In its initial ‘State of Industrial Networking’ report, Cisco highlighted the key priorities in the changing industrial networking landscape. The report identified operational technology (OT) security and cybersecurity as the primary concerns. Cybersecurity emerges as the most significant challenge in managing industrial networks. Additionally, the importance of IT/OT collaboration and the preparation for artificial intelligence (AI) are increasingly recognized by organizations. Clearly, once a peripheral concern, OT security is becoming a mandatory focus for organizations worldwide.
“89% of respondents cited cybersecurity compliance as very or extremely important. CIOs are increasingly aware that their largest vulnerabilities are within their operational infrastructure,” Cisco said in its 2024 State of Industrial Networking Report. “41% of firms report OT and IT teams working independently, emphasizing the need for improved collaboration. A unified approach can lead to simplified operations, enhanced cybersecurity, and faster, more informed decision-making.”
Additionally, 48 percent of respondents view AI as the most significant technological impact on industrial networking in the next five years. AI will be a spending priority for automating tasks, enhancing network performance, and providing predictive insights.
The report identified that global organizations are designing measures to ‘futureproof’ their OT infrastructure, including enhanced cybersecurity (45 percent), increased digital transformation (41 percent), and investment in talent development (40 percent).
“Operational technology, and specifically the network supporting industrial operations, has become a key differentiator for organizations globally,” Vikas Butaney, senior vice president and general manager, Cisco Networking – SD-WAN, Multicloud and Industrial IoT, said in a media statement. “This research spotlights how IT and OT leaders recognize that strengthening their OT security posture is critical to drive business resiliency, improve efficiencies, and prepare for the next wave of innovation with AI.”
Addressing the current state of industrial networking, the Cisco report identified skills shortages, the impact of inflation, and cybersecurity risks that are impacting firms’ ability to grow. To overcome these barriers, organizations are doubling down on investment in OT, while prioritizing a focus on upskilling, improving collaboration, and introducing AI.
Over the past few years, businesses worldwide have faced macro-level challenges ranging from supply chain issues to a global pandemic. Identifying the top issues hampering growth in industrial sectors today, Cisco reported that the key concern—cited by 42 percent of respondents—is a shortage of skilled workers, closely followed by inflation (40 percent) and cybersecurity risks (37 percent).
Cisco identified that compounding the external factors are issues within organizations that hamper progress. “Again, we see businesses struggling with cybersecurity risks (#1) and workforce challenges—namely employee retention (#3); alongside a lack of efficiency when deploying new technology (#2). These barriers are primarily operational, rather than technical: representing human factors such as resistance to change which can lead to difficulties in upskilling and retaining a fit-for-purpose workforce. Market maturity and distribution of skills impact regional results. Retaining employees is proving particularly hard for North American firms, who rated it their top internal obstacle; while inefficiency in deploying technology is the biggest problem for organizations in APAC,” it added.
Technology is seen as an enabler of, rather than an alternative to, the workforce by firms operating in industrial sectors. The top way these organizations are mitigating against the internal obstacles they face is through upskilling or reskilling their employees; followed by adopting AI, which can reduce manual tasks and speed up processes. Importantly, more than a third of respondents (36 percent) say they are increasing collaboration between information technology (IT) and OT teams. Aligning potentially siloed functions will be crucial to overcome organizations’ reported technology deployment inefficiencies and cybersecurity risks.
Cisco also reported that organizations worldwide are recognizing the need to invest more in operational technology to capitalize on the opportunities offered by Industry 4.0. “Almost two-thirds (63%) of respondents have ramped up spending on industrial infrastructure over the past year. Of these, 16% spent significantly more than last year—with that figure rising to nearly a quarter (24%) of the largest businesses in our survey: those with revenues of over $30bn.”
“LATAM (72%) and APAC (67%) saw the highest investment increases of the four regions in our survey,” Cisco disclosed. “The presence here of emerging markets could account for the larger increases, as firms attempt to close the gap to more developed markets and to benefit from the investment opportunities these regions represent. However, no region is exempt from investment increases, with 59% of firms in North America and 60% of those in EMEA spending more than last year. The highest proportion of those who say the increase is ‘significant’ (22%) are from North America.”
The report identified that industrial organizations are fully aware of their risk from cybercriminals—after all, manufacturing firms suffered the highest share of cyberattacks in 2023. “Industrial networking offers a large attack surface via Industrial Internet of Things (IIoT) connected assets. Our findings underline the drive to address this vulnerability, with cybersecurity reported as the second-highest OT investment area, after AI-enabled devices.AI devices may themselves be seen as a double-edged sword. While AI offers OT benefits such as process optimization and threat detection, bad actors are also using adversarial AI techniques to turn the technology against firms,” it added.
Cisco identified that the threat posed by cyberattacks in the industrial sector is driving an intense focus on identifying and addressing vulnerabilities in operational technology. Closer collaboration between IT and OT teams is sought by those pursuing not only better security but greater efficiency and competitive advantage.
“The top challenge for organizations trying to run and maintain industrial infrastructure is cybersecurity: cited by 39% of respondents,” Cisco reported. “This figure rises to 50% of companies whose revenues exceed $30 billion, suggesting the task of defending against cyberattacks increases as businesses get larger and more complex. After cybersecurity, the next biggest stumbling blocks all relate to alignment and integration. Firms struggle with a lack of standardization (37%), disparate vendors and partners (36%), and a lack of collaboration with IT colleagues (33%).”
The report also found that within many organizations, the greatest cybersecurity expertise sits within the IT team. “Yet our research uncovered a significant 41% of firms’ IT and OT teams are working independently on cybersecurity. With collaboration paramount to protect quickly and effectively against cybersecurity threats, this represents an action opportunity for many businesses. A similar finding emerges when we examine who is leading the industrial cybersecurity practice,” it added.
Furthermore, while the majority report that corporate IT or security teams lead the way, there is evidence of decentralization in a third of firms. “The 33% whose cybersecurity practice is led by local teams risk inconsistent deployments, issues caused by skill disparities, and limited visibility across the OT estate. Organizations in APAC are most likely to have specific OT security teams, while cybersecurity leadership via local teams is more common in LATAM than other regions.”
Despite the evidence of siloed working noted earlier in this report, respondents recognize that closer alignment between IT and OT teams would yield important benefits. Firms believe the top outcome of better collaboration would be improved cybersecurity. Almost a third say it would also bring benefits in terms of cost-effectiveness and efficiency (32 percent) and simplification of operations (30 percent).
On the future of industrial networking, the Cisco report identified that both AI and cybersecurity are top of mind as OT leaders look to the future. “Ensuring their infrastructure is futureproofed will be vital for organizations keen to maximize technology investments; as will collecting and analyzing OT data to improve business performance.”
AI is expected to improve IT/OT integration, with the reasons for planned investment in AI becoming clear when understanding the expected benefits. “Not only do around half (49%) anticipate better network management across both IT and OT; a further 46% expect AI to improve collaboration between the two teams,” the report added.
It also disclosed that integrating OT data with IT systems, such as enterprise resource planning (ERP) and manufacturing execution systems (MES), can create a comprehensive view of the production process. Those companies that successfully capture and analyze the data from industrial networking will gain a competitive advantage: 46 percent plan to use OT data to improve quality, while 43 percent will optimize their processes.
Additionally, rising energy prices have impacted organizations’ profitability over the past couple of years. Data gathered from OT provides opportunities to save energy—but not all are harnessing the benefits. 42 percent of larger companies (more than $30bn revenue) use data for better energy management (42 percent), compared to fewer than a quarter (25 percent) of $100 million to $499.9 million revenue companies.
In its conclusion, the Cisco report identified that the industrial operational networking landscape is a place of enormous change and opportunity for those who can overcome its inherent challenges. It highlights the need to prioritize cybersecurity in OT plans, as organizations who fail to prioritize cybersecurity considerations in their industrial networking strategy will find energy, time, and money absorbed in mitigating against attacks—resources that could be otherwise invested in designing OT as a platform for innovation and growth.
Additionally, organizations must introduce measures to encourage IT/OT collaboration, as IT and OT can no longer work in isolation as their skills and domains increasingly overlap. A combination of human and organizational factors, alongside unified technological solutions, will be required to optimize and protect data and assets.
They must also focus on harnessing AI for competitive advantage, as innovative OT leaders are embracing AI to differentiate their firms; delivering higher quality products quicker. Organizations that fail to refresh their industrial networking infrastructure for AI to optimize efficiency, harness data for AI models, support over-stretched employees, and defend against damaging cyberattacks, will struggle to compete.
