Uncharted territory

The idea that every trading company, industrial enterprise and service provider could become a second Uber, Airbnb or Netflix, which completely invalidates the previous value creation models within a sector, has not proven to be the case. The extensive revolution, in which many invested – to no avail – failed to materialise. A rapid evolution was initiated for this purpose. Operational business processes are increasingly interconnected and automated, while documents, accounting, time recording, invoicing, shipping and delivery documents and the supply chain are increasingly incorporated into the digitalisation process in almost all companies.

In the production sector, intelligent control systems are increasingly taking over process steps or whole workflows. However, for most of the projects, the question of a visionary new business idea is cropping up less. Instead, the question of a return on investment is at the top of the list of criteria when it comes to digitalisation. The question of cost-effectiveness also now applies to projects aimed at expanding the company’s portfolio with digital and/or virtual services or at offering completely new digital business models. Many concepts are now left on the shelf if there is no prospect that they will pay for themselves.

Cross-industry applications with potential

Nevertheless, the digital transformation is rapidly gaining ground. The German Federal Statistical Office forecasts that by 2020, 20.4 billion devices will be connected to one another via the Internet. And the Fraunhofer Institute expects a figure as high as up to 32 billion objects. Of this figure, just under 13 billion devices relate to the consumer market, while there are expected to be more than 7 billion devices in industry. Moreover, cross-industry applications are expected to develop a significantly higher potential than vertical solutions, i.e. networked devices within business areas of a value creation chain in a specific sector. At present, 60% of the devices fall into the vertical area, while 40% are allocated to the cross-industry area. This ratio is expected to be reversed by 2020 as the volume simultaneously triples.

The bottom line is that people want to invest in industrial digitalisation, but they want a clear indication that their investment is worth it. In production, there are many different aspects to consider, such as the real-time utilisation overview of in-house production lines and machines, capacity and quality analyses, streamlining procurement, reducing energy and raw material consumption, condition monitoring and predictive maintenance, remote maintenance, benchmarking and others. The eco – Association of the Internet Industry study entitled “Der deutsche Industrial-IoT-Markt 2017-2022. Zahlen und Fakten” [The German Industrial IoT Market 2017-2022. Facts and Figures] assumes annual IIoT growth of almost 20% and projected sales in Germany of 16.8 billion euro in 2022 – with automotive engineering and machinery and plant engineering leading the way. In summary, this means: IIoT applications are still considered to be substantial growth drivers in industry. However, they are moving closer to the general business strategy.

5G mobile communications technology to replace company wireless networks

The fact that companies can completely disengage themselves from the established value creation models and that new players are also appearing on the market is demonstrated, for example, by the development of portal solutions for supply chain management. The new 5G mobile communications standard, which will gradually replace LTE/4G, will represent another advance. The associated figures are impressive. Compared to LTE, 5G is designed to offer a data rate that is one hundred times higher. At the same time, network capacity is expected to increase by a factor of 1000. And even though this will create the possibility of reaching more than 100 billion transmitters worldwide at the same time and providing extremely fast response times where required, Huawei and Co. are expecting a decrease in power consumption of up to 90%. As such, mobile communications technology is also interesting as a replacement for company wireless networks and offers optimum conditions for easy networking and connecting a wide range of devices without investment in local infrastructure, provided that there is a transmitter mast in range.

As a rule, companies currently follow four steps:

Step 1: Selected products, objects, machines and facilities are networked via IIOT technologies. Companies are able to gain initial experience in individual, clearly defined projects with a defined ROI. Important: As the requirements often change at short notice during the project as experience is accrued, data integration should be ensured, wherever possible, on the basis of standard software that is easy to configure and intuitive to use in order to minimise the technical hurdles. In this way, new processes and workflows can be adapted without significant effort. Functioning data integration is a significant driver for IIoT strategies.

Step 2: The digital information flow that arises as a result of the process and data integration makes it possible to collect, transmit and analyse data. Seamless tracking and monitoring of processes and objects is used as a basis for increased transparency and therefore for initial optimisation.

Step 3: Agile methods can help to reproduce the possibilities offered by the new networks. Together with the corresponding creativity of the teams, there is significant potential here – not only to optimise conventional processes and procedures based on the IIOT data and its analysis, but also to break new ground without significant effort. Process integration is now also being joined by business integration, which can be used throughout the company to map and optimise business processes.

Step 4: The experience gained in step 3 generates approaches for developing new sales and service models as well as charging these based on realistic estimates. Extremely flexible, standardised data integration remains important.