digital duo

Networking on a New Scale

But can he call his wife with that thing? Source: Siemens
But can he call his wife with that thing?
  • Why it matters

    Why it matters

    Communications firm Deutsche Telekom will network three locations operated by industrial giant Siemens with the aim of proving the benefits of the total digitalization of the production process.

  • Facts

    Facts

      Billed as the fourth industrial revolution, Industry 4.0 grew out of a German government initiative.

    • Its goal is to create “smart” factories.
    • Siemens and Deutsche Telekom say they welcome other partners.
  • Audio

    Audio

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The German business community is convinced its future hangs on the digitalization of industry.

The idea is to network machines and factories to boost efficiency, reduce costs and make better products. It is a billion-euro market attracting diverse players from many different sectors.

The German economy is still at the forefront of the development of this fourth industrial revolution. After all, Industry 4.0 is an idea emerging from an initiative by the German federal government. But in the meantime others, such as the Americans and the Chinese, have discovered the concept for themselves. Germany and Europe are at risk of losing their advantage to the discussions over the sovereignty and security of the data.

In order to prevent all of this, two German heavyweights, Deutsche Telekom and Siemens, are joining forces to combine their expertise and to give the development of Industry 4.0 a new dynamic.

Siemens and Deutsche Telekom have agreed to a research partnership over the next three years. Three Siemens locations in Nuremberg, Karlsruhe and Munich will be digitally networked with each other.

It remains to be seen whether the American IT firms or the German industry specialists are better able to guarantee this digital revolution.

The project will help identify and hopefully solve problems. There are questions over whether the locations can communicate with each other in real time without delays, and concerns about IT security including the transfer of data and its storage on the Internet cloud.

“If someone were to hack into and completely paralyze production, then it is the end of 4.0,” said Hagen Rickmann, director of sales and marketing for the Deutsche Telekom IT subsidiary T-Systems. A component of Deutsche Telekom’s solution for security will be the collaboration just announced between Telekom and the Munich-based chip producer Infineon.

While Infineon will provide special encrypted chips, Deutsche Telekom will offer secure networks and a cyber defense center, focused on quickly recognizing and responding to hacker attacks and spying attempts.

It remains to be seen whether the American IT firms or the German industry specialists are better able to guarantee this digital revolution.

Wolfgang Heuring, head of research and technology at Siemens sees advantages for companies like Siemens. He said Europe leads in machinery tools, and the plants generate large amounts of data daily. In addition, he said, the production process is understood. “With this knowledge we can create added value for our customers out of the data,” he said. He said that is the crucial difference to classic Internet firms, which “evaluate data from the mouse clicks of private users.”

 

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Neither company is revealing how much they are spending on it, but say the inititiative is of great importance.

Mr. Rickmann expects the first results to be already ready by Germany’s CeBIT technology trade fair in spring 2015. Any solutions found will be made available to other companies.

“We need the findings on a national and European level in order to create the right conditions,” said Mr. Rickmann.

The division of labor between the two companies is clear. Siemens is one of the global market leaders in automation and industrial software, and Deutsche Telekom is taking care of data storage, external data centers (cloud), secure networks and the appropriate tools, such as comprehensive encryption technology.

Deutsche Telekom explicitly does not want to sift through the data of its partner Siemens or its future customers. “Each company should be sure that its data is safe,” said Mr. Rickmann. In doing so, Deutsche Telekom and Siemens are hoping to differentiate themselves from the approach of especially American IT and Internet companies and their hunger for usable third-party data.

Deutsche Telekom and Siemens stand to win lucrative deals if the alliance is successful. But it is about more than just good business, said Mr. Heuring: “We want to contribute to 4.0 being to the benefit of the economy in Germany and Europe.”

 

Axel Höpner is Handelsblatt’s Munich bureau chief and and Martin Wocher covers the IT sector. To contact the authors: Hoepner@handelsblatt.com and Wocher@handelsblatt.com

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