How extended reality (XR) technologies can transform industries
Welcome to the Decoding Innovation podcast series, brought to you by the EY-Nottingham Spirk Innovation Hub, where we explore the innovative technologies, business models and ideas that are shaping the future of industries. During each episode, Mitali Sharma, a principal in the EY-Parthenon Strategy practice, meets with stakeholders at the cutting edge to discuss innovations in their space, challenges they need to overcome and their outlook on the future. John, welcome.
Thank you very much for having me. If you wouldn't mind giving us a little bit of introduction by yourself? Yeah, sure. I grew up in the UK; I went to college at the University of Birmingham. I was an electronics engineering major.
I then worked in the semiconductor industry for around 25–27 years, and I was working with companies in Europe and the US, Japan quite a bit, as well actually. I got very interested in the whole topic of how we can utilize the vast amounts of data that these industries are starting to generate. I'm kind of a startup guy.
I've done several startups, and in 2017, I was looking to do another one and I figured that, you know, the whole area of industrial data, software and how to make the two work together better — it was was going to be a very interesting area to explore and that's really how we started this company is by getting into figuring out ways to utilize these data better. And then the term metaverse has come a long way in the last 18 months or so, and it's a great way of describing all the different technologies that we're utilizing. In your words, how would you describe metaverse, because it means different things to different people? It's the conference or the convergence of a whole bunch of different technologies. If you look at the stuff we work with, on one side, you've got gaming technology, which has made rendering of 3D areas, facilities and worlds much more effective. We've all played, probably at this stage in our lives, computer games, where we're immersed in a very realistic 3D setting. On the other area, you've got real-time data being generated in ever-increasing quantities coming from equipment, facilities, the environment, the extended reality (XR) technologies — virtual reality (VR), augmented reality (AR) really starting to hit the mainstream now. Obviously,
that was really where Facebook came from, I think, when they coined the term the metaverse. So you put those things together, you start to see you've got a realistic environment you can immerse yourself in. You've got real-time data that you can enhance the environment. You've got gaming technology, which makes it very easy to apply all sorts of visual effects to the data.
And then you've got these new ways of looking at these 3D environments and even more immersive ways, which is the VR and AR. And those technologies are still coming of age. I think they've hit the mainstream, but it's the edge of the mainstream.
But next few years, we're going to see them become very, very ubiquitous. But it's that convergence of technologies, how you summarize that up well, if you can pick a single term metaverse and that puts a label on all of that stuff in one word. It's a very convenient way of describing it. How have you interpreted that in the industrial setting and how UrsaLeo is approaching it? What we're trying to do is, we're trying to offer all of those features I just described to existing software products — software-as-a-service (SaaS) products.
So, you have many, many companies around the world who are collecting industrial data. They're running predictive maintenance, they're using artificial intelligence (AI), and they're doing all sorts of things with the data. The one thing they're not doing very well is visualizing it. The way they typically visualize data is as a 2D dashboard.
We've all seen these graphs and dials and things on 2D — looks like an airplane cockpit usually. So, what we do is, we say: "Ok, you've got all the basics. You're collecting the data, you're sitting there, you're analyzing the data, you're making decisions on the data. What we can do is we can offer you a visualization piece that, all of a sudden, brings all of that data to life in a really interesting way." And that's kind of what we do.
We work with companies around the world. We integrate our product with their product. We have a very rich integration framework, and then, all of a sudden, they go from having these boring 2D dashboards with limited amounts of data on them to having the same data. But now it's in a rich, immersive 3D environment that they can go into in virtual reality or augmented reality, and they can see this data. They can see a lot more of it at one time. We've got a project right now where we're bringing in 10,000 data points into a single model.
So, all of a sudden, you go from these 2D dashboards, really hard to understand what's going on in a complex environment, to this rich, immersive way of looking at that data, and then combine with all the things they're doing and doing well, which is the predictive maintenance, AI, analytics. And then you've got something that's really pretty cool. The whole package combined becomes a very, very interesting way of being able to interact with your your industrial environment. And so, are you mostly working on the shop floor level, the factory level or much more than that? Yeah, the markets we're in right now, we do quite a lot in the factory manufacturing space, straight building and energy management. So, typically, large buildings — 150,000 square foot or more — where they just want to see all the different factors around energy, the environment, so they can make the building work better.
We also work with water treatment plants and we do a little bit in the energy sector as well, which is oil and gas, and then utilities. So just about everything across the board, if it's industrial. The only thing we don't do is consumer.
Anything that's not consumer, we're involved in. Where has been the early adopters and why? Yeah, I think the early adopters were early adopters because they love technology, and we definitely had some of them back at the beginning. I think the thing that's really driven our growth in the last couple of years has been the real emergence of sustainability as a goal for just about every corporation.
Once you've got a vice president or a member of the board, who's in charge of sustainability, net zero, whatever you want to call it — and I think 80% of corporations do have that officer appointed at this point — they're going to want to see what's going on in their facilities, in their factories and their buildings. They love the fact that, using these metaverse type technologies, they can show that data off in a much more interesting, understandable way. So, if I had to pick one thing that's driven people from "Hey, that sounds cool" to "Yes, we want to do it," it's the decarbonization, net zero, sustainability side of the business that really has given some impetus to getting this data into a way that you can show it to the board of directors, you can show it to the investors, you can make it really look interesting, compared with just "It's a bunch of numbers on an Excel spreadsheet."
So tell me a little bit more about that. I would have thought it would be more around predictive maintenance and analytics, but how does it tie in with sustainability? Predictive maintenance analytics are technologies that have been around for a long time. They certainly predate the metaverse by many, many years. I mean, those things have been done to greater or lesser efficiency or effectiveness for more than 20 years. So that's not a new technology that, you know, you can set up algorithms to analyze your data and make predictions about when things need to be maintained.
And that's been done for a long time, that the thing that's really different now is sustainability has gone from "Wow, that's something that we should think about" to becoming an absolute core tenet of just about every corporation. When you get into sustainability, that's where you're prepared to try to make your data come alive, so you can show it off to all the people who are interested. You now have many, many projects where the investors write into the initial agreement that there has to be sustainability as part of the deal. They want to invest in things that are green and net zero. If I had to look at one one use case that's really driven people from the boring world of numbers into the world of 3D information, I think sustainability would be the top of my list. How did the name come about? It's actually a slightly weird story.
We were in Eastern Europe, because we were setting up a technology center there, which we've done — it works quite well. We went out to dinner with the team that we were engaging. They took us to a traditional hunting lodge restaurant, and they had bear dumplings on the menu. And I've never seen bear on a menu before, obviously, so I had to try them.
And then on the plane back, myself and my cofounder, Angie Sticher — I was born on 6 August and she's born on 7 August — we've been trying to come up with a name for forever. And I was like, "You know, why don't we put Leo in it?" Because we're both Leos. And then I said that bear dumpling meal was a pretty unusual experience and Latin for bear is Ursus. So, let's put the two together and it was just a silly idea. And then the name is available.
It's short, it's easy to remember. So that was kind of where it came from. Yeah, this is fascinating story for sure. So going back to UrsaLeo, tell us about your journey so far in trying to get this company off ground and you talked about where the application is, but what was your journey like? When we really got into this, which was in 2018–19, and we we were out talking to potential industrial clients, as we were formulating the product strategy, what really leapt out was the not good user interfaces we saw in the industrial world. And Angie, my cofounder, her background is Silicon Valley.
She's worked with some of the big technology companies in the Valley and user interface was absolutely top of her list. If you can't make a good user interface, people just won't use your product or they hate using your product. So, we really started off by saying, "Look, we can just do a better job of serving up this data" and that's how we got into the idea of using a gaming engine to actually serve up information. Then we started combining gaming engine technology with real-time data, internet of things (IoT), Industry 4.0 —
a couple of monikers that you typically hear used around it. When we got into putting those two things together, we really started to get some traction. The metaverse tag came along later. I think that got coined in last year, 2021, and we didn't want to use it initially.
Metaverse didn't have a great connotation in Silicon Valley in the early days. I think it's in the last six months, people have really started to use it as a tag. People sort of understand what it means, and it was a good label for what we were doing. We were using multiple different technologies. I was at a Christmas party trying to explain what I did, and eventually the person I was talking to just said, "Oh, you're an industrial metaverse company." I was like, "Okay, yeah," that's two words that can actually summarize it.
So that was kind of the journey that the label came along later. But it was all around user interface, usability of information, making the product easy to use. We've used the analogy of some of the smartphones. You pick them up and you use them. You don't think about it. You never have to read a user manual on how to use a smartphone.
That simplicity is actually very hard to do. But if you can do it, the product sort of goes away and people just start using the technology without thinking about it. And that's when you start to have real productivity gains and this stuff starts to really become useful.
This is perfect segue, because you talked about the underlying technology and using the gaming technologies, so talk to us a little bit about your proprietary software that underlines your technology. I think you just use the best tools for the job. We do use open source. We also use AWS Amazon tools. We use the gaming engine technology. I don't have a strong opinion and so anybody's technology if we possibly can.
So we try to make our technology transportable, go from an Amazon cloud to a Microsoft cloud. Apart from that, I don't think there's any real strong feelings about open source versus non-open source. And how is your business model constructed, like how are you thinking about monetizing it? Is it the visualization, because the data is the company's data, so do you own it? How do you think about it? We charge an upfront fee for creating the initial digital twin and the actual setting everything up. And then we charge a monthly fee for hosting and combining the data and the model together and serving that up. We're a SaaS company
and yeah, works pretty well. Different industries pay different amounts of money because they have different ways of looking at data and how much value they put on data. But we found a model that works pretty well across multiple different industries. And how are you thinking about the evolution of the ecosystem? What's your positioning there? Who are the other players and how are you thinking about it? So multiple questions there, but the first one is how do we think about the ecosystem? I think the biggest thing that we have to really put some effort into is making sure this stuff has got some standards that we're all following, so people can go from one product to another with relatively little pain. In terms of that, I'm involved in some of the standards committees that are writing standards around this stuff. For example, the smart building industry has something called Project Haystack, which is a way to standardize all the data that's being generated by smart buildings.
I'm involved in extending that standard to the world, the metaverse, and adding the things you need to add to bring it into the 3D digital twin metaverse technologies. How do I see these competitors? I mean, there're some startups. We think we compete well with them. But the good news is there're some startups.
Otherwise, if you're the only person doing something, there's "Why no one else is doing it?" There're some guys in Europe doing some interesting stuff. There're some guys over in Asia doing some interesting stuff. Very recently, we've seen people make big announcements in this space that they've suddenly decided this is a mainstream technology that they need to pursue. Again, I'm pretty happy about that, because I think it just validates the whole concepts in the whole area. I think more and more people will pile into it over time. They're all going to need to find ways to recreate some very complicated technology.
And actually, I think that plays well to us, because we license our stuff to many different companies. As I said, we're not a stand-alone product. We're something that an existing IoT company can take an add-on to turn their product into an industrial metaverse product. So, it's definitely still relatively new. I'd say we were definitely pioneers two to three years ago, but I think it's becoming pretty mainstream now, quite quickly. As you think about what challenges have really come your way, could you talk a little bit more about that? Yeah, I think about some of the biggest challenges.
I mean, obviously any new technology – there's that famous book, Crossing the Abyss – where there's going to be early adopters and then you got to get it into the mainstream. It takes a little bit of time. We're generally working with big industrial companies. They don't make fast decisions. Even when they want to make fast decisions, they don't.
So, you see six, nine, 12 months between engagement and them actually getting something going. On the pure technical front, I think the biggest challenge is modern buildings have been designed using 3D tools — the CAD type approach. If you go back more than about 10 years, typically they don't have any CAD. They may not even have blueprints.
They don't know how the building was originally designed. So, there's some technology where you have to apply that to get to the starting point. But we've figured that out pretty well at this point. I think we can take just about any facility, any building into our environment relatively painlessly. But yeah, it's the slowness of the industrial market, the large size of the companies we typically work with, making them slow and then some technical hurdles we've had to figure out how to jump over.
In terms of the size of the projects, I'm assuming they're not a couple of months, they are multi-month, multimillion dollar projects, but let me know if my assumption is correct. That's a pretty wide range. A building, just a single building, can be significantly less than maybe US$100,000 a year type deal, getting all the way up to large manufacturing facilities.
The actual time to get the thing up and running is not massive. It's a couple of months, depending on exactly where they are and how quickly they can provide the information we need and is it something we've integrated with before? It can be quite quick. And then the size of those projects, individual facilities, hundreds of thousands of dollars, but then you start working with companies that have 50 or 100 facilities worldwide and then, yes, of course, we're talking millions of dollars. In terms of project sponsorship, where is that typically, at what level within the organization? It does vary a little bit. I think it almost always involves C-suite to some degree, because there's capital expenditure. So, somebody's going to have to sign off on that.
The numbers are big enough that it usually gets up to the C-suite. The sustainability side of it — there's almost always now somebody in the C-suite that is responsible for sustainability. They've got a very strong vested interest in the product. I think, then you get down to facilities management, production managers, as you say, they're usually very, very interested in dollars, so the pitch there is how this is going to save them money and make their lives easier, which we can put that together. We can show an ROI on this technology. It's a range of those, but almost always involves C-suite interactions.
We're not selling to junior production engineers, we're selling at a pretty high level. And what's the ROI time period for something like this? And again, I think you're going to say it depends, but still. I'm going to give you 4-6 months. It can be very quick — less than a year. I've seen projects that are going to generate a profit in less than a year.
A lot of that depends on how efficiently they're running their facilities now, and how quickly we can make efficiency improvements and the areas we can make efficiency improvements. I mean, energy consumption, almost every building is wasting, the vast majority — 30% of the energy of the building is just being wasted. So, if you can stop that 30%, that starts generating ROI quite quickly. The collaboration side of this, the fact that multiple people can come into an environment and collaborate without having to travel, that starts to save money quite quickly and saves time. You can put those elements together and show tangible savings fairly rapidly — I've seen less than a year.
When you are implementing, are you in mostly newer facilities or you're also involved in retrofitting? We don't get involved in the actual getting sensors inside a facility or wiring a facility up there. We have partners that do that around the world and that's a well-understood problem. I mean, people know how to retrofit buildings. It's something that just takes a little bit of time and money. Probably the trickiest bit about integration is almost everybody we work with doesn't have one Industry 4.0 solution.
They have several. That's probably where we spend the majority of our time for most projects. They're using a Siemens system and a Honeywell system and a Schneider system and something proprietary. And we have to put all that data together and bring it into a single a single format, because you want to be able to break the 3D image up and categorize it along with the asset databases. So, that's a very specific use of AI that we've started to look into, but we're not an artificial intelligence (AI) company.
Almost everybody we work with is an AI company. We're one of the few people that don't use it extensively. John, if you could give us a little bit about how you're thinking about the next innovations that are coming in the space and how they would impact you and how you would interact with them to advance your own offerings.
I think the one area that still has a lot of a long way to go in innovation is augmented reality. Clearly, in an industrial environment, you don't want people using virtual reality on the shop floor — that's not going to work well. So augmented reality is definitely what you're going to want to use. At the moment, I don't think the technology is quite there. You have things like HoloLens and other products that people are using, but I think a really good augmented reality product is going to have to wait until some of the Silicon Valley guys innovate and come up with something that the hardware is going to be really easy to use, and you just don't even notice it's on your face. And that all the data's being served up in ways that are very easy to understand.
And that's going to require significant bandwidth inside the factory and the shop floor, and that doesn't exist at the moment. They have Wi-Fi, but Wi-Fi in a very noisy environment doesn't work terribly well. So, I think, 5G technologies will actually come along and provide that bandwidth piece. I think something that's going to be really interesting is, when factories have 5G to give them really strong bandwidth, they have good augmented reality hardware, and then we can provide something that's going to blow people's minds, in terms of how they can interact with their environment. Just isn't quite there at the moment. So that for me is probably the next big innovation I see coming.
When you think about the competitors, how do you want to interact with them in the ecosystem? Well, like I said, we definitely want to set standards. We can come up with the standards as long as they get adopted – typically there's open source, anybody comes kind of projects, which get together and put those standards out. So, very happy to to interact with competitors to make sure we come up with stuff that's interoperable. We're not doing something proprietary; they're not doing something proprietary. I am a strong believer that's how we're going to build a technology that's going to be adopted by the mainstream.
Apart from that, it's the way you always interact with competitors. We make a presentation; they make a presentation. Our stuff is way better. The customer picks us. That makes a lot of sense. In terms of your business model, has your thinking evolved from where you started to where you are today and how do you think it's going to change? Yes, absolutely has evolved.
When you come up with a new technology, and this stuff is a new technology, there's no blueprint on how to price it. You've got to figure that out yourselves and it took us quite a while to figure out what the market would pay for. I think, at this point, we've got the "how we actually charge" pretty figured out.
It's going to be interesting going into other parts of the world. We're pretty active in Americas and Europe at this stage. Just starting to see the first projects in Asia. Haven't touched Japan or China really yet.
I think they will probably require different business models to some degree. It's a cultural thing. A lot of those cultures don't like their data going off-premise, so that produces another challenge. You've got to support an on-premise deployment.
And then, it's also the sustainability side of it, which drives a lot of the people spending dollars with us in Americas and in Europe. You find a lot less of that in Asia. They're not wasting a lot of energy. I mean, they're pretty efficient already. They use public transport, small apartments, so there's less opportunities. Their culture isn't as obsessed with sustainability as we're becoming.
Different cultures are going to be different challenges. But I think we know roughly how to price our stuff at this point. I'm always fascinated by how an entrepreneur thinks. When you were coming up with this idea, did it pan out the way you have thought about? Or did you have to do a lot of course corrections? I think, at 10,000 foot level, we knew we were thinking about it, and we haven't really changed our thinking, which is there's lots of data and you need to be able to interact with that data in a way that you couldn't when we started. So that stayed the same, everything else has changed, without a doubt. Are we going to be in the oil and gas industry? Are we going to be in the manufacturing industry? Are we going to be in the smart building industry? So, you have to try it and course correct as you get feedback.
If you just sit in a room and write a business plan, and then think you're going to go answer the market, and that business plan is going to be what you end up doing, that never happens. What's been the most helpful to you as your thinking has evolved? Is it, like you said, going out and talking to people? If you think about different aspects of business, which parts of it did you lean into? I think the biggest thing that's helped me is my cofounder, Angie. I didn't have a background in software development, I was a hardware guy. I looked at it and said, "Yeah, there's an issue here," but I didn't know how to pull a software team together or how to get software development done. She's a great sounding board, I mean, we have lunch once a week at least and just talk through what's going on. She's got a very pragmatic approach, my head's up in the clouds.
She's the one with her feet planted on the ground. So, I think that balance in the team is extremely important. If you surround yourself with people who think the same way you think, you're going to have problems. So, having her as a counterbalance to me going off in all sorts of directions has been very, very useful. Yeah, that's probably been the biggest thing. I mean, getting feedback from customers is always immensely valuable.
You just can't operate as a company without that. Also had a great group of mentors. Our board of directors is very supportive. I mean, they're very tough as well.
Having people hold you accountable is another very valuable thing when you're starting a company, right? When you are implementing on a project, what has been the biggest challenge in the implementation piece? There's a number of different things. As I said, older buildings or older facilities can be a challenge just because there are no plans. There's nothing. You have to create that, so that can be a challenge.
We do run into companies who are very concerned about their data, privacy and security, rightly so. So being able to make sure you can handle that stuff, you have a good answer for that stuff. And again, that's a well-understood problem, but you almost always have to have that conversation.
And then, people who don't like change, they have an incumbent system. It doesn't work very well, but it's their system and this is going to come in and make them do things differently and that's not something that people do easily sometimes. In terms of data, what is your philosophy around data privacy? Is that an issue that you deal with or because it's more corporate level, it's a nonissue for you. On data privacy, our philosophy is we don't want to own the data.
There was a time when people were gathering data and they resell it. The business model of some of the Silicon Valley companies is they gather data and they kind of monetize it. We never wanted to own our customers' data, because we're not there to try to make money off other people's information. Also, it removes a lot of problems because you've now got things like General Data Protection Regulation (GDPR) in Europe, where you've got to be very, very careful with how you handle personal information of any sort. You have the Health Insurance Portability and Accountability Act (HIPAA) type issues in the US, where medical information of any sort, again, is very heavily protected. So not only the data actually works really well.
In terms of the privacy of the data, if you mean the actual technology ways of keeping data secure, I mean, that's a whole industry in its own right and it's something we utilize. We're not security guys per se, we use security techniques. But yeah, I think data privacy is a huge thing, because if it goes wrong and people's information does get out into the public domain, it's going to cause a huge amount of problems and a huge amount of issues for some of the people as well, potentially. So, this has been a pleasure and hopefully if we have something back, maybe we can have you back again. The Decoding Innovation podcast series is a limited production of the EY-Nottingham Spirk Innovation Hub, based in Cleveland, Ohio. For more information, visit our website at ey.com/decodinginnovation.
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