The digital transformation of industry will
cause fundamental structural changes for whole industrial branches. This
process will take place in waves, which will hit the different branches in
various ways and intensities and may change them from the ground up. Following
the first wave, the automotive and logistics industries are already in a
far-reaching shifting process. The second, marginally weaker wave will trigger
upheavals in the medical technology, electrical engineering, mechanical and
plant engineering and energy systems industries. The third wave of digitization
will hit the chemicals and aerospace industries, albeit more gently. European
companies therefore have to act fast and develop a more profound understanding
of what the digital transformation means and come up with new and sustainable
business models.
The study "The
digital transformation of industry" produced by Roland Berger Strategy
Consultants in collaboration with the Bundesverband der Deutschen Industrie (BDI),
examines the changes to value chains caused by new data, interconnectedness,
automation and digital customer interfaces based on the example of German
market leaders. The study represents the first extensive examination of the
causes of digitization and quantifies the overall effect.
Key
findings of the study
Among the key findings, the study presents
both positive and negative scenarios. In a positive scenario Europe has the
potential to create an additional value of EUR 1.25 trillion until 2025. If digital
transformation will not be turned to Europe's advantage, the continent stands
to lose as much as EUR 605 billion in the same period. The European
Commission's goals under the Europe 2020 strategy to raise the share of
industry in Europe from 16% to 20% by 2020 would clearly not be achievable in
the negative scenario.
These radical changes open up new
opportunities for the existing market players as well as for non-industry
players such as those in the information technology sector. Established firms and
industry leaders could quickly fall behind as a result. Market players from
outside the industry who possess a high level of digitization expertise could
come in and replace them in lucrative parts of the value chain.
Recommendations
for Europe's future industry
Companies need a comprehensive
understanding of the new value-added potential afforded by digitization and how
it can be utilized. Not only efficiency and costs have to be improved; and
optimized new business models will also have to be created.
Europe needs a counterweight to the
industrial Internet Consortium dominated by the United States. Therefore
businesses and European governments must commit themselves and define common
standards that accommodate the strengths of the German and the European
industries.
The success of digital transformation depends
on the installation of no-gaps broadband networks. Simultaneously, regulatory steps
must enable the high- quality of service for mission-critical applications.
Europe needs an effective and powerful infrastructure as a backbone if the
companies want to stay competitive in the long run.
If Europe wants to implement the digital
transformation of industry, successful collaborative action is needed. It must
rigorously focus its investment programs on digital transformation,
re-establish its own information and communications technology competence and
foster a virtual digital valley as a counterpart to existing digital centers in
the US and in Asia. Initiatives such as Terra
Numerata™ from Roland Berger Strategy Consultants can help to improve the way
the digital transformation is coordinated in Europe.
To learn more about the digital
transformation of industry, click here.
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