Testing the hype

Today manufacturing companies probably rarely ask themselves whether they should tackle digitalization. Most of them are already right in the midst of it – albeit in various phases. But what kind of potential does digitalization really offer? “Is it worth it?” – a simple question that all entrepreneurs have asked themselves since analog innovations arrived in leaps and bounds, and that is now as relevant as ever.

About US$ 11 trillion worldwide – that is the number the McKinsey Global Institute (MGI), an international think tank, estimates the economic added value of modern IoT applications will amount to by the year 2025. The Internet of Things (IoT) has the potential for the greatest impact in factories (up to US$ 3.7 trillion of economic added value), for example, due to cost or time savings. But who ultimately benefits from this added value?


Consumers have long learned to appreciate the benefits of digitalization: custom products available in a very short time at a reasonable price and of the best quality. As a result, companies have had to shift their focus from homogeneous market requirements to the needs of each individual customer. The key to
 a multivarious and customized range of products lies in digitalization.

$ 11 trillion in added value worldwide thanks to modern IoT applications in 2025.
McKinsey Global Institute

According to the latest study by MGI, companies need to set their goals very deliberately, keeping an eye on the current and future development of digitalization, in order to improve the return on investment for digital assets. “Only those who are familiar with the progress of digitalization in their industry and can assess the impact of this development on their economic performance will be able to implement their own strategy in a goal-oriented manner and be successful” is one conclusion of the investigation. The starting point for different industries in terms of the degree of digitalization required and their current progress varies. Even the question where digitalization will have the greatest impact depends on many industry-specific conditions in each individual case.

80 % less power consumption with additive manufacturing at the Siemens plant in Finspång.
McKinsey Global Institute

Data create added value

The KPMG study titled “Creating values with data,” conducted in collaboration with Bitkom, also shows that in addition to the digitalization of processes
per se, the resulting opportunities for comprehensive data analysis have the greatest impact on value creation. Data are the key to making full use of the potentials of digitalization. It is only when data
from machines and plants are collected, processed, and used in a secure environment that production processes and equipment can be streamlined on an ongoing basis. “All in all, you can say that data analysis is increasingly contributing to the creation of value in companies,” summarizes Thomas Erwin, the head of studies at KPMG. 

3.7 trillion in economic added value for plants thanks to the IoT.
McKinsey Global Institute

The Digital Enterprise is Siemens’ digitalization solution for industry and comprises software and automation components for every sector and for companies of every size. It integrates software and hardware solutions that enable a seamless integration and digitalization of the entire value chain, including suppliers. The result is a digital twin that maps the entire value-added chain – from product design to service – on the basis of a single data model as a perfect digital copy. Companies can use this to simulate, test, and optimize in a completely virtual environment. The process industry benefits from a consistent data model of the entire plant lifecycle. The data also form the basis for analyses, which are conducted with Siemens’ MindSphere, the cloud-based, open IoT operating system. 


Find out how companies, like BioNTech or Bausch+Ströbel, benefit from digitalization already today in our special “Is it worth it?”.


Picture credits: Bo Tornvig


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