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The Might of the Data Specialists

28/05/2014 13:03 BST | Updated 28/07/2014 10:59 BST

The triumphant advance of IT, also in the manufacturing industry, is unstoppable. Just recently, Siemens boss Joe Kaeser said he employs 8,000 software engineers - four times as many as a decade ago. With them he feels well prepared for "Industry 4.0": smart, networked manufacturing systems. But what does Siemens, a classical mechanical-engineering company, need so much software know-how for? The answer is quite simple: Hardware is rapidly losing importance; software will dominate the business models. It is a well-known pattern: In the Eighties, Microsoft, IBM and Apple were forced to reinvent themselves in order to survive. And this time, the digital transformation will be even bigger, more complex and encompass more industries. Today it is all about intelligently linking big data and plant-specific software with each other. Data specialists may even take the market by storm in the near future, because it is they who add value in a networked industry.

The eternal preservationists comfort themselves with the conviction that true value can only stem from production. They consider "big data" to be nothing more than just another marketing buzzword. But what they forget is that every production plant is continuously also producing data. An electric motor is generally serviced after a given period of operation. If it breaks down before that, it has to be written off in an unscheduled replacement. A diagnostic tool based on big data can interpret early warnings from all electric motors in use around the world and know much sooner when something is going to happen. Or, another example: If process data are intelligently prepared, parts of the production process that consume too much energy can be identified and rectified. Applications of this kind can present industrial companies with a cost benefit of up to 80 percent.

European companies have to watch out that they don't get left behind here. We do have quite a few world market leaders in industrial niches, and some of them are very good at bringing together data and production processes, but we are allowing ourselves to be lulled into a false sense of security if we believe that that is enough. We have to admit to ourselves that the manufacturing industry in most European countries is still light years away from the vision of a networked industry. We lack competence in high-tech, data services and industrial Internet applications, and we will continue to lose market share in these fields.

There is strong evidence to suggest that the industry of the future will be governed by data and software. The USA now have the opportunity to get their foot back in the door. US President Barack Obama is working hard on the industry renaissance. With its acquisition of Nest, a specialist in smart home appliances, Google has now set a precedent and simply bought itself the required hardware competence. This strategy is also conceivable in the B2B field. A number of German automakers are already working together with Google on an operating system for cars. The tire maker Continental is cooperating with Cisco and IBM. Perhaps the US data specialists will soon be looking for takeover candidates among the German industrial companies. Siemens is presumably too big to be swallowed, but that is not true of numerous other engineering companies whose niche products can be integrated into the data universe. They should be on the alert.

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