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.
A global race is well underway for data sovereignty on the Internet. We cannot allow ourselves to leave the market to others.
German industry now has a unique chance to usher its leading sectors into a digital future. “As a service” offers will be an important part of that future, in which products and services from different sectors are combined and made available worldwide through custom-made programs.
Providing services that combine physical and digital components will have a decisive impact on the marketing success and economic growth of many German manufacturers. Intelligently processed data from the products is what will fuel such service offers. But we must hurry.
A global race is well underway for data sovereignty on the Internet. We cannot allow ourselves to leave the market to others. Germany needs pioneering entrepreneurs and companies that establish and export digital business models related to their products.
Politics can also play a role. Industry and science can work together to create software clusters and develop digital platforms for German products that are connected to the Internet. Privacy protection depends on uniform European regulations, so there is little use for nations to go it alone. The bottom line is that our manufacturers want to have a single digital interface for their products in all countries.
To ensure that Germany plays a leading role on the industrial Internet, it is critical to creating an internal digital market in Europe. An improved, European-wide system of privacy protection is also needed. Lastly, more vigorous research in software development and data analysis is crucial.
Germany needs a wake-up call lest it is too late for the digital future.
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