How can companies drive their digital transformation forward and create added value for their products? In a short series of articles on digitalisation, we offer tips and present practical examples. This article looks at what companies should bear in mind on their digital journey.

Germany has not exactly been regarded as a model country for digital readiness. On the Digital Readiness Index compiled by the IT and networking provider Cisco, it slipped from 6th to 14th place in the international country comparison in 2019. And in the "Digital Riser Report 2021" by the Berlin-based European Center for Digital Competitiveness (ECDC), Germany ranked second to last in Europe and Central Asia (with a comfortable lead over Albania) in terms of the progress made (or not made) in digital competitiveness over the previous three years (2018 to 2020).

A forced digitalisation boost

That was before the coronavirus pandemic – could a fresh start be on the way now? After all, it seems as though the virus is driving digitalisation forward: servers are groaning under the load of video conferences and health authorities are reporting data to the RKI (Robert Koch Institute) by fax – but thanks to the pandemic, there is now at least a "spirit of optimism" about digitalisation among companies, according to a Bitkom survey. For a long time, development and manufacturing companies were also rather hesitant in this respect. Now, however, they not only want to maintain and expand the forced "digitalisation boost", particularly in collaboration, but also want to engage more closely with the use of key digital technologies such as data analytics and artificial intelligence.

For many manufacturers, digitalisation opens up major market opportunities, at least in theory. In practice, however, these opportunities are often accompanied by a host of questions: How can manufacturers and suppliers enhance their legacy products with digital technologies? How, for example, can a machine tool manufacturer use digitalisation to respond to customer requests for ergonomic improvements – in an environment characterised by competition and price pressure? What does a manufacturer of agricultural technology need to do to make its machines ready for connectivity and remote maintenance? And how can the resulting requirements for functional safety and data security be implemented?

From the existing portfolio to new digital offerings

"One path to new value creation models leads through an analysis of the existing portfolio," explains Stephan Strohmeier, who is responsible for Safety & Security Solutions and digital consulting at NewTec. "For which legacy products can what kind of digital added value be created, and how? What data can be gathered while the product is in use? And who benefits from it?"

To go beyond the existing product portfolio with new offerings, it is worth taking successful business models as a guide and looking beyond the boundaries of one's own industry. New value creation models, however, are only half the battle. It is often still largely unclear how the associated requirements for development, production and personnel can be identified and met. For a digital business model to be implemented successfully within a company, or for a product with digital added value to be launched successfully, the corporate structure and corporate culture should be taken into account from the outset, alongside important technological and, where applicable, safety-critical factors.

Open to new ideas?

What matters here is a systematic analysis of which of these models are suitable for one's own company and whether they are transferable. Can the necessary changes be implemented within the existing corporate structure, or does it need to be adapted? Could existing business models be cannibalised by the new products or new business models? What happens, for example, to the service technician department if products are maintained remotely? This review also includes the question of whether the corporate culture is sufficiently open to digital innovation – traditional organisational, decision-making and project structures are often a major obstacle to digitalisation.

New safety and security challenges

Digitalisation also calls for a different approach to familiar areas of responsibility – above all, functional safety. An example from mechanical engineering: how can you prevent largely autonomous machines, such as collaborative robots (cobots), from injuring their human colleagues? Tried-and-tested protective devices such as safety fences or light curtains hinder close collaboration and therefore efficiency – new concepts are needed. In addition, when processes are digitalised, functional safety must always go hand in hand with information security. Functional safety always requires the entire system to be considered – yet today, machines and plants are often part of production networks, and the systems controlling them (industrial control systems, ICS) are connected to a growing number of components that are accessible from the internet.

All of this makes ICS increasingly vulnerable to cyberattacks. Poorly secured IoT devices are among the most popular attack vectors in production environments. If a hacker succeeds in penetrating the production network, they can sabotage safety measures or cause dangerous incidents. An indispensable prerequisite for safety – protecting people from systems – is therefore security, protecting systems from people. Digitalisation in industrial companies thus requires a new, integrated concept of safety and security that takes both into account equally.

Support from experts

NewTec provides strategic and technological support in all areas of a digital transformation process. In digital change workshops, trends and markets are analysed, potential is identified and implementation strategies are developed. We also take a look at what "digital readiness" means for corporate structure and culture. When things get concrete, we support hardware and software engineering with expertise and manpower, particularly when it comes to developing solutions with a high level of user safety and embedded security (data security). In further articles in this series, we will present some examples and interesting information on digitalisation in various industries.