Disruptive change and the consequences for industrial production

The digital transformation of industry opens up a new, "fourth" dimension. Within this dimension analysis and subsequent reactions take place in real-time. The digitalization of industry challenges well-established value chains. Today's enterprises must scrutinize their products and capabilities so as to achieve digital maturity enabling them to recognize, develop and implement new prospects.

The strength of European industry, especially of the industrial powerhouse that is Germany, is the close linkage with its customers combined with a high level of production skills. With digital transformation, the value chain of manufacturing is shifting towards more standardized IT- solutions.

Is Europe heading towards the worst- case scenario?

If the European industry will be displaced from the top of the manufacturing value chain by enterprises that achieve sovereignty over the customer interface and predominant know-how in the field of data processing, the result will be a decline in the industrial value chain still underlying European prosperity.

Considering the negative scenario for Germany, there may be a loss of industrial value creation of EUR 220 billion until 2025. If Europe as a whole won't increase the share of digital technologies within the industrial value chain there is a possible loss of EUR 605 billion in the near future. The only way to secure Europe's future and prevent these negative scenarios will be to strengthen the European influence on the configuration of the digital economy.

Our enterprises must gear up for digital transformation and comprehend its importance for the next decades.

The future impact of digital customer interfaces: blessing or curse?

Changes concerning customer interfaces will have a significant influence on European enterprises, such as with mobile communication businesses in the last two decades. An integrated producer with its own closed system currently generates profits five times higher than the market leader in 2005. The profit margins of companies without digital customer interface show a severe negative development. This will force these enterprises to pullout of this industrial sector, just as this happened to Siemens and Nokia. Nokia lost its profitable position as a market leader. Selling over 265 million mobile phones and generating a market share of over 30% at its peak, disruptive changes lead to the full retreat of this industrial sector.

In a similar vein this process may reoccur within the automobile industry. The customer interface is gaining more and more importance in this industrial branch. To be prepared, some producer initiated alliances for the development of new technologies, for example the "Open Automotive Alliance" of Volkswagen, Fiat, Renault and others under the leadership of Google.

The impact the integration of the automobile into the digital system of the end customer will have, may be essential.  Will the question of the operating system be as important as it is when buying a smartphone (IOS vs. Android)? Will the automotive manufacturers have to pay a commission? Or will they just be a hardware supplier? This disruption may be an imminent scenario that could come close to the recent developments in the mobile communication branch.