Industry 4.0 is now on the German federal government's digital agenda and is one of the main topics, if not the main topic, in industrial trade fairs. Innovative individual technologies and complete model factories are now in operation. But are we fast enough in Germany? Every object, every device and every machine can become an Internet node and communicate with others. Today, there are already 15 billion of them. Industry 4.0 encompasses the impact of these networks on industrial production; however the economic change goes much deeper. Products will be replaced by individual packages of products, services and support services (Smart Services). The focus is on the user with his or her needs as a consumer, an employee, citizen, patient or tourist.
As early as 2012, the Industry 4.0 working group highlighted that the transfer of Industry 4.0 concepts to small and medium-sized enterprises (SMEs) would be an essential condition for Germany's success. Recent surveys show that only 40% of companies have taken note of the Industry 4.0 initiative. 50% of machine operators don't even know the term. The early adopters are therefore all the more important. The innovation cluster “it's OWL” shows how small and medium-sized enterprises can actively shape and use Industry 4.0. Weidmüller is just one of the companies taking a lead and actively participating not only in the region of Eastern Westphalia-Lippe (Ostwestfalen-Lippe = OWL).
The Industry 4.0 smart factory is the starting point for a new economic paradigm. In the economy of the future, customers will not buy products and services off the shelf. Instead, they will purchase individual product service packages – Smart Services – over the Internet. This may sound visionary but it's now part of our everyday life. We already access products and services online whether it's a travel site, mobility app or media-streaming service
Prof Dr Henning Kagermann, PhD and habilitation in Theoretical Physics, has shaped the development of Germany's IT landscape; until 2009, for example, in his position as Chief Executive Officer of SAP AG. Today as President of acatech, the National Academy of Science and Engineering, he leads, amongst other things, the “Innovation Dialogue” between the Federal Government, business and academia, so urging on with great authority, ideas and initiatives around the topic of Industry 4.0.
In B2B, Smart Services are also becoming ever more important. Industrial plants will be leased and maintained as a service and technological data traded on respective markets. The risk for established producers and service providers is that they lose their customer interfaces. A race for these interfaces and the corresponding data has already begun. It's therefore all the more important that companies refine their value chain models digitally because whoever can generate tailored Smart Services from the data will define the business.
The winner of the race will emerge over the next two to three years. Can today's market leaders systematically rework their business models digitally and become the lead suppliers of Smart Services? Or will intermediaries take over the leadership of key industrial sectors? With world-class machinery and plant engineering, cutting-edge products, a highly qualified skilled workforce and effective research, Germany currently finds itself in a good position. Companies like Weidmüller, who work together in leading-edge clusters, have good prospects. We need pioneering spirit and teamwork to succeed: every business and research institute must quickly develop secure software platforms and data analysis methods on which to base attractive Smart Services.
On a political level, a single European digital market with standardised data protection regulation should give innovators the opportunity of scaling Smart Services quickly, just as is already possible in China and the US. In Germany's particularly strict data protection culture, there's also an opportunity because sovereignty over private and proprietary data is a prerequisite for confidence in Industry 4.0 and Smart Services. Security could become a hallmark for Smart Services made in Germany.
The working group Smart Service World, comprising some 140 experts from industry, science, trade unions and society at large, handed over its final report to the Federal Economics Minister at CeBIT. Our report is a wake-up call: if we shape digitalisation decisively we will create added value, jobs and prosperity. However, if we persist in market leadership niches, today's market champions will become tomorrow's dispensable delivery boys. Our technological sovereignty is at stake and we'll secure it by opening up and cooperating across industrial sector borders in order to head out bravely into the Smart Service world: Isolating ourselves is not an option.
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Published in April 2015
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