This week’s horoscope promises a bright future for all those, whose business is aligned with the “digital twin” star! But – what is a digital twin? What chances and challenges are associated with this term? Why is it so important to act as a data-driven company? Find out more now:
The first base: the internet of things
The term “internet of things” derives from the English language and is commonly known as “IoT”. It offers the base for the economic and technical successful usage of digital twins. The IoT represents all physical products, goods, machines etc. that are compatible with the internet and are therefore part of the global informational network.
However before we dive deeper into this topic, we are going to take a quick look at the statistics:
About 10 years ago, the worldwide IoT was made up of approximately 12,5 billion interconnected machines and every living person on earth had 1,84 internet-capable devices. One prognosis says, that by 2020 the number of IoT-devices will have reached 50 billion! Which means that every living person on earth would have 6,58 interconnected devices. If the prognosis is realistic or maybe even underestimated, will soon be foreseeable.
One thing that is clear though, is the immense sales potential! During the last decade, the sales figures have risen exponentially in Germany. According to a Bitkom-study the majority of board members and CEOs answered, that already today 20-50% of all machines in their company are connected to the internet.
What this connectivity means on a technical level and what economic benefits can be raised from it, will be further explained below.
The digital twin as a part of a cyber-physical system
Let’s get to the core: what is a digital twin?! Easily phrased it is the virtual copy of something real. It is important to note the difference however, that a digital twin is not only an animated 3D-Model in a computer programme or an app. A digital twin is made up of data and therefore a part of the so called cyber-physical system (CPS).
The first known CPS was presumably a soda machine in a university in Pennsylvania in 1982. The vending machine already sent data regarding the temperature and the filling level to a network. This simple use case can be used to explain the benefits of a digital twin: the permanent logging and analysis of data makes it possible to act proactively.
Just imagine the sheer genius to be able to see the temperature and the filling level in the internet – in 1982!
Transparent product life-cycle
Nowadays the concept of the digital twin is much more far-reaching than simply collecting usage data. Globally more and more producer goods are planned, calculated, designed and simulated digitally. As a result, this requires a virtual existence of the product way before his real twin is even brought to life. And the time-to-market can therewith be shortened drastically. As the digital twin can generate data throughout the complete life-cycle, conclusions regarding the condition, usage, error sources and more can be made. These can then be used to develop new and better products. The transparency that a digital twin offers, is therefore of extreme value for companies and users.
Added value of a digital twin
Companies that make use of a digital twin are closer to the customer and can react much quicker. With the direct feedback of the usage of own products a massive benefit is created in today’s VUCA-environment. It enables companies to build a long-standing partnership to the customer and to proactively update services thanks to customers requirements and wishes. Also this enables companies to generate new business models: products aren’t sold anymore but usage of the product is rented out and billed per unit.
A great example for this is the “power-by-the-hour”-principle of Rolls Royce. The airplane-turbine manufacturer generates continuous income, as they do not sell the turbines, but rent them by the thrust of the turbines. The benefits for the user and the company are easily seen: High initial investment costs (CapEx) are extinguished and replaced by continuous, operative costs (OpEx). WHich results in another benefit for the user: the contingency risk is lowered, due to the “as-a-service” business model in which the supplier guarantees reliability.
AI as a driving force
Digital twins and cyber-physical systems only unfold their complete potential by using AI. Just think back to the amount of IoT devices which permanently collect large amount of data which was mentioned in the first part of the article. Pretty quickly it is clear, that it is impossible to prepare analyses and prognoses by hand, right?
Which means, that without AI the economic employment of digital twins is unthinkable. Self-learning algorithms support the experts and help us to analyse behavioural patterns and notice anomalies. Under the pretence of “Predictive maintenance” maintenance and services can be scheduled automatically. The interconnectivity of cyber-physical systems on IoT platforms furthermore make it possible for the systems to learn from each other and can compare anomalies in the data with the large amount of data collected.
Even though it sounds unbelievable it is possible to compare the data of a turbine in a ship with the crankshaft of a car and have the AI create solutions iteratively.
Disruption by digital twins
In the end it is clear, that digitalised and data-driven companies are able to offer quicker, more profound and predictive decisions and can automize processes to make them cheaper and more reliable. Companies following those rules can disrupt a whole market and gain competitive advantage.
Methods used by adoptr to generate new business models
Those who have already seen the potential of a digital twin and already have a couple of actual use cases ready, often finds himself in the situation where he does not know how to create a proper business model. Many creative methods can assist in this process.
The multi-disciplinary adoptr team can assist you there. Apart from the demystification of certain buzzwords (such as digital twin), create use cases that work with the vision of the company and fulfil the strategy. Feel free to contact us to speak about design thinking or other creative workshops and methods such as the value proposition canvas or the business model canvas.