Second Wave of Digitalization From Industrie 4.0 to Data-Driven Business

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1 Second Wave of Digitalization From Industrie 4.0 to Data-Driven Business Henning Kagermann President acatech Global Representative Plattform Industrie 4.0 The Digital Transformation of Manufacturing Industries New York City, March 6, 2018

2 Strategic Projects of the German Government Research Union ( ) Internet of data & services Economy Culture Cross-cutting issues Cloud computing, semantic technologies, tradability & bundling of services, SP2 Manufacturing Smart Factory Energy Smart Grid Mobility Smart Mobility Health Smart Health Cross-cutting issues in CPS Edge computing, reference architecture, norms & standards, security, people & workplaces, SP1 Internet of things 1 The Digital Transformation of Manufacturing Industries March 6, 2018

3 Mission: Ensure Competitiveness in the Digital Economy I Industrie 4.0 IoT enters the factories Smart, connected, decentral & autonomous Rethink production processes and workplaces II Smart Service Welt Business model of the digital economy Data driven, platform based, XaaS Rethink business models and ecosystems III Enabler of an inclusive society Autonomous Systems Ubiquity: at home, at work, on the way Rethink social, legal, and ethical implications 2 The Digital Transformation of Manufacturing Industries March 6, 2018

4 Industrie 4.0 Smart Factories as Part of Connected Smart Infrastructures Smart Products: Actively support production processes Smart Machines: Offer data and capabilities as smart services, negotiate independently Smart Operator: Digital assistance systems support employees Hybrid teams: Robots become co-workers Increasing complexity: Decentralized, connected autonomous systems Agile, learning and adaptable factories 3 The Digital Transformation of Manufacturing Industries March 6, 2018

5 Realized Vision of a Smart Factory Example: Trumpf s Smart Factory in Chicago Situated in Rust Belt only 20km away from Chicago Production with 1 central storage, 3 laser cutting machines, 4 bending machines, 1 Welding Machine Whole production handled by only 2 employees Connected manufacturing: Vertically, from machine up to cloud Horizontally, from customer order to parts delivery Live machine status and order tracking Digital Shopfloor Cockpit Minimized lead time up to -30% Source: Trumpf 4 The Digital Transformation of Manufacturing Industries March 6, 2018

6 Vertical Integration: A first Step towards Industrie 4.0 Connected Products & Cloud-based IoT-Platforms Source: WZL of RWTH Aachen; own illustration 5 The Digital Transformation of Manufacturing Industries March 6, 2018

7 Horizontal Integration of the Production Chain The Digital Twin Asset 6 The Digital Transformation of Manufacturing Industries March 6, 2018

8 Key Success Factor: Interoperability I Reference Architecture Model RAMI 4.0 Architecture Product Life Cycle Hierarchy Development, Production/Sales, Service A solution space with a coordinate system for Industrie The Digital Transformation of Manufacturing Industries March 6, 2018

9 Key Success Factor: Interoperability II Asset Administration Shell Asset Administration Shell Unique ID and nesting Structuring according to views Standardized mandatory properties Free, manufacturer-specific properties Considering aspects of information security Possible accessibility via apps (SOA) 8 The Digital Transformation of Manufacturing Industries March 6, 2018

10 The Digital Transformation needs a Broad Foundation Organizational Initiative Plattform Industrie 4.0 Reference architectures, standards and norms Legal framework Research and innovation Work, education and training Security of networked systems Scientific Advisory Committee Business models for the digital economy* 6 International Cooperations SME Mobilization Recommendations 9 The Digital Transformation of Manufacturing Industries March 6, 2018

11 International Cooperation is Critical for Success Example USA / Germany Opportunities Risks Optimized production 62% 79% Data security 38% 55% New business models 62% 50% Problems with standardization 25% 38% Expansion of product and service portfolio 31% 50% Solutions not in line with market requirements 40% 50% Highest Priority: Interoperability Open standards for architectures, interfaces, semantics Need for international cooperation of national initiatives Source: acatech (2016): Industrie 4.0 in global context 10 The Digital Transformation of Manufacturing Industries March 6, 2018

12 Smart Products in Use Basis for New Business Models and Real-time Business Performance parameters: Capability Functionality Reliability Business model innovation: Optimal user experience New profit/revenue models New business areas Digital technology platform: Bundling digital technologies 11 The Digital Transformation of Manufacturing Industries March 6, 2018

13 Business Model of the Digital Economy Smart Services Business Model Value proposition What value is created? + Profit formula How are revenues/profits created? + Value creation architecture How is value created? Individualized product-service-bundles on demand Superior user experience / real-time responsiveness Everything-as-a-service, low switching costs Flexible pricing model: usage-based (time) output-based (piece) value-based (profit sharing) Data as (direct & indirect) value generator Digital platforms scalable & repeatable business Dynamic ecosystems attract developers of complements Smart talents individualized qualification on the job 12 The Digital Transformation of Manufacturing Industries March 6, 2018

14 How are Smart Services Created? In Dynamic Digital Ecosystems on Digital Technology Platforms Active users: Co-creation Recommendations and ratings Service platform Smart Service-providers: Superior user experience Superior value proposition Smart Service Platform services Advanced analytics AI Blockchain Platform operator: Data integrity and -processing Trustworthy cloud services Smart Data Manufacturer of digitally enhanced products: Efficient generation of data Smart Products Source: acatech (2017), Wegweiser Smart Service Welt 13 The Digital Transformation of Manufacturing Industries March 6, 2018

15 Smart Service Platforms and Applications German Examples for Data-Driven Business Models and Platforms Siemens MindSphere SAP Leonardo Example: Smart Condition Monitoring Services Example: Open Agriculture Network Mechanical Engineering Companies IT Companies Trumpf AXOOM IoT Platform for Manufacturers ADAMOS IIoT Platform for Mechanical Engineering Source: acatech (2017) Wegweiser Smart Service Welt, SAP SE, ADAMOS GmbH, AXOOM Solutions GmbH 14 The Digital Transformation of Manufacturing Industries March 6, 2018

16 Utilization of Digital Technology Platforms Connected Products Connected Factories Coordinated Business Network Digital Economy Production environment for Smart Services (n:1) Digital image of the real factory (1:m) Coordinating the business network (n:m) Connecting the digital platforms (cross-sectoral) Platform interoperability 15 The Digital Transformation of Manufacturing Industries March 6, 2018

17 From Optimized Production to Data-Driven Business Innovation Connecting & acting live Optimizing & deliver efficiently Expanding & increasing revenue Innovating & growing ecosystem Business model Product & support services Product & after-sales services Product-as-a-service & value-added services Data-driven & digital business model Business Driver Product sales Process optimization Services growth Expanding ecosystem IoT skills Embedded systems, augmented reality Analytics, machine learning, optimization Services management (portfolio, product mgmt.) Ecosystem business development Integration & technology Vertical Integration (OT-IT), machine connectivity Horizontal integration (from design to delivery) Services platform, SLA management, accounting for services Open data platform, business networks Standards Connectivity (e.g. OPC-UA) Semantic standards Optimized production Interoperability of services Smart services Cross-industry standards Business innovation Source: acatech, SAP 16 The Digital Transformation of Manufacturing Industries March 6, 2018

18 Future of Work & Corporate Culture Agile working Lifelong learning Scrum / Design thinking Innovative workplace design Flexible working time Innovative partners Individual skills management New feedback tools Speed & Flexibility On-the-job / on-demand Digital tools (e.g. MOOCs) Nanodegrees / Digital achievement awards Tailored to individual needs Hybrid skills Ambidextrous structures Life-long employability 17 The Digital Transformation of Manufacturing Industries March 6, 2018

19 Strategic Project III Autonomous Systems (since 2015) From Automation to Autonomous Systems (AS) Technological Enablers Societal Challenges & Regulatory Framework Recommendations New societal, legal and ethical challenges Germany: Platform Learning Systems established in The Digital Transformation of Manufacturing Industries March 6, 2018

20 Relevance of International Cooperations Activities of the Plattform Industrie 4.0 EU Round Tables First Stakeh. Conference G 20 Digitising Manufacturing in the G 20 Czech Republic Narodni Iniciativa Prumysl 4.0 Industrial Internet Consortium Smart Manufacturing Leader Coalition Alliance Industrie du Futur + Piano Nazionale Industria 4.0 Joint Road Map China Made in China 2025 Internet Plus Japan IoT Accel. Consortium Australia Memorandum of Understanding 19 The Digital Transformation of Manufacturing Industries March 6, 2018

21 Thank you very much for your attention.

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