Harnessing digital technology to drive innovation in business

A conference hosted by Siemens and IRDG explores how Irish companies can prosper in the digital world

1st July, 2018
Gary O’Callaghan, chief executive, Siemens Ireland

Digitalisation offers businesses opportunities to become more efficient, improve quality, scale faster, gain competitive advantage and win new customers. Yet, according to a survey carried out by Siemens in December 2017, almost one-third of Irish companies have no strategy for this.

Siemens responded to this finding by hosting a series of roundtable events with Irish companies earlier this year to discuss digital transformation strategies. This has now been followed up by a major event, co-hosted with the Industry Research & Development Group (IRDG), aimed at helping companies unlock the value and exploit the opportunities presented by digitalisation.

IRDG is Ireland’s leading business-led innovation network for companies and colleges engaged in research, development and innovation. Its raison d’être is driving and supporting business innovation among its members. During the past four years, through its own Smart Connected series, IRDG has recognised and promoted digital technologies as key accelerators of innovation across all sectors of business.

More than 200 delegates attended the Driving Your Digital Transformation conference in Croke Park where they heard from a series of experts from industry and academia as well as from entrepreneurs at the coalface who offered a variety of perspectives on digital transformation and what it means for them.

A common theme running through the presentations was that digital transformation is not actually about technology, it’s about people - and organisations must consider it in those terms if they are to succeed. Another prominent theme was the need to understand that a digital strategy on its own will not be enough: what is required is a set of strategies to deal with a digital world.

Opening the conference, Siemens Ireland chief executive Gary O’Callaghan outlined how there are three recurring barriers on the route to digitalisation: understanding the technologies that are available, addressing concerns about the digital skills gap within an organisation, and how to build and evaluate the investment case around new business models.

“We are living in a VUCA world,” he said. “It is Volatile, Unpredictable, Complex and Ambiguous. Despite this, the digitalisation of Ireland’s industrial landscape presents a window of opportunity for boosting competitiveness by increasing productivity and enabling Irish companies to achieve greater integration into the global value chain.”

According to O’Callaghan, many companies in Ireland still have room to grow when it comes to implementing a holistic digitalisation strategy and should seek to improve their internal processes, productivity and cooperation with suppliers and customers.

“Irish businesses must look at their hierarchies, their decision processes, their risk appetite and their speed and agility in decision-making. They must also encourage innovation and adaptability,” he said. “Times are changing and we all have to change with them. We have to change the culture of our organisations. We have to look at who we hire and how we hire them, how we manage them, and how we keep and incentivise them.”

Event co-host IRDG managing director Denis Hayes said that digital technology is a key enabler of innovation across all of society. “It is highly relevant and highly connected with innovation,” he adds.

He also noted that there had been a lot of hype around digital transformation. In this context, he offered a useful definition of what it actually means: “The profound transformation of business and organisational activities, processes, competencies and models to fully leverage the changes and opportunities of a mix of digital technologies and their accelerating impact across society in a strategic and prioritised way, with present and future shifts in mind.”

And its impact will be profound. “Eighty per cent of current business process and practices will either be changed or eliminated by 2025,” he noted. “That makes digital transformation a must. It’s an imperative. Technologies like data analytics, artificial intelligence, blockchain, augmented reality and virtual reality will give us new capabilities to analyse, personalise, predict, correct in real time, automate and reduce risk. That will offer new opportunities to engage customers, empower employees, optimise operations, develop new products and services, and create new business models.”

Hayes also said that while some companies have imported digital technologies into products and services, others have made them and the associated disruption a way of life. “Look at companies like Uber, Airbnb and Facebook, for example. In Ireland, we have Meagher’s Pharmacy led by Una O’Hagan which has used new technologies to transform the business.”

IRDG is taking a leading role in the new digital ecosystem. “We are helping companies to foster collaboration, share business experiences and learn from each other. We’re on a journey and this is just one stop along the way. We’d like to hear from companies about what they need.”

He concluded by talking about the changes required of leaders. “It’s not about you,” he told the conference. “It’s about what you have to do to align with the digital world. How can business leaders change their organisations to be ready for digital impacts? They have to develop new business models, drive cultural shifts, ensure they have the skills required for the future, and bridge the gap of innovation to protect themselves against attack.”

Siemens business development analyst Seamus Murray then took to the stage to explain how innovative companies can generate new digital business models. Murray pointed out that digital technologies were not an end in themselves and that they must offer a value proposition which fits into a sensible business model.

He spoke of how traditional record shops had largely migrated to online streaming and downloading platforms; domestic manual heating and lighting controls were giving way to smart home technology; aircraft engine purchases have become about simply paying for thrust and time; and traditional haulage was moving from trucks to data-driven fleet logistics.

However, for digital solutions to be successful they have to be built around customer wants and needs. This sees customers become co-creators of new products and services.

“At Siemens we have a five-step customer value co-creation framework,” he said. “This begins with understanding and ideation; creating a value proposition; design value creation logic; piloting and implementation; and scaling.”

Murray also explained the Siemens BizMo value proposition design framework which is built around what customers and users need and how to design the successful offerings that they want.

“We choose the market segment we are aiming at, tasks which need to be done there, existing solutions for those tasks, and the frustrations and pain being experienced by customers. After that we look for gain creators and pain relievers in our search for a value proposition.”

He offered a real-world example of this process in action in the English water industry: “Where a water company experiences a water quality issue, this can result in customer complaints and fines.”

The existing approach to water quality monitoring involves sampling from different parts of the distribution network with attendant high costs. As a pilot, Siemens is using its MindSphere open IoT operating system to enable real-time water quality monitoring by remote sensors. This allows the company to respond to water quality issues very quickly. In future, a predictive element may also enable the company to avoid such events.

“We have a pilot project running at a service reservoir in England at the moment and hope to scale it up in future,” Murray said. “It’s no longer about selling a product. The revenue here is tied to analytics and a time series water quality data as a service model.”

“Another example is from Spain where a new business model offers guaranteed availability and near-perfect on-time performance for high-speed trains thanks to predictive maintenance.

Spanish rail company Renfe, which operates 26 high-speed Siemens trains on its Madrid to Barcelona and Madrid to Malaga routes, guarantees passengers a fare refund if the train is more than 15 minutes late. It can do this thanks to advanced analytics of the train’s sensor data which allows failures to be identified before they occur and ensures the trains’ availability. On-time arrival rates are 99.4 per cent and 60 per cent of people who travel between Barcelona and Madrid now take the high-speed train instead of flying,” Murray said.

“Digital is people” was the central message delivered by Alessandro Rimassa, co-founder of the Talent Garden Innovation School. Talent Garden is a co-working network for a selected community of digital innovators. “We provide the space, the community and the service needed to succeed,” said Rimassa.

Talent Garden’s co-working campuses are designed to help its community connect, collaborate, learn and celebrate success together. There are now 3,500 people working and learning in 23 campuses across Europe with 235 companies involved. Its first co-working space was in Brescia in Italy in 2011 and it has grown rapidly since with plans to add more than ten further campuses by 2020.

Rimassa began his presentation by explaining how digital technologies can work to make the hotel experience better for people. He asked what people’s worst experiences in hotels were, and check-in and check-out almost invariably topped the list. “What can you do to change that experience for hotel owners and their customers?” he said.

The answer was digital with highly automated check-in processes not only speeding up and smoothing the experience for guests, but giving back vital square meterage to hotels for other uses.

“When you change the user experience you change the perception of people towards your business,” said Rimassa. “You can change the future through digital transformation.”

He described the Zoku Hotel in Amsterdam where guests get a pre-arrival email inviting them to check in online or through a dedicated app. The entrance to the hotel is a garden offering a cool and relaxed space for guests, while Forbes magazine has described it as one of the coolest hotels in the world.

The former reception has also been transformed. “It has become a place for a bar, co-working, entertainment experiences like playing guitar, table tennis, or just taking a break. Receptionists don’t exist any more - you meet friendly people that help you to live the experience. Digitisation means a better experience for customers and more margins for the company.”

He stressed the people-centred nature of the solution, however. “Digital transformation is putting people at the core,” he said. “It is about using technology to create a better experience for people and doing it in a smarter way. It means a better experience for customers and more money for the company.

But it has to be a human-centred solution. Digital transformation is not about technology. It also changes values, in companies and society.”

TCD Computer Science Professor Siobhán Clarke told the conference that the digital ecosystem needs to be connected at speed if benefits to citizens are to be maximised. Prof Clarke is also director of the Science Foundation Ireland-funded Enable research programme. The €14.5 million programme is examining how the Internet of Things can be used to improve the quality of life of ordinary citizens living in urban environments and is addressing a wide range of topics including water management, air pollution, transport congestion, data privacy and cyber security.

Among other projects, Enable is working with Dublin City Council on the Smart Docklands Initiative.

“Our aim is to turn the Docklands into the world’s most connected business and living district,” Prof Clarke said. “We organised a number of workshops with stakeholders in the area and have done a good job of including the people living there. We have now come with a list of 300 challenges to meet and this will form the basis of a two-year workplan for the initiative.”

Gary O’Callaghan concluded by saying that the digital ecosystem now exists and is alive and thriving here in Ireland. “Each organisation presented this morning is open for business. What we are now looking for are projects - of any size. Projects where we can work with you to bring your digital product, service or app to a ready state and help you to scale. Siemens is ready to help. If you are in any doubt where to start your digitalisation journey, IRDG is a great place to start and help you navigate its complexity.”

Denis Hayes said: “At IRDG, we see ourselves taking a leadership role in this. We are looking for people to come to us with projects they want to take forward. Please come and talk to us at IRDG. We will be very happy to help facilitate your next steps.”

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