Just a week ahead of this year’s edition of Hannover Messe, the world’s largest industrial fair, the European Commission has today presented a set of measures to digitize European industry. This roadmap for digitizing Europe’s industry aims to enable every sector in Europe to use technology to boost productivity and competitiveness, whilst preparing our workforces for the change.
Currently, the EU’s target is to increase the value of European industrial manufacturing from 15% of overall GDP to 20% by 2020. With 75% of the digital economy’s value expected to come from increased productivity and competitiveness, the need to accelerate the digitization of Europe’s entire industrial fabric is clear.
The package successfully pinpoints the major challenges currently hindering this transformation, one of which is the need for harmonized standards and increased interoperability.
Given that the Internet of Things (IoT) relies on diverse, interconnected systems, the impact of software incompatibilities or limited interoperability could be far-reaching, impeding market access and hampering innovation. McKinsey estimates that without interoperability, 40% of the potential economic benefits of IoT could remain unrealized. Effective use of existing standards is a critical enabler of rapid technological advancement, as it helps avoid “reinventing the wheel” and enhances interoperability. As Forrester’s Senior Cloud Computing Analyst, Dr. Paul Miller, has highlighted, robust, clear and shared standards are essential for everyone to able to benefit from cloud-based IoT solutions.
The European Commission has also identified other remaining barriers to the industrial uptake of cloud solutions, particularly around questions of data ownership and the need to create and implement new safeguards against cyber-risks.
IoT devices are constantly generating vast amounts of data. It is essential that these are kept confidential, private and secure. Standards that help to increase trust and transparency about data could address concerns and drive the adoption of cloud computing. But there is yet another important aspect. While European data protection laws closely regulate the extent to which the processing of personal data is permissible in an IoT context, practices involving ownership of data generated by IoT networks are much less developed. Policymakers need to think about enhancing existing legal regimes relating to ownership of data in order to prevent legal uncertainty from hindering investment and collaboration, whilst being careful not to inadvertently limit the access or availability of data with an overly rigid regulatory approach.
Most decision makers have recognized the value of cloud computing in theory, yet uptake remains frustratingly slow across sectors and businesses. In 2015, a mere 19% of EU enterprises made use of cloud services. European SMEs in particular struggle to make use of the very technology which could help them scale-up – for instance, only 14.5% currently sell online. There are also considerable disparities between high-tech sectors such as aerospace or transport, and more traditional industries such as construction. Such gaps jeopardize Europe’s future industrial competiveness.
Some companies have already embarked on their journey towards intelligent ways of working. The potential of this transformation is particularly noticeable in the automotive industry, where solutions such as BMW Connected are giving us a glimpse at the future – a future that goes beyond simply getting from A to B to include seamlessly personalized services, thanks to the Microsoft cloud.
This is just one of the many smart solutions on display at Hannover Messe this year, focused on making the journey to the intelligent cloud a realistic possibility for businesses large and small. Companies such as Liebherr, Rolls-Royce, and Maschinenfabrik Reinhausen will demonstrate how European industry has already found ways to innovate in the cloud, generate business value and deliver highly profitable new products or service offerings to their customers – all thanks to the power of IoT.
And many of these solutions also have the potential to deliver significant societal benefits. Recent Forrester research, and existing success stories such as smart car-sharing initiatives in Paris or Danish greenhouse management solution Sensohive, show that IoT solutions can help tackle pressing issues, from waste reduction and traffic management, to improving energy efficiency.
Embracing progress is not always easy. But if we can break with traditional economic thinking and look at digital value chains in new ways, Europe should be able to devise policies to fuel the intelligence revolution and ensure our industrial future is as bright as our past.