Digitising European Industry
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1 Digitising European Industry TAFTIE Expert Session Industrie 4.0 München 9 September 2015 Dr. Max Lemke Head of Unit DG CONNECT A3 European Commission 1
2 Value creation from digitisation: Products, Processes and Business models "Digital inside": Innovations in all types of products Smart connected objects powered by e.g. Sensors, wearables, embedded software, Connectivity, Big data, Cloud Large opportunities in all sectors (Non-tech, high-tech, SMEs, etc) Digital transformations of processes From logistics and product design to shop floor automations and CRM Increasing resource efficiency, productivity,.. Built on CPS, IoT, digital design, robotics, laser technologies, big data,.. Radical/disruptive changes in business models Blurring the boundaries (products-services), reshuffling value chains XaaS, 3D Printing & customisation, CRMs, maintenance, A Value services Built on real time information, data analytics, etc.. 2
3 The 'digital inside' value chain New digital value chains ~40% of >25% AV of AV >40% of AV > 33% of Added value
4 R&D investments in ICT by non ICT sectors R&D spending B % on ICT Aerospace and defence Automotive Electrical equipment Healthcare equipment/services Industrial manufacturing
5 Digital process innovation: e.g. manufacturing Modelling, Simulation, Analytics and big data Cyber-physical systems and IoT for process (chain) optimisation "from cradle to grave" Robotics and automation Laser-based manufacturing
6 Transforming the business model Blurring boundaries: products-services Trends in business models "Reintegration" across the value chain Expansion to services Expansion to "systems of systems" "Sharing" economy Des-intermediation Game-changing technologies - simulation and data analytics - sensing and control - digital automation - 3D manufacturing - Seamless connectivity and Cloud) 6
7 Technology tracks and Opportunities ahead Five main converging innovation tracks Big Data Cloud CPS, Smart connected objects and IOT Robotics, Autonomous systems and automation Hyper connectivity, BB and wireless Areas of business opportunities High growth "Smart X" and IoT markets Mobility, society (smart homes, smart cities, wearables,..), manufacturing, health, energy, etc.. High growth of vertical markets!! Automotive, energy, security, etc. Next digital champions may come from "non-digital" industries And vice versa!!
8 Digital industry: Where does Europe stand? Strengths Professional and vertical markets (products and services) Components, software, systems (robotics, engineering), networking, World class R&D hubs Good infrastructure Size of EU market (~27% of world ICT market) Weaknesses Consumer markets, Internet and web products and services From components to applications, Data platforms' ownership Structural weaknesses No DSM yet (substantial impact on attractiveness to investment including VCs, BAs, etc..) Lagging in investment in R&D Already paying the price 8
9 Digitised industry: What is the situation? Strong digitisation in high tech industries and in some MSs. But: Slowness and disparities in adopting digital solutions across industries and regions Mainly SMEs and non tech sectors lagging behind New competition from non-eu digital platform owners E.g. OS, Web and Data platform owners Lack of standards and interoperable solutions Skills and re-skilling of work force Legislative and regulatory gaps Fragmentation of effort in Europe 9
10 Digitisation readiness: disparities in Europe 10
11 11
12 Digitising European Industry: Proposal for four key lines of action Speech of Commissioner Oettinger at Hannover Fair on 14 April 2015 Europe's future is digital: Digitising European Industry: Proposal of four key lines of action complementing our efforts on a Digital Single Market High-level Roundtable of National Platforms on 30 June 2015 with Commissioner Oettinger Member States and industrial representatives welcomed EU plans and confirmed the need to act on EU scale Next steps/plans: Industrial Roundtable with Commissioner Oettinger 18 Sept 2015 EU policy/strategy announcements in Spring
13 Digitising European Industry: Next steps for Action Line 1 Digital innovation hubs World class innovation hub easily accessible from every region" Empower any business in EU to master its digital transformation Next steps: 1. Reinforce Innovation Initiatives like I4MS, SAE: Top up I4MS and SAE (135M ) by 60M in 2016/17, + others Reinforce link between the existing competence centres & Regions Provide access to additional finances (EFSI) 2. Provide the glue/networking between EU, national, and regional "Industry 4.0"-type initiatives between their demo centres, field labs, model factories, 3. Stimulate the dynamic growth of the ecosystems Innovation hubs in less developed regions Link to smart specialisation Mobilise investments from structural funds, and others 13
14 Starting Point: EU Innovation Schemes Smart Anything Everywhere (SAE) Digital Manufacturing Processes ICT inside of products and services I4MS event 22 May 2015 and others: ACTPHAST, ECHORD,
15 Innovation hubs - an example to build on: ICT Innovation for Manufacturing SMEs I4MS is part of the Factories of the Future PPP I4MS.eu Phase 1 + 2: M of EU funding large projects competence centres experiments 22 Members States and Ass. Countries Focus on 4 areas of ICT adoption in the FoF: HPC cloud-based modelling, simulation and analytics services Industrial robotics systems Laser-based manufacturing Smart sensors systems, CPS and IoT Expanding the ecosystem Provide "glue" for natl/regl initiatives Expand into "all" regions
16 Action Line 2: Leadership in digital platforms for industry Appropriate Instruments: ECSEL Pilot Projects PPP Work Programmes FoF, I4MS and alike Estimated EU-level investment: - At least 1 B through H Leveraging up to 3B in total
17 Platform: What are we talking about? No: Stakeholder groups: Industrie4.0, European Technology Platforms No: Technological platforms (Middleware, reference architectures, ) Instead:Economical multi-sided market platforms creating valueby enabling interactions between two or more customer groups (often including the above) Google: People who search - advertisers Apple/Android: People who buy a phone -developers of apps Amazon Marketplace: People who search a product -companies selling products
18 Characteristics of platforms Product or platform? A product is largely proprietary and under one company s control An industry platform is a foundation technology or service that enables a broader, interdependent ecosystem of businesses The platform requires complementary innovations (created by the "complementors") to be useful Open or closed? Some level of openness is necessary to enable complementors (developers) to interact with the platform, e.g. API's (Application Programming Interface), which ones? SDK (Software Development Kit), what is the form? Necessary to go through standardisation? Some platforms are based on standards, others are not Alternative: "quasi"-standardisation by strong market actors or groups of actors 18
19 Examples: Apple App Store No: standards interoperability reference architecture Yes: Software development kit, Quality control Clear revenue model for Apple and Complementors
20
21 Is FIWARE a two-sided platform? Open source repository is not a platform, only addresses one side of the market (software developers) Smart city platform run by Telefonica in Santander is a platform: It brings complementorsinto contact with citizens of Santander SmartAgriFoodis a platform: It brings complementorsinto contact with farmers
22 Standardized architecture for automotive software Eases cooperation of automobile manufacturers, suppliers and tool developers Facilitates innovation through open standards "Cooperate on standards, compete on implementation" 22
23 Convergence of Platforms: Automotive sector example Amazon Google (search, youtube, gmail, drive, android, ) Blahblah car ebay Apple Criteo Facebook Online Platforms dominated by non-eu AUTOSAR Embedded Platforms EU with significant WW market share 23
24 Steps in creating 2-sided platforms Define the (two) sides, and scope of the technical basis Decide on how to open parts of the infrastructure to attract complementors Solve tech issues and create testbeds to accelerate the innovation process and help maturing the platform Complementors can start building applications Users cantry out thesystemandtheapplications build by the complementors Consortium can learn what complementorsand users need Create the ecosystem Manage the quality of the contribution of complementors
25 Concrete Steps - Action Line 2: Leadership in digital platforms for industry Work with national initiatives to avoid national silos and to complement efforts to reach appropriate scale lift up promising national/ regional efforts to EU scale Increase weight of EU actors in international alliances Workshop "Platforms for the Connected Factories of the Future" on 5-6 Oct in Brussels Bring key actors around the table: Industry: Siemens, Dassault, ATOS, Bosch, SAP, Platform initiatives: Virtual Fort Knox, BEINCPPS, IDS, RAMI, ROS, ARROWHEAD, Questions: What platforms are needed on EU scale? On what does industry want to work together vs to compete on? How can EU R&I programmes support, e.g. ICT-FoF11 (50M, Jan 2016)? ECSEL stakeholder meetings September in Graz Define the 5 key strategic areas and their needs cross value chain 25 collaboration needs for the next years
26 Action Line 3: Fill the skills gap and prepare our workforce for the 21 st century Promote digital skills: EU acting as catalyst "digital" education reskilling and learning Reinforce digital industrial interests in EU education, skills and employment actions, e.g.: Industry to identify essential components of a digital skills set Grand coalition for digital jobs Collaborate with other Commission services (EMPL, EAC, ) Promote exchange of Best Practices Collaborate with EIT-KIC announced for
27 Action Line 4: Smart Legislation for Smart Industry Make regulation fit for the digital world in the context of digitising all industry Reinforce industrial interests and inject industrial needs in the Digital Single Market (DSM) package Stimulate regulatory dialogue, for example but not limited to: Open digital platforms for balanced value creation Liability and safety issues for autonomously acting systems Data ownership, innovative use, data and IPR protection 27
28 Conclusions High political momentum for digitising European industry CONNECT has taken first steps towards better pan-eu collaboration to be continued Collaboration with GROW, RTD, Four key issues need to be addressed at EU scale: 1) Wide-spread adoption & best use of digital technologies in all industrial sectors 2) Increase emphasis on pan-european platform building 3) Filling the skills gap and preparing the workforce for change 4) Provide the best framework conditions Success depends on a strong collaborative effort Between EU, national and regional initiatives and their programmes Across DGs and programmes (H2020, DSM, industrial policy, EIT, ) Across all actors: industry, RTOs, social actors, 28
29 THANK YOU Digitising European Industry: Speech: _Speech _en.html Paper: Digital Agenda for Europe Components and Systems: DG CONNECT (Communications Networks, Content and Technology): Horizon 2020 on the web: ICT Innovation for Manufacturing SMEs: i4ms.eu Structural Funds and Smart Specialisation: 29
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