Business Transformation in the New Digital Industrial Economy
Credit to Author: Sophie Borgne| Date: Tue, 17 Sep 2019 19:01:44 +0000
During Industry 4.0, or the Fourth Industrial Revolution as we often call it, companies who rethink the way they do business and how they make money are ones who will succeed. At Schneider Electric we’re no strangers to this. As our CEO Jean Pascal Tricoire points out Schneider Electric has transformed its business many times over since starting out in iron and steel 180 years ago.
But what does business transformation mean in practical terms, apart from increasing efficiency and profitability? What are the completely new business opportunities now possible in this new digital industrial economy?
And how much of this can you do NOW?
We’ve identified 3 main types of business transformation that might interest you, both now, and in the future.
Servitization: Remote Monitoring and Pay-Per-Use Models
Servitization is a trend that’s commonplace in our daily lives and gaining more traction in Industry. Thanks to the Industrial Internet of things (IIoT), plants can enter into remote monitoring and maintenance contracts, helping them access the expertise necessary to improve operational efficiency and reduce downtime.
This also has implications for other future challenges such as the changing workforce. With 50% of all manufacturing workers to retire by 2029, training a new generation of workforce will be a big cost. By combining these types of support contracts with other technologies such as Augmented and Virtual Reality (AR and VR), training time and efficacy plus subsequent operational errors are also reduced (which in turn reduces downtime).
Right now, we already support our customers in this way by embedding capabilities like remote monitoring, AR, and VR in our IIoT solutions.
Pay-per-use models for plant assets
In the future, we see ‘pay-per-use’ models for process equipment coming into play. Under this business model plants could rent an asset with a service and maintenance contract, paying for usage rather than owning it outright. Considering 75% of the capital invested in a new plant typically goes into production assets, it’s easy to see the appeal. Not to mention the cost of ongoing maintenance and operational costs. It also allows you to better tie costs to production volumes.
Market Exposure: Finding the Right Expertise for your Digital Transformation
Another way to enable business transformation is by creating a digital marketplace of ‘prosumers’ to trade know-how and services. Market Exposure is important because it creates a place where businesses can find the expertise they need for their digitalization projects. Digital projects can fail if they don’t have the right expertise from the beginning. This includes other aspects of digitization such as organizational issues (e.g. change management).
A company likely doesn’t have all the specialists necessary under the one roof, so it will need to bring more people in, start collaborations, or even partner with other companies – as we do here at Schneider electric. This is also why we created the Schneider Electric Exchange…
An interesting thing about market exposure is it will change the nature of the relationships between companies, creating the ‘prosumer’. For example, a company that once was a consumer of products can now become a producer of data insights, and vice versa. SE Exchange and platforms like it are opening up an exciting new business landscape for companies to explore.
Monetization: Turning Process Data into a Hot Commodity
If ‘data is the new gold’, how do you turn these potential nuggets into new business opportunity? With the operating data we have, we can now find out more about the manufacturing process, like the specific temperature that allows you to make a product most efficiently. Certain manufacturers could take the data they already have in their system, package it as business insights and sell it to others.
Social media is the obvious example of data monetization that we see in practice every day. Industry is not at this point yet, but many companies are investigating how they can profit from their own data. And with the advent of 5G combined with human creativity, it could be here sooner than we think. Just look at how far social media has come since its inception.
So as you make plans to digitize now, remember that in the future you could be sitting on a gold mine, while those who haven’t invested to digitize won’t be. A big part of it is playing the game as much as winning it, and as they say, ‘you have to be in it to win it’.
As you can see, digitization isn’t just about making your business more efficient and sustainable. Like the previous industrial eras, these technological advances have the potential to completely transform business as we know it. And the most exciting part is that some of it is already available now.
Learn more about the Schneider Electric Exchange
The post Business Transformation in the New Digital Industrial Economy appeared first on Schneider Electric Blog.