IN INTERVIEW: ROLAND SOMMER, ASSOCIATION INDUSTRY 4.0 AUSTRIATuesday May 2nd, 2017
Industry 4.0. Is this just another term for the digitalisation that is happening anyway?
Industry 4.0 is many things, including a very successful marketing concept. Suddenly politics has taken an interest in industry again – and this in OECD high-wage countries like Germany and Austria, of all places! Industry is again being seen as a necessary part of a successful country. But there is of course a whole range of technologies that you might see as coming under Industry 4.0, so better descriptors are terms like the Internet of Things, digital production, machine-to-machine communication, etc.
How would you assess the current situation on digital transformation in Austria?
The differences between and indeed within the various industry sectors are now so great that it is very hard to generalise. There are companies in Austria that are technology leaders in their field, and there are firms that really need to catch up when it comes to introducing new business models. For the machine construction industry, for instance, Industry 4.0 means a fundamental change in business model. It is time to say goodbye to production and sales and move over to leasing models. The automotive industry on the other hand must use different models on a production line if it is to be able to produce ever more quickly and more effectively.
What other forms might the new business models you mention take?
There are three major trends at the moment. One is from hardware to software. The external appearance of mobile phones is becoming less important. What are crucial are customised apps. Secondly, there is a move from product to service provision, e.g. car-sharing or Rolls-Royce, which no longer sells the turbine but thrust. And thirdly, from product to platform. All major IT firms are already working on IoT platforms. There is also a range of sector-specific platforms in agriculture or tourism.
Does this also alter the relationship with the customer?
Of course, the value proposition is what is disruptive about digitalisation. Technology is developing not only extremely quickly, but also continuously. In some sectors, new players can gain a substantial market share in a very short time through heavily digitalised processes. Was it a big US online commerce firm or a Dutch insurance company that was recently able to win a 5% share of the market within two years, using an online presence alone?
Will everything be digitalised that can be digitalised?
Many studies relating to the degree of potential digitalisation in the labour market stoke fears of job losses, as the received view is that computers will take over the work. But that’s not quite true. In many areas and occupations, the job profile will change massively, but this does not automatically mean that thoroughgoing digitalisation is either necessary or a good idea. Viewed as a whole, there will be more new jobs, but these will be in other areas. Some people believe that increasing automation has already meant that most of the streamlining potential within production has been realised, so that the next wave of digitalisation will tend to affect accounting or finance management.
Does digitalisation always make things more efficient?
Two of the main reasons for digitalisation are better quality and traceability. If I could use digital means to determine precisely which airbag is defective, I wouldn’t have to recall 600,000 cars. Sectors like the medical engineering industry are considerably further along this road, partly due to statutory requirements. In future, quality assurance will automatically take place at each individual production stage. It saves on costs, minimises waste, reduces energy costs and is good for the environment.
Does digitalisation also mean a change in the requirements facing managers?
Yes, because digitalisation flattens hierarchies, and companies will often no longer be evident as entities, due to increasing bifurcation and third-party holdings. Where are the borders of the company if staff have been seconded for years to customers? And what does that imply for a credible corporate identity? In addition, competitors will suddenly spring up out of the blue completely unforeseen. Amazon is offering content, firms are entering other sectors. There will be more disruption. The idea that a strategic plan will keep you safe will be a thing of the past. Change is the new norm.