© 2014 IBM Corporation 1

FOURTH INDUSTRIAL REVOLUTION AN OPPORTUNITY FOR EUROPE TO TAKE THE LEAD ?

vollmar@de.ibm.com

Version 31. October 2014

European Economic and Social Committee

Consultative Commission on Industrial Change (CCMI)

Bruxelles 14th of October 2014

© 2014 IBM Corporation 2

� Introduction : Pattern of industrial revolutions

– In an Industrial Revolution productivity rises by a factor X In parallel, society is changing substantial and for ever.

� A Industrie 4.0 : Hype or reality ?. What is the Vision of Industrie 4.0 ? Where do we stand today ??– A-1- Checkpoints : Drivers of industrial revolutions + early indicators

• A 1 1. New level of productivity or new , disruptive industrial capabilities ?.• A 1.2. Massive demand of society for this new capabilitties ?. ?• A 1-3 Substantial change in pattern of society ?.

� B Evalution of chances and opportunities for Europe in Industrie 4.0

� C What is missing ? My vision of the next step

� D Call to action

Industrie 4.0 , a chance for Europe to lead and grow ?

© 2014 IBM Corporation 3

The Vision Industrie 4.0 ( Industrie 4.0 similar to IoT, IIC, Advanced Manu facturing, Industry 5.0 e.a )

Internet of People , Internet of Things , Internet of Services are interconnecting and increasingly are merging. Communication and Cooperation of all participants in realtime enables new value chains and business models.Enabler are available technologies : Networks, software driven intelligent, connected machines and services.Industrial capability to produce lot-size ONE for th e price of a mass-produced good. + F2 productivity, - F2 resources

© 2014 IBM Corporation 4

Industrie 4.0 driven by exponential growth of IT ca pabilities ( F2 per 18 m) Example : Embedded IT-Systems 1961 and 2014

� Apollo Guidance System 1961– 4100 Integrated Circuits– 1 K Byte Cache– 12 K Byte ROM– Taktung 1 Mhz– Connected to Houston Control

» Quelle Wikipedia

� Mid Class Car 2014– > 25 embedded IT-Systems connected by bus– 20 x Power of PC ( Winterkorn, CEO VW, Cebit 2014)– > 3.6 GB System Data per Hour � 1 MB/sec– Per Processor ca.

• >100 Mio Integrated Circuits• 1MB Cache , Taktung > 1 GHz

� Connected to the Internet , other cars + road side services » Quelle

Autosar

Price 400 K USD IT-HW Price 35K Euro inkl Car + Car2Everything Communication

© 2014 IBM Corporation 5

20th century: the mass era

21st century: era of the “new individual”(*)

(*) “… a new awareness that I call psychological self-determination…”

Shoshana Zuboff, Charles Edward Wilson Professor of Business Administration, Harvard Business School

Industrie 4.0 Motivation : Individuality drives cus tomer demand today

© 2014 IBM Corporation 6

Industrie 4.0 Test Case : Integrate existing machinery in a sheet metal plant

Project – Goals- Vertical Integration of Plant-Automation and

Sensors with IT / ERP System

- Horizontal IT based Integration of existing machinery

- Better productivity + F 1.3- Less resource input - F 1.3

6

7

Industrie 4.0 : Consumer become direct interacting customer

• Challenge : New business model to master. • Chances : Customer demand can be more precisely fulfilled . Cost saving + better ROI • : Additional differentiators, new offerings and enhanced extended customer relationship• Issue : SMBs will have difficulties to build their own connection to customer.

Friedrich Vollmar

Design

Production

Retail

Consumer

Design

Production Communication

Customer

© 2014 IBM Corporation 8

Industrie 4.0 changes market-place patternProductions capabilities and customer interest can meet on digital exchange platforms

Market law ?

Digital Platforms will develop to MONOPOLES accordi ng to Metcalfs Law

Customer

Individualized

Demand +

Interest

Wishes

Individualized Supply

Capabilities

Producer +

Service-

provider

Pin

Interest

Demand

Wishes

Markets for existing productsClassical Markets

Bourses

Market-Economy

Markets for future products

Industrie 4.0 enables new pattern of markets

Exchange Platform

Connects Interest with Offerings

Posting

Offerings +

Capabilities

© 2014 IBM Corporation 9

� One single European Market – Place ,– Equal , well defined proven markets rigths for all players

• Key for SMB , the backbone of our industry , to have level playing field– BUT : One size for all does not fit to European people ,culture and inheritage at all

• Disentvantage in scale of economics compared to more unified markets ( US, China )

� High Quality , individualized trusted Products + Se rvices are our differentiator in WW markets today.• Europes industry is good in teaming ( f.e Airbus, ISOBUS, SWIFT, ) and complex solutions.• Industrie 4.0 is all about teaming cross industries and companies • Consultant studies forcast additional growth in Europe based on Industrie 4.0 (Bitkom, Roland Berger , PWC , e.a)

– BUT : We produce at high cost , increasingly challenged by cheaper mass-produced copies.

� Industrie 4.0 can turn European disadvantages into major advantages. – Better fitting services and products for the individualized needs + demands of European Societies – Re-enforce our existing industrial strength to a level playing field with mass-producing societies – Opportunities for new value chains , in special combinations of trusted services and new products. – The expected growing demand for individual products and trusted services can position Europe in a WW leadership position – Combine proven + accepted legal market place framew ork with innovative digital industrie 4.0 exchange platform

• Exchange platform allows SMB to offer and do busin ess ww.

Industrie 4.0 has the potential to make Europe the leading economy + society of the 21 century.

Evaluation of the potential of Industrie 4.0 for Eu rope

© 2014 IBM Corporation 10

What is missing ? The IoT assessment of GardnerQuelle Gardner Report July 2014

� Gardner Hype Cycle for Internet of Things July 2014

� Concerns / Issues

– Who owns the data ?

– Customer relationship• Who does the customer want the

Relationship with ?

– Standards. Missing or to many diverse

– IoT security lags behind IoT technology• Things interfere with public safety

– Integrate Legacy Things

– Bring IT and OT to cooperation(OT = operation technology)

We are here

© 2014 IBM Corporation 11

�

Proven Pattern Market – Place to be extended to Digi tal Market – Places

Defined location : The Market place

Defined legal framework : The market rigth

Defined law enforcement + control Public

Infrastructure

Same rules

for all markets

Participants

Demand

Customer

Consumer

Supply

Producer

Service-

offerings

Selection

Choices

of

products

Classical Markets

Bourses

Market-Economy

© 2014 IBM Corporation 12

Democratizing Metcalf Law :Extend proven markets-place pattern to the digital exchange platform

Defined location : The Market place

Defined legal framework : The market rigth

Defined law enforcement + control Public

Infrastructure

Same rules

for all markets

Participants

Customer

Individualized

Interests

Demand +

Wishes

Individualized Supply

Capabilities

Producer +

Service-

providerPosting

Demand

Wishes

Classical Markets

Bourses

Market-Economy

Industrie 4.0 Exchange

Secure + trusted

Industrie 4.0 Exchange Platform

Connects Demand with Offerings

Posting

Offerings +

Capabilities

© 2014 IBM Corporation 13

. The task ahead: The 5 Dimensions of Industrie 4.0

Industrie 4.0 demands cross-branches, cross-company , public-private Teamwork

Moving forward in all 5 dimensions will make indust rie 4.0 reality

User AcceptanceUseability

ROI ���� Demand

Legacy Integration Metcalfs+Reeds Laws

Standardization of communication and cooperation

Protocols, ConnectionPlatform, Semantics

Legal FrameworkSecurity + Safety

Secure , trusted solid InfrastructurOwnership of data + Liabilities

Governance + legal approvement

Understand Metcalf s law

IT / IoT Technology

Enables new opportunities for Innovation

and Industrial capabilities

© 2014 IBM Corporation 14

. Industrie 4.0. represents a massive chance for Euro pe.Let ´́́́s get it done together !!! Packen wir es an !!!

Thank You for Your attention

RechtsrahmenSecurity + Safety

Eigentumsrechte+ProdukthaftungGovernance + Zulassungen

IoT Technik

Schafft neue Möglichkeiten für Innovation

Nutzer AkzeptanzNutzen

ROI

Legacy Anbindung

Metcalfs+Reeds Regeln

Standardisierung Der Kommunikation und Kooperation

Protokolle, Vermittlung, Semantik