Germany continues to be a world leader in engineering complex machines, products and processes, including cars, medical equipment, elevators, robots, home automation and intelligent electrical grids but without a coherent digital strategy, companies stand to lose growth potential and market share.
For years, software has played an increasing role in these industries, to the point that it constitutes more than a third of overall costs in some products. The triumph of smartphones and their many connected applications has led a digital revolution that is shaking up many traditional businesses. The music industry and retail, for instance, have been turned upside-down. But German companies are not thinking digitally enough.
It is easy to underestimate the massive and lightning-quick impact digital change is having on traditional business models. For instance, what is ultimately important for a patient is not the best X-ray machine but the best evaluation of the X-ray. A diagnosis based on millions of digitally collected images can be a vital tool for radiologists. In the future, manufacturers of medical equipment can offer these kinds of services as additional features of their products. Or someone else can provide the service instead.