Analytics everywhere

What Germany’s Industrie 4.0 initiative is teaching us about the power of analytics

The core of Industry 4.0 is connected, intelligent products that communicate with users or other products.

The core of Industry 4.0 is connected, intelligent products that communicate with users or other products. Photo courtesy of | © aimage

By Arnab Chakraborty and Thomas D. Meyer

Through advances such as big data and the Internet of Things (IoT), the field of analytics has been growing by leaps and bounds. However, much of the focus, particularly in the United States, has been in the consumer (i.e., business-to-consumer, or B2C) market. Indeed, much of the innovation coming out of Silicon Valley, and from disruptive digital companies with new business models and no legacy infrastructure to contend with, remains in the context of personalization and the consumer experience.

However, organizations too often focus on analytics simply as a tool for incremental gain, with data siloed throughout the business and used by different groups, each focusing on different goals, unable to unlock new value and outcomes. As a result, their business intelligence is out of sync with the business itself, and they’re missing out on a tremendous opportunity to get the most value from their analytics investments and reap the full benefits that analytics can offer. To move past business intelligence and toward becoming an “intelligent business,” companies must embed analytics across the entire value chain.

The Example of Germany

That is starting to happen, as evidenced by the Industrial Internet of Things (IIoT), also known as Industry 4.0 (for the fourth industrial revolution). Engineering and manufacturing ecosystems are getting reshaped because of the IIoT – particularly sensor technologies and the vast amounts of data they can provide – which is enabling the creation of “smart” products and services connected to each other through generally available platforms. It’s no surprise that Germany is among those leading the charge in this area, in industry – given the country’s role as one of the world’s most-innovative manufacturing markets and its technological leadership in industrial production R&D – as well as in academia, with many universities making advancements in IIoT-related areas of robotics, sensor technologies and artificial intelligence.

The core of Industry 4.0 is connected, intelligent products that communicate with users or other products, enabling new digital business models that harness collected data to offer additional services and as-a-service products – a fully digital value chain. Production processes in all sectors, from high tech to manufacturing and industrial equipment, are being transformed by digital technologies, with leading companies integrating these technologies to improve and evolve pillars of their value chain across entire industries. Innovative manufacturers recognize that enhancing the manufacturing process for even simple products presents new opportunities for growth.

Germany’s commitment to this digital evolution is evidenced through its public-private strategic initiative designed to establish itself as a leading provider of advanced manufacturing solutions. The purpose of this initiative, known as Industrie 4.0 [1] (related to, but not to be confused with, Industry 4.0), is to connect the IoT to traditional industrial manufacturing, leveraging digital technologies including advanced analytics, big data and cloud computing. Industrie 4.0 and other programs such as Smart Service Welt [2] represent a paradigm shift from “centralized” to “decentralized” smart manufacturing and production, where intelligent machines, systems and networks are capable of autonomously exchanging and responding to information to manage industrial production processes through edge analytics.

By designing their systems for broad-scale adoption and enabling connected “things” to make decisions – while also empowering individuals to use data, gather insights and make informed business decisions that require a “human touch” – leading companies in Germany are re-orientating themselves around data to realize the full value of their analytics investments and to unlock new sources of value. By encouraging the adoption of agile technology platforms and tools such as data visualization to increase the reach of data-driven insights, Industrie 4.0 has touched on a cultural change we’re seeing throughout Germany. New work models are being developed to scale collaboration across organizations, with analytics embedded to transform the value chain and deliver real outcomes, with new efficiencies freeing up time across the organization to focus on the development of new revenue sources.

The list of major companies leading in the Industrie 4.0 ecosystem is long. Bosch Group [3] with global sales of more than †70 billion, is active on all three levels of the IoT – sensors, software and services – and produces 4 million IoT sensors daily. Nearly three years ago it formed a new company, Bosch Connected Devices and Solutions, to supply electronic components and software designed to add intelligence to and Web-enable a wide range of devices. And earlier this year, as part of its shift toward Industrie 4.0, Bosch launched its first IoT cloud-computing infrastructure and platform at a dedicated data center in Germany.

Manufacturing and electronics conglomerate Siemens this past June launched its Simcenter portfolio [4], a suite of simulation software and test solutions that help companies address the modern engineering challenges of today’s complex products. Combining simulation and physical testing with intelligent reporting and data analytics, Simcenter helps companies more accurately predict product performance throughout all stages of the product development process.

Just recently, Lufthansa Technik [5] – the Lufthansa Group subsidiary that provides maintenance, repair and overhaul services for aircraft, engines and components – announced that in 2017 it will launch an independent platform, called Condition Analytics, to predict precisely when components should be replaced, delivering results faster and saving operators money. This is another example of Lufthansa’s strategy to blend digital analytics with engineering expertise to make component maintenance, repair and overhaul more predictive.

Agricultural-equipment company Claas [6] is leveraging this type of continuous remote monitoring technology by developing ways to transmit information from its harvesters operating in fields to farmers or grain experts thousands of miles away automatically via satellite networks. Operators of Claas combine harvesters can use the company’s smartphone app to help control machines – and can even leave them to operate alone.

These are just a couple of the countless examples of German companies getting involved and taking a lead in analytics and Industrie 4.0, saving time, creating new operating efficiencies and creating new revenues. Accenture is working with many of these and other companies around the world to help them embed analytics across their businesses and throughout their value chains to transform the culture of their operations, unlock the greatest possible value from their analytics investments, and ultimately create new business models.

In Germany and elsewhere, much of what we see taking place as organizations begin embedding analytics across the value chain entails developing new digital and data-driven prototypes that help accelerate digital journeys toward becoming “intelligent businesses.” We often bring clients into the Accenture Labs and Accenture Liquid Studios to leverage immersive environments and help them quickly develop analytics-based prototypes to unlock new value.

Creating New Business Models Across Industries

In the same way as manufacturers have been placing sensors in shop-floor equipment to feed information directly to an analytics engine – enabling them to identify, predict, and then proactively address, machine-related maintenance issues – this can be done with other technologies and in other industries. For example, by embedding sensors in its vehicles, a trucking company can identify potential operational issues, such as when a part is likely to break down, the truck’s likely location when it will break down, the potential locations for repair and the optimal repair times to maximize in-service time. Based on these insights, the fleet manager can make effective decisions regarding ordering spare parts necessary for repairs; scheduling repairs with the garage, and even planning a motel stay for the driver during this time.

Some of these tasks can now be fully automated, removing the need for time-consuming human intervention. So rather than just selling its customers the vehicles it manufactures, the company can sell them ancillary services related to the ongoing operation of the vehicle, helping customers maximize the vehicle’s uptime. In this way a truck manufacturer can now be so much more, providing additional services and creating new revenue streams by taking advantage of the insights powered by analytics to unlock value and, in many cases, provide something unexpected but highly appreciated to clients.

Across industries, we’re seeing new business models like this being powered by analytics, and Germany is at the forefront of this activity through initiatives such as Industrie 4.0, which play on its manufacturing heritage.

Creating a Digital Ecosystem

Of course, leveraging the full power of advanced analytics requires more than just a solid technology infrastructure and the latest technologies. What’s needed is a cultural shift within organizations so that each element of the value chain uses analytics to work toward the same business goals.

To get as much value out of data as possible in such a fast-paced environment, companies need to think beyond the confines of the four walls of their own organizations to the broader analytics ecosystem. This might entail partnering with technology companies or vendors that have expertise (and data scientists) unavailable in your own organization; participating in industry or academic activities in the field; or perhaps even teaming with competitors to make the greatest advancements as quickly as possible. A rising tide lifts all ships, as they say.

In Germany, one of our key relationships is with the German Research Center of Artificial Intelligence (DFKI) – the world’s largest research center in the field of AI – with whom we’re collaborating to develop and apply deep learning capabilities that will solve complex and challenging business problems. With an initial focus on next-generation retailing and, in the manufacturing sector, smart products, we can pair DFKI’s labs and skills with design-led approaches to analytics and AI expertise to facilitate ideation and achieve innovative solutions faster than either of us could alone.

The Road Forward

The first three industrial revolutions came about as a result of mechanization, electricity and IT. The introduction of the Industrial IoT and related services into the manufacturing environment has ushered in a fourth industrial revolution, one that has already shown the potential to bring differentiated products and services at scale and create new customer experiences.

Germany’s Industrie 4.0 initiative is a great example of how collaboration between a wide variety of organizations across the public and private sectors is helping drive innovation, enabling organizations to become agile, innovative and disruptive. By applying analytics to drive digital disruption in the industrial and manufacturing sectors, leading companies in Germany are creating intelligent products and smart services to deliver unique outcome-based customer experiences. By following a similar model, companies in the United States and elsewhere would be well-positioned to create new and novel business models – and prosper from the new sources of value they provide.

Arnab Chakraborty is a managing director at Accenture Analytics, part of Accenture Digital, with responsibility for the ASG (Austria-Switzerland-Germany) region. Thomas D. Meyer is the Accenture country managing director for Switzerland and the Accenture Digital lead for the ASG region.
Editor’s note:
An earlier version of this article appeared in the 2017 January/February issue of Analytics magazine.