large amount of force.
The vibration from the tool can cause injury to the operator. A cobot can provide the necessary force,
repetition and accuracy. These finishing jobs can include polishing, grinding, and deburring. The robot
can be taught manually or via computer programming. Cobots with force control can be more robust and
can deal with different dimensioned parts through force sensing, either via the end-effector or internally
(Gonzalez, 2018).
7.5.4.6 Quality Inspection

The last task that can be accomplished using a robot is the quality inspection of parts. The process usu-
ally involves full inspection of finished parts, high-resolution images for precision machined parts, and
part verification against CAD models (see Figure 7.45). Mounting multiple high-resolution cameras onto
cobots can automate the process for faster results. The inspection can also be captured digitally and
the comparison can be digitized to a computer-generated model. Using cobots for inspection can result
in higher-quality inspection, resulting in more accurate production batches. End-effectors with high-
resolution cameras may be required for the inspection, as well as vision systems and software (Gonzalez,
2018).
FIGURE 7.45 CAD model of component inspection. (From Universal Robots, How cobots are changing quality assur-
ance in manufacturing, http://en.ict.com.hk/newsdetails/113.htm, 2016.)
7.6 Human Factors in Industry 4.0: Ergonomic and Psychological

Issues and Challenges
Industry 4.0 comprises the entire value chain process in manufacturing goods and providing ser-
vices. Researchers and practitioners have a good grip on the technology (hardware and software), but
the human factor has not been considered adequately. Humans are involved everywhere: as a team
of system designers, a group of workers and our society as the clients of the manufactured goods.
The requirements and needs of each individual involved in the process should be included in the
system through a modified mediation process. A mediator acts as a facilitator to assist in the commu-
nication of needs and requirements among everyone involved. By creating ownership of the system,
acceptance is achieved.
7.6.1 Interfaces of Industry 4.0 and Humans

Each technical or industrial system has humans involved at some point. Often, however, the interfaces
are not clearly defined. Everybody recognizes immediately that there are people in front of the computer
screens or workers operating the manufacturing machines. Customers of the manufactured product are
also part of the manufacturing process, often just known as “the client.” In the case of a complex system
such as the Industry 4.0 concept, the entire society is at the “output” end of the automated manufacturing
process. Systems do not “yet” create themselves. There are teams of experts behind every new idea, and
very specialized engineers and software designers are required to convert ideas into working software
(Kinzel, 2016).
7.6.1.1 Complex Systems Communicating with Humans

Modern workplaces in a technical environment usually contain an interface between humans and
machines. Kramer and Zimolong (2005) say a machine is a device comprising a number of technical
components. A more complex machine or a combination of machines can be called a system. This sys-
tem communicates with humans via a user interface. This may consist of gauges and control lights or,
more likely today, of a computer screen. In return, the human controlling such a system enters com-
mands by pressing buttons or using keyboards and control sticks.
OPERATOR 4.0 279
7.6.1.2 System Users

Typically, a group of people communicates with a system. Each individual member of the group interacts
with the group as well as with the machines. Each individual member of the group has a unique personal-
ity, has different moods that may change throughout the day, and brings a distinctive set of capabilities to
the table. It is a challenge for any system designer to predict exactly how the group will react if something
unusual happens; it will depend on the way the group communicates and interacts.
7.6.1.3 System Designers

Complex systems are designed by a team of engineers and software designers. Once again, the team is
made up of individuals. Every member of the team has his or her particular expertise and a unique set of
competencies and abilities. This process is a challenge. The hardware and software must properly inter-
act with each other, while the group members must interact with each other and with the hardware and
software. The information technology engineers responsible for the hardware design need to understand
the requirements of the software and vice versa.
7.6.1.4 Clients
At the end of each manufacturing process, there is a client or a group of clients. Marketing and business
development specialists evaluate the expectations and requirements of clients and report that back to the
manufacturing place. In Industry 4.0, data collection is automatized and analysis is performed by com-
puter algorithms created by system designers (Kinzel, 2016).
7.6.2 Inclusion of the Human Factor

As the preceding analysis suggests, the sociotechnical component, “the group of humans in front of the
control system,” and the sociological component, “the group of humans designing the interior of the
system,” need to be included in the system design (Kinzel, 2016). In an ideal world, users and designers
will talk to each other. The system designers need to find out the users’ requirements. The third group of
people to be considered is the client group.
7.6.2.1 Needs and Motivations

Effectively motivating employees is one of management’s most important and challenging duties.
Motivation refers to the psychological processes that stimulate excitement and persistence of voluntary
actions aimed at some goal. Because motivation can be highly individualized, managers use a wide range
of techniques to keep employees motivated and happy. Information technology is essential for manag-
ers to understand the psychological processes involved in motivation so that they can direct employ-
ees toward organizational goals (Hartzell, The Needs Theory: Motivating Employees with Maslow’s
Hierarchy of Needs, https://study.com/academy/lesson/the-needs-theory-motivating-employees-with-
maslows-hierarchy-of-needs.html).
Needs theories identify internal factors that motivate an individual’s behavior based on the premise
that people are motivated by unfulfilled needs. Needs are psychological or physiological insufficiencies
that provoke some type of behavioral response. A person’s needs can range from weak to strong and can
vary based on environmental factors, time and place.
In 1943, Abraham Maslow, a pioneer in motivation research, defined the basic needs that drive all
human beings as follows (Maslow, 1970):
1. Fundamental physiological needs (e.g., food, air, water, shelter from the elements, sexuality);
2. Safety and security needs (stability, protection, order);
3. Love and belongingness needs (love, belongingness, affection);
4. Esteem needs (self-respect, esteem of others, prestige);
5. Self-actualization (“What a man can be, he must be”) (Maslow, 1943).

Maslow put these needs into a hierarchy; once the needs of one level are met, the fulfillment of
the next level is the next goal. Human beings whose fundamental physiological needs are satis-
fied will seek to establish a safe and protected environment. Once this environment is assured,
they will seek to satisfy the love needs.
6. In 1970, Maslow added two additional classes of needs:
7. Cognitive needs (knowledge, meaning);
8. Aesthetic needs (appreciation of beauty, balance);
9. Transcendence needs (the desire to help others to achieve self-actualization) (Maslov, 1970).
The Maslow hierarchy of needs is often depicted as a pyramid (see Figure 7.46) (Kinzel, 2016).
7.6.2.2 Neglecting Basic Needs Results in Conflicts

Industry 4.0 will change the way we live and work. According to some people, the remaining workers
who operate a system will need to acquire new competences. Many will probably no longer be needed
because their tasks will be carried out by computer systems. Most of the workers in any of the fields
touched by Industry 4.0 will see changes in the way they work. They need to understand the new require-
ments and to recognize any benefits for them (“What is in it for me?”). The key is to engage those people
(= the human factor) in the new processes as soon as possible (Edwards and Ramirez, 2016).
7.6.2.3 Empowerment and Ownership Create Acceptance

Free will or the ability of an individual to follow his or her own will is a very strong motivator. Therefore,
people who in any way are connected to a new system need to feel that they are part of the system.
They need to feel they are a part of design of the system, and their needs have to be considered.
FIGURE 7.46 Maslow motivational model. (From Kelly J., Maslow’s motivation model, http://thepeakperformancecenter.
com/educational-learning/learning/principles-of-learning/maslows-hierarchy-needs/, 2014.)
OPERATOR 4.0 281
It does not matter if this individual is a member of the design team, a member of the operating team or
someone who is in any other way influenced by the system. The point is that a person must feel some kind
of ownership in the complex system and understand the design concept. The designers of any system in
Industry 4.0 need to consider this desire to be involved. Involvement creates ownership and acceptance.
Without this acceptance, the system will fail (Kinzel, 2016).
7.6.3 Human Factor Specialist: A Mediator?

How can the needs of everyone involved be considered? How can the human factors of all individuals be
considered in the system design? How can conflicts among the team members, either the design team or the
team of users, be managed and mitigated? The call for a human factor specialist by Saetren et al. (2016) seems
a promising solution. In addition, a mediation process, traditionally designed to solve conflicts, can be adapted
and used in conflict prevention and also used to introduce the human factor into system design (Kinzel, 2016).
7.6.3.1 Mediation
Mediation is a well-established method to resolve conflicts. It is a structured process in which an inde-
pendent third party, the mediator, assists two or more conflicting parties to identify the cause of their
conflict and to develop and agree on a solution. The mediator will establish communication between
the conflicting parties and guide them through a number of phases. The parties must start an open and
preferably creative conflict solution dialog. They need to be able to listen to the other side and understand
the requirements and needs of their opponent (Kessen and Troja, 2009).
The process of mediation can generally be divided into the following phases (Kracht, 2009):
1. Preparation of the process;

2. Statements of positions, collection of subjects to be discussed;
3. Determination of underlying needs of conflicting parties;
4. Creative development of several options to solve the conflict;
5. Joint assessment of these options;
6. Mutual agreement between the parties.
Arguably, the most important step is the transition between the positions of the conflicting parties to the needs
of the parties. If the underlying needs driving the positions of the conflicting parties have been expressed and
have been understood by the other party, this leads to the solution finding phase (Kinzel, 2016).
7.6.3.2 Mediators
The style and personality of the mediator are a key factor. In an ideal world, the mediator is completely neu-
tral, and he or she is just conducting the communication process. In the real world, the mediator often helps
to overcome obstacles in the solution finding process and even expresses his or her own opinion on a possible
way to success, especially when asked by the conflicting parties. However, it is important that the mediating
person stays neutral and impartial, an “all-party” mediator who valued the interests of all parties and the
mediation process itself. The mediator should never have the power to enforce a solution. The agreement on
how to solve the conflict is the sole responsibility of the conflicting parties (Kinzel, 2016).
7.6.3.3 Adapted Mediation

The mediation methodology and the mediation process might not be directly applicable to the complex
processes of Industry 4.0. However, they can be adapted. People need to be involved in the changes
accompanying Industry 4.0, as this will provide them a much-needed sense of ownership (Kinzel, 2016).
The adapted mediation process is a tool to communicate and consider the requirements and needs of all
parties involved, with a view to developing a joint solution.
All parties must be part of the mediation process:
• System designers and developers;

• System users = workers;
• System clients = (parts of) society.
The various parties can express their needs, develop joint solutions and thus eventually claim ownership
in the new system(s).
7.6.3.4 Adapted Mediation and Industry 4.0

It seems as if system designers commonly fail to include the human factor in the equation. They appear to
be deeply in love with their systems and processes, their analysis and computing algorithms. Sometimes,
technology for technology’s sake seems to be the prime motivator. Humans or the human factor does
not make it to the list of system specifications.
However, humans want to be involved, they want to understand what is going on and they want to be
in charge of their lives. They need to see that they can communicate their own basic requirements and
needs and that these are taken seriously.
Industry 4.0 is at a stage where many people are skeptical about the new technologies, although some
of the ideas and concepts of Big Data are already in place, influencing our daily lives. If the human factor
is not included in Industry 4.0, it might end as other industrial revolutions have ended—with some people
left out entirely or at least feeling they do not really belong to it. It might lead to frustration and a sense
of exclusion, destabilizing the society.
In a recent BBC documentation on Big Data and their influence on society, University of Oxford
Professor Luciano Floridi says: “We should be worried about what to do with these smart technologies,
not about the smart technologies in themselves. They are in our hands to shape our future. They will
not shape our future for us” (Frey, 2016). We need to take control of the systems before they gain
control over us.
The proposed adapted mediation process allows everyone concerned to express his or her needs and
requirements. Ownership of the system leads to acceptance. More importantly, this process allows soci-
ety to influence and actively control the design and the use of Industry 4.0 (Kinzel, 2016).
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8
Cybersecurity and Risk
CONTENTS
8.1 Cybersecurity in OT...................................................................................................................... 290
8.1.1 OT Security Defined.......................................................................................................... 290
8.1.1.1 Challenges to Implementation.............................................................................291
8.1.2 OT Security Challenges..................................................................................................... 292
8.1.2.1 Security Assessments......................................................................................... 293
8.1.2.2 Security Solutions............................................................................................... 293
8.1.3 Why Is OT Security Important?........................................................................................ 294
8.1.3.1 Critical Infrastructure and Key Resources......................................................... 294
8.1.4 Five Security Recommendations....................................................................................... 296
8.2 Cybersecurity on the IT Level....................................................................................................... 298
8.2.1 Network Security or Cybersecurity in IT.......................................................................... 299
8.2.2 IT Cybersecurity Objectives.............................................................................................. 300
8.2.3 Security Engineering......................................................................................................... 301
8.2.4 Vulnerability and Penetration Testing............................................................................... 302
8.2.5 Intrusion Detection System................................................................................................ 304
8.2.5.1 Firewalls............................................................................................................. 306
8.2.6 Internet Security................................................................................................................. 306
8.2.6.1 HTTPS................................................................................................................ 306
8.2.6.2 SSL Certificates.................................................................................................. 307
8.2.6.3 OAuth 2.0............................................................................................................ 308
8.2.7 Cloud Security.................................................................................................................... 309
8.2.7.1 WebSockets......................................................................................................... 309
8.2.8 Wireless Security............................................................................................................... 309
8.2.9 Endpoint Security................................................................................................................310
8.3 IT-OT Cybersecurity Convergence.................................................................................................310
8.4 Risks and Threats of Sharing Data.................................................................................................312
8.4.1 Threats to Cybersecurity and a Methodology to Address Them........................................312
8.4.2 End-to-End Communications Security...............................................................................313
8.4.3 Possible Network Protection Strategies..............................................................................314
8.4.3.1 Closed Loop Policy Management........................................................................315
8.4.3.2 Uniform Access Management.............................................................................315
8.4.4 Variable Depth Security......................................................................................................316
8.4.4.1 Virtual Local Area Networks (VLANs).............................................................316
8.4.4.2 Firewalls..............................................................................................................317
8.4.4.3 Layer 3 Virtual Private Networks.......................................................................317
8.4.5 Securing Management........................................................................................................317
8.4.5.1 Secure Activity Logs...........................................................................................318
8.4.5.2 Authentication......................................................................................................318
8.4.5.3 Access Control.....................................................................................................318
8.4.5.4 Encryption of Network Management Traffic......................................................319
8.4.5.5 Secure Remote Access for Operators..................................................................319
8.4.5.6 Firewalls..............................................................................................................319
287
8.4.5.7 Intrusion Detection..............................................................................................319

8.4.5.8 OS Hardening......................................................................................................319
8.4.5.9 Virus-Free Software........................................................................................... 320
8.4.6 Layered Security across the Application, Network and Network Management................ 320
8.4.7 Network Survivability Even under Attack......................................................................... 320
8.4.8 Attacker Techniques............................................................................................................321
8.4.8.1 Taxonomy of Security Threats............................................................................321
8.4.9 Fields of Cybersecurity Technology.................................................................................. 325
8.4.10 Data Encryption and Access Control of Cloud Storage..................................................... 325
8.5 Blockchains in Cybersecurity........................................................................................................ 327
8.5.1 Background and History.................................................................................................... 328
8.5.2 Blockchain Categorization................................................................................................. 329
8.5.2.1 Permissionless.................................................................................................... 329
8.5.2.2 Permissioned....................................................................................................... 329
8.5.3 Blockchain Components.................................................................................................... 330
8.5.3.1 Cryptographic Hash Functions........................................................................... 330
8.5.3.2 Cryptographic Nonce..........................................................................................332
8.5.4 Transactions........................................................................................................................332
8.5.5 Asymmetric-Key Cryptography.........................................................................................333
8.5.6 Addresses and Address Derivation.................................................................................... 334
8.5.7 Private Key Storage.............................................................................................................335
8.5.8 Ledgers................................................................................................................................335
8.5.9 Blocks................................................................................................................................. 336
8.5.10 Chaining Blocks................................................................................................................. 337
8.5.11 Blockchain Limitations and Misconceptions..................................................................... 337
8.5.11.1 Immutability....................................................................................................... 337
8.5.11.2 Users Involved in Blockchain Governance........................................................ 338
8.5.12 Beyond the Digital............................................................................................................. 339
8.5.13 Blockchain Death............................................................................................................... 339
8.5.14 Cybersecurity..................................................................................................................... 339
8.5.14.1 Cyber and Network-Based.................................................................................. 340
8.5.15 Malicious Users.................................................................................................................. 340
8.5.16 No Trust...............................................................................................................................341
8.5.17 Resource Usage...................................................................................................................341
8.5.18 Inadequate Block Publishing Rewards...............................................................................341
8.5.19 Public Key Infrastructure and Identity.............................................................................. 342
8.5.20 Application Considerations................................................................................................ 342
8.5.21 Other Considerations.......................................................................................................... 344
8.5.22 The Decision to Adopt Blockchain Technology................................................................ 345
References............................................................................................................................................... 346
LIST OF FIGURES
Figure 8.1 IT/OT pyramid.................................................................................................................. 290

Figure 8.2 Share of OT incidents by sectors in 2015..........................................................................291
Figure 8.3 OT versus IT..................................................................................................................... 292
Figure 8.4 How the Firewall or Router device separates two network segments.............................. 296
Figure 8.5 Virtual local area networks............................................................................................... 297
Figure 8.6 Intermediate network with DMZ...................................................................................... 297
Cybersecurity and Risk 289
Figure 8.7 Intermediate network with DPI......................................................................................... 298

Figure 8.8 IT security......................................................................................................................... 299
Figure 8.9 IT security layers............................................................................................................... 301
Figure 8.10 Vulnerability assessment................................................................................................. 303
Figure 8.11 Steps in vulnerability testing process............................................................................. 304
Figure 8.12 Steps in vulnerability assessment................................................................................... 304
Figure 8.13 A comparison between HTTP and HTTPS.................................................................... 307
Figure 8.14 How SSL works............................................................................................................... 308
Figure 8.15 OT or IT cybersecurity.....................................................................................................311
Figure 8.16 A
pplied technology and data analytics services. Managing the risks of integrating
IT and OT systems...........................................................................................................311
Figure 8.17 Applying security dimensions to security layers.............................................................314
Figure 8.18 Security planes reflecting different types of network activities.......................................314
Figure 8.19 Secure authentication and authorization reference model...............................................315
Figure 8.20 Reference model for securing management.....................................................................318
Figure 8.21 Example cryptocurrency transaction...............................................................................332
Figure 8.22 A
QR code example which has encoded the text “NISTIR 8202 – Blockchain
Technology Overview QR code example”...................................................................... 334
Figure 8.23 Generic chain of blocks.................................................................................................. 337
Figure 8.24 DHS Science and Technology Directorate flowchart..................................................... 343
LIST OF TABLES
Table 8.1 Cybersecurity technologies................................................................................................. 326

Table 8.2 Examples of input text and corresponding SHA-256 digest values.....................................331
8.1 Cybersecurity in OT
8.1.1 OT Security Defined
Operational technology (OT) is hardware and software that detects or causes a change through the
direct monitoring and/or control of physical devices, processes and events in the enterprise. OT is
common in industrial control systems (ICS), such as distributed control systems (DCSs) and supervi-
sory control and data acquisition (SCADA) systems (see Figure 8.1). In the world of critical infrastruc-
ture, OT may be used to control power stations or public transportation. As this technology advances
and converges with networked technology, the need for OT security is growing exponentially.
Cybersecurity is a major threat to organizations of all kinds. However, until recently, relatively few
companies considered the potential risk of attacks on their production and manufacturing environments.
Yet, there are serious vulnerabilities, for reasons including the expansion of connectivity in these envi-
ronments or the use of legacy operating systems. Organizations need to act now to protect themselves
and gain competitive advantage in their market.
During the last couple of years, the number of cyber-attacks on the production and manufacturing
environments has grown. In particular, shop floor systems, including DCSs and SCADA systems, have
become primary targets for attacks.
Many organizations have introduced new technology to drive improvements such as production and
supply chain efficiency and asset management. This has led to closer and more open integration between
information technology (IT) and shop floor systems—but the increasing connectivity of previously iso-
lated manufacturing systems, together with a reliance on remote supporting services for operational
maintenance, has introduced new vulnerabilities for cyber-attack. Not only is the number of attacks
growing but also their sophistication.
As OT security becomes a widely discussed topic, the awareness of OT operators is rising, but so is
the knowledge and understanding of the hacker community.
OT environments have very different security requirements, priorities and operational conditions
compared with typical corporate IT networks and systems: they are focused on ensuring product quality
and the continuity of manufacturing processes. OT system vendors are more eager to utilize proven, reli-
able technologies than emerging ones, even if they promise improved security. The security aspect alone
is very rarely a driver to replace a vendor who is offering the most effective manufacturing equipment.
Figure 8.2 shows the share of OT incidents by sectors in 2015.
FIGURE 8.1 IT/OT pyramid. (From https://consulting.ey.com/operational-technology-security-and-safety-in-life-sciences/.)

FIGURE 8.2 Share of OT incidents by sectors in 2015. (From https://consulting.ey.com/operational-technology-security-and-

safety-in-life-sciences/.)
In many organizations, OT systems have been treated as an integral part of production machinery rather
than computerized information systems; thus, the ultimate responsibility of its operation, including issues of
security, is assigned to manufacturing maintenance teams. In some examples, only the “technology” aspect is
taken into consideration (e.g., protection tools), but the “people aspect” is certainly an equally important issue.
8.1.1.1 Challenges to Implementation

There are currently some features of OT environments that make them difficult to secure.
Heterogeneity: Manufacturing and equipment vendors use a great variety of OT technologies and
applications. Individual manufacturing facilities have had autonomy over their choice of systems or
facilities, and very different systems have been acquired through mergers and acquisitions. This creates
a challenge in defining and implementing coherent security policies across production plants. System-
dedicated networks, multiple domains and dedicated supporting systems (i.e., engineering tools and
backup solutions) require more resources to achieve a maturity level comparable with IT. It also greatly
increases the complexity in monitoring and maintaining security levels.
Legacy systems: As OT system vendors prefer proven, reliable technologies at the point of implemen-
tation, some OT systems are already only supporting obsolete, insecure operating systems. As the risks
continue to expand and regulations start to come into place, the time window for competitive advantage
through better OT security is closing.
Internet of Things (IoT) revolution and security impact: The Industry 4.0 revolution is having a great
impact on manufacturing environments. It offers significant opportunities for improving production
effectiveness, in particular, based on continual, online information about manufacturing processes and
equipment. However, the utilization of new IoT technologies also has an impact on security. New pro-
tocols (including wireless) or mesh network architectures increase the number of potential access points
to the network and require a different approach to security.
Lack of expertise: The challenge all sectors are facing is the lack of OT security specialists available.
Internally, because this issue cuts across manufacturing and IT, the major roadblock is typically obtain-
ing alignment on the organizational reporting lines, responsibilities and, critically, who pays for it. As
the risks continue to expand and regulations start to come into place, the time window for competitive
advantage through better OT security is closing. To seize the opportunity for rapid improvements and
be successful, it is critical that OT security initiatives are initiated with the strongest possible executive
sponsorship (https://consulting.ey.com/operational-technology-security-and-safety-in-life-sciences/).
Lack of visibility: Lack of visibility is a problem in industrial environments. Most users are simply
not aware of the full scope of industrial assets connected to their networks. While this is a major issue
from an availability perspective—as it takes much longer for OT to root cause machine downtimes caused
by communication issues—the problem takes on a different dimension when it comes to cybersecurity.
Defining security policies based solely on network attributes such as Internet protocol (IP) and media access
control (MAC) addresses as identifiers is challenging. The enterprise IT world has solved this problem by
enabling security platforms to profile enterprise assets such as phones, tablets, laptops, and printers to get
identity attributes such as device type, make, model, and vendor, and integrating with directory and domain
systems to get contextual information that indicates the “who” and “when” aspects of communication flows.
Friction between IT and OT: When it comes to implementing security on the plant floor, the friction
between IT and OT is often mischaracterized as a problem of “control.” In reality, this has less to do with
control and more with interdependency. In most industries, customers have a centralized IT group respon-
sible for supporting widely distributed industrial control system (ICS) networks such as factories, electric
substations, oils and gas fields, mines and so on. Each of those distributed plant networks is supported by
a dedicated onsite cross-function process control or network OT team. As it stands today, most OT teams
are quickly ramping up on IT networking skills, but still lack expertise in cybersecurity. Thus, any attempt
to implement security at the process network level requires the centralized IT team to deploy the security
infrastructure and maintain security policies. In such a situation, the local OT team is dependent on the
remote IT team to modify security policies on the network to accommodate adds, moves and changes to
industrial endpoints and the control system needed for day-to-day operations. This interdepartmental coor-
dination is not achievable in real-time, and changes to the control systems made by the controls team often
cause security policy violations set by IT, leading to downtime and an unacceptable impact to production.
The solution depends on two factors—visibility and automation Figure 8.3 shows a comparison
between OT and IT.
8.1.2 OT Security Challenges

A cyber attack that successfully targets an OT ICS, SCADA control system, or even connected devices
such as valves, gauges or switches could result in devastating physical consequences to things such as
critical infrastructure and services, the environment and even human life.
Other concerns include the inability to properly identify, measure and track risk, IT outages that impact
customer-facing systems, and the interruption of business operations due to a catastrophic event. These
challenges are compounded by the lack of security expertise inside organizations, not only within their
own in-house staff (reported by 40% of organizations), but also with the third party vendors to whom they
outsource their security services (41%). This is partly because there is a cybersecurity skills gap in the
computing industry, and partly because even available security professionals have little experience with
OT environments.
FIGURE 8.3 OT versus IT. (From https://blogs.cisco.com/digital/ot-intent-based-security-policies.)

As a result, nearly 90% of organizations with connected OT infrastructures have experienced a security
breach within their SCADA and ICS architectures. Security concerns include viruses (77%), internal
(73%) or external (70%) hackers, the leakage of sensitive or confidential information (72%) and the lack
of device authentication (67%). Over a third are currently concerned with the exploitation of backdoors
built into connected IoT devices (https://www.csoonline.com/article/3283238/security/resolving-the-
challenges-of-it-ot-convergence.html).
8.1.2.1 Security Assessments

Security requires taking a proactive stance. In the industrial sector, a great place to start is with an over-
all site security assessment and health check that can uncover existing weaknesses, map out potential
future risks and recommend mitigation strategies.
Security needs to be an organizational priority. First, emergencies need handling and weaknesses need
uncovering. Next, a treatment plan must be devised for any issues found. Finally, organizations need to
consider ongoing care and prevention.
With a security assessment, companies can establish a baseline understanding of their existing secu-
rity posture and begin to develop an effective long-term strategy for maintaining overall system health.
A typical assessment entails:
• Information gathering and documentation relating to an organization’s people, architecture and

technology;
• Review and analysis of documents detailing network configuration, topology, policies and
other relevant aspects unique to an organization;
• Onsite interviews and inspection with subject matter experts for additional technical and con-
textual understanding not apparent from documentation reviews alone;
• Onsite technical testing to assess and evaluate the cybersecurity posture of assets;
• Offline data analysis and application of best practices methodology to assess risks;
• Risk assessment to identify sources of vulnerabilities, determine security posture, prioritize
potential risks and provide remediation roadmap;
• Findings report to include recommended mitigations based on prioritized risks.
Benefits of an assessment include:
• In-depth visibility: Discovery of current security posture via a comprehensive report and work-
book that maps out the potential risks for each system analyzed;
• Actionable results: Immediate security risk remediation and long-term financial planning and
resource justification with analysis based on leading expertise in the OT security field;
• Enhanced security: Best practices methodologies identify key risks and dictate necessary strat-
egies for overall improved security posture.
8.1.2.2 Security Solutions

Once the assessment is completed, companies can install security solutions purpose-built for their
particular environments. Solutions should have a modular platform designed for scale to accommodate
complex ICS and SCADA systems and provide full network visibility, control and protection. They should
interoperate with traditional or next-generation firewalls to provide the right design for a company’s IT–
OT security transition zone to protect its processes and control systems, without the need for network
re-engineering or downtime.
Industrial customers should expect device manufacturers to certify that their products have passed
stringent security assessments throughout the product development lifecycle.
Solutions may include:
• Decreasing the use of commercial off-the-shelf systems that are easier to hack (the cost savings
often aren’t worth the risk);
• Forbidding use of personal devices in control rooms;
• Requiring changes to default passwords on equipment;
• Blocking off USB ports;
• Enforcing rules;
• Implementing stricter pre-employment screening requirements;
• Conducting property inventories and audits on desktops, laptops, removable media, security
tokens and access cards;
• Enhancing access controls for privileged users;
• Offering cybersecurity training programs that encourage dialog—between engineers, con-
tractors and so on.—to raise awareness of cybersecurity risks, including the dangers of
setting up unauthorized Internet connections. Risk is everywhere, but can be reduced by
enabling accountability, implementing least privilege access and regulating sensitive control
and data access.
None of these solutions is easy, but it’s worth the time, effort and justified expense to be safe (Special
Report Cybersecurity).
8.1.3 Why Is OT Security Important?

As industrial systems become more connected, they also become more exposed to vulnerabilities.
The high cost of industrial equipment and the devastation to communities and economies that an
attack could generate are key factors for organizations looking to protect their industrial networks. Add
legacy equipment, safety regulations that may prohibit any modifications being made to equipment and
compliance regulations that require sensitive data to be made available to third parties, and the challenge
is obvious (https://www.forcepoint.com/cyber-edu/ot-operational-technology-security).
The OT networks that run modern society are a collection of devices designed to work together as an
integrated and homogenous system. If one of these systems fails, it can have a catastrophic domino effect.
For example, electricity requires telecommunications to transfer information on wheeling power from the
electrical grid. This same telecommunication is used to enable financial transactions for both electricity
producers and consumers. Electric generators rely on coal, natural gas, oil and so on to power the tele-
communication and financial companies. Railroads and trucks provide transportation for the delivery of
their products to produce energy. The point is that resources and services are intertwined.
8.1.3.1 Critical Infrastructure and Key Resources

The OT systems and devices essential to a nation’s security, public health and economic vitality are
known collectively as critical infrastructure and key resources (CIKR). Protecting these and similar CS/
SCADA systems is a challenge for a number of reasons:
• First, these systems were originally designed to be stand-alone and air-gapped, so that no out-
side protection was needed.
• They are workhorses that produce products continuously, and so downtime even for mainte-
nance or patching can be difficult.
• Because they can last 30+ years in their life cycle, the equipment or operating systems running
them is often out of date or even obsolete.
The CIKR industry has been slow to adopt newer technologies because its OT systems have been able to
consistently produce an end product that is essential for society for years using their current processes.
Whether that product is electricity, pharmaceuticals, chemicals, food and so on, these OT systems have
historically been able to work day in and day out without catastrophic failures. This does not mean that
parts in the system don’t fail at times, but such systems are designed with enough resiliency to absorb
such failures and keep producing their product.
Many of these legacy systems were never designed for cyber protection. Layers of cyber defense pro-
tection can be added to them today, but that comes with a cost, in terms of deployment and engineering,
as well as ongoing operations overhead.
Another approach would be to bake protection into the hardware for continuous coverage. This would
be the best long-term answer and is being investigated. However, given the lifespan of much of the equip-
ment in place, it may take decades for a natural transition to more secure systems to occur. Besides the
risk to interrupting essential services, updating these systems comes at the same sort of expense as for
overlaying security technologies.
Cost is always a factor in making decisions for long-term investment in OT systems, because of their
longevity and their incorporation of legacy systems. One proposal for how to fund the evolution needed
is to pass the costs through to the consumers of the services. This might not be a sustainable solution,
however, because the consumers of the products produced by these OT systems and end devices have
the long-term fixed costs of these resources figured into other expenses. The additional expense of new
technologies, combined with their dramatically shorter lifecycles may quickly become cost-prohibitive.
Some of these costs may not also be able to be passed on to consumers due to laws, regulations and so on.
Achieving consensus by vendors and OT system owners on the cost of protecting OT systems, and how
to fund those changes, has been a struggle for decades.
Until recently, there was no real evidence that there was any need for the kind of baked-in solutions
required to protect these systems against cyber threats. However, with the advent of things such as
STUXNET, SHODAN and the Ukrainian Electrical Distribution and Transmission cyber attacks, along
with other incidents targeting OT systems, the need to protect these systems to maintain the viability
of the digital economy is clear. The immediate need is for security products to protect the CIKRs’ OT
systems from end to end, while enabling secure external access to OT systems where required.
The overall concern for all OT or ICS and SCADA systems is to protect them against all forms of OT
cyber manipulation so that the CIKRs can continue to provide us with the goods and services our modern
society depends upon.
Given the interconnection of the CIKRs, what is the best first step to take in building in protection?
And what is the best strategy for managing the cost to upgrade all these CIKRs to be inherently pro-
tected, especially considering the expected size of that cost?
• The first step of cybersecurity defense protection has to be to segment these networks into
individual lines of control. Such segmentation will protect the different OT environments from
each other, so that in the event that one is compromised, the others can continue to operate.
• The next step is to encrypt messaging to prevent others from seeing communications between
the human–machine interface (HMI), the database and the communication switches at the
remote terminal units or programmable logic controllers (PLCs), then onto the end devices.
Without access to these messages, an attacker is unable to script a malicious software (malware)
message that effectively mimics a real message in order to achieve bad consequences.
• Additional layers of defense that need to be applied can be added a little at a time, such as two-
factor wired and wireless authentication, security information and event management systems,
patch management and so on.
The bottom line for CIKR owners is that a product still has to be produced at the end of the process for sale
to the markets, whether electricity, petrochemical products, natural gas, pharmaceuticals, food products,
water or wastewater treatment. Thus, the return on investment for the cost of such cybersecurity defense pro-
tection upgrades has to be weighed against the costs of not producing the end products for sale to the mar-
kets should a catastrophic cyber event occur. In our digital world, this seems to be more an issue of when and
not if such an event will happen (https://www.fortinet.com/blog/business-and-technology/the-importance-
of-operational-technology-ot-systems-for-a-standard-of-living-in-today-s-modern-society.html).
8.1.4 Five Security Recommendations

The following list suggests a number of ways to provide greater security to an OT network:
1. Use industrially manageable switches wherever possible.

The mean time between failure (MTBF) of these switches is much larger than the transactional
switches; if they are manageable, they will have greater flexibility in their configuration and can
be provided with special features for specific environments (DIN rail, IP20, IP67, high avail-
ability, redundancy, specific approvals such as IEC61850, industrial protocols such as Profibus
or Ehternet/IP, etc.).
2. Physically segment the IT network and the OT network where real-time technologies (PLCs,
SCADA, HMI, etc.) have been installed using industrial firewalls or routers.
Figure 8.4 shows how the firewall or router device separates two network segments (net-
work A or IT with IP address range 192.168.1.X and network B or OT with IP address range
193.167.1.X). In addition to separating the networks, the device acts as a firewall blocking the
non-allowed traffic between the network segments.
Normally, this type of segmentation mechanism can be configured to perform network address
translation (NAT) in the ratio of 1:1. That is, the computers located in the IT network only see the
IP address of the network card of the router that communicates with the equipment located in the
OT network, thus increasing the security in the transit of information between both networks.
3. Avoid using virtual local area networks (VLANs) to separate IT and OT (see Figure 8.5).
If this is done within the OT environment, do not “trunk” between switches to communi-
cate servers and clients. If done for very specific needs, the traffic should be filtered between
switches or VLAN using industrial firewalls compatible with the IEEE 802.1Q standard.
4. Create a demilitarized zone (DMZ) if it is necessary for the SCADA web server to access users
from the Internet and/or the OT network.
FIGURE 8.4 How the Firewall or Router device separates two network segments. (From http://www.ciberseguridadlogitek.
com/5-recomendaciones-para-el-despliegue-de-redes-ot-seguras-parte/.)
FIGURE 8.5 Virtual local area networks. (From http://www.ciberseguridadlogitek.com/5-recomendaciones-para-el-

despliegue-de-redes-ot-seguras-parte/.)
A DMZ is an intermediate network created between two other networks through two firewalls.
The information or application that wants to be shared by the users of the main networks is
located in the intermediate network, allowing the required access, but avoiding traffic and
direct access between the two main networks.
Figure 8.6 shows how between the network A or IT (192.168.1.X) and the network B or OT
(193.167.1.X) an intermediate network has been created, the DMZ, with its own range of IP
addresses (202.168.1.Y). In this intermediate network are located the applications and/or infor-
mation that is necessary to be shared by the users of the IT and OT networks (the manufacturing
execution system [MES] solutions or a historian-replicated so that the process data are acces-
sible from IT) or the servers that must be accessible from outside (SCADA Web Server).
5. Incorporate deep packet inspection (DPI) industrial firewalls between SCADA servers
and PLCs to guarantee the security of the process against possible threats and malicious
actions (see Figure 8.7).
FIGURE 8.6 Intermediate network with DMZ. (From http://www.ciberseguridadlogitek.com/5-recomendaciones-para-el-

despliegue-de-redes-ot-seguras-parte-ii/.)
FIGURE 8.7 Intermediate network with DPI. (From http://www.ciberseguridadlogitek.com/5-recomendaciones-para-el-

despliegue-de-redes-ot-seguras-parte-ii/.)
Deep packet inspection industrial firewalls are located between SCADA systems and PLCs, guarantee-
ing their safety, and therefore that of the process. The fact that they perform DPI implies that they block
malware built on typically IT protocols. That is, most malware is not built on industrial protocols. By
being able to define specific segmentation rules by industrial protocol (Modbus, Profinet, open platform
communications [OPC], Ethernet/IP, DNP3), they eliminate this traffic.
In addition, they allow segmentation of traffic that does not conform to the “standard” of the selected
industrial protocol and even define segmentation rules for specific function codes of protocols such
as Modbus or Ethernet/IP. For example, if the protocol used is Modbus transmission control protocol
(TCP)/IP, it is possible to define a rule that does not allow a master to execute the “function codes” 05
“write code” and 06 “write register” on a slave (Figure 8.7).
8.2 Cybersecurity on the IT Level

The use of networks to connect heterogeneous IT systems can result in productivity gains to organiza-
tions and new capabilities that are enabled by the networked systems. At present, it is relatively easy to
obtain information, to communicate, to monitor and control IT systems across vast distances.
However, widespread access and the loose coupling of interconnected IT systems can be a primary
source of widespread vulnerability. Threats to networked systems, such as denial of service (DoS) attacks,
theft of financial and personal data, network failures and disruption of voice and data telecommunica-
tions, are increasing. The network protocols in use today were developed in an environment of trust. Most
new investments and development are dedicated to building new functionality and not on securing that
functionality (file:https://www.itu.int/rec/T-REC-X.1205-200804-I/es).
Technologies, such as wireless networks and voice-over-IP (VoIP), extend the reach and scale of the
Internet. In this regard, the cyber environment includes users, the Internet, the computing devices that
are connected to it and all applications, services and systems that can be connected directly or indirectly
to the Internet and to the next generation network environment, the latter with public and private incar-
nations. Thus, with VoIP technology, a desk telephone is part of the cyber environment. However, even
isolated devices can also be part of cyber environment if they can share information with connected
computing devices through removable media.
The cyber environment includes the software that runs on computing devices, the stored (also trans-
mitted) information on these devices or information generated by these devices. Installations and build-
ings that house the devices are also part of the cyber environment. Cybersecurity needs to take such
elements into consideration.
Cybersecurity aims at securing the cyber environment, a system that may involve stakeholders that
belong to many public and private organizations, using diverse components and different approaches to
security. As such, it is beneficial to think of cybersecurity in the following sense:
• A collection of policies and actions used to protect connected networks (including, computers,
devices, hardware, stored information and information in transit) from unauthorized access,
modification, theft, disruption, interruption or other threats.
• An ongoing evaluation and monitoring of policies and actions to ensure the continued
quality of security in the face of the changing nature of threats (file:https://www.itu.int/
rec/T-REC-X.1205-200804-I/es).
IT security is often regarded as the technical side of privacy (see Figure 8.8).
8.2.1 Network Security or Cybersecurity in IT

Network security is any activity designed to protect the usability and integrity of a network and data.
It includes both hardware and software technologies. Effective network security manages access to the
network. It targets a variety of threats and stops them from entering or spreading on a company’s network
(https://www.cisco.com/c/en/us/products/security/what-is-network-security.html).
Network security consists of the policies and practices adopted to prevent and monitor unauthor-
ized access, misuse, modification or denial of a computer network and network-accessible resources.
It involves the authorization of access to data in a network, which is controlled by the network adminis-
trator. Users choose or are assigned an ID and password or other authenticating information that allows
them access to information and programs within their authority.
FIGURE 8.8 IT security. (From https://www.upwork.com/hiring/development/understanding-it-security-and-network-security/.)

Network security covers a variety of computer networks, both public and private, used in everyday
jobs, such as conducting transactions and communications among businesses, government agencies and
individuals. Networks can be private, such as within a company, and others, which might be open to public
access. Network security is involved in organizations, enterprises and other types of institutions. It does as
its title explains: it secures the network, as well as protecting and overseeing operations being performed.
Authentication: Network security starts with authentication, commonly with a username and a pass-
word. Because this requires just one detail authenticating the user name—i.e., the password—this is
sometimes termed one-factor authentication. With two-factor authentication, something the user “has”
is also used (e.g., a security token or “dongle,” an ATM card or a mobile phone). With three-factor
authentication, something that the user “is” is also used (e.g., a fingerprint or retinal scan) (https://
en.wikipedia.org/wiki/Network_security).
Firewalls: Once authenticated, a firewall enforces access policies, such as what services are allowed
to be accessed by the network users (A Role-Based Trusted Network Provides Pervasive Security and
Compliance—interview with Jayshree Ullal, senior VP of Cisco). Although effective to prevent unauthor-
ized access, this component may fail to check potentially harmful content, such as computer worms or
Trojans being transmitted over the network. Antivirus software or an intrusion prevention system (IPS)
(Dittrich, 2006) helps detect and inhibit the action of such malware. An anomaly-based intrusion detec-
tion system (IDS) may also monitor the network like Wireshark traffic and may be logged for audit
purposes and for later high-level analysis. Newer systems combining unsupervised machine learning
with full network traffic analysis can detect active network attackers from malicious insiders or targeted
external attackers that have compromised a user machine or account (Dark Reading, 2015).
Encryption: Communication between two hosts using a network may be encrypted to maintain privacy.
Honeypots: These are essentially decoy network-accessible resources. Honeypots may be deployed
in a network as surveillance and early warning tools, as they are not normally accessed for legitimate
purposes. Techniques used by attackers that attempt to compromise these decoy resources are studied
during and after an attack to keep an eye on new exploitation techniques. Such analysis may be used to
further tighten the security of the actual network being protected by the honeypot. A honeypot can also
direct an attacker’s attention away from legitimate servers. It encourages attackers to spend their time
and energy on the decoy server while distracting their attention from the data on the real server. Similar
to a honeypot, a honeynet is a network setup with intentional vulnerabilities. Its purpose is also to
invite attacks so that the attacker’s methods can be studied and that information can be used to increase
network security. A honeynet typically contains one or more honeypots (“Honeypots, Honeynets”).
Cybersecurity standards: These techniques intended to protect the cyber environment of a user or orga-
nization generally appear in published documents (“Guidelines for Smart Grid Cyber Security”; http://
www.itu.int/ITU-T/recommendations/rec.aspx?rec=9136). This environment includes users themselves,
networks, devices, all software, processes, information in storage or transit, applications, services and sys-
tems that can be connected directly or indirectly to networks. The principal objective is to reduce the risks,
including prevention or mitigation of cyber attacks. These published materials consist of collections of tools,
policies, security concepts, security safeguards, guidelines, risk management approaches, actions, training,
best practices, assurance and technologies (https://en.wikipedia.org/wiki/Cyber_security_standards).
8.2.2 IT Cybersecurity Objectives

An organization’s and a user’s assets include connected computing devices, personnel, infrastructure, appli-
cations, services, telecommunications systems and the totality of transmitted and/or stored information in
the cyber environment. Cybersecurity strives to ensure the attainment and maintenance of the security
properties of the organization’s and user’s assets against relevant security risks in the cyber environment.
The general security objectives comprise the following:
• Availability;
• Integrity, including authenticity and non-repudiation;
• Confidentiality.
IT-Security
Layers:
1. View: Protecon of the System Protecon from the System
2.Aspects (Aims): Confidenality, Integrity, Availability, Reliability, Funconality, Anonymity,

Pseudonymity, Unobservability, Unlinkability, etc.
3. Security Models: Bell LaPadula, Biba, Clark Wilson, Chinese Wall, Role-Based, Object-
Oriented, Resource Allocaon Monitor, etc.
4. Basic Security Idenficaon & Authencaon, Access Control (DAC, MAC), Audit, Object
Funcons: Reuse, Reliability of Service, Anonymisaon, Pseudonymisaon,
Communicaon Security Funcons, etc.
5. Security Internal: Passwords, Chipcards, Access Control Lists, Cryptography, Digital

Mechanisms: Checksums, Redundancy, etc.
External: Physical, Organisaonal, Personnel Controls
FIGURE 8.9 IT security layers. (From https://www.springer.com/gp/book/9783540421429.)
Information technology security can be defined by different layers (Fischer-Hübner, 1995): it can be
defined by the perspective or view, by different security and safety aspects, by models that enforce those
different aspects, by basic security functions used by the models and security mechanisms that imple-
ment these security functions (see Figure 8.9). Security mechanisms can be divided into internal mecha-
nisms enforced by the IT system and external mechanisms implemented outside the system (https://
www.springer.com/gp/book/9783540421429).
8.2.3 Security Engineering

Security engineering is a specialized field of engineering that focuses on the security aspects in the
design of systems that need to be able to deal robustly with possible sources of disruption, ranging from
natural disasters to malicious acts. It is similar to other systems engineering activities in that its primary
motivation is to support the delivery of engineering solutions that satisfy predefined functional and user
requirements, but it has the added dimension of preventing misuse and malicious behavior. These con-
straints and restrictions are often asserted as a security policy.
In one form or another, security engineering has existed as an informal field of study for several cen-
turies. For example, the fields of locksmithing and security printing have been around for many years.
Recent catastrophic events, most notably 9/11, have made security engineering a rapidly growing field.
In fact, a 2006 report estimated the value of the global security industry as US$150 billion.
Security engineering involves aspects of social science, psychology (such as designing a system to
“fail well,” instead of trying to eliminate all sources of error) and economics, as well as physics, chem-
istry, mathematics, architecture, and landscaping (“Landscaping for security”). Some of the techniques
used, such as fault tree analysis, are derived from safety engineering. Other techniques such as cryptog-
raphy were previously restricted to military applications. One of the pioneers of security engineering as
a formal field of study is Ross Anderson (https://en.wikipedia.org/wiki/Security_engineering).
Security engineering incorporates a number of cross-disciplinary skills, including cryptography, com-

puter security, tamper-resistant hardware, applied psychology, supply chain management, and law. Security
requirements differ greatly from one system to another. System security often has many layers built on user
authentication, transaction accountability, message secrecy, and fault tolerance. The challenges are protect-
ing the right items rather than the wrong items and protecting the right items but not in the wrong way.
Security engineering is an area of increasing emphasis in the defense domain. Baldwin et al. (2012)
provide a survey of the issues and a detailed reference list.
The primary objective of system security engineering (SSE) is to minimize or contain defense system
vulnerabilities to known or postulated security threats and to ensure that developed systems protect
against these threats. Engineering principles and practices are applied during all system development
phases to identify and reduce these system vulnerabilities to the identified system threats.
The basic premise of SSE is recognition that an initial investment in “engineering out” security vulnera-
bilities and “designing-in” countermeasures is a long-term benefit and cost-saving measure. Furthermore,
SSE provides a means to ensure adequate consideration of security requirements, and, when appropriate,
those specific security-related designs are incorporated into the overall system design during the engi-
neering development program. Security requirements include physical; personnel; procedural; emission;
transmission; cryptographic; communications; operations; and computer security.
There may be some variation in the SSE process from program to program, due mainly to the level
of design assurance—that is, ensuring that appropriate security controls have been implemented cor-
rectly as planned—required of the contractor. These assurance requirements are elicited early in the
program (where they can be adequately planned), implemented and verified in due course of the system
development.
The system security engineering management plan (SSEMP) is a key document to develop for SSE.
The SSEMP identifies the planned security tasks for the program and the organizations and individuals
responsible for security aspects of the system. The goals of the SSEMP are to ensure pertinent security
issues that are raised at the appropriate points in the program, to ensure adequate precautions are taken
during design, implementation, test, and fielding, and to ensure that only an acceptable level of risk is
incurred when the system is released for fielding. The SSEMP forms the basis for an agreement with SSE
representing the developer, the government program office, the certifier, the accreditor and any additional
organizations that have a stake in the security of the system. The SSEMP identifies the major tasks for cer-
tification & accreditation (C&A), document preparation, system evaluation and engineering; identifies the
responsible organizations for each task; and presents a schedule for the completion of those tasks.
System security engineering planning and risk management planning includes task and event planning
associated with establishing statements of work and detailed work plans, as well as preparation and negotia-
tion of SSE plans with project stakeholders. For each program, SSE provides a system security plan (SSP)
or equivalent. An initial system security Concept of Operations (CONOPS) may also be developed. The SSP
provides the initial planning of the proposed SSE work scope; detailed descriptions of SSE activities per-
formed throughout the system development life cycle; the operating conditions of the system; the security
requirements; the initial SSE risk assessment (includes risks due to known system vulnerabilities and their
potential impacts due to compromise and/or data loss); and the expected verification approach and validation
results.
These plans are submitted with the proposal and updated as required during engineering develop-
ment. In the case where a formal C&A is contracted and implemented, these plans comply with the
government’s C&A process, certification responsibilities, and other agreement details, as appropriate.
The C&A process is the documented agreement between the customer and contractor on the certification
boundary. Upon agreement of the stakeholders, these plans guide SSE activities throughout the system
development life cycle (https://www.sebokwiki.org/wiki/Security_Engineering).
8.2.4 Vulnerability and Penetration Testing
Vulnerability testing is a software testing technique performed to evaluate the quantum of risks involved
in the system to reduce the probability of an event (see Figure 8.10). Operating systems, application
software and networks are scanned to identify vulnerabilities, including inappropriate software design,
insecure authentication and so on (Figure 8.10).
FIGURE 8.10 Vulnerability assessment. (From https://en.wikipedia.org/wiki/Vulnerability_assessment_(computing).)
Vulnerability testing—checklist:
• Verify the strength of the password as it provides some degree of security.
• Verify the access controls with the operating systems or technology adopted.
• Verify how easily the system can be taken over by online attackers.
• Evaluate the safety level of the data of the system.
• Check if the system configuration and/or application configuration files are protected.
• Check if the system allows users to execute malicious script.
Vulnerability testing—methods:
• Active and passive testing;
• Network and distributed testing;
• Verifying file or system access (https://www.tutorialspoint.com/software_testing_dictionary/
vulnerability_testing.htm).
Vulnerability testing—process:
1. Set goals and objectives;

2. Define the scope of the assessment. The following are three possible scopes:
• Black box testing: Testing from an external network with no prior knowledge of the inter-
nal network and systems.
• White box testing: Testing within the internal network with the knowledge of internal net-
work and system, also called internal testing.
• Grey box testing: Testing from either external or internal networks, with the knowledge of
internal network and system; combines black box testing and white box testing.
3. Gather information about the IT environment such as networks, IP addresses, operating system
version and so on.
4. Detect vulnerabilities: Vulnerability scanners scan the IT environment and identify the
vulnerabilities.
5. Analyze the information on vulnerabilities and devise a plan for penetrating into the network
and systems.
To continue, Figure 8.11 shows the steps in vulnerability testing process, and Figure 8.12 shows steps in
vulnerability assessment:
Goals & Objecves
Scope
Informaon Detecon
Vulnerability Detecon
Informaon Analysis & Planning
FIGURE 8.11 Steps in vulnerability testing process. (From https://www.guru99.com/vulnerability-testing.html.)
FIGURE 8.12 Steps in vulnerability assessment. (From https://www.guru99.com/vulnerability-testing.html.)
8.2.5 Intrusion Detection System

An IDS monitors network traffic for suspicious activity and issues alerts when such activity is discov-
ered. While anomaly detection and reporting is the primary function, some IDS are capable of taking
actions when malicious activity or anomalous traffic is detected, including blocking traffic sent from
suspicious IP addresses.
Although IDS monitor networks for potentially malicious activity, they are prone to false alarms (false
positives). Consequently, organizations need to fine-tune their IDS products when they first install them.
That means properly configuring their IDS to recognize what normal traffic on their network looks like
compared to potentially malicious activity.
An IPS also monitors network packets for potentially damaging network traffic. However, where an
IDS responds to potentially malicious traffic by logging the traffic and issuing warning notifications,
IPSs respond to such traffic by rejecting the potentially malicious packets.
Types of IDS:
• A network intrusion detection system (NIDS) is deployed at a strategic point or points within
the network, where it can monitor inbound and outbound traffic to and from all the devices on
the network.
• Host intrusion detection systems run on all computers or devices in the network with direct
access to both the Internet and the enterprise internal network. They have an advantage over
NIDS in that they may be able to detect anomalous network packets that originate from inside
the organization or malicious traffic that a NIDS has failed to detect. They may also be able to
identify malicious traffic that originates from the host itself, as when the host has been infected
with malware and is attempting to spread to other systems.
• Signature-based IDS monitor all the packets traversing the network and compare them against
a database of signatures or attributes of known malicious threats, much like antivirus software.
• Anomaly-based IDSs monitor network traffic and compare it against an established baseline
to determine what is considered normal for the network with respect to bandwidth, protocols,
ports and other devices. This type of IDS alerts administrators to potentially malicious activity.
Historically, IDSs were categorized as passive or active; a passive IDS that detected malicious activity
would generate alert or log entries, but would take no actions. An active IDS, sometimes called an intru-
sion detection and prevention system, would generate alerts and log entries, but could also be configured
to take actions, such as blocking IP addresses or shutting down access to restricted resources.
Snort, one of the most widely used IDS, is an open source, freely available and lightweight NIDS used
to detect emerging threats. It can be compiled on most Unix or Linux operating systems, and a version
is available for Windows as well.
Capabilities of IDS:
• Monitoring the operation of routers, firewalls, key management servers and files needed by
other security controls aimed at detecting, preventing or recovering from cyber attacks;
• Providing administrators a way to tune, organize and understand relevant operating system
audit trails and other logs that are often otherwise difficult to track or parse;
• Providing a user-friendly interface so that non-expert staff members can assist with managing
system security;
• Including an extensive attack signature database against which information from the system
can be matched;
• Recognizing and reporting when the IDS detects that data files have been altered;
• Generating an alarm and notifying that security has been breached;
• Reacting to intruders by blocking them or blocking the server.
An IDS may be implemented as a software application running on customer hardware, or as a net-

work security appliance; cloud-based IDS are also available to protect data and systems in cloud
deployments.
Benefits of IDS:
• Identify security incidents.

• Help analyze the quantity and types of attacks; organizations can use this information to change
their security systems or implement more effective controls.
• Help companies identify bugs or problems with their network device configurations; these met-
rics can then be used to assess future risks.
• Help companies attain regulatory compliance; an IDS provides companies greater visibility
across their networks, making it easier to meet security regulations. Businesses can also use their
IDS logs as part of the documentation to show they are meeting certain compliance requirements.
• Improve security response. As IDS sensors can detect network hosts and devices, they can be used
to inspect data within the network packets and identify the operating systems of services being
used. Using an IDS to collect this information can be much more efficient than manual censuses of
connected systems (https://searchsecurity.techtarget.com/definition/intrusion-detection-system).
8.2.5.1 Firewalls
In computing, a firewall is a software or firmware that enforces a set of rules about what data packets will
be allowed to enter or leave a network. Firewalls are incorporated into a wide variety of networked devices
to filter traffic and lower the risk that malicious packets traveling over the public Internet can impact the
security of a private network. They may also be purchased as stand-alone software applications.
The term firewall is a metaphor that compares a type of physical barrier that’s put in place to limit
the damage a fire can cause, with a virtual barrier that’s put in place to limit damage from an external
or internal cyberattack. When located at the perimeter of a network, firewalls provide low-level network
protection, as well as important logging and auditing functions.
Types of firewalls:
• Host-based firewalls: installed on individual servers and monitors incoming and outgoing signals.
• Network-based firewalls: can be built into the cloud’s infrastructure or a virtual firewall service.
• Packet-filtering firewalls: examine packets in isolation and do not know the packet’s context.
• Stateful inspection firewalls: examine network traffic to determine whether one packet is
related to another packet.
• Proxy firewalls: inspect packets at the application layer of the Open Systems Interconnection
(OSI) reference model.
• Next-generation firewalls: use a multilayered approach to integrate enterprise firewall capabili-
ties with an IPS and application control.
• Static packet-filtering firewalls: examine packet headers and use rules to make decisions about
what traffic to let through.
When organizations began moving from mainframe computers and dumb clients to the client-server
model, the ability to control access to the server became a priority. Before the first firewalls emerged
based on work in the late 1980s, the only real form of network security was enforced through access
control lists residing on routers. Access control lists specified which IP addresses were granted or denied
access to the network.
The exponential growth of the Internet and the resulting increase in the connectivity of networks meant
that filtering network traffic by IP address alone was no longer enough. Static packet-filtering firewalls
arguably became the most important part of every network security initiative by the end of the last century
(https://searchsecurity.techtarget.com/definition/firewall).
8.2.6 Internet Security

Internet security is a branch of computer security whose objective is to establish rules and measures
to use against attacks over the Internet (Gralla, 2007). The Internet represents an insecure channel for
exchanging information, which leads to a high risk of intrusion or fraud, such as phishing (Rhee, 2003),
online viruses, trojans, worms and more.
Many methods are used to protect the transfer of data, including encryption and from-the-ground-up
engineering. The current focus is on prevention as much as on real-time protection against well-known
and new threats (https://en.wikipedia.org/wiki/Internet_security).
8.2.6.1 HTTPS
Hypertext Transfer Protocol Secure (HTTPS) is an Internet communication protocol that protects the
integrity and confidentiality of data between the user’s computer and the site. Users expect a secure and
private online experience when using a website. Hypertext Transfer Protocol Secure can protect users’
connections to a website, regardless of the content on the site.
Data sent using HTTPS are secured via Transport Layer Security (TLS) protocol, which provides
three key layers of protection (Figure 8.13):
FIGURE 8.13 A comparison between HTTP and HTTPS. (From https://www.instantssl.com/ssl-certificate-products/

https.html.)
• Encryption: encrypting the exchanged data to keep it secure from eavesdroppers. That means
that while user is browsing a website, nobody can “listen” to their conversations, track their
activities across multiple pages or steal their information.
• Data integrity: data cannot be modified or corrupted during transfer, intentionally or otherwise,
without being detected.
• Authentication: proves that users communicate with the intended website. It protects against
man-in-the-middle attacks and builds user trust, which translates into other business benefits
(https://support.google.com/webmasters/answer/6073543?hl=en).
How Does HTTPS Work?

HTTPS pages typically use one of two secure protocols to encrypt communications: Secure Sockets
Layer (SSL) or TLS. Both the TLS and SSL protocols use what is known as an “asymmetric” Public
Key Infrastructure (PKI) system. An asymmetric system uses two “keys” to encrypt communications, a
“public” key and a “private” key. Anything encrypted with the public key can only be decrypted by the
private key and vice versa.
As the names suggest, the private key should be kept strictly protected and should only be accessible
the owner of the private key. In the case of a website, the private key remains securely ensconced on
the web server. Conversely, the public key is intended to be distributed to anybody and everybody who
needs to be able to decrypt information encrypted with the private key (https://www.instantssl.com/ssl-
certificate-products/https.html).
8.2.6.2 SSL Certificates

Secure Sockets Layer or TLS certificates are data files that bind a cryptographic key to the details of
an organization. When SSL/TLS certificate is installed on a web server, it enables a secure connection
between the web server and the browser that connects to it. The website’s uniform resource locator (URL)
is prefixed with “https” instead of “http” and a padlock is shown on the address bar. If the website uses an
extended validation certificate, then the browser may also show a green address bar.
The SSL protocol is used by millions of online business to protect their customers, ensuring their
online transactions remain confidential. A web page should use encryption when it expects users to
submit confidential data, including personal information, passwords or credit card details. All web
browsers have the ability to interact with secured sites so long as the site’s certificate is issued by a
trusted CA.
The Internet has spawned new global business opportunities for enterprises conducting online com-
merce. However, that growth has also attracted fraudsters and cyber criminals who are ready to exploit
any opportunity to steal consumer bank account numbers and card details. Any moderately skilled
hacker can easily intercept and read the traffic unless the connection between a client (e.g., Internet
browser) and a web server is encrypted.
How Does SSL Work?
The process is the following (see Figure 8.14):
• An end-user asks his or her browser to make a secure connection to a website (e.g., https://www.
example.com).
• The browser obtains the IP address of the site from a DNS server and then requests a secure
connection to the website.
• To initiate this secure connection, the browser requests that the server identifies itself by send-
ing a copy of its SSL certificate to the browser.
• The browser checks the certificate to ensure:
• That it is signed by a trusted CA;
• That it is valid—that it has not expired or been revoked;
• That it confirms to required security standards on key lengths and other items;
• That the domain listed on the certificate matches the domain requested by the user.
• When the browser confirms that the website can be trusted, it creates a symmetric session key
which it encrypts with the public key in the website’s certificate. The session key is then sent
to the web server.
• The web server uses its private key to decrypt the symmetric session key.
• The server sends back an acknowledgment that is encrypted with the session key.
• From now on, all data transmitted between the server and the browser are encrypted and secure
(https://www.instantssl.com/ssl.html).
8.2.6.3 OAuth 2.0

OAuth 2.0 is a protocol that allows a user to grant limited access to resources on one site to another site,
without having to expose his or her credentials (https://auth0.com/docs/protocols/oauth2).
The OAuth 2.0 authorization framework has become the industry standard in providing secure access
to web application programming interfaces (APIs). OAuth allows users to grant external applications
FIGURE 8.14 How SSL works. (From https://www.instantssl.com/ssl.html.)

access to their data, such as profile data, photos, and email, without compromising security (https://
oauth2simplified.com/).
In any OAuth 2.0 flow, we can identify the following roles:
• Resource Owner: the entity that can grant access to a protected resource; typically this is the
end-user.
• Resource Server: the server hosting the protected resources; this is the API you want to
access.
• Client: the app requesting access to a protected resource on behalf of the Resource Owner.
• Authorization Server: the server that authenticates the Resource Owner and issues Access
Tokens after getting proper authorization, in this case, Auth0 (https://auth0.com/docs/protocols/
oauth2).
8.2.7 Cloud Security

Cloud computing security is a fast-growing service that provides many of the same functionalities
as traditional IT security. This includes protecting critical information from theft, data leakage and
deletion.
One of the benefits of cloud services is that it can be operated at scale and still remain secure. It is similar
to how security is managed, but currently there are new ways of delivering security solutions that address
new areas of concern. Cloud security does not change the approach on how to manage security from pre-
venting to detective and corrective actions, but it does give the ability to perform these activities in a more
agile manner.
Data are secured within data centers and where some countries require data to be stored in their coun-
try, choosing a provider that has multiple data centers across the world can help to achieve this.
Data storage often includes certain compliance requirements, especially when storing credit card num-
bers or health information. Many cloud providers offer independent third-party audit reports to attest that
their internal processes exist and are effective in managing the security within their facilities where data
are stored (https://aws.amazon.com/security/introduction-to-cloud-security/).
8.2.7.1 WebSockets
Web sockets are defined as two-way communication between servers and clients, which means both
parties communicate and exchange data at the same time (https://www.tutorialspoint.com/websockets/
index.htm).
The WebSocket protocol enables interaction between a web client (such as a browser) and a web server
with lower overheads, facilitating real-time data transfer from and to the server. This is made possible
by providing a standardized way for the server to send content to the client without being first requested
by the client and allowing messages to be passed back and forth while keeping the connection open.
In this way, a two-way ongoing conversation can occur between the client and the server. The commu-
nications are done over TCP port number 80 (or 443 in the case of TLS-encrypted connections), which
is of benefit for those environments that block non-web Internet connections using a firewall. Similar
two-way browser-server communications have been achieved in non-standardized ways using stop-gap
technologies such as Comet.
The WebSocket protocol is supported in most major browsers including Google Chrome, Microsoft
Edge, Internet Explorer, Firefox, Safari and Opera. WebSocket also requires web applications on the
server to support it (https://en.wikipedia.org/wiki/WebSocket).
8.2.8 Wireless Security

Wireless security is the first step in ensuring that a network stays safe. An encrypted wireless link to a
router with access protected with a password can keep unauthorized people from using your resources.
It’s important to understand the security aspects of a wireless connection and use them properly.
Choosing the right type of wireless security will determine how secure a system really is. The choice is
often dictated by what a router supports, but generally the choice consists of:
• Wired equivalent privacy (WEP)—an older standard that’s generally considered easy to break into.
• Wireless protected access (WPA)—better than WEP, but still considered to be a bit on the not-
so-secure side.
• WPA2—the most secure of the possible choices.
Once wireless security is established on the router, a strong password is required to keep it safe (https://
www.routercheck.com/wireless-security/).
8.2.9 Endpoint Security

Endpoint security (or) endpoint protection refers to protecting a business network when it is accessed by
remote devices such as smartphones, laptops, tablets or other wireless devices. It includes monitoring
status, software, and activities. The endpoint protection software is installed on all network servers and
on all endpoint devices.
With the proliferation of mobile devices such as laptops, smartphones, tablets, and notebooks, there
has been a sharp increase in the number of devices being lost or stolen. These incidents potentially
translate as huge loss of sensitive data for enterprises who allow their employees to bring in these mobile
devices (enterprise-provided or otherwise) into their enterprise.
To solve this problem, enterprises have to secure the enterprise data available on these mobile devices
of their employees in such a way that even if the device falls into the wrong hands, the data should stay
protected. This process of securing enterprise endpoints is known as endpoint security.
Apart from this, it also helps enterprises prevent any misuse of their data which they’ve made available
on the employee’s mobile devices, for example, a disgruntled employee trying to cause nuisance to the
enterprise or someone who may be a friend of the employee trying to misuse the enterprise data available
on the device (https://enterprise.comodo.com/blog/what-is-endpoint-security/).
8.3 IT-OT Cybersecurity Convergence

Successful IT-OT convergence requires close cooperation between the previously separate IT and OT
groups within an organization. Information technology and OT cybersecurity teams need to follow suit.
The convergence of their efforts will close gaps in existing, siloed programs and help defend the organi-
zation against new challenges (see Figure 8.15).
Many industrial companies still view IT and OT cybersecurity as separate challenges. Different con-
cerns and practices seem to justify siloed efforts and separation of responsibilities. However, attackers
are already exploiting gaps between IT and OT defenses. For example, spam phishing is commonly
used to gain privileges and entry into OT systems, and hackers are using heating, ventilation, and air
conditioning and other poorly defended OT systems as entry points into data centers and corporate IT
networks (https://www.arcweb.com/blog/it-ot-cybersecurity-convergence).
For many years, industrial systems relied upon proprietary protocols and software were manually
managed and monitored by humans and had no connection to the outside world. For this reason, they
were a fairly insignificant target for hackers as there was no networked interface to attack and nothing to
gain or destroy. The only way to infiltrate these systems was to obtain physical access to a terminal and
this was no easy task. OT and IT integrated little and did not deal with the same kinds of vulnerabilities.
Today, it’s a very different story as we see more industrial systems brought online to deliver big data
and smart analytics and adopt new capabilities and efficiencies through technological integrations. IT-OT
convergence gives organizations a single view of industrial systems together with process management
solutions that ensure accurate information is delivered to people, machines, switches, sensors and devices
FIGURE 8.15 OT or IT cybersecurity. (From https://www.nozominetworks.com/2018/09/05/blog/overcoming-it-ot-cyber-

security-convergence-roadblocks/.)
at the right time and in the best format. When IT and OT systems work in harmony, new efficiencies are
discovered, systems can be remotely monitored and managed and organizations can realize the same
security benefits that are used on administrative IT systems (https://www.forcepoint.com/cyber-edu/ot-
operational-technology-security). Figure 8.16 shows the increasing concern for OT cybersecurity.
While necessary, IT-OT cybersecurity convergence will be challenging, the different priorities, prac-
tices and technologies could be hard to reconcile. Cultural issues, such as overcoming the longstanding
distrust between IT and OT groups, can be an even larger hurdle. A convergence plan that anticipates
these roadblocks is essential (https://www.arcweb.com/blog/it-ot-cybersecurity-convergence).
Integrating IT and OT requires more than converging networking resources. It is critical that organiza-
tions avoid the pitfalls created by developing a parallel security team for the OT portion of their network.
FIGURE 8.16 Applied technology and data analytics services. Managing the risks of integrating IT and OT systems. (From
https://www.abs-group.com/Knowledge-Center/Insights/Infographic-Managing-the-Risks-of-Integrating-IT-and-OT-Systems/.)
The duplication of staff, training and resources is not only an expense that few organizations can sustain,
but resulting organizational gaps can raise governance, risk management and compliance issues.
Success in the new digital economy requires developing integrated networks to seamlessly leverage
all available resources, even those ICS/SCADA systems deep inside an OT network. While malicious
cyber actors demonstrate their ability to exploit the expanding digital attack surface, organizations
need to respond not by adding new isolated devices to their security wiring closet, but by deploying an
integrated security framework that prioritizes critical functions such as speed, collaboration, advanced
analytics and risk-based decision-making. Such an approach, built around a flexible fabric strategy,
enables comprehensive protection at machine speed and scale, while integrating appropriate solutions
across IT and OT environments into a single, centralized and automated security system (https://www.
csoonline.com/article/3283238/security/resolving-the-challenges-of-it-ot-convergence.html).
8.4 Risks and Threats of Sharing Data

As information systems become increasingly interdependent, there is an increased need to share cyber-
security data across government agencies and companies and within and across industrial sectors.
This sharing includes threat, vulnerability and incident reporting data, among other data. For cyberat-
tacks that include socio-technical vectors, such as phishing or watering hole attacks, this increased shar-
ing could expose customer and employee personal data to increased privacy risk (Bhatia et al., 2016).
To understand how risks and threats of sharing data can affect the data sharing, we must have to know
how it works the cybersecurity across the network where we share the data.
8.4.1 Threats to Cybersecurity and a Methodology to Address Them

Threats to a data communication system include the following:
• Destruction of information and/or other resources;

• Corruption or modification of information;
• Theft, removal or loss of information and/or other resources;
• Disclosure of information;
• Interruption of services.
Threats can be classified as accidental or intentional and may be active or passive. Accidental threats are
those that exist with no premeditated intent. Examples of realized accidental threats include system mal-
functions, operational blunders and software bugs. Intentional threats may range from casual examina-
tion, using easily available monitoring tools, to sophisticated attacks using special system knowledge. An
intentional threat, if realized, may be considered an “attack.” Passive threats are those which, if realized,
would not result in any modification to any information contained in the system(s), and where neither
the operation nor the state of the system is changed. The use of passive wiretapping to observe informa-
tion being transmitted over a communications line is a realization of a passive threat. Active threats to a
system involve the alteration of information contained in the system or changes to the state or operation
of the system (Recommendation ITU-T X.800, 1991).
Security features usually increase the cost of a system and may make it harder to use. Before design-
ing a secure system, therefore, a recommended practice is to identify the specific threats against which
protection is needed. This is known as threat assessment. A system is vulnerable in many ways, but
only some are exploitable because the attacker lacks the opportunity or because the result does not jus-
tify the effort and risk of detection.
Threats are against assets; thus, the first step is to list the assets that require protection. The next step
of the assessment is a threat analysis, then a vulnerability analysis (including impact assessment), coun-
termeasures and security mechanisms.
1. Identifying the vulnerabilities of the system;

2. Analyzing the likelihood of threats aimed at exploiting these vulnerabilities;
3. Assessing the consequences if each threat were to be successfully carried out;
4. Estimating the cost of each attack;
5. Costing out potential countermeasures;
6. Selecting the security mechanisms that are justified (possibly by using cost-benefit analysis).
In some cases, nontechnical measures, such as insurance coverage, may be a cost-effective alterna-
tive to technical security measures. In general, perfect technical security is not possible. The objective,
therefore, should be to make the cost of an attack high enough to reduce the risk to acceptable levels
(Recommendation ITU-T X.800, 1991).
8.4.2 End-to-End Communications Security

End-to-end network security addresses the global security challenges of service providers, enterprises
and consumers and is applicable to wireless, optical and wireline voice, data and converged networks.
The architecture addresses security concerns for the management, control and use of network infrastruc-
ture, services and applications.
The security architecture logically divides a complex set of end-to-end network security-related
features into separate architectural components. This separation allows for a systematic approach to end-
to-end security that can be used to plan new security solutions and to assess the security of the existing
networks. Eight dimensions that protect against all major security threats are the following:
1. Access control;
2. Authentication;
3. Non-repudiation;
4. Data confidentiality;
5. Communication security;
6. Data integrity;
7. Availability;
8. Privacy.
In order to provide an end-to-end security solution, the security dimensions are applied to a hierarchy of
network equipment and facility groupings, called security layers:
1. Infrastructure security layer;

2. Services security layer;
3. Applications security layer.
The security layers identify where security is addressed in products and solutions by providing a
sequential perspective of network security. For example, security vulnerabilities are first addressed for
the infrastructure layer, then for the services layer and finally the applications layer. Figure 8.17 depicts
how the security dimensions are applied to security layers to reduce vulnerabilities at each layer.
A security plane is a certain type of network activity protected by security dimensions. Three security
planes represent the three types of protected activities that occur on a network (Recommendation ITU-T
X.805, 2003). The security planes are:
1. Management plane;
2. Control plane;
3. End-user plane.
FIGURE 8.17 Applying security dimensions to security layers. (From Recommendation ITU-T X.805, Security architec-
ture for systems providing end-to-end communications, 2003.)
These security planes address specific security needs associated with network management activi-
ties, network control or signaling activities and end-user activities correspondingly. Networks should
be designed in such a way that events on one security plane are kept isolated from the other security
planes. For example, a flood of domain name system (DNS) lookups on the end-user plane, initiated by
end-user requests, should not lock out the operations, administration, maintenance and provisioning
(OAM&P) interface in the management plane that would allow an administrator to correct the problem
(Recommendation ITU-T X.805, 2003).
Figure 8.18 illustrates the security architecture with the security planes included. The concept of secu-
rity planes allows the differentiation of the specific security concerns associated with those activities
and the ability to address them independently. For example, in a VoIP service, which is addressed by the
services security layer, the task of securing the management of the service should be independent of the
task of securing the control of the service. The task is independent of the task of securing the end-user
data being transported by the service (e.g., the user’s voice).
8.4.3 Possible Network Protection Strategies

Security includes all the architectural layers of a network. This approach enables a higher layer to define
its own security requirements at that specific layer and to use the security services of the lower levels.
The layered security approach allows the development of flexible, scalable security solutions across the
network level, application level and management level for all organizations.
FIGURE 8.18 Security planes reflecting different types of network activities. (From Recommendation ITU-T X.805,
Security architecture for systems providing end-to-end communications, 2003.)
8.4.3.1 Closed Loop Policy Management

A properly designed and implemented security policy is an absolute requirement for all types of
organizations. The security policy typically is a living document and process, which is enforced,
implemented and updated to reflect the latest changes in the organization’s infrastructure and service
requirements.
The security policy clearly identifies the resources in the organization that are at risk and resulting
threat mitigation methodologies. It provides for vulnerability and risk assessment and defines appro-
priate access control rules. Risk and vulnerability assessment is performed at all levels of the network.
The policy helps identify and discover security violations and states the specified violation responses.
Information technology and network administrators should perform vulnerability assessment on their
networks, following the principle of the least privilege access. They should ensure that audit trails are
reviewed, thus closing the loop on policy management. If problems are discovered in the audits, they
ensure the policy is updated to reflect the revised actions.
A security policy that is not enforced is worthless. The enforcement of the security policy is dependent
on people. There should be clear responsibility and accountability for policy enforcement.
8.4.3.2 Uniform Access Management

The term uniform access management is used to define systems that may make use of both authentication
and authorization services in order to control the use of a resource. Authentication is the process which a
user or entity requests the establishment of an identifier to a network. Authorization determines the level
of privileges of that entity based on access control. The control of the level of access is based on a control
policy definition and its enforcement. Figure 8.19 depicts the reference model for secure authentication
and authorization (ITU-T X.1205, 2008).
Approaches to access management include IP source filtering, proxies and credential-based tech-
niques. Each approach has its advantages and limitations. Depending on the type of the enterprise and
within a given type, more than one or a combination of approaches may be used. For example, an enter-
prise may choose to manage access for workstations using IP source filtering and to use a credential-
based scheme for other users.
Several methods can be used to authenticate a user. Techniques include passwords, one-time pass,
biometric techniques, smart cards and certificates. Password-based authentication must use strong
passwords (e.g., that are at least eight characters in length with at least one alphabetic, one numeric
and one special character). Password authentication alone may be insufficient. Based on vulnerability
FIGURE 8.19 Secure authentication and authorization reference model. (From ITU-T X.1205, Overview of cybersecurity,
2008.)
assessment, it may be necessary to combine password authentication with other authentication and
authorization processes, such as certificates, lightweight directory access protocol (LDAP), remote
authentication dial-in user service (RADIUS), Kerberos and PKI.
All authentication mechanisms have advantages and drawbacks. UserID or password combinations
are simple, low cost and easy to manage; however, remembering a multitude of complex passwords is
very difficult for users. Two-factor and three-factor authentication systems add additional authentication
strength; however, all are costly, add additional complexity and are difficult to maintain.
A “single password” system with enforced strong passwords can be a good solution for enterprise
authentication and authorization. Such system provides high authentication security, granular authoriza-
tion and is easier to administer. With this system, a user’s strong single password is synchronized with
many applications and systems enterprise wide for authentication and authorization. All enterprise sys-
tems and applications automatically refer authentication and authorization functions to the single pass-
word system. As users only have to remember is one strong password making the system simple to use
and not likely to be bypassed. The advantages to single-password system are:
• Single consistent method for setting passwords.

• Single consistent method for authentication and authorization.
• Single method for registration and termination of user accounts.
• Enforcement of corporate password strength guidelines.
• Consistency—users know what to do.
• Standardization—easy to support and adopt.
• Fast—standard interface and APIs.
• Lower costs, lower help calls.
The open and the extended enterprise face the most challenges when designing their access manage-
ment policy. It is advantageous to consider access management as an integral component of the security
policy. These organizations should design a uniform access management system with fine-grained rules
that properly interfaces with:
• Directories and databases holding identity attributes;

• Multiple authentication systems such as password, Kerberos, TACACS and RADIUS;
• Hosts, applications and application servers.
The use of unique accounts for each administrator with accountability for actions traceable to individu-
als is recommended (ITU-T X.1205, 2008).
8.4.4 Variable Depth Security

Security solutions based on the layered approach are flexible and scalable. The solution is adaptable to the
security needs of an enterprise (ITU-T X.1205, 2008). The following solutions can be effectively layers.
8.4.4.1 Virtual Local Area Networks (VLANs)

A VLAN is a group of network devices, such as servers and other network resources, configured to
behave as if they were connected to a single, network segment. In a VLAN, the resources and servers of
other users in the network will be invisible to each of the other VLAN members.
Virtual local area networks restrict the dissemination of broadcast and node-to-node traffic, so that the bur-
den of extraneous traffic is reduced throughout the network. All packets traveling between VLANs may also
pass through a router, as router-based security measures can be implemented to restrict access to the segment.
Basic network compartmentalization and segmentation can be achieved by VLANs. This allows
various business functions to be contained and segmented into their own private local area networks
with cross-traffic from other VLAN segments controlled or prohibited. There are several benefits
derived from the deployment of VLANs across an organization’s multiple sites. For example, the use
of VLAN “tags” allows the segregation of traffic into specific groups such as finance, human resources
and engineering. Separation of data without “leakage” between the VLANs is an important element
for security.
8.4.4.2 Firewalls
The second layer of security can be achieved through the use of perimeter and distributed firewall filter-
ing capabilities at strategic points within the network. The firewall layer allows the network to be further
segmented into smaller areas and enables secure connections to the public network. Firewalls limit
access to inbound and outbound traffic to those protocols that are explicitly configured within the fire-
wall. An authentication capability for incoming or outgoing users can also be provided. Those firewalls
that support NAT enable optimization of IP addresses within the network (address allocation for private
Internets) [IETF RFC 1918].
The use of firewalls provides an extra layer of protection that is useful for access control. The applica-
tion of policy-based access allows the customization of access based on business needs. The use of a
distributed firewall approach affords the additional benefit of scalability as the enterprise needs evolve.
Personal firewalls can be deployed on end systems to ensure application integrity.
8.4.4.3 Layer 3 Virtual Private Networks

Layer 3 VPNs can be added as a third layer for enhanced security. Virtual private networks s provide a
finer granularity of user access control and personalization and enable secure remote access for remote
sites and business partners. With VPNs, the use of dedicated lines is not necessary. The use of dynamic
routing over secure tunnels across the Internet provides a highly secure, reliable and scalable solution.
The use of VPNs in conjunction with the use of VLANs and firewalls allow the network administrator
to limit the access by a user or user group based upon policy criteria and business needs. Virtual private
networks provide stronger assurance of data integrity and confidentiality. Strong data encryption can be
enabled at this layer for providing confidentiality and data integrity.
8.4.5 Securing Management

Whether considered a “best practice” or an integral part of an organization or enterprise security archi-
tecture, a secure management channel or plane is the foundation for all other elements of the network’s
management, performance and survivability. Figure 8.20 proposes a reference model for securing net-
work management for network operations center (NOC).
Secure management is a holistic approach rather than a security feature set on a given network ele-
ment. It should cover critical areas of network infrastructure and provide specific actions to mitigate
potential threats to the network.
Nine key network management domains should be addressed by security before a network’s manage-
ment plane can be considered secure:
• Secure activity logs;

• Network operator authentication;
• Access control for network operators;
• Encryption of network management traffic;
• Secure remote access for operators;
• Firewalls;
• Intrusion detection;
• OS hardening;
• Virus-free software (ITU-T X.1205, 2008).
FIGURE 8.20 Reference model for securing management. (From ITU-T X.1205, Overview of cybersecurity, 2008.)
8.4.5.1 Secure Activity Logs

Secure logs can be used to create an audit trail of user or administrator activities and events generated by the
device itself, a critical element of closing the loop on policy management. The raw data collected are called
the “audit log,” and the verifiable path of events through the audit logs is the “audit trail.” To be effective,
security audit logs have to contain sufficient information for after-the-fact investigation or analysis of security
incidents.
These audit logs provide a means to accomplish several security-related objectives, including indi-
vidual accountability, reconstruction of past events, intrusion detection and problem analysis. Logs can
also be used for long-term trend analysis. Audit log information helps identify the root cause of a security
problem and prevent future incidents. For instance, audit logs can be used to reconstruct the sequence of
events that led up to a problem, such as an intruder gaining unauthorized access to system resources, or
a system malfunction caused by an incorrect configuration or a faulty implementation.
This information should be securely stored.
8.4.5.2 Authentication
Network operator authentication should be based on strong centralized authentication of network opera-
tors and administrators. Centralized administration of passwords enables enforcement of password
strength and removes the need for local storage of passwords on the network elements and element
management system (EMS) systems. Remote authentication dial-in user service is the basic mechanism
of choice for automating centralized authentication.
8.4.5.3 Access Control

Good practice for access control for network operators should be used. For example, to determine the
authorization level, techniques based on RADIUS server-based techniques can be used to provide a basic
level of access control with the addition of an LDAP server to provide more fine-grained access control
should this be necessary.
8.4.5.4 Encryption of Network Management Traffic

Encryption is recommended for all data traffic used in a network management capacity to ensure data
confidentiality and integrity. Corporations are increasingly using in-band network management; thus,
separation of management traffic through the use of encryption is necessary.
Encryption of management traffic provides a high degree of protection against insiders with the excep-
tion of the small group of insiders that have legitimate access to the encryption keys. Encryption between
NOC clients and EMS servers and/or network elements should be provided. This includes simple network
management protocol (SNMP) traffic, because there are known vulnerabilities with SNMP v1 and v2;
these are addressed in SNMP v3.
Depending on traffic type, the security protocols to use for these links are TLS, IPSec and secure shell
(SSH) (IETF RFC 4252, 2006).
• SSH is an application level security protocol that directly replaces Telnet (IETF RFC 854,
1983) and file transfer protocol (FTP) (IETF RFC 959, 1985), but cannot normally be used to
protect other traffic types.
• IPSec protocol runs just between the network layer (layer 3) and the transport layer (layer 4) and
can be used to protect any type of data traffic independent of applications and protocols used.
It is the preferred method, but SSH can be used if the traffic consists of Telnet and FTP only.
• TLS technology can protect HTTP traffic when used in a network management capacity
between the NOC clients and the EMS and/or network elements.
• External IPSec VPN devices can be used in various parts of the network to secure management
traffic.
8.4.5.5 Secure Remote Access for Operators

Security has to be provided for operators and administrators who manage the network from a remote
location over a public network. Providing a secure VPN using IPSec is the preferred solution, as this will
provide strong encryption and authentication of all remote operators. For example, a VPN product could
be placed at the management system interface, and all operators should be equipped with extranet access
clients for their laptop or workstations.
8.4.5.6 Firewalls
It is a good practice for the application of variable depth security principles to partition the network man-
agement environment through the use of VLANs and firewalls (see Section 8.4.4). The firewall controls
the type (protocol, port number, source and destination address) of traffic used to transit the boundary
between different security domains. Depending on the type of firewall (application versus packet filter-
ing), this can be extended to include filtering of the application content of the data flow. Firewall place-
ment, type and filtering rules are specific to the particular network implementation.
8.4.5.7 Intrusion Detection

Host-based intrusion detection systems can be incorporated into management servers to defend against
network intrusions. Intrusion detection systems can be used to warn network administrators of the pos-
sibility of a security incident such as a server compromise or DoS attack.
8.4.5.8 OS Hardening
All operating systems used in a network management capacity should be hardened whether they are gen-
eral purpose operating systems or embedded real-time operating systems. For operating systems without
a specific hardening guide, the operating system manufacturer should be consulted to obtain the latest
hardening patches and procedures.
8.4.5.9 Virus-Free Software

All software, whether developed in-house or bought from a third party, has to be examined and ensured
to be virus free to the maximum extent possible. A process has to be developed for virus checking, which
will involve scanning all software with a specified virus detection tool before incorporating the software
into a product (ITU-T X.1205, 2008).
8.4.6 Layered Security across the Application, Network and Network Management
Every organization has a different security threshold and different technology infrastructure. Internet-
enabled applications represent increased risks and threats. They can have built-in security at the application
level. Using the security functionality that could be provided by lower network layers could enhance security.
Enterprises with Internet presence are cautioned to use extreme care in designing their sites.
1.
At the application level, a fine-grained security policy is recommended. Where possible, objects
should be addressable at the uniform resource identifiers level. Unneeded functionality should
be disabled. Where possible, TLS should be used. Application level gateways and a focus on
strong authentication and authorization are also recommended. If the security infrastructure
allows, e-mail services should be secured using secure/multipurpose internet mail extensions
(S/MIME) (IETF RFC 2311, 1998) or techniques such as pretty good privacy (PGP) (IETF
RFC 1991, 1996).
2.
At the network level, security is achieved through the use of layered architecture that can be
customized as per the security requirements of each type of enterprise.
Securing network management traffic is an essential requirement for securing the network:
• This can be achieved by first ensuring that the operating system is hardened against known
threats. The operating system manufacturer should be consulted to obtain the latest OS harden-
ing patches and procedures.
• Steps should be performed to check that all installed software is free from known viruses.
• It is preferable to encrypt all management traffic all the time using IPSec or TLS to protect
HTTP traffic. Encryption is a good and recommended practice if the traffic is traveling outside
the local LAN.
• SNMPv3 and RADIUS are recommended for remote access control for network operators,
with multiple levels of control mechanisms that include the use of strong passwords and the
ability to centrally administer access control system is preferred.
• Secure logs are essential for logging network management traffic.
8.4.7 Network Survivability Even under Attack

In today’s environment, the enterprise network supports mission-critical operations and is essential for
conducting business. The network is assumed to be secure, reliable and available for business partners
all the time.
Network reliability ensures the appropriate operation of a network when software and/or hardware
components fail. However, when security threats are present, the concept of survivable networks is the
paradigm. A survivable network is a network that continues to fulfill a minimum set of essential functions
in a timely manner in the presence of attacks, even if parts of the network are unreachable or have failed.
One characteristic of survivable networks is adaptability. For example, the network can re-route traffic
from one server to another if an intrusion or an attack is detected on the first server.
A clear strategy is needed on how to deal and recover from an attack. Depending on the type of attack,
there may be several resistance, identification and recovery strategies that the network administrator may
want to consider.
The design of survivable networks starts by organizing network services into two categories, essential
and nonessential.
During the security policy design phase, it is necessary to determine the essential services that a network
is expected to deliver even under attack. This phase identifies how a network will resist an attack, how the
network will overcome such attacks and the best approach for recovering from such attacks. Management
systems, hosts, applications, routers and switches are all typical elements to consider in the analysis.
The resistance to attacks is increased by the use of access control mechanisms with strong authentication
and encryption. The use of message and packet filtering and network and server segmentation also enhance
network resistance. The use of appropriate intrusion detection techniques can help to identify an attack.
Appropriate back-up techniques can be used for system and network recovery (ITU-T X.1205, 2008).
8.4.8 Attacker Techniques

8.4.8.1 Taxonomy of Security Threats
IT professionals are advised to view their network as a resource that will be accessed by users that can-
not be trusted. Many tools, techniques and methodologies are available for attackers to compromise a
network. Hackers can use these tools to launch multilevel attacks. In some cases, the attacker will exploit
a security compromise and then use secondary attacks to exploit other parts of the network.
The following techniques, tools and methodologies are used by attackers, hackers and intruders to
compromise a network.
• Authorization threats
Unauthorized access to network resources is usually the result of improper system configuration
and usage flaws. Attackers can obtain unauthorized access by taking advantage of insufficient
authentication and authorization of users and tasks in corporate systems or sloppy employee
practices (e.g., posting passwords, when the user is forced to remember multiple passwords).
Practices, such as the improper allocation of hidden space and sharing privileges among appli-
cations, represent serious sources of vulnerabilities. Trapdoor attacks can be used to obtain
unauthorized access. For example, attackers can obtain unauthorized access by guessing user
names and passwords using a dictionary of common strings. Attackers can derive passwords by
algorithmic means. Passwords can be captured in transit if they are sent in the clear.
After guessing the user name and the associated password, the attacker will have access to the
organization resources. The level of access is dependent on the privileges that the compromised
account has. The amount of damage that the attacker can inflict on the organization is depen-
dent on his or her intent. In most cases, hackers will use the compromised account to install a
backdoor entry to the enterprise.
Protocols for remote access to e-mail, such as IMAP, POP3 and POP2, use simple username and
password authentication techniques. These protocols can be used to facilitate brute force attacks.
There are published methods that allow attackers to remotely exploit the services of these protocols.
There are even more sophisticated ways of gaining unauthorized access. Worms can be used
to perform system-spoofing attacks whereby one system component masquerades as another.
For example, worms can exploit flows in the debug option of sendmail and in.rhosts (e.g.,
used in UNIX) due to weak authentication. The debug option of sendmail can be turned OFF.
Leaving the option ON is an example of a usage flaw.
• IP spoofing
IP spoofing is a complex attack that exploits trust relationships. Using masquerade techniques,
the attacker hijacks the identifiers of a host to sabotage the security of the target host. As far as
the target host knows, it is carrying on a conversation with a trusted host.
In this assault, the attacker first identifies a trusted host whose identifier will be hijacked. Then
the attacker determines the patterns of trust for the host. This usually involves the determination
of the range of IP addresses that the host trusts. The next step involves disabling the host,
because the attacker will hijack its identifiers. This could be achieved by such techniques as
TCP SYN flooding attacks.
IP spoofing attacks can succeed because it is easy to forge IP addresses and network-based address
authentication techniques have limitations. The IP spoofing attack is blind, because the attacker
may not have access to the responses from the target host. However, the attacker can obtain a
two-way communication if the routing tables are manipulated to use the spoofed source IP address.
IP spoofing attacks are often used as a first step for other assaults such as DoS and flooding attacks.
Most (but certainly not all) Internet service providers and many of the more responsible enter-
prise networks are currently doing outgoing address filtering, which precludes straight IP
spoofing attacks. In response to this, attackers have been busy accumulating “botnets” to main-
tain their anonymity (ITU-T X.1205, 2008).
• Network sniffers
Network sniffers were originally designed as an aid tool to network managers to allow them to
diagnose problems, perform analysis or improve the performance of their networks. Network
sniffers work in a network segment that is not switched, such as segments connected through a
hub. In this way, the sniffer can see all traffic on that segment.
Sniffers originally read packet headers of the network traffic and focused on identifying low-
level packet characteristics, such as source and destination address. However, sniffers can
now decode data from packets across all layers of the OSI model.
Attackers can use sniffers to view user information and passwords from packets across public
or private networks. By using sniffers, attackers can obtain valuable information about user
names and passwords, in particular from applications such as FTP, Telnet and others that send
passwords in the clear. Protocols for remote access to e-mail such as IMAP, POP3 and POP2 use
simple username and password authentication techniques and are susceptible to sniffer attacks.
As users tend to reuse passwords across multiple applications and platforms, attackers can use the
acquired information to obtain access to various resources on the network, where their confidenti-
ality could be compromised. These resources could also be used as launch pads for other attacks.
In general, attackers are able to use networks sniffers by compromising the physical security of
the corporation. This is equivalent to someone walking into the enterprise and plugging his or
her laptop to the network. The risks are also applicable to wireless networks, whereby someone
in the parking lot can acquire access to the corporation local network. Gaining access to the
core packet network allows the attacker to determine configurations and modes of operation for
further exploitation (ITU-T X.1205, 2008).
• Denial of service (DoS)

Denial of service attacks focus on preventing legitimate users of a service from the ability to
use the service. They are easy to implement and can cause significant damage. They can disrupt
the operation of the enterprise and disconnect it from the rest of the world. Distributed DoS
attacks use the resources of more than one machine to launch synchronized DoS attacks on a
resource.
Denial of service attacks can take various forms and target a variety of services, but they focus
on exhausting network, servers, host and application resources. Some DoS attacks focus on
disrupting network connectivity. For example, the SYN flooding attack uses bogus half-open
TCP connection requests that exhaust memory capacity of the targeted resource. These types of
attacks can prevent legitimate users from accessing hosts, web applications and other network
resources. Denial of service attacks can:
• Deny network connectivity to the Internet;
• Deny network element availability to legitimate users;
• Deny application availability to legitimate users.
Denial of service attacks exploit weaknesses in the architecture of the system that is under
attack. In some cases, they exploit the weakness of common IPs, such as the Internet control
message protocol (ICMP). For example, some DoS attacks send a large number of ICMP echo
(ping) packets to an IP broadcast address. The packets use a spoofed IP address of a potential
target. The replies coming back to the target can cripple it. These types of attacks are called
smurf attacks. Another form of attack uses user datagram protocol (UDP) packets but works on
the same concept (ITU-T X.1205, 2008).
• Bucket brigade attacks
Bucket brigade attacks are also known as man-in-the-middle attacks. In this kind of assault, the
attacker intercepts messages in a public key exchange between a server and a client. The attacker
retransmits the messages, substituting their public key for the requested one. The original par-
ties will think they are communicating with each other. The attacker may just have access to
the messages or may modify them. Network sniffers can be used to launch such attacks.
• Back door traps

Back doors are quick methods of access network resources that could:
• Have been deliberately placed by system developers to allow quick access during develop-
ment and have not been turned off upon delivery;
• Have been placed by employees to facilitate performance of their duties;
• Be part of standard operating system installs that have not been eliminated by hardening
such as default user logon ID and password combinations;
• Be placed by disgruntled employees to allow access after termination;
• Have been created by the execution of malicious code, such as viruses.
• Masquerading
This entails pretending to be valid maintenance or engineering personnel to access the network
and is just the tip of the iceberg of a range of threats that build on physical security holes and
human vulnerabilities. For example, the intruder can modify data relating to configuration
management and signaling layers of network, as well as to billing and usage data.
• Replay attacks
This attack occurs when a message or part of a message is repeated to produce an unauthorized
effect. For example, an entity replies a valid message containing authentication information in
order to authenticate itself.
• Modification of messages
Modification of a message occurs when the content of data transmission is altered without
detection and results in an unauthorized effect.
• Insider attacks
Insider attacks occur when legitimate users of a system behave in unintended or unauthorized
ways. Many known computer crimes involve insiders who compromise the security of the sys-
tem. Careful screening of staff and continued securitization of hardware, software and security
policy can help to reduce risks of insider attacks. Having good audit trails to increase the likeli-
hood of detecting such attacks is also a good practice to follow (ITU-T X.1205, 2008).
• Application layer attacks

Application layer attacks can take various forms and use various methods. As web hosts are
accessible by the public at large at known ports addresses as specified by protocols such as
HTTP (port 80), hackers can use this knowledge to launch attacks capable of bypassing firewalls.
Application layer attacks exploit vulnerabilities in the operating system and applications to
gain access to resources. Improper configuration and authorization can lead to security holes.
For example, a host might be a web server and should provide anyone with requested web
pages. Security policy could specify that hosts restrict shell command access to authorized
administrators.
Account harvesting targets the authentication process when an application requests a user logon
ID and a password. Applications that generate different error messages for wrong user logon ID
and wrong password are vulnerable to this type of attack. Based on the type of error message,
an intruder can customize an attack that first determines a valid user logon ID and then uses
other forms of password-cracking techniques to obtain the password.
Application layer attacks can be based on viruses, worms, buffer overflow and password
harvesting, among others. The advent of web services and single sign-on technologies only
aggravate the problem, because they tend to web-enable legacy-based applications. These
applications were not designed with web connectivity and security in mind.
Some application layer attacks are aimed at just dismantling the website. Other attacks poison
a website’s cookies to gain illegitimate information about a particular server. Applications gen-
erally do not check the validity of cookies and can become the victims of executing malicious
code that is hidden in the cookies. There are known vulnerabilities in current browsers that
allow cookies-based attacks.
An attacker may also use cross-site scripting technique to insert malicious code in the form of
a script tag that is added to a URL. The code will be executed when an unsuspected user clicks
on that URL.
To reduce the threats of application layer attacks, the following are recommended:
• The use of TLS can solve some of the problems of the security at the application layer,
but SSL does not fully protect web applications. Attacks, such as account harvesting and
password cracking, can still be launched even if SSL is used.
• Harden all operating systems used in a network management capacity whether they are
general purpose operating systems or embedded real-time operating systems. Specific
and up-to-date hardening guides are available from the manufacturer. For some legacy
systems using older operating systems, no security patches might be available from the
manufacturer.
• Use secure e-mail, application layer firewalls, host intrusion prevention and detection sys-
tems, strong authentication techniques, strong passwords and proper exit control in web-
sites that prevent displaying of unauthorized modifications web content (ITU-T X.1205,
2008).
• Network layer threats

Extended and open enterprises are particularly vulnerable to network layer attacks. A number
of serious security threats are commonly associated with the network infrastructure. These
threats include sabotage, vandalism, bad system configuration, DoS, snooping, industrial espi-
onage and theft of service. Attacks may be launched from inside the network by insiders and
from external sources such as hackers.
Recent developments in hacker technology, such as mobile terminal-based port scanners, dem-
onstrate that attacks on network infrastructure can originate from the mobile terminal as well.
It is recommended that a good security policy and a well-understood security process should
be developed to protect the network infrastructure. Switches, routers, access points, remote
access servers, wireless access points, hosts and other resources are typical assets that deserve
protection.
The following network infrastructure threats and vulnerabilities are typical of IP packet
networks:
1. Proliferation of insecure protocols: Some networks still use protocols known to have secu-
rity vulnerabilities. Such protocols include ICMP, Telnet, SNMPv1&2, DHCP, TFTP,
RIPv1, NTP, DNS and HTTP.
2. Use of weak, locally managed, static passwords: Some networks still allow the use of weak
passwords based on short, common dictionary words that are easy to guess. Some adminis-
trators may use one password across network elements, and this may be shared and known
by all administrators.
3. Unprotected security information: In some networks, critical information such as password
files is not encrypted. Other information, such as passwords, is sent in the clear across the
network. Firewall rule sets are improperly set and weak cryptographic keys are used.
4. Unauthenticated software loads and configuration files: Threats to networks can come
from loading incorrect or malicious software, or configuration files can cause loss of ser-
vice and may result in poor performance. This practice may open security holes such as the
installation of Trojan horses or other malicious code by insiders or outsiders. The practice
also leads to incorrect configurations on devices.
5. Non-hardened network elements and operating systems: Threats to networks can arise
from factory default operating system loads that are not hardened against common attacks.
This includes the running of unnecessary services, with default accounts and passwords left
enabled.
6. Management ports and interfaces unnecessarily exposed to the public network: Threats to
networks can arise from in-band management interfaces that are left accessible to the public
Internet. Additional threats can arise from support mechanism abuse, such as access to core
network in a support mode via dial-up, ISDN or other connection.
• Unauthorized access
Unauthorized access is a term that can refer to a number of different kinds of attacks. The ulti-
mate goal of the attacker is to gain access to some resource illegitimately. This is a security
problem for all types of enterprises. Any enterprise that enables Internet access or remote LAN
access capabilities is susceptible to unauthorized access attacks.
Remote access services that enable traveling employees to dial in for e-mail access, remote
offices connected via dial-up lines, intranets and extranets that connect outside parties to the
enterprise network can cause the network to be vulnerable to hackers, viruses and other attack-
ers. Hackers can use the tools of the trade to acquire access to the enterprise network where
sensitive information can be jeopardized, or the network can be used to launch attacks against
other networks (ITU-T X.1205, 2008).
8.4.9 Fields of Cybersecurity Technology

The sophistication and effectiveness of attack technology are always advancing. Intruders can quickly
develop attacks to exploit vulnerabilities discovered in products. Attackers can automate these attacks
and make them available for use by the general public. Examples of technologies to combat cyber threats
are provided in Table 8.1 (ITU-T X.1205, 2008).
8.4.10 Data Encryption and Access Control of Cloud Storage

The attribute-based encryption (ABE) algorithm includes key-policy ABE (Yu et al., 2010) and ciphertext-
policy ABE (Bethencourt et al., 2007). ABE decryption rules are contained in the encryption algorithm,
avoiding the costs of frequent key distribution in ciphertext access control. However, when the access control
strategy changes dynamically, a data owner is required to re-encrypt the data (Li et al., 2010). A semi-trusted
agent with a proxy key can re-encrypt ciphertext; however, the agent cannot obtain the corresponding plain-
text or compute the decryption key of either party in the authorization process (Wang et al., 2010).
TABLE 8.1
Cybersecurity Technologies
Techniques Category Technology Purpose
Cryptography Certificate and Digital signatures Used to enable the issuance and maintenance of certificates
public key to be used in digital communications
architecture Encryption Used encryption of data during transmission or storage
Key exchange Establish either a session key or a transaction key to be used
to secure a connection
Assurance Encryption Ensures data authenticity
Access Perimeter Firewalls Control access to and from a network
control protection Content Monitors traffic for noncompliant information
management
Authentication Single factor A system that uses user ID or password combinations to
verify an identifier
Two-factor A system that requires two components in order to grant a
user system access, such as the possession of a physical
token plus the knowledge of a secret
Three-factor Adds another identification factor such as a biometric or
measurement of a human body characteristic
Smart tokens Establish trusted identifiers for users through a specific
circuitry in a device, such as a smart card
Authorization Role-based Authorization mechanisms that control user access to
appropriate system resources based on its assigned role
Rule-based Authorization mechanisms that control user access to
appropriate system resources based on specific rules
associated with each user independent of their role within
an organization
System Antivirus Signature Protect against malicious computer code, such as viruses,
integrity methods worms, and Trojan horses using their code signatures
Behavior Checks running programs for unauthorized behavior
methods
Integrity Intrusion Can be used to warn network administrators of the
detection possibility of a security incident, such as files on a server
are compromised
Audit and Detection Intrusion Compare network traffic and host log entries to match data
Monitoring detection signatures that are indicative of hackers
Prevention Intrusion Detect attacks on a network and take actions as specified by
prevention the organization to mitigate the attacks. Suspicious
activities trigger administrator alarms and other
configurable responses
Logging Logging tools Monitor and compare network traffic and host log entries to
match data signatures and host address profiles indicative
of hackers
Management Network Configuration Allows for the control and configuration of networks and
management management fault management
Patch Install latest updates, fixes to network devices
management
Policy Enforcement Allow administrators to monitoring and enforce security
policies
Source: ITU-T X.1205, Overview of cybersecurity, 2008.
A fully homomorphic encryption (FHE) mechanism permits a specific algebraic operation based on
ciphertext that yields a still-encrypted result (Gentry, 2009). More specifically, retrieval and compari-
son of the encrypted data produce correct results, but the data are not decrypted throughout the entire
process. The FHE scheme requires very substantial computation, and it is not always easy to implement
with existing technology. Ciphertext retrieval with a view toward data privacy protection is possible in
the cloud (Ananthi et al., 2011; Hu et al., 2011; Cao et al., 2011).
In a new cryptographic access control scheme, attribute-based access control for cloud storage, each
user’s private key is labeled with a set of attributes, and data are encrypted with an attribute condition
restricting the user to be able to decrypt the data only if its attributes satisfy the data’s condition (Hong
et al., 2010). Distributed systems with information flow control (Zeldovich et al., 2008) use a tag to track
data based on a set of simple data tracking rules. They allow untrusted software to use private data but
use trusted code to control whether the private data can be revealed (Dong et al., 2015).
All companies today face a greater demand for wireless access from customers, suppliers, and/or
employees. Unfortunately, hackers also continue to try to gain access within networks. The following
are the main threats:
• Wi-Fi password cracking: Wireless access points that still use old security protocols, such as
WEP, are easy targets because passwords are very easy to crack.
• False hotspots: Nothing physically prevents a cybercriminal from allowing an outside access
point to be close to or coincident with an service set identifier (SSID) access point, inviting
users to identify themselves. Users who are victims of a rogue access point are likely to be
affected by malicious code, which often goes unnoticed.
• Malware placement: Users who join a wireless guest network are susceptible to unknowingly
taking unwanted malware from a neighbor with bad intentions. A common tactic used by hackers
is to place a backdoor in the network, which allows them to return later to steal confidential data.
• Spying: Users run the risk of their private communications being intercepted by cyber-spies
while an unprotected wireless network is connected.
• Data theft: Joining a wireless network exposes users to the loss of private documents that fall
into the hands of cyber thieves, who are listening to the transmissions to intercept the informa-
tion that is being transmitted.
• Inappropriate and illegal use: Companies that offer Wi-Fi to guests face the risk of improper
use by users, whether by accessing adult or extremist content, illegal downloads or attacks
against other companies. The company could face legal demands.
• Bad neighbors: As the number of wireless users in the network grows, so does the risk that a previ-
ously infected device enters the network. Mobile attacks, such as Android’s Stagefright, spread
from one user to another, even without the “victim zero” knowing (https://www.networkworld.
es/seguridad/principales-amenazas-para-la-seguridad-de-las-redes-inalambricas).
8.5 Blockchains in Cybersecurity

Blockchains are tamper-evident and tamper-resistant digital ledgers implemented in a distributed man-
ner (i.e., without a central repository) and usually without a central authority (i.e., a bank, company or
government). At their basic level, they enable a community of users to record transactions in a shared
ledger within that community, such that under normal operation of the blockchain network, no transac-
tion can be changed once published. In 2008, the blockchain idea was combined with several other tech-
nologies and computing concepts to create modern cryptocurrencies: electronic cash protected through
cryptographic mechanisms instead of a central repository or authority.
This technology became widely known in 2009 with the launch of the Bitcoin network, the first of
many modern cryptocurrencies. In Bitcoin, and similar systems, the transfer of digital information
that represents electronic cash occurs in a distributed system. Bitcoin users can digitally sign and
transfer their rights to that information to another user, and the Bitcoin blockchain records this transfer
publicly, allowing all participants of the network to independently verify the validity of the transac-
tions. The Bitcoin blockchain is independently maintained and managed by a distributed group of
participants. This, along with cryptographic mechanisms, makes the blockchain resilient to attempts
to alter the ledger later (modifying blocks or forging transactions). Blockchain technology has enabled
the development of many cryptocurrency systems such as Bitcoin and Ethereum1. Because of this,
blockchain technology is often viewed as bound to Bitcoin or possibly cryptocurrency solutions in
general. However, the technology is available for a broader variety of applications and is being inves-
tigated for a variety of sectors.
The numerous components of blockchain technology, along with its reliance on cryptographic
primitives and distributed systems, can make it challenging to understand, but each component can be
described simply and used as a building block to understand the larger complex system.
Blockchains can be informally defined as distributed digital ledgers of cryptographically signed
transactions grouped into blocks. Each block is cryptographically linked to the previous one (making it
tamper-evident) after validation and undergoing a consensus decision. As new blocks are added, older
blocks become more difficult to modify (creating tamper resistance). New blocks are replicated across
copies of the ledger within the network, and any conflicts are resolved automatically using established
rules (Yaga et al., 2018).
8.5.1 Background and History

The core ideas behind blockchain technology emerged in the late 1980s and early 1990s. In 1989, Leslie
Lamport developed the Paxos protocol, and in 1990 submitted the paper “The PartTime Parliament”
(Lamport, 1998) to ACM Transactions on Computer Systems; the paper was published in a 1998 issue.
The paper describes a consensus model for reaching agreement on a result in a network of computers
where the computers or network itself may be unreliable. In 1991, a signed chain of information was used
as an electronic ledger for digitally signing documents in a way that could easily show none of the signed
documents in the collection had been changed (Narayanan et al., 2016).
These concepts were combined and applied to electronic cash in 2008 and described in the paper,
“Bitcoin: A Peer to Peer Electronic Cash System” (Nakamoto, 2008), published pseudonymously by
Satoshi Nakamoto. Nakamoto’s paper contained the blueprint that most modern cryptocurrency schemes
follow (although with variations and modifications).
In 2009 the Bitcoin cryptocurrency blockchain network was established, the first of many blockchain
applications. Many electronic cash schemes existed prior to Bitcoin (e.g., eCash and NetCash), but none
of them achieved widespread use. The use of a blockchain enabled Bitcoin to be implemented in a
distributed manner such that no single user controls the electronic cash and no single point of failure
exists. Its primary benefit is to enable direct transactions between users without the need for a trusted
third party. It also enables the issuance of new cryptocurrency in a defined manner to those users who
manage to publish new blocks and maintain copies of the ledger; such users are called miners in Bitcoin.
The automated payment of the miners enables distributed administration of the system without the need
to organize. By using a blockchain and consensus-based maintenance, a self-policing mechanism ensures
that only valid transactions and blocks are added to the blockchain.
In Bitcoin, the blockchain enables users to be pseudonymous. This means that users are anonymous,
but their account identifiers are not; in addition, all transactions are publicly visible. This enables Bitcoin
to offer pseudo-anonymity because accounts can be created without any identification or authorization
process (such processes are typically required by Know-Your-Customer (KYC) laws).
As Bitcoin is pseudonymous, it is essential to have mechanisms to create trust in an environment
where users cannot be easily identified. Before the use of blockchain technology, this trust was typically
delivered through intermediaries trusted by both parties. Without trusted intermediaries, the needed
trust within a blockchain network is enabled by four key characteristics of blockchain technology:
• Ledger: The technology uses an append-only ledger to provide full transactional history. Unlike
traditional databases, transactions and values in a blockchain are not overridden.
• Secure: Blockchains are cryptographically secure, ensuring that the data contained within the
ledger have not been tampered with and are attestable.
• Shared: The ledger is shared by multiple participants. This provides transparency across the
node participants in the blockchain network.
• Distributed: The blockchain can be distributed. This allows for scaling the number of nodes of a
blockchain network to make it more resilient to attacks by bad actors. By increasing the number of
nodes, the ability for a bad actor to impact the consensus protocol used by the blockchain is reduced.
For blockchain networks that allow anyone to anonymously create accounts and participate (called per-
missionless blockchain networks), these capabilities deliver a level of trust among parties with no prior
knowledge of one another; this trust can enable individuals and organizations to transact directly, which
may result in transactions being delivered faster and at lower costs. For a blockchain network that more
tightly controls access (called permissioned blockchain networks), where some trust may be present
among users, these capabilities help to bolster that trust (Yaga et al., 2018).
8.5.2 Blockchain Categorization

Blockchain networks can be categorized based on their permission model, which determines who can
maintain them (e.g., publish blocks). If anyone can publish a new block, it is permissionless. If only par-
ticular users can publish blocks, it is permissioned. In simple terms, a permissioned blockchain network
is like a corporate intranet that is controlled, while a permissionless blockchain network is like the public
Internet, where anyone can participate. Permissioned blockchain networks are often deployed for a group
of organizations and individuals, typically referred to as a consortium. This distinction is necessary to
understand as it impacts some of the blockchain components.
8.5.2.1 Permissionless
Permissionless blockchain networks are decentralized ledger platforms open to anyone publishing
blocks, without needing permission from any authority. Permissionless blockchain platforms are often
open source software, freely available to anyone who wishes to download them. As anyone has the right
to publish blocks, this results in the property that anyone can read the blockchain and issue transactions
on the blockchain (by including those transactions within published blocks). Any blockchain network
user within a permissionless blockchain network can read and write to the ledger.
As permissionless blockchain networks are open to all to participate, malicious users may attempt to
publish blocks in a way that subverts the system. To prevent this, permissionless blockchain networks often
utilize a multiparty agreement or “consensus” system that requires users to expend or maintain resources
when attempting to publish blocks. This prevents malicious users from easily subverting the system. Non-
malicious behavior is promoted by rewarding the publishers of protocol-conforming blocks with a native
cryptocurrency.
8.5.2.2 Permissioned
In permissioned blockchain networks, users publishing blocks must be authorized by some authority
(centralized or decentralized). As only authorized users are maintaining the blockchain, it is possible to
restrict read access and to restrict who can issue transactions. Permissioned blockchain networks may
thus allow anyone to read the blockchain or they may restrict read access to authorized individuals.
They may also allow anyone to submit transactions to be included in the blockchain or, again, they may
restrict this access only to authorized individuals. Permissioned blockchain networks may be instantiated
and maintained using opensource or closed source software.
Permissioned blockchain networks can have the same traceability of digital assets as they pass through
the blockchain, as well as the same distributed, resilient and redundant data storage system as permis-
sionless blockchain networks. They also use consensus models for publishing blocks, but these methods
often do not require the expense or maintenance of resources (as is the case with current permissionless
blockchain networks) because the establishment of one’s identity is required to participate as a member
of the permissioned blockchain network. Those maintaining the blockchain have a level of trust with
each other, because they were all authorized to publish blocks, and their authorization can be revoked
if they misbehave. Consensus models in permissioned blockchain networks are usually faster and less
computationally expensive.
Permissioned blockchain networks may be used by organizations that need to more tightly control and
protect their blockchain. However, if a single entity controls who can publish blocks, the users of the
blockchain will need to have trust in that entity. Permissioned blockchain networks may also be used by
organizations that wish to work together but may not fully trust one another. They can establish a permis-
sioned blockchain network and invite business partners to record their transactions on a shared distributed
ledger. These organizations can determine the consensus model to be used, based on how much they
trust one another. Beyond trust, permissioned blockchain networks provide transparency and insight that
may help better inform business decisions and hold misbehaving parties accountable. This can explicitly
include auditing and oversight entities making audits a constant occurrence versus a periodic event.
Some permissioned blockchain networks support the ability to selectively reveal transaction informa-
tion based on a blockchain network user’s identity or credentials. With this feature, some degree of pri-
vacy in transactions may be obtained. For example, the blockchain may record that a transaction between
two blockchain network users occurred, but the actual contents of transactions may only be accessible
to the involved parties.
Some permissioned blockchain networks require all users to be authorized to send and receive trans-
actions (they are not anonymous or even pseudo-anonymous). In such systems, parties work together to
achieve a shared business process with natural disincentives to commit fraud or otherwise behave as a
bad actor (because they can be identified). If bad behavior were to occur, when the organizations are
incorporated, they know what legal remedies are available and how to pursue those remedies in the rel-
evant judicial system (Yaga et al., 2018).
8.5.3 Blockchain Components

Blockchain technology can seem complex, but it can be simplified by examining each component indi-
vidually. At a high level, blockchain technology utilizes well-known computer science mechanisms and
cryptographic primitives (cryptographic hash functions, digital signatures, asymmetric-key cryptogra-
phy) mixed with record keeping concepts (such as append-only ledgers). This section discusses each
individual main component: cryptographic hash functions, transactions, asymmetric-key cryptography,
addresses, ledgers, blocks and blocks chaining.
8.5.3.1 Cryptographic Hash Functions

An important component of blockchain technology is the use of cryptographic hash functions for
many operations. Hashing is a method of applying a cryptographic hash function to data; the func-
tion calculates a relatively unique output (called a message digest or just digest) for an input of
nearly any size (e.g., a file, text or image). It allows individuals to independently take input data,
hash those data and derive the same result—proving that there was no change in the data. Even the
smallest change to the input will result in a completely different output digest. Table 8.2 shows
simple examples of this.
Cryptographic hash functions have these important security properties:
1. They are preimage resistant. This means that they are one-way; it is computationally infeasible
to compute the correct input value, given some output value (e.g., given a digest, find x such that
hash(x) = digest).
TABLE 8.2
Examples of Input Text and Corresponding SHA-256 Digest Values
Input Text SHA-526 Digest Value
1 0x6b86b273ff34fce19d6b804eff5a3f5747ada4eaa22f1d49c01e52ddb78754b
2 0xd4735e3a265el6eee03f59718b9b5d03019c07d8b6c51f90da3a666eecl3ab35
Hello, World! 0xdffd6021bb2bd5b0af676290809ec3a53191dd81c7f70a4b28688a362182986f
2. They are second preimage resistant. This means no input hashes to a specific output. More
specifically, cryptographic hash functions are designed so that given a specific input, it is com-
putationally infeasible to find a second input that produces the same output (e.g., given x, find
y such that hash(x) = hash(y)). The only approach available is to exhaustively search the input
space, but this is computationally infeasible to do with any chance of success.
3. They are collision resistant. This means no two inputs hash to the same output. More specifi-
cally, it is computationally infeasible to find any two inputs that produce the same digest (e.g.,
find an x and y which hash(x) = hash(y)).
A specific cryptographic hash function used in many blockchain implementations is the Secure
Hash Algorithm (SHA) with an output size of 256 bits (SHA-256). Many computers support this
algorithm in hardware, making it fast to compute. SHA-256 has an output of 32 bytes (1 byte = 8 bits,
32 bytes = 256 bits), generally displayed as a 64-character hexadecimal string (Table 8.2).
This means that there are 2256 ≈ 1077 or 115, 792, 089, 237, 316, 195, 423, 570, 985,008, 687, 907, 853,
269, 984, 665, 640, 564, 039, 457, 584, 007, 913,129, 639, 936 possible digest values. The algorithm for
SHA-256, as well as others, is specified in the US Federal Information Processing Standard (FIPS) 180–4
(National Institute of Standards and Technology, 2015). The NIST Secure Hashing website (National Institute
of Standards and Technology) contains FIPS specifications for all NIST-approved hashing algorithms.
As there are an infinite number of possible input values and a finite number of possible output digest
values, it is possible but highly unlikely to have a collision where hash(x) = hash(y) (i.e., the hash of two
different inputs produces the same digest). SHA-256 is said to be collision resistant, because to find a col-
lision in SHA-256, we would have to execute the algorithm, on average, about 2128 times (which is 340
undecillions, or more precisely 340, 282, 366, 920, 938, 463, 463, 374, 607, 431, 768, 211, 456; roughly
3.402 × 1038).
To put this into perspective, the hash rate (hashes per second) of the entire Bitcoin network in 2015
was 300 quadrillion hashes per second (300,000,000,000,000,000/s) (“Hash per Second”). At that rate,
it would take the entire Bitcoin network roughly 35,942,991,748,521 (roughly 3.6 × 1013) years to manu-
facture a collision (note that the universe is estimated to be 1.37 × 1010 years old). Even if any such input
x and y that produce the same digest, it would be also very unlikely for both inputs to be valid in the
context of the blockchain network (i.e., x and y are both valid transactions).
Within a blockchain network, cryptographic hash functions are used for many tasks, such as:
• Deriving addresses;
• Creating unique identifiers;
• Securing the block data: a publishing node will hash the block data, creating a digest that will
be stored within the block header;
• Securing the block header: a publishing node will hash the block header. If the blockchain
network utilizes a proof of work consensus model, the publishing node will need to hash the
block header with different nonce values until the puzzle requirements have been fulfilled.
The current block header’s hash digest will be included within the next block’s header, where it
will secure the current block header data.
Because the block header includes a hash representation of the block data, the block data itself is also
secured when the block header digest is stored in the next block.
There are many families of cryptographic hash functions utilized in blockchain technology (SHA-256 is
not the only one), such as Keccak (selected by NIST as the winner of a competition to create the SHA-3 hashing
standard) and RIPEMD-160 (SHA-3 Standard: Permutation-Based Hash and Extendable-Output Functions).
8.5.3.2 Cryptographic Nonce

A cryptographic nonce is an arbitrary number that is only used once. A cryptographic nonce can be
combined with data to produce different hash digests per nonce:
hash (data + nonce) = digest
Only changing the nonce value provides a mechanism for obtaining different digest values while keep-
ing the same data. This technique is utilized in the proof of the work consensus model.
8.5.4 Transactions
A transaction represents an interaction between parties. With cryptocurrencies, for example, a transaction
represents a transfer of the cryptocurrency between blockchain network users. For business-to-business
scenarios, a transaction could be a way of recording activities occurring on digital or physical assets.
Figure 8.21 shows a notional example of a cryptocurrency transaction.
Each block in a blockchain can contain zero or more transactions. For some blockchain implementa-
tions, a constant supply of new blocks (even with zero transactions) is critical to maintain the security
of the blockchain network; having a constant supply of new blocks being published prevents malicious
users from “catching up” and manufacturing a longer, altered blockchain.
The data that comprise a transaction can be different for every blockchain implementation, but the
mechanism for transacting is largely the same. A blockchain network user sends information to the block-
chain network. The information sent may include the sender’s address (or another relevant identifier),
sender’s public key, a digital signature, transaction inputs and transaction outputs.
A single cryptocurrency transaction typically requires at least the following information, but can
contain more:
• Inputs: The inputs are usually a list of digital assets to be transferred. A transaction will
reference the source of the digital asset (providing provenance)—either the previous transaction
where it was given to the sender, or in the case of new digital assets, the origin event. Because
the input to the transaction is a reference to past events, the digital assets do not change. In the
case of cryptocurrencies, this means value cannot be added or removed from existing digital
assets. Instead, a single digital asset can be split into multiple new digital assets (each with
Transacon ID: 0x15
Alice sends Bob $17 Input

($17)
Transacon ID:0x14 Bob send $17 to ...

Output0
Alice has $20 from
previous transacons Input
($20)
Output0
($17)
Output1
($3) Alice sends herself $3 as “change”
FIGURE 8.21 Example cryptocurrency transaction. (From Yaga, D. et al., Blockchain Technology Overview, National
Institute of Standards and Technology, 2018.)
lesser value), or multiple digital assets can be combined to form fewer new digital assets (with
a correspondingly greater value). The splitting or joining of assets will be specified within
the transaction output. The sender must also provide proof that it has access to the referenced
inputs, generally by digitally signing the transaction—proving access to the private key.
• Outputs: The outputs are usually the accounts that will be the recipients of the digital assets along
with how much digital asset they will receive. Each output specifies the number of digital assets
to be transferred to the new owner(s), the identifier of the new owner(s) and a set of conditions the
new owners must meet to spend that value. If the digital assets provided are more than required,
the extra funds must be explicitly sent back to the sender (this is a mechanism to “make change”).
While primarily used to transfer digital assets, transactions can be more generally used to transfer data.
In a simple case, someone may simply want to permanently and publicly post data on the blockchain.
In the case of smart contract systems, transactions can be used to send data, process those data and store
some result on the blockchain. For example, a transaction can be used to change an attribute of a digitized
asset such as the location of a shipment within a blockchain technology-based supply chain system.
Regardless of how the data are formed and transacted, determining the validity and authenticity of
a transaction is important. The validity of a transaction ensures that the transaction meets the protocol
requirements and any formalized data formats or smart contract requirements specific to the blockchain
implementation. The authenticity of a transaction is also important, as it determines that the sender of
digital assets had access to those digital assets. Transactions are typically digitally signed by the sender’s
associated private key and can be verified at any time using the associated public key (Yaga et al., 2018).
8.5.5 Asymmetric-Key Cryptography

Blockchain technology uses asymmetric-key cryptography (also called public key cryptography).
Asymmetric-key cryptography uses a pair of keys: a public key and a private key that are math-
ematically related to each other. The public key is made public without reducing the security of the
process, but the private key must remain secret if the data are to retain their cryptographic protec-
tion. Even though there is a relationship between the two keys, the private key cannot efficiently
be determined based on knowledge of the public key. We can encrypt with a private key and then
decrypt with the public key. Alternately, we can encrypt with a public key and then decrypt with a
private key.
Asymmetric-key cryptography enables a trust relationship between users who do not know or trust
one another, by providing a mechanism to verify the integrity and authenticity of transactions while at
the same time allowing transactions to remain public. To do this, the transactions are “digitally signed.”
A private key is used to encrypt a transaction such that anyone with the public key can decrypt it. As the
public key is freely available, encrypting the transaction with the private key proves that the signer of
the transaction has access to the private key. Alternately, data could be encoded with a user’s public key
such that only users with access to the private key can decrypt it. A drawback is that asymmetric-key
cryptography is often slow to compute.
In symmetric-key cryptography, a single secret key is used to both encrypt and decrypt. With
symmetric-key cryptography, users must already have a trust relationship established with one
another to exchange the pre-shared key. In a symmetric system, any encrypted data that can be
decrypted with the pre-shared key confirm that they were sent by another user with access to the
pre-shared key; no user without access to the pre-shared key will be able to view the decrypted data.
Compared to asymmetric-key cryptography, symmetric-key cryptography is very fast to compute.
Because of this, the data may be encrypted with symmetric-key cryptography and then the symmet-
ric key is encrypted using asymmetric-key cryptography. This can greatly speed up asymmetric-key
cryptography.
To sum up, asymmetric-key cryptography provides the ability to verify that the user transferring value
to another user is in possession of the private key capable of signing the transaction. The following are
typical attributes of asymmetric-key cryptography in many blockchain networks:
• Private keys are used to digitally sign transactions;

• Public keys are used to derive addresses;
• Public keys are used to verify signatures generated with private keys;
Some permissioned blockchain networks can leverage a business’s existing PKI for asymmetric-key cryp-
tography to provide user credentials, rather than having each blockchain network user manage their own
asymmetric-keys. This is done by utilizing existing directory services and using that information within
the blockchain network. Blockchain networks that utilize an existing directory service can access it via
existing protocols, such as the LDAP (LDAP.com.), and utilize the information from the directory natively,
or import it into an internal certificate authority within the blockchain network (Yaga et al., 2018).
8.5.6 Addresses and Address Derivation

Some blockchain networks make use of an address, a short, alphanumeric string of characters derived
from the blockchain network user’s public key using a cryptographic hash function, along with some
additional data (e.g., version number, checksums). Most blockchain implementations make use of
addresses as the “to” and “from” endpoints in a transaction. Addresses are shorter than the public keys
and are not secret. One method to generate an address is to create a public key, apply a cryptographic
hash function to it and convert the hash to text:
public Key → cryptographic hash function → address
Each blockchain implementation may implement a different method to derive an address. For permis-
sionless blockchain networks, which allow anonymous account creation, a blockchain network user can
generate as many asymmetric-key pairs and therefore addresses as desired, allowing for a varying degree
of pseudo-anonymity. Addresses may act as the public-facing identifier in a blockchain network for a user,
and an address will often be converted into a quick response code (a two-dimensional bar code, which can
contain arbitrary data) for easier use with mobile devices (see an example of QR code in Figure 8.22).
Blockchain network users may not be the only source of addresses within blockchain networks. It is
necessary to provide a method of accessing a smart contract once it has been deployed within a block-
chain network. For Ethereum, for example, smart contracts are accessible via a special address called a
contract account. This account address is created when a smart contract is deployed (the address for a
contract account is deterministically computed from the smart contract creator’s address (“How Is the
Address of an Ethereum Contract Computed?”)). This contract account allows for the contract to be
executed whenever it receives a transaction and to create additional smart contracts in turn.
FIGURE 8.22 A QR code example which has encoded the text “NISTIR 8202 – Blockchain Technology Overview QR code
example.” (From Yaga, D. et al., Blockchain Technology Overview, National Institute of Standards and Technology, 2018.)
8.5.7 Private Key Storage

With some blockchain networks (especially permissionless blockchain networks), users must manage
and securely store their own private keys. Instead of recording them manually, they use software to
securely store them. This software is often referred to as a wallet. The wallet can store private keys,
public keys and associated addresses. It may also perform other functions, such as calculating the total
number of digital assets a user may have.
If a user loses a private key, then any digital asset associated with that key is lost, because it is
computationally infeasible to regenerate the same private key. If a private key is stolen, the attacker
will have full access to all digital assets controlled by that private key. The security of private keys
is so important that many users use special secure hardware to store them; alternatively, users may
take advantage of an emerging industry of private key escrow services. These key escrow services
can satisfy KYC laws in addition to storing private keys, as users must provide proof of their identity
when creating an account.
Private key storage is an extremely important aspect of blockchain technology. When it is reported in
the news that “Cryptocurrency XYZ was stolen from…,” it almost certainly means some private keys
were found and used to sign a transaction sending the money to a new account, not that the blockchain
network itself was compromised. It should be noted that because blockchain data cannot generally be
changed, once a criminal steals a private key and publicly transfers the associated funds to another
account, that transaction generally cannot be undone (Yaga et al., 2018).
8.5.8 Ledgers
A ledger is a collection of transactions. Throughout history, paper ledgers have been used to keep track
of the exchange of goods and services. In modern times, ledgers have been stored digitally, often in large
databases owned and operated by a centralized trusted third party (i.e., the owner of the ledger) on behalf
of a community of users. These ledgers with centralized ownership can be implemented in a centralized
or distributed manner (i.e., just one server or a coordinating cluster of servers).
There is a growing interest in distributed ownership of the ledger. Blockchain technology enables
such an approach using both distributed ownership and distributed physical architecture. The distributed
physical architecture of blockchain networks often involves a much larger set of computers than is typical
of centrally managed distributed physical architecture. The growing interest in distributed ownership of
ledgers stems from trust, security and reliability concerns related to ledgers with centralized ownership:
• Centrally owned ledgers may be lost or destroyed; a user must trust that the owner is properly
backing up the system.
• A blockchain network is distributed by design, creating many backup copies, all updating
and syncing to the same ledger data between peers. A key benefit to blockchain technol-
ogy is that every user can maintain his or her own copy of the ledger. Whenever new full
nodes join the blockchain network, they reach out to discover other full nodes and request
a full copy of the blockchain network’s ledger, making loss or destruction of the ledger
difficult. It should be noted that certain blockchain implementations provide the capability
to support concepts such as private transactions or private channels. Private transactions
facilitate the delivery of information only to those nodes participating in a transaction,
not the entire network.
• Centrally owned ledgers may be on a homogeneous network, where all software, hardware
and network infrastructure may be the same. Because of this characteristic, the overall
system resiliency may be reduced, as an attack on one part of the network will work on
everywhere.
• A blockchain network is a heterogeneous network, where the software, hardware and
network infrastructure are all different. Because of the many differences between nodes
on the blockchain network, an attack on one node is not guaranteed to work on other
nodes.
• The transactions on a centrally owned ledger are not made transparently and may not be valid;
a user must trust that the owner is validating each received transaction.
• A blockchain network must check that all transactions are valid; if a malicious node is
transmitting invalid transactions, others will detect and ignore them, preventing the invalid
transactions from propagating throughout the blockchain network.
• The transaction list on a centrally owned ledger may not be complete; a user must trust that the
owner is including all valid transactions that have been received.
• A blockchain network holds all accepted transactions within its distributed ledger. To
build a new block, a reference must be made to a previous block—thus building on top
of it. If a publishing node does not include a reference to the latest block, other nodes
will reject it.
• The transaction data on a centrally owned ledger may have been altered; a user must trust that
the owner is not altering past transactions.
• A blockchain network utilizes cryptographic mechanisms such as digital signatures
and cryptographic hash functions to provide tamper-evident and tamper-resistant
ledgers.
• The centrally owned system may be insecure; a user must trust that the associated computer
systems and networks are receiving critical security patches and have implemented best prac-
tices for security. The system may be breached and have had personal information stolen
because of insecurities.
• A blockchain network, because of its distributed nature, provides no centralized point of
attack. Information on a blockchain network is usually publicly viewable and offers noth-
ing to steal. To attack blockchain network users, an attacker must individually target them.
Targeting the blockchain itself will be met with the resistance of the honest nodes present
in the system. If an individual node is not patched, it will only affect that node—not the
system overall (Yaga et al., 2018).
8.5.9 Blocks
Blockchain network users submit candidate transactions to the blockchain network via software (desk-
top applications, smartphone applications, digital wallets, web services, etc.). The software sends these
transactions to a node or nodes within the blockchain network. The chosen nodes may be non-publishing
full nodes or publishing nodes. The submitted transactions are then propagated to the other nodes in the
network, but this by itself does not place the transaction in the blockchain. For many blockchain imple-
mentations, once a pending transaction has been distributed to nodes, it must wait in a queue until it is
added to the blockchain by a publishing node.
Transactions are added to the blockchain when a publishing node publishes a block. A block contains a
block header and block data. The block header contains metadata for this block. The block data contain a
list of validated and authentic transactions that have been submitted to the blockchain network. Validity
and authenticity are ensured by checking that the transaction is correctly formatted and the providers of
digital assets in each transaction (listed in the transaction’s “input” values) have each cryptographically
signed the transaction. This verifies that the providers of digital assets for a transaction had access to
the private key, which could sign over the available digital assets. The other full nodes will check the
validity and authenticity of all transactions in a published block and will not accept a block if it contains
invalid transactions.
It should be noted that every blockchain implementation can define its own data fields; however, many
blockchain implementations utilize data fields such as the following:
• Block Header
• The block number, also known as block height in some blockchain networks.
• The previous block header’s hash value.
• A hash representation of the block data; different methods can be used to accomplish this,
such as generating a Merkle tree and storing the root hash, or by using a hash of all the
combined block data.
• A timestamp.
• The size of the block.
• The nonce value. For blockchain networks using mining, this is a number, which is
manipulated by the publishing node to solve the hash puzzle. Other blockchain net-
works may or may not include it or use it for another purpose other than solving a hash
puzzle.
• Block Data
• A list of transactions and ledger events included within the block.
• Other data.
8.5.10 Chaining Blocks

Blocks containing the hash digest of the previous block’s header are chained together through each
block, thus forming the blockchain. If a previously published block is changed, it will have a different
hash. This, in turn, will cause all subsequent blocks to have different hashes because they include the
hash of the previous block. This makes it possible to easily detect and reject altered blocks. Figure 8.23
shows a generic chain of blocks.
8.5.11 Blockchain Limitations and Misconceptions

There is a tendency to overhype and overuse nascent technology. Many projects will attempt to
incorporate the technology, even if it is unnecessary. The technology is relatively new, not well
understood and surrounded by misconceptions. In addition, there may be a fear of missing out
on something. This section highlights some of the limitations and misconceptions of blockchain
technology.
8.5.11.1 Immutability
Most publications on blockchain technology describe blockchain ledgers as immutable, but this is
not strictly true. They are tamper-evident and tamper-resistant; for this reason, they are trusted by
FIGURE 8.23 Generic chain of blocks. (From Yaga, D. et al., Blockchain Technology Overview, National Institute of
Standards and Technology, 2018.)
financial transactions. However, they cannot be considered completely immutable, because, in some
situations, the blockchain can be modified.
The chain of blocks itself cannot be considered immutable. For some blockchain implementations,
the most recently published or “tail” blocks are subject to being replaced (by a longer, alternative chain
with different “tail” blocks). Most blockchain networks use the strategy of adopting the longest chain
(the one with the most amount of work put into it) as truth when there are multiple competing chains. If
two chains are competing, but each includes its own unique sequence of tail blocks, whichever is longer
will be adopted. However, this does not mean the transactions within the replaced blocks are lost—rather
they may have been included in a different block or returned to the pending transaction pool. This degree
of weak immutability for tail blocks is the reason why most users of the blockchain network wait several
block creations before considering a transaction to be valid.
For permissionless blockchain networks, the adoption of a longer, alternate chain of blocks could be the
result of a form of attack known as a 51% attack (“Majority Attack”). For this, the attacker simply garners
enough resources to outpace the block creation rate of the rest of the blockchain network (holding more
than 51% of the resources applied toward producing new blocks). Depending on the size of the blockchain
network, this could be a very cost-prohibitive attack carried out by state-level actors (Greenspan, 2017a).
The cost of performing this type of attack increases the further back in the blockchain the attacker wishes
to make a change. This attack is not technically difficult (e.g., it just repeats the normal process of the
blockchain implementation, but with selected transactions either included or omitted and at a faster pace),
but it is just expensive.
For permissioned blockchain networks, this attack can be mitigated. There is generally an owner or con-
sortium of blockchain network users who allow publishing nodes to join the blockchain network and remove
publishing nodes from the blockchain network, which gives them a great amount of control. There is less
likely to be competing chains, as the owner or consortium can force publishing nodes to collaborate fairly:
non-cooperating publishing nodes can simply have their privileges removed. There may be additional legal
contracts in place for the blockchain network users, including clauses for misconduct and the ability to take
legal action. While this control is useful to prevent misconduct, it means that any number of blocks can be
replaced through legitimate methods if desired by the owner or consortium (Yaga et al., 2018).
8.5.11.2 Users Involved in Blockchain Governance

The governance of blockchain networks deals with the rules, practices and processes by which the block-
chain network is directed and controlled. A common misconception is that blockchain networks are systems
without control and ownership. This is not strictly true. Permissioned blockchain networks are generally
set up and run by an owner or consortium, which governs the blockchain network. Permissionless block-
chain networks are often governed by blockchain network users, publishing nodes and software develop-
ers. Each group has a level of control that affects the direction of the blockchain network’s advancement.
Software developers create the blockchain software that is used by a blockchain network. As most
blockchain technologies are open source, it is possible to inspect the source code and compile it inde-
pendently; it is even possible to create separate but compatible software as a means of bypassing pre-
compiled software released by developers. However, not every user will have the ability to do this, and
this means the developer of the blockchain software will play a large role in the blockchain network’s
governance. These developers may act in the interest of the community at large and are held account-
able. For example, in 2013, Bitcoin developers released a new version of the most popular Bitcoin client,
which introduced a flaw and started two competing chains of blocks. The developers had to decide to
either keep the new version (which had not yet been adopted by everyone) or revert to the old version
(Narayanan, 2015). Either choice would result in one chain being discarded—and some blockchain net-
work users’ transactions becoming invalid. The developers made a choice, reverted to the old version and
successfully controlled the progress of the Bitcoin blockchain.
This example was an unintentional fork; however, developers can purposely design updates to blockchain
software to change the blockchain protocol or format. With enough user adoption, a successful fork can be
created. Such forks of blockchain software updates are often discussed at length and coordinated with the
involved users. For permissionless blockchain networks, this is usually the publishing nodes. There is often
a long discussion and adoption period before an event occurs; all users must switch to the newly updated
blockchain software at some chosen block to continue recording transactions on the new “main” fork.
For permissionless blockchain networks, although the developers maintain a large degree of influence,
users can reject a change by refusing to install updated software. Of the blockchain network users, the pub-
lishing nodes have significant control as they create and publish new blocks. The user base usually adopts
the blocks produced by the publishing nodes but is not required to do so. An interesting side effect of this is
that permissionless blockchain networks are essentially ruled by the publishing nodes and may marginal-
ize a segment of users by forcing them to adopt changes they may disagree with to stay with the main fork.
For permissioned blockchain networks, control and governance are driven by members of the associ-
ated owner or consortium. The consortium can govern who can join the network, when members are
removed from the network, coding guidelines for smart contracts, and so on.
In summary, the software developers, publishing nodes and blockchain network users all play a part
in the blockchain network governance.
8.5.12 Beyond the Digital

Blockchain networks work extremely well with the data within their own digital systems, but when they
need to interact with the real world, there are some issues (often called the Oracle problem (Buck, 2017)).
A blockchain network can be a place to record both human input data and sensor input data from the real
world, but there may be no method to determine if the input data reflect real-world events. A sensor could
be malfunctioning and recording data that is inaccurate. Humans could record false information (intention-
ally or unintentionally). These issues are not specific to blockchain networks, but to digital systems overall.
However, for blockchain networks that are pseudonymous, dealing with data misrepresentation out-
side of the digital network can be especially problematic. For example, if a cryptocurrency transaction
occurred to purchase a real-world item, there is no way to determine within the blockchain network
whether the shipment occurred, without relying on outside sensor or human input.
Many projects have attempted to address the “Oracle problem” and create reliable mechanisms
to ingest external data in a way that is both trustworthy and accurate. For example, projects such as
“Oraclize” provide mechanisms to take web API data and convert them into blockchain readable byte
or opcode. Within the context of decentralized applications, these projects may be considered central-
ized, as they provide single points of failure for attackers to compromise. As a result, projects such as
“Mineable Oracle Contract” (https://www.springer.com/gp/book/9783540421429) have tried to enable
oracle ingestion in a way that is inspired by blockchain technology and built atop established consensus
models and economic incentives.
8.5.13 Blockchain Death

Traditional centralized systems are created and taken down constantly, and blockchain networks are no dif-
ferent. However, because they are decentralized, there is a chance that when a blockchain network “shuts
down” it will never be fully shut down, and there may always be some lingering blockchain nodes running.
A defunct blockchain will not be suitable for a historical record, because, without many publishing
nodes, a malicious user could easily overpower the few publishing nodes left and redo and replace any
number of blocks.
8.5.14 Cybersecurity
The use of blockchain technology does not remove inherent cybersecurity risks. Many of these risks
involve a human element. Therefore, a robust cybersecurity program remains vital to protect the network
and participating organizations from cyber threats, particularly as hackers develop more knowledge
about blockchain networks and their vulnerabilities.
Existing cybersecurity standards and guidance remain relevant for ensuring the security of systems
that interface and/or rely on blockchain networks. Subject to certain adjustments to consider specific
attributes of blockchain technology, they provide a strong foundation for protecting blockchain networks
from cyber attacks.
In addition to general principles and controls, specific cybersecurity standards relevant to blockchain
technology already exist and are in wide use by many industries. For instance, the NIST Cybersecurity
Framework expressly states that it is “not a one-size-fits-all approach to managing cybersecurity risk”
because “organizations will continue to have unique risks—different threats, vulnerabilities and risk
tolerances—and how they implement the practices in the [Framework] will vary.” With that said, even
though the Framework was not designed for blockchain technology specifically, its standards are broad
enough to cover blockchain technology and to help institutions develop policies and processes that iden-
tify and control risks affecting blockchain technology.
8.5.14.1 Cyber and Network-Based

Blockchain technologies are considered extremely secure due to the tamper-evident and tamper-resistant
design—once a transaction is committed to the blockchain, it generally cannot be changed. However, this
is only true for transactions that have been included in a published block. Transactions that have not yet
been included in a published block within the blockchain are vulnerable to several types of attacks.
For blockchain networks with transactional timestamps, spoofing time or adjusting the clock of a mem-
ber of an ordering service could have positive or negative effects on a transaction, making time and the
communication of time an attack vector. Denial of service attacks can be conducted on the blockchain
platform or on the smart contract implemented on the platform.
Blockchain networks and their applications are not immune to malicious actors who can conduct net-
work scanning and reconnaissance to discover and exploit vulnerabilities and launch zero-day attacks.
In the rush to deploy blockchain-based services, newly coded applications (such as smart contracts) may
contain new and known vulnerabilities and deployment weaknesses that will be discovered and then
attacked through the network just as websites or applications are attacked today.
8.5.15 Malicious Users

While a blockchain network can enforce transaction rules and specifications, it cannot enforce a user
code of conduct. This is problematic in permissionless blockchain networks, as users are pseudony-
mous and there is not a one-to-one mapping between blockchain network user identifiers and users
of the system. Permissionless blockchain networks often provide a reward (e.g., a cryptocurrency)
to motivate users to act fairly; however, some may choose to act maliciously if that provides greater
rewards. The largest problem for malicious users is getting enough power (be it a stake in the system,
processing power, etc.) to cause damage. Once a large enough malicious collusion is created, mali-
cious mining actions can include:
• Ignoring transactions from specific users, nodes or even entire countries;

• Creating an altered, alternative chain in secret, then submitting it once the alternative chain is
longer than the real chain. The honest nodes will switch to the chain that has the most “work”
done (per the blockchain protocol). This could attack the principle of a blockchain network
being tamper-evident and tamper-resistant (Greenspan, 2017b);
• Refusing to transmit blocks to other nodes, essentially disrupting the distribution of informa-
tion (this is not an issue if the blockchain network is sufficiently decentralized).
While malicious users can be annoyances and create short-term harm, blockchain networks can perform
hard forks to combat them. Whether damage done (money lost) is reversed will be up to the developers
and users of the blockchain network.
In addition to malicious users of the network, the administrators of the infrastructure for permissioned
blockchain networks may act maliciously. For example, an infrastructure administrator may be able (depend-
ing upon the exact configuration) to take over block production, exclude certain users from performing trans-
actions, rewrite block history, double spend coin, delete resources or re-route or block network connections.
8.5.16 No Trust
Another common misinterpretation comes from people hearing that there is no “trusted third party” in
a blockchain and assuming blockchain networks are “trustless” environments. While there is no trusted
third party certifying transactions in permissionless blockchain networks (in permissioned systems it is
less clear, as administrators of those systems act as an administrator of trust by granting users admission
and permissions), a great deal of trust is needed in the following areas:
• Trust in the cryptographic technologies utilized; for example, cryptographic algorithms or

implementations can have flaws.
• Trust in the correct and bug-free operation of smart contracts, as these might have unintended
loopholes and flaws.
• Trust in the developers of the software to produce software that is as bug-free as possible.
• Trust that most users of the blockchain are not colluding in secret. If a single group or individual
can control more than 50% of all block creation power, it is possible to subvert a permission-
less blockchain network, but obtaining the necessary computational power can be prohibitively
expensive.
• For blockchain network users not running a full node, trust that nodes are accepting and pro-
cessing transactions fairly.
8.5.17 Resource Usage

Blockchain technology has enabled a worldwide network where every transaction is verified and the
blockchain is kept in sync among a multitude of users. For blockchain networks utilizing proof of work,
many publishing nodes are expending large amounts of processing time and, more importantly, consum-
ing more electricity. A proof of work method is an effective solution for “hard to solve, easy to verify”
proofs, but it generally requires significant resource usage. Because of their different applications, and
trust models, many permissioned blockchain technologies do not use a resource-intensive proof; rather,
they utilize different mechanisms to achieve consensus.
The proof of work consensus model is designed for the case where there is little to no trust among users
of the system. It ensures the publishing nodes cannot “game the system” by always being able to solve
the puzzles and thereby control the blockchain and the transactions added to it. However, a major concern
about the proof of work consensus model is its use of energy in solving the puzzles.
The amount of energy used is often not trivial; for example, some estimate that the Bitcoin blockchain net-
work uses around the same amount of electricity as the entire country of Ireland (de Vries, 2018). It has also
been speculated that the Bitcoin blockchain network will consume as much electricity as the entire country
of Denmark by 2020 (Deetman, 2016; Hern, 2017; Power Compare). Software and hardware will continue to
improve, resulting in more efficient puzzle solving (reducing the amount of electricity utilized) (Loh, 2018).
At the same time, however, blockchain networks are also still growing, resulting in harder puzzles.
An additional strain on resources occurs whenever a new full node is created; the node must obtain (usually
through downloading) most of or all the blockchain data (Bitcoin’s blockchain data is over 175 gigabytes and
growing as of this writing) (“Blockchain Size” 2018). This process uses a lot of network bandwidth.
8.5.18 Inadequate Block Publishing Rewards

A potential limitation is the risk of inadequate rewards for publishing a block. The combination of
increased competition, increased computational resources needed to have meaningful contributions to
pools of publishing nodes and highly volatile market prices in the cryptocurrency market creates the
risk that the expected return for any given cryptocurrency may be less than the power costs needed
to run publishing node software. Thus, the expected return for other cryptocurrencies may be more
attractive.
Cryptocurrencies that are not able to consistently and adequately reward publishing nodes risk delays
in publishing blocks and processing transactions. These delays could reduce confidence in the cryptocur-
rency, reducing its market value further. It could then become increasingly less attractive for publishing
nodes to contribute to that cryptocurrency’s publishing efforts. Even worse, such weakened cryptocur-
rencies open themselves up to being attacked by nodes with large amounts of resources that may mali-
ciously alter the blockchain or deny service to users attempting to submit transactions (Yaga et al., 2018).
8.5.19 Public Key Infrastructure and Identity

When hearing that blockchain technology incorporates a PKI, some people immediately believe it intrin-
sically supports identity. This is not the case, as there may not be a one-to-one relationship of private
key pairs to users (a user can have multiple private keys), nor is there a one-to-one relationship between
blockchain addresses and public keys (multiple addresses can be derived from a single public key).
Digital signatures are often used to prove identity in the cybersecurity world, and this can lead to con-
fusion about the potential application of a blockchain to identity management. A blockchain’s transaction
signature verification process links transactions to the owners of private keys but provides no facility for
associating real-world identities with these owners. In some cases, it is possible to connect real-world
identities with private keys, but these connections are made through processes outside, not explicitly
supported by the blockchain. For example, a law enforcement agency could request records from an
exchange that would connect transactions to specific individuals. Another example is an individual post-
ing a cryptocurrency address on his or her personal website or social media page for donations; this
would provide a link from address to real-world identity.
While it is possible to use blockchain technology in identity management frameworks that require a
distributed ledger component, it is important to understand that typical blockchain implementations are
not designed to serve as stand-alone identity management systems. There is more to having secure digital
identities than simply implementing a blockchain.
8.5.20 Application Considerations

As blockchain technology is still new, many organizations are looking at ways to incorporate it into their
businesses. The fear of missing out on this technology is high, and most organizations approach the prob-
lem as “We want to use blockchain somewhere, but where?” This leads to frustration with the technol-
ogy, as it cannot be applied universally. A better approach is to first understand blockchain technology,
where it fits, and then identify systems (new and old) that may fit the blockchain paradigm.
Blockchain technology solutions may be suitable if the activities or systems have the following char-
acteristics and needs:
• Many participants;
• Distributed participants;
• A want or need for removal of trusted third party;
• Transactional workflow (e.g., transfer of digital assets or information between parties);
• A need for a globally scarce digital identifier (i.e., digital art, digital land, digital property);
• A need for a decentralized naming service or ordered registry;
• A need for a cryptographically secure system of ownership;
• A need to reduce or eliminate manual efforts of reconciliation and dispute resolutions;
• A need to enable real-time monitoring of activity between regulators and regulated entities;
• A need for full provenance of digital assets and full transactional history to be shared among
participants.
Several agencies and organizations have developed guides to help organizations determine whether a
blockchain is suitable for their systems or activities and, if so, which kind of blockchain technology will
be of most benefit.
The United States Department of Homeland Security (DHS) Science & Technology Directorate has
been investigating blockchain technology and has created a flowchart to help organizations determine
whether a blockchain would be useful for a development initiative (see Figure 8.24).
The American Council for Technology and Industry Advisory Council is a public or private partnership
that facilitates collaboration and discussion between government and industry experts. It has developed
Blockchain provide a historically consistent data store. If

Do you need a shared, NO you don´t need that, you don´t need Blockchain
consistent data store?
CONSIDER: Email / Spreadsheets
YES
Your data comes from a single enty. Blockchains are

NO typically used when data comes from mulple enes.
Does more than one enty
need to contribute data? CONSIDER: Database
CAVEAT: Auding Use Case
AUDITING
YES
Blockchains do not allow modificaons of historical data;

Data records, once wrien, NO they are strongly auditable
are never updated or
deleted? CONSIDER: Database
YES
You should not write sensive informaon to a
Sensive idenfiers WILL NO Blockchain that requires medium to long term
NOT be wrien to the data confidenality, such as PII, even if it is encrypted
store?
CONSIDER: Encrypted Database
YES
Are the enes with write If there are no trust or control issues over who runs the
access having a hard me NO data store, tradional database soluons should suffice
deciding who should be in
control of the data store? CONSIDER: Managed Database
YES
If you don´t need to audit what happened and when it

Do you want a
NO happened, you don´t need a Blockchain
tamperproof log of all
writes to the data store? CONSIDER: Database
YES
You may have a useful

Blockchain use case
FIGURE 8.24 DHS Science and Technology Directorate flowchart. (From Yaga, D. et al., Blockchain Technology
Overview, National Institute of Standards and Technology, 2018.)
a blockchain primer document (ACT-IAC, 2018a) providing an overview of the technology. A second
document, a blockchain playbook (ACT-IAC, 2018b), provides a set of questions with weights to help
organizations in their consideration of the technology.
Two computer scientists at the Eidgenössische Technische Hochschule at Zürich University wrote a
whitepaper “Do you need a Blockchain?” (Wüst and Gervais, 2017). The paper gives the background and
properties of blockchains and discusses several use cases. Although not created by the authors, a website
(“Do You Need a Blockchain?”) implements the paper’s flowchart in an interactive form. Interestingly,
in the flowchart logic, as well as the website code, most paths lead to “no,” with only a few leading to
“maybe.” This critical view on the technology is one that most organizations should take. Can existing
technologies really solve their problems?
The Institute of Electrical and Electronics Engineers (IEEE) published “Do you need a blockchain?”
in its Spectrum magazine (Peck, 2017). The article emphasizes a blockchain’s utility as an anti-censor-
ship tool but notes the tradeoff that must be made by moving away from a traditional system. Removal of
trusted third parties means relying on multiple sources of “unaffiliated participants” acting in coordina-
tion; depending on the type of blockchain platform, this may be difficult. The article says the technology
is changing at a rapid pace, making its future difficult to predict. It includes a flowchart to help readers
decide whether they need a blockchain and ends with the statement: “But you should also consider the
possibility that you don’t need a blockchain at all.”
Others are also asking organizations to look closely at the technology and apply it only when neces-
sary. In “Don’t use a blockchain unless you really need one,” Coindesk, a technology website special-
izing in cryptocurrency and blockchain news, technical matters and editorials, says, “Despite some of
the hype, blockchains are incredibly inefficient” (Hochstein, 2018).
Even software developers are urging organizations to examine the key aspects of the technology
before investing. One such developer published “Do You Need A Blockchain?” on the website C# Corner
(Chand, 2018). The author says trust is the cornerstone of blockchain but cautions those interested in the
technology to take a close look at what it offers.
Most of the advice is: investigate it and use it if it is appropriate—not because it is new.
8.5.21 Other Considerations

When deciding whether to utilize a blockchain, organizations must consider the following factors
and determine whether these factors limit their ability to use a blockchain or a particular type of
blockchain:
• Data visibility:
• Permissioned blockchain networks may or may not reveal blockchain data publicly.
The data may only be available to those within the blockchain network. Data may be gov-
erned by policy or regulations (such as personally identifiable information (PII) or General
Data Protection Regulation (GDPR)). These types of data may or may not be appropriate to
store, even within a permissioned blockchain network.
• Permissionless blockchain networks can allow anyone to inspect and contribute to the
blockchain. The data are generally public. This leads to several questions that must be
considered. Do the data for the application need to be available to everyone? Is there any
harm to having public data?
• Full transactional history: Some blockchain networks provide a full public history of a digital
asset, from creation to every transaction in which it is included. This feature may be beneficial
for some solutions, but not for others.
• Fake data input: As multiple users are contributing to a blockchain, some could submit false
data, mimicking data from valid sources (such as sensor data). It is difficult to automate the
verification of data entering a blockchain network. Smart contract implementations may pro-
vide additional checks to help validate data where possible.
• Tamper-evident and tamper-resistant data: Many applications follow the “CRUD” (create,
read, update, delete) functions for data. With a blockchain, there is only “CR” (create, read).
There are methods that can be employed to “deprecate” older data if a newer version is
found, but there is no removal process for the original data. By using new transactions to
amend and update previous transactions, data can be updated while providing a full history.
However, even if a new transaction marks an older transaction as “deleted,” the data will
still be present in the blockchain data, even if it is not shown within an application process-
ing the data.
• Transactions per second: Transaction processing speed is highly dependent on the consen-
sus model used. Transactions on many permissionless blockchain networks are not exe-
cuted at the same pace as other information technology solutions because of the slow
publication time for blocks (usually in terms of seconds, but sometimes minutes). Thus,
some slowdown in blockchain-dependent applications may occur while waiting for data to
be posted. Organizations must ask if their application can handle relatively slow transac-
tion processing.
• Compliance: The use of blockchain technology does not exclude a system from following any
applicable laws and regulations. For example, legislation and policies tied to PII or GDPR
identify certain information that should not be placed on the blockchain. In addition, certain
countries may limit the type of data that can be transferred across its geographic boundary.
In other instances, certain legislation may dictate that the “first write” of financial transactions
must be written to a node within their borders. In any of these cases, a public permissionless
chain may be less appropriate, with a permissioned or hybrid approach required to satisfy regu-
latory needs. An additional example of laws and regulations is a blockchain network, which
manages government records. These types of records are subject to many laws and regulations.
Government agencies themselves must follow specific guidelines when utilizing blockchain
technology.
• Permissions: For permissioned blockchain networks, there are considerations related to the
permissions themselves
• Granularity: Do the permissions within the system allow enough granularity for specific
roles that users may need (in a manner like role-based access control methods) to perform
actions within the system?
• Permissioned blockchain networks allow more traditional roles such as administrator, user,
validator, auditor and so on.
• Administration: Who can administer permissions? Once permissions are administered to
a user, can they easily be revoked?
• Node diversity: A blockchain network is only as strong as the aggregate of all the existing nodes
participating in the network. If all the nodes share similar hardware, software, geographic loca-
tion and messaging schema, there is a certain amount of risk associated with the possibility
of undiscovered security vulnerabilities. This risk is mitigated by the decentralization of the
network of heterogeneous devices, defined as “the non-shared characteristics between any one
node and the generalized set.”
8.5.22 The Decision to Adopt Blockchain Technology

Blockchain technology is a new tool with many potential applications for organizations, as it enables
secure transactions without the need for a central authority. It relies on existing network, cryptographic
and recordkeeping technologies but uses them in a new manner.
Organizations need to take a close look at the technology before adopting it, however, both its advan-
tages and disadvantages. Once a blockchain is implemented and widely adopted, it may be difficult to
change it. Once data are recorded in a blockchain, these data are usually there forever, even if there is
a mistake. Applications that utilize the blockchain as a data layer work around the fact that the actual
blockchain data cannot be altered by making later blocks and transactions act as updates or modifica-
tions to earlier blocks and transactions. This software abstraction allows for modifications to working
data, while providing a full history of changes. For some organizations, these are desirable features.
For others, these may not.
Blockchain technology is still new, and organizations should treat it like they would any other
technological solution at their disposal—use it only in appropriate situations (Yaga et al., 2018).
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9
Industry 4.0 across the Sectors
CONTENTS
9.1 Introduction................................................................................................................................... 350
9.1.1 Industry 4.0 in an Era of Information Technology and Open Market Operations............351
9.1.2 Industry 4.0 and Innovation...............................................................................................351
9.1.3 Industry 4.0 Initiatives around the World.........................................................................352
9.2 Transportation 4.0: Multimodal Transportation Systems..............................................................353
9.2.1 The Connected Experience...............................................................................................353
9.2.2 Keeping Passengers Connected.........................................................................................353
9.2.3 Laying the Groundwork with Open Data and Application
Programming Interface (API).......................................................................................... 354
9.2.4 Safeguarding the Network................................................................................................ 354
9.2.5 A Glimpse into the Future................................................................................................ 354
9.2.5.1 Transport 4.0: How IoT Will Transform the Future of Travel.......................... 354
9.3 Rail 4.0...........................................................................................................................................355
9.3.1 SmartRail 4.0: The Railway of the Future........................................................................355
9.3.2 Digital Transformation of Railways..................................................................................355
9.3.2.1 Digital Business (DB) 4.0: Investing in Start-Ups............................................ 356
9.4 Manufacturing 4.0: Challenges and Accelerators......................................................................... 356
9.5 Logistics 4.0.................................................................................................................................. 357
9.5.1 Technological Applications.............................................................................................. 358
9.5.1.1 Resource Planning............................................................................................ 358
9.5.1.2 Warehouse Management Systems..................................................................... 358
9.5.1.3 Transportation Management Systems............................................................... 358
9.5.1.4 Intelligent Transportation Systems................................................................... 359
9.5.1.5 Logistics and Information Security.................................................................. 360
9.5.2 Logistics 4.0: Autonomous Decisions and Applications...................................................361
9.5.3 Logistics 4.0 and Supply Chain 4.0: From Data and Autonomous Decisions to
Intelligence and Actions��361
9.5.4 The Road Ahead for Logistics 4.0 and Supply Chain 4.0.................................................361
References............................................................................................................................................... 362
LIST OF FIGURES
Figure 9.1 I ndustry 4.0 across the globe—main initiatives, partnerships and influences as of

March 2017........................................................................................................................ 352
Figure 9.2 DB 4.0—Concept of digital transformation..................................................................... 356
Figure 9.3 Smart logistics and supply chain....................................................................................... 362
349
9.1 Introduction
Great Britain led the first industrial revolution with the invention of the commercial steam engine.
The invention revolutionized communication and transportation and led to many other industrial devel-
opments, not just in Britain but around the world. In the second industrial revolution, the United States
was primarily in the lead, with the telephone revolutionizing communication this time. In the third
industrial revolution, the Internet was the key factor; it succeeded because it was conceived as a public
infrastructure technology, not a proprietary technology (Carr, 2003). The Internet has transformed the
world economic landscape, and this transformation is expected to continue with the development of
Internet of Things (IoT), arguably the driver of the fourth industrial revolution, or Industry 4.0. Rifkin
(2014) emphasizes connectivity in his anticipation of a collaborative economy that will replace the capital
system in its current form—with the IoT as the main driver. In effect, the rapid progress of smart things
is paving the way to a more collaborative world (Kanter and Litow, 2009).
Previous industrial revolutions have resulted in economic growth, increased productivity, and
advanced welfare in those countries that managed to reap most of its positive impact, including from
high-quality goods and services. However, wealth distribution has not been equitable, certainly not at
the global level, and inequality is a key challenge in today’s world, along with climate change and other
sustainability issues. The rapid depletion of Earth’s resources at the expense of the future of society
and the environment has created an epic global challenge. Concepts such as sustainability and social
innovation have surfaced and are a major global concern. The United Nations’ global initiative toward
sustainable development goals has sent a strong message on the need to commit to inclusive social and
economic development (Morrar et al., 2017). Innovative efforts in using, for instance, the sustainable
livelihood approach to link socioeconomic and environmental issues represents a step in this direction
(Brocklesby and Fisher, 2003).
Industry 4.0 is no exception to the previous industrial revolutions, and like its predecessors, it is expected
to bring immense benefits while posing many challenges. Arguably, the main challenge is cybersecurity.
There is an immense risk of cybercrime due to increased connectivity. The IoT is the backbone of Industry
4.0, and it has the potential to increase the level risk dramatically from where we are today. Moreover, the
rate of technological development in Industry 4.0 is exponential; therefore, anticipating the challenges
or even the benefits is much more difficult than in the previous industrial revolutions. This increased dif-
ficulty is due to the high convergence of technologies that could complement or compete with different
possible diffusion scenarios, resulting in frequent and difficult to forecast breakthroughs. With the speed
of progress, policies and regulations may not be able to address unexpected consequences or develop-
ments, especially if they remain non-global and reactive (Morrar et al., 2017).
Job losses are also likely to occur with the automation of large segments of operations in many indus-
tries. Although new opportunities may appear for high-skill categories, as argued by Drucker (2014),
the volume of these new jobs may not meet the supply of labor. In addition to automation, the rapid
development and recent successes of artificial intelligence in business domains are changing the nature of
the workplace. IBM has already developed new system solutions; Watson of IBM is a striking example
(Waters, 2016).
Technological and business-driven innovative solutions are not going to be enough to handle the pos-
sible downside of Industry 4.0. Innovation in its broadest sense is the key solution, in particular, social
innovation. The drive to innovate technologies to increase productivity can be utilized to improve wel-
fare and societal needs of the world population (Morrar et al., 2017).
Industries around the world are facing tremendous pressure to deliver products to match their com-
petitors. In effect, Industry 4.0 is transforming the industry from a manufacturing to a service busi-
ness model (Vijaykumar et al., 2015). In today’s dynamic environment, companies need to monitor and
control things in new ways to retain a competitive edge. For example, Industry 4.0 has a cyber-physical
architecture; sensors permit self-aware and self-predictive behavior. The equipment has the potential to
monitor its own degradation, leading to production efficiency, maximum uptime and predictive health
monitoring. Networked manufacturing systems will be able to provide worry-free productivity because
of their ability to self-configure, self-maintain and self-organize.
Industry 4.0 across the Sectors 351
A problem yet to be addressed is security. Digital ecosystems are pervasive, but they can only function
efficiently if all parties involved can trust in the security of their data and communication, as well as the
protection of their intellectual property.
9.1.1 Industry 4.0 in an Era of Information Technology and Open Market Operations
Schmitt (2013) lists five reasons why Industry 4.0 is revolutionary in an era of information technology
and open market operations:
1. Industry 4.0 mitigates the burden of current challenges for manufacturers to make their compa-
nies more flexible and responsive to business trends. These challenges include increasing mar-
ket volatility, shorter product lifecycles, higher product complexity, and global supply chains.
For example, smart items will bring stronger integration of the top floor and shop floor, adding
intelligence and flexibility to production.
2. Industry 4.0 enables innovation and hence increases productivity. It is expected that the use
of modern technologies such as digital chains, smart systems, and the Industrial Internet will
speed up innovation, as new business models can be implemented much faster.
3. Industry 4.0 highlights the role of consumer as a co-producer and puts the consumer in the center of
all activities. The customization of products is the most important activity in the product value chain,
and digitization will facilitate crowdsourcing, which, in turn, will lead to a faster design process.
4. Industry 4.0 puts humans in the center of production. Workers will be assigned where help is
needed; hence, there will be more demand in the workforce for skills in managing complex
projects, yet more flexible work will also become available.
5. Industry 4.0 will enable sustainable prosperity through the use of modern technologies to find
solutions to the challenges related to energy, resources, environment, and social and economic
impact. Innovative solutions will reduce energy consumption, help companies sustain their
business with existing and new business models and use new technologies to produce all over
the world (even at high-cost locations) close to the markets utilizing the domestic workforce
skills (Morrar et al., 2017).
Acatech (2014) describes Industry 4.0 in terms of IoT; more specifically, the data and services enabled by
the IoT will change future production, logistics and work processes. The IoT has gone beyond Internet-
connected applications in recent years with the integration of various technologies such as machine learn-
ing, embedded systems and wireless connection. The European Research Cluster on the Internet of Things
(IERC) (Vermesan et al., 2009) states that the IoT is “an integrated part of future Internet and could be
defined as a dynamic global network infrastructure with self-configuring capabilities based on standard
and interoperable communication protocols where physical and virtual ‘things’ have identities, physical
attributes, and virtual personalities and use intelligent interfaces, and are seamlessly integrated into the
information network.” European Research Cluster on the Internet of Things adds that “things” in the IoT
“are expected to become active participants in business, information and social processes where they are
enabled to interact and communicate among themselves and with the environment by exchanging data
and information ‘sensed’ about the environment, while reacting autonomously to the ‘real/physical world’
events and influencing it by running processes that trigger actions and create services with or without direct
human intervention.” The main goal of the IoT is to “enable things to be connected anytime, anyplace, with
anything and anyone ideally using any path/network and any service” (Vermesan et al., 2014).
9.1.2 Industry 4.0 and Innovation

Industry 4.0 is highly connected with innovation, including mobile technology, the cloud, social media,
and big data. These and other innovations are predicted to work together to create a new concept for the
industrialization process and shift the market into a new era of competition and differentiation of prod-
ucts (Geiger and Sá, 2013).
Industry 4.0 represents a shift toward an innovation-based economy with knowledge, data, and the
IoT as central concepts. This will change the structures, markets and business processes of the industrial
age and pave the way for a new age of digitization, the “smarter” networking of production systems and
interlinked business processes (Morrar et al., 2017).
In the new industrial revolution, traditional competitive factors such as market share, economies of
scale, and access to resources are now linked or joined with other factors such as innovation, intellec-
tual property rights, smart technology and access to knowledge (Geiger and Sá, 2013). The role of the
consumer is changing as well; the availability of relevant information for both consumers and business
units allows more interactive relationships so that consumer needs can be better fulfilled. The consum-
er’s role in the production process is vital: consumers are now co-producers. They have become more
outcome-oriented (Geiger and Sá, 2013), and the “make-for-me” approach represents a new business
model. Radical process innovation is associated with the technological revolution and the new con-
sumer model; tailored production will replace industrial or mass-manufacturing facilities (Buhr, 2015).
These trends have contributed to the emerging concept of mass customization in manufacturing (Da
Silveira et al., 2001). Many firms have started to introduce new marketing interfaces and manufacturing
processes to meet the customized customers’ requirements. For example, consumers now define exactly
what they need. Companies are expected to modify their business models and insert flexible value
chains to respond to the changes in consumer behavior. A smart factory with smart production systems
will cope with such demand while maintaining high-quality products and services (Morrar et al., 2017).
9.1.3 Industry 4.0 Initiatives around the World

Industry 4.0 has clearly gone global. Companies around the world are leveraging the Industry 4.0 concept
(see Figure 9.1) (i-SCOOP, 2016).
FIGURE 9.1 Industry 4.0 across the globe—main initiatives, partnerships and influences as of March 2017. (From i-SCOOP,
Industry 4.0: the fourth industrial revolution—guide to Industrie 4.0., 2016, available at: https://www.i-scoop.eu/industry-
4-0/#Industry_40_has_gone_global_Industrie_40_initiatives_and_evolutions_around_the_world, Accessed: October 19, 2018.)
However, the global expansion of Industry 4.0 is not just a matter of government initiatives or agree-
ments. It is also a result of an increasing focus among industrial giants and leading consulting firms on
Industry 4.0, with new partnerships driving the Industry 4.0 concept further across the globe. There is
also an increasing adoption of Industry 4.0 principles and technologies across vertical markets beyond
manufacturing (healthcare, utilities, smart cities, oil and gas, etc.) (i-SCOOP, 2016).
9.2 Transportation 4.0: Multimodal Transportation Systems

In multimodal transportation, arguably the transportation model of the future, different forms of trans-
portation are integrated into a single passenger interaction to arrange complete door-to-door travel.
Imagine buying one ticket to get on a train, to the airport and straight to the hotel—where your luggage
will be waiting for you. The aim is to make travel experiences more efficient, safer, greener and hassle-
free while optimizing journey times and minimizing costs (Muraine, 2018).
9.2.1 The Connected Experience

The technology to create seamless or connected multimodal transportation exists, but the majority of
services are still being delivered to the end customer in a disconnected, piecemeal way. For example,
a journey from A to B might involve switching from a bus to a train and then a ferry, with tickets
purchased for each separate stage from the different operators providing transportation. In order to
improve services and keep up with the huge growth in numbers of people traveling throughout the
world, we need to look at new ways to streamline services for travelers and simplify the provision of
services for operators.
The multimodal experience starts at home or on the smartphone. There are already travel planning
apps and websites that show different modes of transportation, times and costs to help get passen-
gers from A to B, but even these are done through separate providers and intermodal systems. In the
future, we will see services that will be able to book an itinerary through a single app—with one
search and payment.
Smart-ticketing and e-ticketing are essentially already here, from boarding passes on smart-
phones to contactless card machines on buses. The next step will be to offer one ticket for all forms
of travel. While simplifying travel for passengers, these ticketing systems will also be useful to
transportation operators, as information gathered by smart systems can be analyzed to offer better
services.
Single token travel is the next development in multimodal travel: using a passenger’s biometrics and
travel data to create a digital record and provide secure authentication. The technology has the potential
to create a seamless journey for passengers by cutting the time taken for security checks, check-in and
boarding at airports and stations.
To achieve multimodal travel, transportation systems need to be connected both physically and opera-
tionally. This means having the right infrastructure supported by high-quality, real-time information
systems for connecting routes, schedules and fares (Muraine, 2018).
9.2.2 Keeping Passengers Connected

Communication is an important factor in the passenger journey; keeping passengers connected and
informed improves their experience. Smartphones, laptops and tablet devices are ubiquitous for
travelers today, as is public Wi-Fi. The same needs to be true for real-time data and communications
for transportation operators. In addition, there are applications that provide guidance and wayfind-
ing to help find retail outlets, departure gates or even locate their car, but this is not enough. The real
value comes from requesting assistance in real-time to enhance passenger experience (Muraine,
2018). A true added value for the passenger is a possibility to receive assistance at any time (Qulix
Systems, 2017).
Collaboration services embedded in applications through a CPaaS (Communications Platform as a

Service) model allow transportation authorities to provide real-time communications, such as messag-
ing, voice and video, to provide scheduling updates, travel information, real-time interaction with staff
and passengers and emergency notifications. All of this can be delivered via a single app, simplifying and
enhancing the traveler experience (Muraine, 2018).
9.2.3 Laying the Groundwork with Open Data and Application

Programming Interface (API)
Mass data are gathered every second from traffic management systems, CCTV cameras, vehicle detec-
tors and many more devices, such as IoT. This will only increase in the future as transportation becomes
smarter. However, collecting data is just one challenge. The real value comes from sharing data and
creating operational processes to create truly connected transportation systems (Muraine, 2018).
Infrastructure based on open data and APIs will be important to push transportation innovations and
mobility solutions. Multimodal transportation involves different operators coming together to provide
better travel, but they can’t provide this without knowing what’s going on around them. Consider the
cooperation between London Gatwick Airport and a low-cost airline EasyJet. The airport provides real-
time data from the information systems used by EasyJet to make a personalized notification for every
passenger using the mobile app (Qulix Systems, 2017).
9.2.4 Safeguarding the Network

The growth in the IoT and the increase in connected devices will only increase the number of vulner-
able points for unauthorized access—unless properly secured on the network. Cyber-attacks and data
breaches are a top concern for IT departments currently, and it will be of vital importance that operators
secure this data or risk losing passenger trust and the benefits of streamlined travel.
One solution to this problem is IoT containment, as part of an overall layered security approach.
By “containing” connected IoT devices in several virtualized environments on a network, businesses
can greatly decrease the chances of a broad network breach, as the threat is confined and cannot spread
to wider business operations. This segmented approach allows IoT devices to be managed and operated
only by the authorized personnel who use them, simplifying IoT management.
Another security approach focuses on mission-critical communications. A consistent cybersecurity
strategy is a key to keep the communication platform safe from cyberattacks and ensure service conti-
nuity, supported by embedded protection in the system and smart best practice rules (Muraine, 2018).
9.2.5 A Glimpse into the Future

Multimodal transportation will completely transform the way we travel. The technology is already here,
enabled by open APIs to offer a single ticket, payment and itinerary across different modes of transportation.
However, the groundwork—the network and systems that connect it all together—must be installed now if
we are to take full advantage of seamless travel. This means having a secure and reliable network that keeps
passengers and operators connected, regardless of mode of transportation they’re using (Muraine, 2018).
9.2.5.1 Transport 4.0: How IoT Will Transform the Future of Travel
• Interconnected travel experience;
• Connected passengers;
• Open data and APIs;
• Network protection (Qulix Systems, 2017).
9.3 Rail 4.0

Many railway networks are outdated and require comprehensive modernization. For the rail industry to
be able to compete with other traffic and transport networks in the long run, companies need to replace
outdated technology with more efficient, automated processes (HIMA, 2018).
9.3.1 SmartRail 4.0: The Railway of the Future

Mobility patterns and customer requirements are changing, and the growing mobility market is increas-
ingly fraught with uncertainty. With SmartRail 4.0, Swiss Federal Railways (SBB) is using new technol-
ogy, digitalization and automation in its mission to design the smart mobility of the future, which will
be simple, personal and connected.
SmartRail 4.0’s long-term objectives include integrated automated planning, automated control cen-
ters, flawless safety systems and full monitoring of railway operations, high data transmission capacity
for rail traffic and customers and automatic train operation. With this new technology, the program will
increase safety, capacity, flexibility and environmental sustainability.
As a pioneer in the railway sector, SBB has installed every train monitoring system equipped with
radio-frequency identification (RFID) technology, which automates the process of monitoring railway
operations. RFID measurement data is extremely precise, identifying technical problems in trains before
they lead to an incident. RFID technology is an essential component of SBB’s train monitoring system
(ZKE), which SBB also makes available to other railway companies (SBB, 2018).
9.3.2 Digital Transformation of Railways

The creation of smart, environment and user-friendly mobility systems is a high priority in the evolution
of transport worldwide. Rail transport is recognized as a vital part of this process. Meanwhile, a radical
advancement in the business environment, facilitated by ICT technologies, requires the existing business
models and strategies adopted by rail operators to be brought up to date. The thorough understanding
of the concept of digital transformation is paramount in the development of rail transport in the new
economy.
Digitalization, as an ongoing process of a convergence of the physical and virtual worlds, is bound
toward cyber-physical systems (CPS) and is responsible for the innovation and change in multiple sectors
of the economy.
The main technologies and solutions that have accelerated digital transformation in the railway sector
in recent years are:
• IoT,
• Cloud computing,
• Big Data analytics, and
• Automation and robotics.
The adaptation to the new conditions of the digital economy is marked by the emergence of the concept
Industry 4.0 and more recently by Railway 4.0 and digital railway. Mobile applications, e-ticketing, digi-
tal train control, signaling and traffic management, and digital platforms for predictive maintenance are
key areas of digitalization in the rail sector.
New products and services are becoming an integral part of the operations of railways, infrastructure
managers and manufacturers for the industry. As such, they contribute to the creation of added value
for multiple stakeholders in public transport initiatives, which facilitates the implementation of new
concepts of mobility.
FIGURE 9.2 DB 4.0—Concept of digital transformation. (From Pieriegud, J., Digital Transformation of Railways,
Department of Transport SGH Warsaw School of Economics, Siemens Sp. Z O.O., Poland, 2018.)
Railway companies in different countries have developed digitalization program. Solutions proposed
within such initiatives as the Shift2Rail public-private partnership and UIC Digital Platform promote
digital transformation of railways on a European scale (Pieriegud 2018).
9.3.2.1 Digital Business (DB) 4.0: Investing in Start-Ups

Digital Business 4.0 program is an example of a comprehensive digital transformation strategy designed
for a railway holding. It involves initiatives in all areas of DB’s business activity (see Figure 9.2).
The three currently prioritized areas of digital transformation in DB are:
• Developing the customer interface;

• Supporting operations, including the maintenance of infrastructure and rolling stock;
• Designing new business models that reach beyond the basic business activity, including the
Qixxit platform.
To address these priorities, DB is prepared to continue its investment in the development of start-ups.
Between 2015 and 2016, the implementation of the concept crowdsourcing allowed DB to launch a num-
ber of initiatives to create innovative solutions that monitor and analyze the customers’ expectations and
emotions. These include DB Mindbox, Zukunft Bahn, Skydeck and D-Lab. The coordination of these proj-
ects is a responsibility of the newly created entity DB Digital Ventures GmbH—the start-up ZERO.ONE.
DATA—initiated by DB Systel launched the DataBOX data exchange platform. One of the most recent
initiatives is the Beyond1435 program, a start-up co-launched by the Plug and Play platform. In collabora-
tion with Hyperloop TT, DB is developing a prototype of a train with augmented windows, with the envis-
aged completion year 2018. Finally, DB is looking to introduce autonomous trains into regular scheduled
service by 2021. Consideration is also being given to the feasibility of the development of autonomous
cars to be used by railway passengers to reach the train station or their final destination (Pieriegud 2018).
9.4 Manufacturing 4.0: Challenges and Accelerators

In the manufacturing industry, the driving forces of digital transformation are relatively similar to those in
other industries. Here as elsewhere, Industry 4.0 and the Industrial Internet are accelerating transforma-
tions via the IoT, and IT and operational technology (OT) are being integrated. IoT will play an increasing
role in the manufacturing industry, with advanced data analytics, digital twins, industrial robots and col-
laborative robots or cobots (i-SCOOP, 2016 (b)). In addition, the changing expectations of consumers are
impacting the entire supply chain (i-SCOOP, 2016 (b)). Other drivers include enhanced efficiency, cost
reduction and innovation and the development of new revenue sources in an age where data and how they
are leveraged are the currency of automation, optimization and profound transformation.
Just like many other industries, the manufacturing industry is diverse, with different sectors moving at
different speeds. While, in general, digital transformation strategy has been missing and initiatives have
been ad hoc, things are changing but a holistic picture is still missing, and the goals remain relatively
traditional and isolated.
The main drivers or challenges or opportunities for digital transformation and manufacturing are the
following (i-SCOOP, 2016 (b)):
• An uncertain macroeconomic and geopolitical context where risk needs to be managed, and
cost reductions and enhanced efficiencies are a necessity (read: automation).
• A more complex and connected supply chain where data or information and speed are key.
• The need to better understand the possibilities and benefits that can be achieved. While this is a
strategic and information matter, it also requires manufacturing companies to understand tech-
nological enablers of new opportunities, such as digital twins, robotics, artificial intelligence
and 3D printing to name a few—within their benefit, use case and holistic context.
• A changing customer with an increasing need to be not only more customer-centric but also be
more customer-adaptive and innovative.
• A highly competitive landscape in which faster movers are poised to gain advantages and even
become disruptive.
• The need to diversify and tap into new revenue sources, leveraging new ecosystems, and (con-
nected) data, to thrive and in some cases survive.
• A lack of clear vision and of a strategic holistic approach to tap into the revenue growth and new
revenue source potential of Industry 4.0.
• The human talent dimension in an altering reality where technology and innovation play more
profound roles; in many important areas (data, industrial IoT, convergence of IT and OT, new
business models, etc.), neither the talent nor the culture is ready to take the necessary steps.
9.5 Logistics 4.0

The demand for highly individualized products and services is continually increasing. Thus, inbound
and outbound logistics have to adapt to this changing environment. Due to its increasing complexity, it
cannot be handled with ordinary planning and control practices (Müller et al., 2015).
The term “Logistics 4.0” is used to refer to the combination of using logistics with the innovations
and applications added by CPS. Logistics 4.0 is related to the same conditions as smart services and
smart products. Therefore, the technology-driven approach used to define “Smart Products” and “Smart
Services” should also be used to define “Smart Logistics.” Smart products and services are the ones that
can perform tasks that normally are performed by people. In addition, they make it possible to delegate
activities so that employees can focus on the tasks that need more intelligence than automatic processes
or the smartness that a simple smart product or smart service can provide (Barreto et al., 2017).
“Smart Logistics” is a logistics system that can enhance flexibility and adjustment to the market
changes and bring the company closer to customer needs. This will make possible to improve the level
of customer service, optimize production and lower the prices of storage and production. As “Smart
Logistics” will change according to the actual technology used, it has a time dependency; thus, it is
essential to seek out state-of-the-art technology (Uckelmann et al., 2008).
This new paradigm is the result of the increased use of Internet that enables the communica-
tion between machines and humans in real time and the use of advanced digitalization (Barreto
et al., 2017).
9.5.1 Technological Applications

An efficient and strong Logistics 4.0 must rely on and use the following technological applications
(Barreto et al., 2017):
• Resource planning,
• Warehouse management systems,
• Transportation management systems,
• Intelligent transportation systems, and
• Information security.
9.5.1.1 Resource Planning

Under the Industry 4.0 paradigm and with the implementation of CPS, resource planning management
procedures should seek to enhance overall productivity, flexibility and agility when changes occur in
the supply chain. The proper alignment and integration of the main actors of the supply chain and an
increased level of visibility and transparency will lead to better forecasting of resources (people, materi-
als, equipment) (KPMG, 2016), and this, in turn, will optimize resources or processes, increase mar-
ket alignment and raise asset use (McKinsey Digital, 2015).
The level of sophistication required to use the IoT will substantially increase, as will the degree of
specialization of human resources (HRs). Human resource competencies will change dramatically with
the adoption of the Industry 4.0 paradigm. New computational and analytical skills will be required,
changing the common profiles of HR in the industry (Barreto et al., 2017).
9.5.1.2 Warehouse Management Systems

Warehouses have always been a vital hub in the flow of goods within a supply chain. In today’s economic
climate, they also need to serve as a key source of competitive advantage for logistics providers (DHL
Trend Research et al., 2015).
The adoption of the Industry 4.0 paradigm will introduce remarkable changes in the way warehouses
work. The introduction of smart management throughout the adoption and implementation of warehouse
management systems (WMSs) will transform warehouse activities to accommodate the inbound logistics
of Industry 4.0 (Schrauf and Berttram 2016).
The integration required for the different actors and stakeholders of the supply chain will guarantee
the alignment of all the value chain phases. As an example, transports will be able to communicate their
position and predicted arrival time to the intelligent warehouse management system, which will be able to
select and prepare a docking slot, optimizing just-in-time and just-in-sequence delivery. Simultaneously,
the RFID sensors will reveal what has been delivered and send the track-and-trace data to the entire sup-
ply chain. The WMS will automatically attribute storage space according to the delivery specifics and
request the appropriate equipment to move the goods to the right location autonomously.
Once pallets are moved to the assigned location, tags will transmit signals to the WMS to pro-
vide real-time visibility into inventory levels, which could prevent costly out-of-stock situations and
enhance the management decision capability to make adjustments to increase clients’ service level
(Barreto et al., 2017).
9.5.1.3 Transportation Management Systems

Traffic management system (TMS) is part of supply chain management (SCM) centered on transpor-
tation logistics. A TMS enables interactions between an order management system and distribution
center or a warehouse. As TMS technology has matured, these systems have been called upon to help
companies control and manage ever-higher freight costs, integrate with other supply chain technolo-
gies (such as WMSs and Global Trade Management Systems) and handle electronic communications
with customers, trade partners and carriers. As the breadth of offerings has expanded to incorporate
these and other capabilities, TMS has become a popular choice for companies of all sizes and across
all industries (Barreto et al., 2017).
With the massive use of IoT, and in the context of Industry 4.0, a TMS is an essential element in the
concept of Logistics 4.0. Logistics 4.0 uses real-time and inline data to achieve more efficiency and
effectiveness in a logistic process. A TMS is important for a company to be able to use GPS technology
to accurately locate its own vehicles while they’re on the road, monitor freight movement, negotiate with
carriers, consolidate shipments and use the platform’s advanced functionalities and interact with intel-
ligent transportation systems (ITSs).
Transportation management system functionalities continue to expand every year. In the near future,
more companies will adopt these systems to improve overall transportation management and customer
service. With the increased offers in cloud services and cloud computing, cloud-based TMS is becoming
the standard. The most important software houses are rapidly moving their TMS solutions to the cloud,
thus drastically reducing the number of on-premise installs (Cunnane 2017).
TMS solutions are redefining companies’ strategies. They offer the following advantages:
• A TMS offers better end-to-end supply chain visibility;

• A TMS increases the upper end of Return on investment;
• With the increased use of mobile devices and services, TMS solutions will be integrated into
smartphone applications that drivers can use to see where specific trucks are at any given time
(Barreto et al., 2017).
IoT and TMS will play an increasingly important role in the transportation and logistics industries
(Atzori et al., 2010). As more and more physical objects are equipped with bar codes, RFID tags or
sensors, transportation and logistics companies can conduct real-time monitoring of the movement of
physical objects from an origin to a destination across the entire supply chain, including manufacturing,
shipping and distribution. IoT is also offering promising solutions to transform transportation systems
and automobile services (Qin et al., 2013). As vehicles have increasingly powerful sensing, networking,
communication and data processing capabilities, IoT technologies can be used to enhance these capabili-
ties and share under-utilized resources among vehicles in the parking space or on the road. For example,
IoT technologies make it possible to track each vehicle’s existing location, monitor its movement and
predict its future location.
A well-defined and configured TMS, interacting with IoT devices, or a “Smart TMS,” will increase
the decision-making quality of management and make the SCM more and more flexible and efficient,
leading to a full Logistics 4.0 operation (Barreto et al., 2017).
9.5.1.4 Intelligent Transportation Systems

Intelligent transportation system is a novel field that interoperates different fields of transportation
systems, including transportation management, control, infrastructure, operations, policies and con-
trol methods. Intelligent transportation system adopts new technologies such as computing hardware,
positioning system, sensor technologies, telecommunications, data processing, virtual operation and
planning techniques.
Virtual technology integration is a new phenomenon in the transportation field and has the potential
to overcome many issues in today’s global world:
• ITSs are important for increasing safety, reliability and traffic flow;
• ITSs are important for reducing risks, accident rates, carbon emissions and air pollution;
• An ITS provides solutions for cooperation and a reliable platform for transport. Electronic toll
collection, highway data collection, traffic management systems (TMS), vehicle data collec-
tion, transit signal priority and emergency vehicle preemption are some applications;
• An ITS can be implemented in navigation systems, air transport systems, water transport sys-
tems and rail systems;
• The most recent generation of ITS, generation 4.0, makes use of multimodal systems incorpo-
rating personal mobile devices, vehicles, infrastructure and information networks for system
operations, and personal contextual mobility solutions (Sorensen 2012);
• ITS plays an important role in cooperative systems technologies, to support and enhance the
logistic process and the effectiveness of the fleet to substantially improve the results of the
transportation community, economically and in sustainability;
• An ITS using real-time and in-line data gathered through vehicular ad hoc networks (VANET)
systems (Hartenstein and Laberteaux 2010), sensor networks, drone points and business intelli-
gence systems will increase the decision-making quality of management and become more and
more flexible and efficient in the near future, improving the efficiency of logistics through the
convergence of machine-to-machine communication and cooperative systems technologies.
Thinking in terms of Logistics 4.0, a fully operational ITS environment can be used for:
• Intelligent truck parking and delivery area management;

• Multimodal cargo, i.e., supporting planning and synchronization between different transport
modes during the various logistic operations;
• CO2 footprint estimation and monitoring;
• Priority and speed advice, i.e., saving fuel consumption, reducing emissions and heavy vehicle
presence in urban areas;
• Eco-drive support, i.e., supporting truck drivers in adopting a more energy-efficient driving
style, thus reducing fuel consumption and CO2 emissions (Barreto et al., 2017).
9.5.1.5 Logistics and Information Security

The proliferation of Internet-based applications promoted by the emergence of cloud-based systems, the
IoT, Big Data, Industry 4.0, Bring Your Own Device and Choose Your Own Device trends have changed
the way organizations conduct their business. They are deeply interested in finding new technological ini-
tiatives at low operating cost, to offer better and more innovative services and thus gain competitive advan-
tage. However, with increasing reliance on technology to gain competitive advantage, information security
is becoming a critical issue. In fact, the new technological solutions always carry vulnerabilities, and some
have unexpected security risks (Goodrich and Tamassia et al., 2014; Bosworth and Kabay et al., 2002). It is
very important for organizations to develop ways to protect their information assets and IT infrastructure.
The amount of data which organizations daily have to deal with, the increasing number of online
transactions, the integration of new systems and their increased hypothetical potential third-party access,
coupled with the lack of computer security awareness, motivates a certain segment of the population to
exploit both software and human vulnerabilities (Barreto et al., 2017).
In general, users tend to accept new technologies with complete disregard for their inherent security
vulnerabilities, if they get sufficient benefits from them. Fostering and continuously encouraging a secu-
rity culture and recognizing that all technological applications and systems have their inherent vulner-
abilities and that people still are, and will always be the weakest link, will certainly assist organizations to
achieve adequate levels of security (ENISA 2010). Monitoring and early detection also play an important
role, as they enable organizations to react more quickly to events that are harder to find and understand
from the security management point of view. The rapid response to the security events and the establish-
ment of preventive actions to manage security are becoming an important competitive strategy.
In this context, organizations should identify, implement, monitor and evaluate the most effective set
of controls to provide an adequate level of security and to ensure their business continuity.
• Organizations usually start by identifying security controls according to their business needs
and the associated security requirements. The security requirement should be clearly defined in
the information security policy. The security policy dictates the set of controls that will provide
the required protection (Bishop et al., 2004).
• Monitoring and evaluating the implemented controls are crucial to determine if they are per-
forming as expected, i.e., controls are in place, are designed appropriately, are operating effec-
tively and are monitored regularly, in an effort to reduce risk exposure (Barreto et al., 2017).
Many companies are seeking to become certified. Certification enables organizations to comply with
increasing demands from financial institutions and insurance companies for security audits. It also
promotes trust in an organization’s capacity to implement appropriate security controls to manage and
protect confidential and sensitive client and business information.
The International Organization for Standardization/International Electrotechnical Commission Joint
Technical Committee (ISO/IEC_JTC1) has published the ISO/IEC 27000 family of standards, while
National Institute of Standards and Technology provides a series of publications, particularly the 800-series,
which include information on computer security (ISO/IEC_JTC1 2009; NIST 1996). These standards are
an important reference in the security information domain. They share many concepts and offer guidance
on security protection; consequently, their adoption enables organizations to demonstrate their commit-
ment to secure information assets and to ensure confidentiality and integrity of customer information.
They also provide their business partners and clients with greater confidence in their capacity to prevent
and rapidly recover from any interruptions to production or service levels (Barreto et al., 2017).
9.5.2 Logistics 4.0: Autonomous Decisions and Applications

There are many types of logistics, and there are many definitions of logistics, ranging from the orga-
nization, planning and management of something complex, such as the logistics of setting up an event,
to activities whereby many moving parts and processes are involved. It’s in the latter sense of moving
things (goods, assets, materials, data, etc.) around in business, supply chain and Industry 4.0 context that
we look at logistics in this section.
In Logistics 4.0, we add autonomy to the need to move things from A to Z in an intelligent, efficient
and holistic way this changes things. This gives such innovations as driverless transportation, intelligent
containers, smart warehousing, smart ports, smart shelves to the human and information exchange in all
possible logistical chains and contexts. A major game-changer in this regard is blockchain with myriad
use cases for distributed ledger technology in transportation, smart ports, cross-border maritime ship-
ping, retail and so on.
9.5.3 Logistics 4.0 and Supply Chain 4.0: From Data and

Autonomous Decisions to Intelligence and Actions
Without a digital supply chain, Logistics 4.0 simply isn’t possible. Here, Industrial IoT plays a key role,
as does a thorough understanding of all data and insights and actionable intelligence for SCM (i-SCOOP
2016 (a)). Turning data into actionable intelligence and ultimately actions (autonomous, semiautonomous
and human) is key to smart SCM and logistics in Industry 4.0.
It is also important to enable secure data exchange between participants, while, at the same time,
ensuring data sovereignty for the participating data owners. When many moving parts and many pro-
cesses are involved, both data and logistics must be secure.
All major players who are involved in the future of logistics have looked at the potential of blockchain
technology in SCM and logistics of the hyper-connected and (semi-)autonomous kind. The combination
of blockchain and IoT, a core component of Logistics 4.0, is accelerating. One example is the Blockchain
in Trucking Alliance in the United States. Blockchain initiatives in logistics are multiplying, as are
important consortiums (e.g., Maersk and IBM).
9.5.4 The Road Ahead for Logistics 4.0 and Supply Chain 4.0

Despite the talk of the digitization and digitalization of logistics and supply chains with the IoT (enabling
multiple logistics use case and, along with other technologies such as cloud computing and edge
computing or fog computing, bringing intelligence to the edge across logistics), digital supply chains and
FIGURE 9.3 Smart logistics and supply chain. (From i-SCOOP, Logistics 4.0 and smart supply chain management in
Industry 4.0, 2016(a), Available at: https://www.i-scoop.eu/industry-4-0/supply-chain-management-scm-logistics/, Viewed:
October 19, 2018.)
(semi-)autonomous decisions and logistical assets such as self-driving trucks and so on, the role of people
in SCM is far from over (i-SCOOP 2016 (a)).
In the end, however, the traditional pyramids in SCM and logistics will be disrupted. The road ahead
is one of more autonomy across various logistics components such as supply chain logistics, inbound
logistics, warehouse management, intralogistics or line feeding, outbound logistics and logistics routing.
One of the best images depicting the evolution toward more autonomy across all these areas is the
roadmap image from UNITY Consulting and Innovation shown in Figure 9.3. A highly autonomous,
flexible and predictive picture is painted in later stages, up to the point where there is no warehouse in
the supply chain (i-SCOOP 2016 (a)).
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Index
Note: Page numbers in italic and bold refer to figures and tables, respectively.
A Big Data analytics, 9, 175

content/context, 170–171
acceleration, 69 data sharing and collaboration, 171–175
access control, 318 descriptive analytics, 176–178
accidental threats, 312 diagnostic analytics, 178–182
active identity-related services, 220 prescriptive analytics, 182–184
active IDS, 305 sensors and networks, 156–170
active RFID tags, 210 types, 176
active threats, 312 biosensors, 266–267
actors vs. actuator, 169 Bitcoin network, 328
actuator networks, 85, 87 black box testing, 303
adapted mediation process, 281–282 blockchain technology, 330, 333, 336–337, 345–346
adaptive clustering method, CPS, 92 application considerations, 342–345, 343
machine condition/working regimes, Bitcoin, 328
similarity, 94–95 characteristics, 328–329
prognostics, machine health, 95–96 compliance, 345
adaptive health state recognition, blade condition, 93 cryptographic hash functions, 330–332, 331
additive manufacturing, 12 cryptographic nonce, 332
addresses/address derivation, 334, 334 data visibility, 344
aggregate network diagram, 221 death, 339
Amazon cobot, 273, 274 fake data input, 344
Amazon fulfillment center, 273, 274 full transactional history, 344
anomaly-based IDSs, 305 governance, 338–339
application layer attacks, 323–324 limitations/misconceptions, 337–339
application programming interfaces (APIs), 203–204, node diversity, 345
230, 354 permissioned, 329–330
applied technology/data analytics services, 311 permissionless, 329
AR, see augmented reality (AR) permissions, 345
asymmetric-key cryptography, 333–334 tamper-evident/tamper-resistant data, 345
asymmetric Public Key Infrastructure (PKI) transactions per second, 345
system, 307 Bluetooth, 209, 215–216
attribute-based encryption (ABE) algorithm, 325 Bluetooth technology (BT) devices, 226
audio, 70 boards, 54
audit log, 318 Bosch Rexroth, 11
augmented reality (AR), 12 bucket brigade attacks, 323
O&M, 242
parts, 244–246
properties, 243 C
value of, 243 CAD model, component inspection, 278
authentication, 300, 307, 318 chaining blocks, 337
authorization threats, 321 CIKR, see critical infrastructure and key
Auto Identification (Auto-ID), 62 resources (CIKR)
automatic crash notification (ACN), 61 classic applications, CPS, 96–98
automation, IoT impact on, 219 clay form of pervasive systems, 54
autonomous robots, 11 closed loop policy management, 315
cloud, 12
B cloud computing, 196, 207
CMMS, ERP, MES and PLM, 125–130
back door traps, 323 IT vs. OT, 121–125
band saw machines, 91, 92 security and privacy, 150
barcodes, 62 taxonomies, see taxonomy, cloud computing
beacons, 215 cloud security, 309
365
366 Index
cloud services, 138 objectives, 300–301

advantages, 138–139 OT/IT, 311
features and benefits, 139 standards, 300
as professional services, 145 technologies, 325, 326
public vs. private, 145 threats to, 312–313
types of, 139–144
vs. web services, 145 D
XaaS, 144–145
cloud storage, access control, 325–327 dangers, IOT, 200
CMMS, see computerized maintenance management data
system (CMMS) analysis, 6
cognitive invisibility, 55 breaches, 354
collaborative aware services, 220–221 encryption, cloud storage, 325–327
collaborative robots (cobots), 270 integrity, 307
applications, 275–278 model, 173–174
characteristics, 270–272 outstrips voice, 217
history, 271 repository, 146–147
operations, 272 and signal processing technology, 212
workforce, 272–275 theft, 327
communication technology, 208–209 visibility, 344
computerized maintenance management system (CMMS), data analytics
129–130 advances, 196
computing economics, 196 types of, 175
connected worker technology, 264, 264 data center, 85, 147–148
content, age of, 170–171 architecture and design, 149
context, age of, 171 vs. cloud, 150
contract decoupling, 200 consolidation and colocation, 148
control center, 85 definition, 148–149
convertible factory, 5 energy consumption and efficiency, 149
CPaaS (Communications Platform as a Service) infrastructure management and monitoring, 149
model, 354 security and safety, 149
CPSs, see cyber-physical systems (CPSs) datafication, 218
critical infrastructure and key resources data sharing, 171–172
(CIKR), 294–295 analyst’s needs, collaboration, 172
cross-layer approach, 160 application/network management, 320
cross-site scripting technique, 324 attacker techniques, 321–325
cryptographic hash functions, 330–332, 331 cybersecurity technology, fields, 325
cryptographic nonce, 332 data model, 173–174
customer-oriented solutions, 5–6 domain knowledge and mapping, 172–173
cyber-attacks, 354 end-to-end communications security, 313–314
cyber-physical systems (CPSs), 4–5, 15 knowledge management, 174–175
architecture, 85–88, 86 network protection strategies, 314–316
characteristics, 84–85 network survivability, 320–321
classic applications, 96–98 securing management, 317–320
classification, 98–101 variable depth security, 316–317
computational and physical processes, 83 Dave Linthicum’s 10-layer taxonomy, 135
cost-effective methods, 82 DB 4.0, see Digital Business (DB) 4.0
current and Industry 4.0 factories, 81, 81 decentralization, 18
digital platforms, 113–117 deep packet inspection (DPI), 297–298, 298
engineering systems, 82 dematerialization, 35
functions and uses, 110–112 demilitarized zone (DMZ), 296–297, 297
opportunities and research challenges, 82 demographic preference research, 251
self-modifying machine, 112–113 denial of service (DoS), 322–323
service-oriented architecture, 83, 83 descriptive analytics, 178
system integration, 84, 84 data, 177–178
WSNs and IoT, 83 definition, 176–177
cybersecurity, 12, 339–340 process, 177
blockchains, see blockchain technology design principles, 17, 17–18
IT level, 298–299 desktop computing, 52
network security, 299–300 Digital Business (DB) 4.0, 356, 356
Index 367
digital business technology platform, 113–114, 116 cyber, 89

building, 116 data flow and information, 91
cross-cutting concerns, 116, 117 data-to-information conversion, 89
need of, 114 smart connection, 89
technology platforms, 115 smart machines, 91–93
digital factory, repository of, 29, 29 flame sensors, 266, 266
digitalizing production, 6 flexible production, 5
digital revolution, 4 forecasting IoT growth, 218
digital transformation, railways, 355–356, 356 fully homomorphic encryption (FHE), 327
digital workpieces, 7
discovery/search engine technologies, 212 G
distributed computing, 50–51
distributed control systems (DCSs), 290 GatorTech Smart Home, 72
DMZ, see demilitarized zone (DMZ) Gaussian Mixture Model, 94
document tracking, RFID, 261, 261 General Electric (GE), 210
DoS, see denial of service (DoS) geographic information systems (GIS),
DPI, see deep packet inspection (DPI) 253–254, 255
drivers, servitization, 31 German manufacturing
dust form of pervasive systems, 54 impact quantification, 18–19, 20, 21
system suppliers, 21
E transforming production processes and
systems, 19
EasyMeeting, 71 global positioning system (GPS), 254
economic impact of pervasive computing, 67 accuracy, 257
ecosystems, IoT, 228, 231–232 application, 256, 257
APIs, 230 core segments of, 255
cloud computing, 231 Google Maps, 55
communities, 230 Google smart contact lenses, 251
defining, 228–229 grey box testing, 303
enabling platforms, 230
vs. platforms, 229
H
revenue models, 230
support functions, 230 hand-held displays (HHD), 244
Ekso Bionics, 247, 249 hardware technology, 211
electric power grid, CPS, 96, 97 head-mounted displays (HMDs), 245
emerging technologies, cycle, 225 health care, 63, 63–64, 222
encryption, 300, 307 and medicine, 96
endpoint security, 310 heart monitor, 251
end-to-end communications security, 313–314 heterogeneity, 291
end-to-end engineering, 5 home linking technology (HLT), 61
enterprise-based application, 223 honeypots, 300
enterprise resource planning (ERP), 101–102, horizontal integration, 5, 108, 108–109, 109
126–129 horizontal network connections, 7
environmental sensors, 265–266, 266 host-based firewalls, 306
Everything as a Service (XaaS), 144–145 host intrusion detection systems, 305
Extensible Markup Language (XML), 200, 204, human factors, Industry 4.0
207, 212 adapted mediation, 281–282
basic needs, 280
F clients, 279
complex systems, 278
false hotspots, 327 empowerment and ownership, 280–281
fast-growing telecommunications, 216 mediation, 281
fault tolerance, 200 mediators, 281
firewalls, 300, 306, 317, 319 needs and motivations, 279–280
fitness tracker, 247 system users/designers, 279
5C CPS architecture, 89 humidity, 71
applications and techniques, 90 sensor, 266, 266
cognition, 90 The HX2, 250
components, 88, 90 Hypertext Transfer Protocol Secure (HTTPS),
configuration, 90 306–307, 307
368 Index
I intelligent health and safety devices

connected worker, 264, 264
identification technology, 208 market, 268–269
identity-related services, 220 research and innovation, 269–270
IDS, see intrusion detection system (IDS) SafeScan, 265
immutability, 337–338 sensors, 265–268
impact, pervasive computing SmartCap, 263
economic, 67 smart helmets, 264, 265
privacy, 67 smartwatch, 263, 264
social, 67–68 intelligent machines, 7
winners and losers, 68 intelligent networking, 5–6
industrial AR (IAR), 243–244 intelligent transportation systems (ITS), 359–360
Industrial Internet, 192, 195, 198 intentional threats, 312
Industrial IoT, 11, 195 inter-domain operability, 201
Industry 4.0, 3–4, 350 International Data Corporation (IDC), 268
augmented operator, 6–7 Internet control message protocol (ICMP), 323
component model, 26–29, 27, 28 Internet Engineering Taskforce (IETF), 214
conception and technologies, 8, 8 Internet of Everything (IoE), 192–193
definition, 5 Internet of Services (IoS), 16
design principles, 17, 17–18 Internet of Things (IoT), 15–16, 191–192, 192
dimensions, 4–5 architecture, 193, 194, 201–204, 208, 209
information technology/open market operations, 351 challenges, 226–227
initiatives, 352, 352–353 dangers, 200
and innovation, 351–352 definition, 192–193
intelligent networking, 5–6 ecosystems, 227–232
macro perspective, 12–14, 13 enablers, 214–216, 215
micro perspective, 14, 14–15 4 As/4 Cs, 205
networked production, components, 7–8 framework, 200–201
smart machine, 6 growth, 195
smart products, 4, 6 hardware, 206, 211
technological advancement, pillars, 8–12, 9 humans in loop, 196
traditional manufacturing relationships, 10 IT and OT convergence, 103–107, 107
trends/expected development, value creation market over time, 219
factors, 15, 16 middleware, 206–207
uniform norms and standards, 6 and pervasive computing, 74
information aggregation services, 220, 221 revolution/security impact, 291
information technology (IT) services types, 220–221
ERP tool, 101–102 software, 207
Industry 4.0 structure, 103 technologies, 198, 199, 207–214
MES systems, 102 and telecommunications, 216–217
and OT convergence, industrial IoT, 103–106, 104, 105 transforming industry/society, 218–219
pyramid structure, modern production systems, vision/possibilities, 197–198, 198
101, 102 works, 204–205, 205
security, 299, 301 and WSNs, 83
information technology (IT) vs. operation technology Internet security
(OT), 121 cloud security, 309
concerns, 122–123 endpoint security, 310
conservation, conditions of, 124 HTTPS, 306–307
data vs. processes, 124 OAuth 2.0, 308–309
definition, 122 SSL certificates, 307–308, 308
integration, 125 web sockets, 309
IoT, 124–125 wireless security, 309–310
regulations and protocols, 124 interoperability, 17
security, 123–124 intrusion detection, 319
technological needs, 123–124 intrusion detection system (IDS), 300, 304–306
update frequency, 124 intrusion prevention system (IPS), 300
Infrastructure as a Service (IaaS), 132, 140–144 IoT, see Internet of Things (IoT)
insider attacks, 323 IoT applications
integrated intelligent road with unmanned vehicles, 98 cities, 224
integration, IoT impact on, 219 enterprise, 223
intelligent decision-making algorithms, 212 health care, 222
Index 369
personal/home, 223 mobile user (mobUser), 57–58, 58

smart infrastructure, 221–222 mobile WSN, 164
social applications, 222, 223 modularity, 18
supply chains/logistics, 222 MTConnect, 89
transportation, 225–226 multimedia WSN, 164
utilities, 224 multimodal transportation systems, 353–354
video-based, 224–225
water apps, 225 N
IP-based networking, widespread adoption, 196
IP spoofing, 321–322 near-field communication (NFC), 206, 214
IT-OT cybersecurity convergence, 310–312 network
ITS, see intelligent transportation systems (ITS) discovery mechanisms, 211
IT security layers, 301 layer threats, 324–325
management traffic, encryption, 319
L protection strategies, 314–316
safeguarding, 354
layer 3 virtual private networks, 317 sniffers, 322
layered security, application/network management, 320 survivability, 320–321
ledgers, 335–336 network-based firewalls, 306
legacy systems, 291 networked production, 7–8
library RFID management system, 261 networking technology, 210
light, 69–70 network intrusion detection system (NIDS), 304
sensors, 266, 266 next-generation firewalls, 306
lightweight implementation, IoT, 200 next-generation network systems, 85
localization devices Nyquist rate, 87
GIS, 253–254
GPS, 254–257 O
QA process, 252
RFID, 257–262 OAuth 2.0, 308–309
strings and speech, 252 Ocado, 273, 275
WLAN, 262 one-factor authentication, 300
Logistics 4.0, 357 operating room CPS, 96, 97
autonomous decisions/applications, 361 operational technology (OT), 101
ITS, 359–360 convergence, IT and, 103–106
resource planning, 358 heterogeneity, 291
and supply chain, 361–362, 362 incidents, share, 290–291
technological applications, 358 IoT revolution/security impact, 291
TMS, 358–359 vs. IT, 121–125, 292, 292
WMSs, 358 lack of expertise, 291
low-power wide-area network (LPWAN), 168 lack of visibility, 292
legacy systems, 291
M pyramid, 290, 290
security challenges, 292–294
macro perspective, 12–14, 13 Operator 4.0
mainframe computing, 52 AR, 242–246
malicious users, 340 cobots, 270–278
malware placement, 327 human factors, 278–282
man-in-the-middle attacks, 323 intelligent health and safety devices, 263–270
manufacturing execution system (MES), 102, 126–129 localization device, 251–262
manufacturing-system suppliers, 21–22 wearable devices, 246–262
Maslow motivational model, 279–280, 280 optical biosensors, 267
masquerading, 323 optical see-through display, 244
MavHome, 72 optical tag, 215
mean time between failure (MTBF), 296 Oracle problem, 339
mediation process, 281–282 OS hardening, 319
MES, see manufacturing execution system (MES) OT, see operational technology (OT)
message digest, 330
messages modification, 323 P
microelectromechanical systems (MEMS), 54
micro perspective, 14, 14–15 packet-filtering firewalls, 306
mobile computing, 51–52 pads, 54
370 Index
palm-sized mobile computer, 73 technological drivers, 41–42

passive identity-related services, 220 types, 36, 38
passive RFID tags, 210 programmable logic controller (PLC), 91, 103, 110
passive threats, 312 proximity, 70
password-based authentication, 315–316 proxy firewalls, 306
penetration testing, 302–303 PSSs, see product-service systems (PSSs)
permissioned blockchain networks, 329–330 public key cryptography, 333
permissionless blockchain networks, 329 public key infrastructure (PKI)/identity, 342
pervasive computing, 48–49, 49; see also UbiCloud pyramid structure, modern production systems, 101, 102
applications, 59–63, 60
core concepts, 53–54 Q
definitions, 49–50
distributed systems, 50–51 quality assurance (QA), 252
framework, 52 Quell relief, 251
goals, 54 quick response (QR) code, 215
and IoT, 74
mobile computing, 51–52 R
problems, 55–56
research issues, 54–55 radio-frequency identification (RFID), 83, 96, 206, 222, 257
research problems, 50, 50 agriculture, 261–262
sensors, 69–71 apparel manufacturing, 259
smart spaces, see smart spaces asset management, 258, 258
stages, 65, 65–66 asset tracking, 260
traditional networking, 68–69 automation and manufacturing tracking, 260
waves, 52–53 chips, 15
physical invisibility, 55 in defense, 258, 259
Platform as a Service (PaaS), 132, 142–144 document tracking, 261, 261
PLC, see programmable logic controller (PLC) laundry automation, 258, 259
PLM, see product lifecycle management (PLM) library automation, 261
PoPSS, see product-oriented PSS (PoPSS) in retail, 258
ports addresses, 323 tags, 62–63
positioning system, CPS, 112, 112–113, 113 Rail 4.0
position/location tracking sensors, 267–268 digital transformation, 355–356
potential IoT applications, 224 SmartRail 4.0, 355
power and energy storage technologies, 213 RAMI 4.0 model, see Reference Architecture Model
power line communication (PLC), 61 Industry 4.0 (RAMI 4.0) model
power usage effectiveness (PUE), 149 real-time capability, 18
predictive analytics, 182 real-time SOA middleware services, 88
definition, 178–179 Reference Architecture Model Industry 4.0 (RAMI 4.0)
process, 179, 180, 181 model, 23–24, 24
value chain, 180 components, 26–29
prescriptive analytics digitization, 23
definition, 182–183 hierarchical system architecture, 26
process, 183 horizontal left axis, layers on, 25
usage, 183–184 vertical axis, layers on, 24–25
private key storage, 335 reference architectures, 202–204, 203
producers, 22 replay attacks, 323
product lifecycle management (PLM), 125–129 representational state transfer (REST), 204
product-oriented PSS (PoPSS), 36–37 research issues, pervasive computing, 54–55
product-service continuum, 32 resource-efficient circular economy, 6
product-service systems (PSSs), 30–31 resource planning, 358
customer-driven rationales, 41 resource usage, blockchain technology, 341
definition, 34–35, 35 result-oriented PSS (RoPSS), 36, 38
economic rationales, 40–41 revenue models, 230
environmental rationales, 39–40 RFID, see radio-frequency identification (RFID)
evolution, 36
exemplification, 39 S
features, 35–36
photocopier/document management capability, 36, 37 SafeScan, 265
Rolls-Royce, airlines, 34 safety devices, see intelligent health and safety devices
servitization, 34 Sam Johnston’s six-layer stack, 133–134
Index 371
SCADA systems, see supervisory control and data barcodes, 62

acquisition (SCADA) systems cars, 61–62
scalability, 55, 200 factory, CPS, 99
secure activity logs, 318 helmets, 264, 265
Secure Hash Algorithm (SHA), 331 homes, 59, 61
secure remote access, operators, 319 infrastructure, 221–222
securing management, 317–320, 318 logistics/supply chain, 362
security machines, 91–93
assessments, 293 RFID, 62–63
engineering, 301–302 workpieces, 7
layers, 313, 314 SmartCap, 263
and privacy technologies, 213 smart clothing, 247
recommendations, OT network, 296, 296–298 smart eyewear, 247
solutions, 293–294 SmartFactoryKL, 17–18
threats, taxonomy, 321–325 Smart Grid Architecture Model (SGAM), 23
security architectures, 202 smartness, IoT, 195
application layer, 202 SmartRail 4.0, 355
business layer, 202 smart spaces, 55, 72
coding layer, 201 components, 72
middleware layer, 202 EasyMeeting, 71
network layer, 201 GatorTech Smart Home, 72
perception layer, 201 MavHome, 72
self-organizing map (SOM), 94 UbiComp devices, 73–74
semantic interoperability, 208 smartwatch, 247, 263, 264
semi-passive RFID tags, 210 SOA, see service-oriented architecture (SOA)
sensors, 73–74, 268 social applications, 222, 223
acceleration, 69 social impact, 67–68
audio, 70 social networking, 63
biosensors, 266–267 software, platform, and infrastructure (SPI) model, 132,
environmental, 265–266, 266 135–137, 136
humidity, 71 Software as a Service (SaaS), 132, 139–140, 143–144
light, 69–70 software-defined networking (SDN), 168
mechanical force, 71 software-defined networking in a wide area network
movement, 69 (SD-WAN), 166
networks, 85, 206 sound sensors/microphones, 266, 266
node, 156–158, 157 spatial displays, 244
position and location tracking, 267–268 speech, 252
proximity, 70 SPI model, see software, platform, and infrastructure (SPI)
temperature, 70 model
service coordination/choreography, 201 spying, 327
service directory (SD), 57–58, 58 standardization, 213–214
service orientation, 18 stateful inspection firewalls, 306
service-oriented architecture (SOA), 83, 83, 88, 193, static packet-filtering firewalls, 306
203–204 stress matrix, rotating machinery, 95, 96
service provider (SP), 57 stress relief monitor, 251
servitization, 29–30 strings, 252
businesses, governments and academics, 30 structured tags, 215
definitions, 30, 30–31 supervisory control and data acquisition (SCADA)
features, 32 systems, 101–102, 110, 290
framework, 33, 33 Swiss Federal Railways (SBB), 355
impacts, 32 symmetric-key cryptography, 333
IoT impact on, 219 system integration, CPS, 84, 84
manufacturing firms, 30 system security engineering (SSE), 302
state of, 32 system security engineering management plan (SSEMP),
sharing data, risks/threats, see data sharing 302
signature-based IDS, 305 system user, 85
six-layered architecture, IoT, 202
skin form of pervasive systems, 54 T
smart
appliances, 61 tabs, 54
Auto-ID, 62 tamper-evident/tamper-resistant data, 345
372 Index
taxonomy, cloud computing uniform access management, 315–316

comparison and limitations, 135–136, 136 uniform resource locator (URL), 307
Dave Linthicum’s 10-layer, 135 use-oriented PSS (UoPSS), 36–38
need for, 130–132 user agent (UA), 57, 57–58, 58
NIST’s SPI model, 132 user interface, real-time access/machine health
proposed, 136–138 information, 93
Sam Johnston’s six-layer stack, 133–134 user mobility, 74
Youseff’s five-layer ontology, 132–133
technological advancement, 8–9, 9 V
additive manufacturing, 12
augmented reality, 12 vertical integration, 109–110, 110
autonomous robots, 11 and networked manufacturing systems, 5
big data and analytics, 9 vertical network connections, 7
cloud, 12 video-based applications, 224–225
cybersecurity, 12 video-mixed display, 244, 245
horizontal and vertical system integration, 11 virtualization, 18
industrial IoT, 11 virtual local area networks (VLANs), 297, 316–317
simulation, 11 virtual private network (VPN), 167
technological applications virus-free software, 320
ITS, 359–360 voice-over-IP (VoIP), 298
logistics/information security, 360–361 vulnerability testing, 302–303, 303, 304
resource planning, 358
TMS, 358–359 W
WMSs, 358
telecommunication management networks (TMNs), 201 wallet, 335
telecommunications warehouse management systems (WMSs), 358
growth, 216–217 water apps, 225
transitions, 217 WBAN, see wireless body area network (WBAN)
terrestrial WSN, 163 wearable camera, 247
threat assessment, 312 wearable device, 246
three-dimensional (3-D) simulations, 11 application and product categories, 253
traditional networking vs. pervasive computing, 68–69 classification, 247
traffic management system (TMS), 358–359 computer, 248–250
transactions, 332, 332–333 demographic preference research, 251
transmission control protocol (TCP), 201 health care devices, 250–251
transportation, 64, 64, 225–226 QA process, 252
Transportation 4.0 sensors, see sensors
API, 354 strings and speech, 252
connected experience, 353 types of, 248
information technology/open market operations, 351 wearable robot, 246–248
keeping passengers connected, 353–354 wearable gloves, 248
network safeguarding, 354 wearable medical device, 247
trend forecasting, IoT, 195 web sockets, 309
two-factor authentication, 300 white box testing, 303
Wi-Fi password cracking, 327
U Wikisensing system, 161
wired vs. wireless networking, 199
UbiCloud wireless
CC component, 56–57 blood pressure monitor, 250
environment, 56, 57 networks, 73
infrastructure, 58 security, 309–310
localized scalability and adaptability, 58, 59 wireless body area network (WBAN), 164, 165
SD, UA and mobUser interactions, 58, 58 wireless local area network (WLAN), 262
UbiComp component, 57 wireless personal area networks (WPANs), 209
UbiComp devices, 73–74 wireless sensor and actuator network (WSAN),
ubiquitous connectivity, 196 168–170, 169
ubiquitous services, 221 wireless sensor network (WSN), 156–159, 206
unauthorized access, 325 application domains and deployments, 164–166
underground WSN, 163 challenges and requirements, 162
underwater WSN, 163–164 characteristics of, 159–160
Index 373
platforms, 160–161 X
potential synergies, 166
types, 159, 163–164 XaaS, see Everything as a Service (XaaS)
wireless sensor networks (WSNs), 83 XML, see Extensible Markup Language (XML)
WMSs, see warehouse management systems (WMSs)
WSAN, see wireless sensor and actuator network Y
(WSAN)
Youseff’s five-layer ontology, 132–133

Handbook I 4.0 SMARTSystems

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Handbook I 4.0 SMARTSystems

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Handbook of Industry 4.

Diego Galar Pascual

© 2020 by Taylor & Francis Group, LLC

No claim to original U.S. Government works

Printed on acid-free paper

International Standard Book Number-13: 978-1-138-31629-4 (Hardback)

and the CRC Press Web site at

1. Fundamentals of Industry 4.0.......................................................................................................... 1

2. SMARTness and Pervasive Computing........................................................................................ 47

3. The Industry 4.0 Architecture and Cyber-Physical Systems..................................................... 79

4. Cloud Computing, Data Sources and Data Centers.................................................................. 119

5. Big Data Analytics as Service Provider...................................................................................... 155

6. IoT and the Need for Data Rationalization................................................................................. 189

7. OPERATOR 4.0............................................................................................................................ 239

8. Cybersecurity and Risk................................................................................................................ 287

9. Industry 4.0 across the Sectors.................................................................................................... 349

Retrospectively looking at previous revolutionary development of manufacturing from its beginning

• General support in defining development strategies and policies of its realization,

1.2.12 The Way Forward.............................................................................................................. 21

Figure 1.1 Main technologies of Industry 4.0...................................................................................... 8

Figure 1.12 Repository of the digital factory........................................................................................ 29

Table 1.1 Trends and expected developments in value creation factors................................................16

1.2 Industry 4.0

1. Horizontal integration across the entire value creation network,

1.2.1 Definition of Industry 4.0

1.2.2 What Is Industry 4.0?

1.2.2.1 Industry 4.0—What Is It?

• Flexible production: Many companies use a step-by-step process to develop a product. By

1.2.2.2 Talking about a Revolution: What Is New in Industry 4.0?

1.2.2.3 On the Path to Industry 4.0: What Needs to Be Done?

1.2.3 Key Paradigm of Industry 4.0

1.2.4 Industry 4.0 Conception

1.2.4.1 Five Main Components of Networked Production

1.2.5 Framework of Industry 4.0: Conception and Technologies

• Integration and digitalization of horizontal and vertical value chains,

The new connected technologies are shown in Figure 1.1.

1.2.6 Nine Pillars of Technological Advancement

Big Data Internet of

Augmented INDUSTRY 4.0

Augmented Horizontal and ver

The Cloud Cybersecurity

1.2.6.1 Big Data and Analytics

...to fully integrated data and

Machine to machine and machine to human interacon

1.2.6.2 Autonomous Robots

1.2.6.4 Horizontal and Vertical System Integration

1.2.6.5 Industrial IoT

1.2.6.8 Additive Manufacturing

1.2.6.9 Augmented Reality

1.2.7 Macro Perspective of Industry 4.0

Raw Water Reservoir

Product Lyfe Cycle

1.2.8 Micro Perspective of Industry 4.0

In-house Transport Value Creaon

Value Chain Acvies

1.2.9 Industry 4.0 Components

1.2.9.2 Internet of Things

1.2.9.3 Internet of Services

1.2.9.4 Smart Factories

1.2.10 Industry 4.0: Design Principles

1.2.10.4 Real-Time Capability

1.2.10.5 Service Orientation

1.2.11 Impact of Industry 4.0

Figure 1.1 Main technologies of Industry 4.0...................................................................................... 8

Machine to machine and machine to human interacon

In-house Transport Value Creaon

Value Chain Acvies

Gross producon Producvity Producvity total

Relave development Absolute development of employees

A significant shi in the skill profile is required to enable growth

1.2.11.3 Manufacturing-System Suppliers: Meeting New Demands

* EIC 62264-1: 2013 Enterprise-control system integraon Enterprise

Administraon Administraon (Unknown)

I4.0 – compliant communicaon

Administraon Shell Manifest

Administraon Administraon Administraon

Cyber Consulng Condion

6. Acvity 3. Product lease 1. Product

Producon of Markeng &

Figure 2.1 Pervasive computing: a vision of the future of computers................................................ 49