Recently I attended several panel discussions at business conferences, including the “Day of German Industry,” and spoke to stakeholders in charge of digitization in Germany.
I realized that the elements needed for success—success of a magnitude never before achieved by Europe’s software industry— lie in our own backyard, in our own industrial, engineering and manufacturing heritage.
The marriage of the manufacturing sector and IT industries will give Europe a wealth-creating platform fit for the 21st Century. This is not just a wish but an imperative. If we do not want this to be the final act of European industry play, then there is no choice but to embrace this marriage wholeheartedly; by politics, science, education, enterprises and every individual.
The European Union is the world’s largest trading block, the world’s largest manufacturer, the largest trading partner to over 80 countries and a huge importer of software. The planned Digital Single Market for Europe can contribute €415 billion per year to our economy by tearing down regulatory walls.
Today, however, there is only one European company in the world’s top 15 high-tech companies, with the USA and Asia dominating, and only one European software vendor in the world’s top ten. I prefer the high-tech measurement as it is a hybrid industry, software and technology together that will dominate the 21st Century. Social media companies and software platform-only companies might hold the highest market capitalizations but they do not return the highest profits (most do not return any at all) yet.
It is in Industry 4.0, or the Industrial Internet and the Internet of Things, where the quantum leap lays, along with real positive impact for societies everywhere. And here is the crunch: If the future of industry lies in a marriage of software and “Things,” such as smart devices, sensors, robots or factories, then the ownership of the software layer and the integration of the “Things” has to remain in Europe where the “Things” are manufactured. To lose it would be no less than losing the continent’s future intellectual property (IP). That would be no less than disastrous, decades of heritage and expertise exported never to return.
The value of this layer should not be underestimated. At a technology level, the 21st Century European industrial cluster means the marriage of Information Technology (IT) and Operational Technology (OT). These are two differing worlds of high technology. These are two different cultures and two huge opportunities to develop a digital business model that can streamline resource usage, streamline design to delivery and streamline the manufacturing process to a customized market of one at a reduced cost, waste and redundancy.
IT today provides the customer interface, the customer feedback loop, social sentiment, the integration of external data sources, the real-time analytics of unfolding business events and the dynamic automated process to respond to them. OT operates the manufacturing processes, real-time identification of manufacturing events, the near real-time isolation of quality aberrations. It operates the robotic assistants that dramatically reduce the dangers inherent in many jobs, or eliminate drudgery and improve the accuracy of repetitive jobs freeing workers to add more value to the business chain.
And is this IT/OT cluster forming? I am happy to say yes, emphatically. Looking at Software AG and our partners, I can point out many events of the last six months that show the convergence of IT and OT, of software and industry taking great strides. Software AG has announced major partnerships with Bosch, Dürr AG, Dell, Huawei and others.
Europe must not let this opportunity slip if we are to remain on the crest of the Industry 4.0 wave to the advantage of future generations and continued export success.