Industrial Manufacturing And The Intelligent Enterprise

Georg Kube

Industrial machinery and component manufacturers are stretched thin, addressing global challenges like the need for clean energy, smart cities, and a circular economy. In addition, they are confronted with ever more demanding customers and the transformation of their business ecosystem, including customers, partners, and competitors.

In my discussions with customers, I see innovative industrial machinery and component manufacturers tackling these challenges by pursuing a bold vision: Providing bespoke products at scale and as a service. These services span from simple after-sales services and value-add services to complex outcome or equipment-as-a-service models. They include new business models based on the monetization of data assets.

I also see these companies embracing new intelligent technologies such as artificial intelligence, machine learning, and augmented/virtual reality as they focus on strategic priorities to drive digitalization. These strategies are helping them realize their vision.

As IM&C companies undergo digital transformation, the following priorities have evolved:

  • Customer-centricity: Understand how value is delivered to the end consumer – not just through sales processes, but across the entire enterprise.
  • Segment of one: Deliver products (at scale) that are tailored to each customer, capture customer requirements effectively, and enable mass customization to give customers exactly what they want.
  • Digital smart products: Replace physical products with digital capabilities to provide offerings that can think, make connections, and communicate. These capabilities will be key differentiators for industrial manufacturers.
  • Digital supply chain and smart manufacturing: Produce products with next-generation supply chain and manufacturing processes so they are intelligently connected to the rest of the business and respond to external impulses such as short-term demand and supply fluctuations or changes in the configuration of a customer order.
  • Servitization and new business models: Find new ways to make money, often by delivering products as a service or monetizing the outcomes.

As companies deploy intelligent technologies to achieve their digital priorities, they will transform into intelligent enterprises. For more on the intelligent enterprise and why it is important for industrial machinery and component companies, watch my talk here.

David G. Myers, professor of psychology at Hope College in Michigan, says, “Intelligence is the ability to learn from experience, solve problems, and use knowledge to adapt to new situations.”

Similarly, an intelligent enterprise is one that brings together siloed processes, intelligent technologies, and real data. They will run integrated, automated processes that are transparent and connected to the real world—processes that talk to machines in the factory, chat with the products they make, interact with people, are aware of traffic, weather, and customer opinions and feedback.

This connection to the real world enables business processes in an intelligent enterprise to make smart decisions autonomously, anticipating and creatively solving problems before anybody notices. As a bonus, automation of these decisions will relieve people of repetitive work and enable them to focus on high-impact tasks. This will enable them to provide a transformative customer experience and support next-generation business processes.

I see companies becoming intelligent enterprises in three distinct ways:

  1. They optimize what they already do, often by implementing a stable and scalable digital core to make processes more transparent and integrated. This includes integrating machine learning algorithms into product configuration, or remotely monitoring assets.
  1. They extend their current processes by connecting them to the real world using IoT technologies. For example, introducing collaborative digital twin management or leveraging predictive algorithms for maintenance and service.
  1. They transform their business using a constant stream of data, enabling new service-driven business models such as pay-for-outcome service models.

These examples relate back to digital priorities such as customer-centricity: The ultimate goal is to engage customers in lifelong relationships that are based on sharing risk and rewards with seamless omnichannel interactions. To get there, companies must first optimize their disparate channels to omnichannel interactions. They will then extend by directly connecting to their products deployed at their customer’s site. Finally, they will transform into a true 360-degree collaboration with their customers.

I am seeing companies start at whichever point generates the most value for them. But many companies realize that they need a stable and scalable digital core to make this transformation smooth and painless. A digital core makes it easier to optimize and extend existing processes to take advantage of IoT, data lakes, and analytics. It also provides the foundation and flexibility to re-create and transform business processes.

This is an exciting time, with both opportunities and challenges for industrial machinery and component companies.


Georg Kube

About Georg Kube

Georg Kube is the global head of SAP’s industry business unit for the Industrial Machinery & Components industry. He is responsible for defining industry-relevant solutions based on SAP’s complete portfolio of products and technologies, bringing them to market, and driving business in the regional units.