How can digitalization create digital and real value?

To reach plausible answers to this question, we must examine the industries more closely.

Participants and presenters considered this question at the first ABB Technology Forum in Zurich at the end of October 2016. Because the ubiquitous digital transformation is more than just a technology issue or a technological challenge. It is tasked with bringing benefits that aid companies, societies, people, and the environment. Technological requirements for the successful digitalization of different industries and processes are already here — but what noticeable added value does digitalization bring specifically?

To reach plausible answers to this question, we must examine more closely the industries in which digitalization or the Fourth Industrial Revolution has already made considerable progress: IT and telecommunications, media, banking and finance, and retail. It is in this space that digitalization offers competitive advantages: differentiation from the competition through optimization and networking of systems, better services thanks to big data analytics, reduced downtime, greater speed, higher yields, and more profit.

Less-digitized industries such as utility companies, manufacturing enterprises, and transportation and infrastructure providers are already benefiting from these advantages, and they will continue to do so in the future. The energy transition creates significant challenges for traditional utilities that can only be surmounted with digital technologies such as micro grids, HVDC, and intelligent energy storage. Industrial enterprises are making large investments in machine-to-machine communications and robots for smart manufacturing. The transportation and infrastructure space will benefit from the shift to connected cars, electric cars, smart homes, energy management, and the rapidly expanding urban population — all this requires investments in digitalization projects that benefit everyone: the companies who provide the technologies and products as well as the companies who use these products and solutions and, of course, the end users.

Digital differentiation differs with respect to the benefits and success factors from the physical differentiation of the Third Industrial Revolution. Then, factors such as higher energy efficiency, greater accuracy, and an increase in performance were critical for differentiating from competitors.

With digitalization, a new factor has been added: location independence. Smart manufacturing has resulted in progress leaving the factory gates to enable completely new applications even in areas that had previously not been very digitized such as mining, shipping, healthcare, construction, and agriculture. In Sweden, for instance, digitalization has resulted in the most profitable and safe mine in the world. Sensors report both the number of workers and their locations while intelligent control systems manage ventilation so there is always good air quality wherever people happen to be. Or take shipping, for example – accurate measurements of weather or currents form the basis for calculating the best possible route for freight and cruise ships. This markedly lowers fuel consumption and reduces the environmental impact of marine diesel.

For energy efficiency and environmental protection in particular, digitalization is achieving great progress around the globe. That progress gives rise to new business models that yield benefits for both vendors and customers — less downtime, more uptime, less maintenance and repair, lower energy consumption, fuel savings and faster planning.

Let’s write the future.

Stay tuned for my next post on Digital Transformation