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© Fraunhofer IESE ARTEMIS Technology Conference 2016 Madrid, October 05, 2016 Prof. Dr. Dieter Rombach [email protected] TU Kaiserslautern & Fraunhofer IESE & Science Alliance Kaiserslautern Kaiserslautern, Germany Digital Transformation – Opportunities & Challenges

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Page 1: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

ARTEMIS Technology Conference 2016Madrid, October 05, 2016

Prof. Dr. Dieter [email protected]

TU Kaiserslautern &Fraunhofer IESE &Science Alliance KaiserslauternKaiserslautern, Germany

Digital Transformation –Opportunities & Challenges

Page 2: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Agenda

• Fraunhofer Applied Research Organization

• Mega-Trend „Digital Transformation“

• Examples

• Today

• Future

• Opportunities

• Challenges

• Takeaways

October 05, 2016 2

Page 3: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Agenda

• Fraunhofer Applied Research Organization

• Mega-Trend „Digital Transformation“

• Examples

• Today

• Future

• Opportunities

• Challenges

• Takeaways

October 05, 2016 3

Page 4: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Fraunhofer-Gesellschaft, the largest organization for applied research & technology transfer in Europe

4

Applied Research for Economy and Society

About 27,000employees

Above 70% of industry contracts and publicly funded research projects

About 30% of base funding fromfederal and state government

70 institutes andresearch institutions

Res

earc

h V

olu

me

2 billion €

2013C

on

trac

ted

Res

earc

h

1.7 billion €

October 05, 2016

Trusted Partner of German/European Industry for Innovation since 1949

Page 5: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Fraunhofer Institute for Experimental Software Engineering

5

Founded in 1996

Scaleable software & systems engineering with quality guarantees to support digital transformation

Applied in automotive/mobility, industry 4.0, health, energy, etc.

Over 200 (FTE) employeesSchkopau

Teltow

Oberhausen

Duisburg

EuskirchenAachen

Schmallenberg

Dortmund

PotsdamBerlin

RostockLübeck

Itzehoe

Braunschweig

Hannover

Bremen

Bremerhaven

LeipzigDresden

CottbusMagdeburg

Halle

Wachtberg

München

Holzkirchen

Freiburg

Efringen-Kirchen

FreisingStuttgart

PfinztalKarlsruheSaarbrücken

St. Ingbert

DarmstadtWürzburg

Erlangen

Nürnberg

Ilmenau

St. Augustin JenaChemnitz

Fürth

Ettlingen

Kandern

Kaiserslautern

October 05, 2016

Leading German/European Institute for Software & Systems Engineering

Page 6: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Science Alliance Kaiserslautern(Leading German Competence Center in Digital Transformation

Transofrmation 2 Universities

10 Research Institutes in IT and Engineering, including

Max Planck (CS)

3 x Fraunhofer (CS, Math, Physics)

German Center for AI

App. 35 High-Tech Companies

Leading National Research Centers in

Industry 4.0 („Smart Factory“)

Agriculture („Commercial Vehicle Alliance“)

Energy („Fraunhofer Service Center: Cross EnergyManagement“)

Health („Fraunhofer Service Center: eHealth“)

App. 1000 scientists in Software;Equal Strengths in Engineering & Information Technology

Page 7: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Fraunhofer Subsidiaries and Centers worldwide

Dubai

Bangalore

Jakarta

Beijing Seoul

Tokyo

Cairo

Ampang

Santiago de Chile

Singapore

Brussels

Porto

Vienna

Bolzano GrazBudapest

Wrocław

Gothenburg

Thessaloniki

Sydney

Salvador

Sendai

Paris

São PauloCampinas

Jerusalem

SubsidiaryCenterProject CenterICON / Strategic CooperationRepresentative / Marketing OfficeSenior Advisor

Stellenbosch

Boston

Plymouth

East LansingSan José

NewarkMaryland

Cambridge

LondonVancouver

Storrs

Glasgow

SouthamptonDublin

Page 8: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Agenda

• Fraunhofer Applied Research Organization

• Mega-Trend „Digital Transformation“

• Examples

• Today

• Future

• Opportunities

• Challenges

• Takeaways

October 05, 2016 8

Page 9: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Mega-Trend „Digital Transformation“

• Digital technologies enter all areas of business, private and public life(iPhone is main access device)

• Key enablers are

• Omni-present ad-hoc communication technologies

(with internet as backbone)

• Micro-sensors to capture masses of data

• Key synergizing characteristics are

• Interconnected things (physical, digital, human)

• Buzzword: Internet of things (IoT)

• Value generation via (big) data analytics

October 05, 2016 9

Smarter & New Products and Services via networking of all „things“ (IoT) and smart data usage!

Page 10: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Digital Tranformation – Evolution vs. Revolution?

Big Data Analytics

Industry 4.0

Optimization

(Evolution)

New Business

(Revolution)

Evolution represents normal innovation (competitiveadvantage); Revolution enables new revenues & jobs!

Page 11: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Smart EcosystemsA Trend across Domains

Smart Ecosystems

Industry 4.0

Smart Mobility

Smart Energy

Smart X

Smart Health

Smart Farming

11February 20, 2015

Digital Transformation affects all sectors of industry and society – all of us!!

Page 12: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Agenda

• Fraunhofer Applied Research Organization

• Mega-Trend „Digital Transformation“

• Examples

• Today

• Future

• Opportunities

• Challenges

• Takeaways

October 05, 2016 12

Page 13: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Digitalization: A Driver in Private Life

13October 05, 2016

We all use it: Uber, Streaming services to produce our own music, apps!

Page 14: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Digitalization as Driver for Business Life: Integration Enables Innovation!

… in Information Systems as well as in Embedded Systems

14October 05, 2016

Wide-spread usage in logistics, traffic management, smart farming, driver assistance systems, etc.!

Page 15: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

The Fourth Industrial Revolution

Industry 4.0 is more than

automation:

Individual products at the cost of mass products

Massive integration of data intotechnical systems of systems

Self-organisation andreorganisation

Self-optimisation: Autonomy

Self-diagnostics: Safety!

Instead of static solutions designed during development time, we move to dynamicsolutions that adapt and optimize autonomously during run-time.

Too manyindustry 4.0 solutions aretruely onlyindustry 3.0!

Page 16: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Individual Products; Batch Size = 1

Image: SmartFactoryKL

• The product configures the production line, which is assembled from interoperable production cells

• Research: Smartfactory @ DFKI/Kaiserslautern• Practice: BoschRexroth, Wittenstein

Image: Industry 4.0 production of electro/hydraulictractor valves in Homburg, Germany (BoschRexroth)

Germany is investing heavily in digitalized production (Industry 4.0)

Page 17: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Agenda

• Fraunhofer Applied Research Organization

• Mega-Trend „Digital Transformation“

• Examples

• Today

• Future

• Opportunities

• Challenges

• Takeaways

October 05, 2016 17

Page 18: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Future Examples (More of the same!)

• Cross energy management systems

• Fraunhofer leads large consortium on „Cross-Energy-Management“

• Mobility management systems

• Intelligent guidance systems (fully connected)

• Automated Driving

• To guide in boaring & critical systems

• Integrated health systems (hospital, doctor‘s office, home)

• Telemonitoring, tele-medicine, …

October 05, 2016 18

Systems of ecosystems (smart traffic management & smart working at home create synergies)!

Page 19: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Smart networking between mobility, logistics, energy, health, communication, safety and security “only” for cities?

Our Main Theme in 2015 – Smart Rural Areas

19

This project is currently being replicated in many states in Germany & USA!

Page 20: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Agenda

• Fraunhofer Applied Research Organization

• Mega-Trend „Digital Transformation“

• Examples

• Today

• Future

• Opportunities

• Challenges

• Takeaways

October 05, 2016 20

Page 21: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Opportunities

• (Continued automation Stay / become competitive)

• Commercial opportunities

• Establish new streams of revenues and jobs

could function as spinoff enabler

Software = machine; data = fuel!

• Societal opportunities

• Partial solution to the lack of highly qualified personnel

• Guidance via virtual & augmented reality

• Cost reduction of public infrastructures

• Health, energy, education, …

October 05, 2016 21

Opportunities affect entire society!

Page 22: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Agenda

• Fraunhofer Applied Research Organization

• Mega-Trend „Digital Transformation“

• Examples

• Today

• Future

• Opportunities

• Challenges

• Takeaways

October 05, 2016 22

Page 23: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Challenges

• Business

• Business models that generate value ?

• Challenge for SMEs ( Rapid Innovation Labs)

• Technical

• (Software) Engineering of open, hybrid (embedded & information systems), and run-time adaptivity

• Social, ethical, legal, …

• Dealing with acceptance, ethical decision making of automatedsystems, responsibility, data privacy ( data usage control), …

October 05., 2016 23

Risks are multi-dimensional and serious, but can be addressed !

Page 24: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Prototyping New Business Models in IESE’s Rapid Innovation Labs

24October 12, 2016

Feasibility Study

Concepts

Ideas

Vague Ideas

tProduct Development

Cre

ativ

ity

Wo

rksh

op

s

LabInfrastructure

• Big Data• Embedded

Systems• Mobile

Systems Pote

nti

al

An

alys

is

Technology Evaluation

IESE’s Toolbox

Systems Engineering and Technologies

Partner

innovate

prototype

evaluate

support

Rapid Innovation Lab enables „creativity“ to find revolutionary business models, andreduces „risk“ by evaluating them rapidly before major invest!

Page 25: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

25

Smart Ecosystems

Key TechnicalChallengesfor Software&SystemEngineering

Complexity

( model based system

dev)

Inter-Disciplinary

Uncertainty

(Runtime safety

certificates)

Guaranteed Qualities

Big Data

Lifecycle Management

SafetySecurity

Data Privacy

Developing Smart Ecosystems requires solid engineering apporaches!

Page 26: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

26

IND²UCE Data Privacy Framework

The IND²UCE Framework (INtegrated Distributed Data Usage Control Enforcement) provides all necessary components for implementing data usage control.

Static access control & encryption are insufficient in smart ecosystems!

Context-sensitive data usage policies support appropriate compromise between new business models and data privacy needs (e.g., data can only be used in a specific building, data must be deleted after 1 week, data can only be copied 3 times)

Graphical selection of policies by end-user

creates trust!

The framework has been implemented in severalenvironments and can be evaluated in the IESE Data Usage Control Lab

2014 Innovation PrizeWinner

The Induce approach addresses „data privacy“ in the appropriate way for smart ecosystems!

Page 27: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Agenda

• Fraunhofer Applied Research Organization

• Mega-Trend „Digital Transformation“

• Examples

• Today

• Future

• Opportunities

• Challenges

• Takeaways

October 05, 2016 27

Page 28: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

TAKEAWAYS• Industry 4.0 (and other domains of digital transformation) are essential for

global competitiveness

• Smart ecosystems (instead of just automating existing things further) are key

• Opportunities outweigh challenges/risks by far

• Opportunities: competitiveness, new revenues and jobs through new business models, overcoming demographic and geographical challenges

• Challenges: finding the right business models, proper engineering, addressing also economic, social, ethical and legal aspects

• EU needs to take a comprehensive approach

• Communication infrastructure everywhere (government)

• Education addressing new challenges (government)

• Identifying & implementing new business models (industry)

• Fraunhofer offers cooperation across Europe

• Rapid Innovation Labs (to identify proper business models and validate them rapidly)

• Engineering support (software & systems)February 20, 2015 28

Page 29: Digital Transformation – Opportunities & Challenges › publication › download › atc2016-rombach-keyn… · Mega-Trend „Digital Transformation“ • Digital technologies

© Fraunhofer IESE

Thank You!

[email protected]

www.iese.fraunhofer.de