Guest article | Accenture: Germany's future lies in digital services - Part 2

03/19/2015  |  Partner
Accenture Riemensperger

Frank Riemensperger, Chairman of the Board of Accenture Germany & Board Member of BITKOM

Part 1 of the guest article by Frank Riemensperger highlighted a number of issues for many industry sectors, which lead to one conclusion: companies that remain purely product manufacturers will sooner or later be pushed backwards in the performance chain and ousted by a better supplier. Companies that want to grow against this not only need to simply use (more) IT, but also develop business models that cover a product’s entire lifecycle. This follow up article will reveal even more insights on the Accenture study.

The Internet of Things illustrates that the digital caravan is heading clearly in this direction. As soon as our intelligent products leave the factory, they connect to the Internet and are then reachable to many via digital means. Just how enormous and in particular how quick this digital revolution can be for the business models of established manufacturers in Germany is often still under-estimated.

Ultimately, for patients it’s not about the best X-ray machine, but rather the best evaluation of the X-ray image. A diagnosis based on millions of digitally collected reference images can be a crucial support for radiologists.

Now, medical equipment manufacturers can offer such a service in future as an additional service to their product. Otherwise a third-party provider will supply the service. One thing is for sure: only companies that keep (long-term) patients tethered to the digital umbilical cord will be able, with all likelihood, to take charge of their all-round care too.

Companies that always lead the way: in the healthcare industry, as well as in all other sectors of business, it is becoming more and more crucial for success to be able to recognize interesting patterns from data and derive useful applications from these for consumers. With modern analytical tools, it is actually now already possible to evaluate millions of sets of data in real time and to network the information gained from them. The magic word here is Big Data.

The mobility industry is also growing through digital technology and intelligent services.

Today, the number of companies sharing the marked has multiplied. Internet start-ups offer digitally-assisted car sharing concepts to allow people to share private cars – with billing and insurance included. Here too, the top 500 companies show that they’re focusing on the future. They are cooperating with service start-ups to provide intelligently networked cars in cities for short-term hire.

“Everything as a service” is the key: Intelligent products that work on intelligent networks and that are linked with Internet-based services. Leading industrial groups are already setting the tone: They evaluate huge volumes of machine and operating data from their products in order to subsequently offer customers concepts to help them optimize machine operation and maintenance, for example. Rebundled across industries, tailored, worldwide.

In Germany, we have the ideal conditions because our companies manufacture products of high technical quality

They’re also market leaders in many sectors – especially where engineering expertise needs to be deployed for complex machinery, products and processes. However we need to hurry up. The global race for data supremacy in the Internet of Things is fully underway. More and more companies are promoting networked products and “as-a-service” services. There are currently around ten billion links between machines or products. By 2020, over 50 billion objects that store data are set to be networked, using services distributed via the Internet or sending product-related information.

We must not leave this market for others to take over. It needs local pioneering entrepreneurs and companies who build digital business models around their products and export them globally. The top 500 companies need this growth stimulus. In 2013, they only achieved a combined growth of 0.6 percent. Major companies – but also SMEs – need to urgently check how they can develop their business model further. The questions they need to ask themselves are these: Can our products be permanently connected to the Internet and packaged as “as-a-service” services? Are we able to fully digitize elements of our added value chain? Would this digitization move the control points of the added value chain in our favor?

Companies that have good answers to these questions also have the best prospects of additional growth.

However only very few of them are likely to have the core skills required to leverage such potential. As a result, cross-industry initiatives, cooperation agreements or even targeted acquisitions are key to digitizing Germany industry.

Data protection has a very important role to play. To come back to the self-driving car analogy: countless user data are stored with this concept. Does this amount to complete monitoring of the individual? These reservations need to be taken seriously and addressed. The success of social media illustrates that consumers are willing to share their data if they gain a highly personal benefit from it – and they are not surprised by the misuse of their own data. Whether personalized online advertising is already part of this is still in doubt. Certainly, nobody wants to be excluded from health insurance in the face of looming sickness. Broad consensus among society is needed on the subject of data protection – with no extremes in either direction.

Create a digital domestic market in Europe, improve EU data protection, carry out more research into software architectures and data analysis. If we are able to surmount these challenges, Germany can assume the leading role on the industrial Internet.

Go back to part one.