Digitalisation – driving the fourth industrial revolution

Gary O'Callaghan, Siemens Ireland (Image: Siemens)

12 June 2018

Today, we stand at the beginning of a transformation that will fundamentally change our economy and our society: the Fourth Industrial Revolution. It is the largest transformation in the history of industry, and its power and speed will eclipse all that has gone before. It is changing the way we manufacture, communicate, learn, work, and do business.

Driven by Digitalisation, the early stages of this revolution are already behind us. Think of the proliferation of smart phones. Just ten years ago, there was no such thing; today, practically no one leaves home without one. Just a few decades ago, the Internet connected computers at just a few sites. Today, almost every human no matter where in the world can connect to a network that spans the entire globe and provides access to the greatest repository of information and knowledge ever created by humankind. Today, national boundaries are losing their significance. The flow of data and information is extraterritorial.

While the Fourth Industrial Revolution initially took hold in consumer markets, it has now reached the industrial world – a sector that accounts for 70% of the global exchange of goods and thus forms the foundation for the “wealth of nations,” as Adam Smith put it.

Where does Irish business stand in this global revolution?

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. To enable that growth, increasing the efficient use of resources, skills and expertise should be the primary aim of all stakeholders in the economy.

Our research shows that digitalisation is primarily viewed by Irish business leaders as a vehicle for improving processes and efficiency. Up to now, the impact has not been felt in a way that is significantly disruptive to the operational businesses. That said, anticipating the threat of disruptive new business models, there is a clear imperative in leading Irish companies to engage with organisations seeking pilot projects, data expertise and good data sources while also looking to build a digital reputation. In some industries, where there are very high numbers of homogenous customers, robotic process automation is seen as a driver of operational efficiency.

In general, many companies in Ireland still have room to grow when it comes to implementing an holistic digitalisation strategy and should therefore seize this potential in order to improve their internal processes, productivity and cooperation with suppliers and customers.

“A critical success factor for the Fourth Industrial Revolution is education. Political leaders must do more to promote digital skills in schools, and universities. And business must do far more to equip employees for the digital future”

How can we successfully master the Fourth Industrial Revolution?

A critical success factor for the Fourth Industrial Revolution is education. Political leaders must do more to promote digital skills in schools, and universities. And business must do far more to equip employees for the digital future. At Siemens, digital skills are part of all our training curricula. If the workforce doesn’t keep pace with advances in artificial intelligence and other technologies, how will the millions of new jobs be filled?

At the heart of the Fourth Industrial Revolution, and thereby digital transformation, is Organisational Culture. 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. Digitalisation has already demonstrated its disruptive power. It has turned entire industries upside down. You know the saying: “The Internet cuts out the middleman.” Indeed, the digital age does not tolerate mediocrity. It’s binary. One or zero. On or off. It is that simple – and yet extremely difficult to accept.

Above all, there is one thing a company should do: it should listen to and understand its customers. It should analyse value chains, always question its own business models, and invest in technologies that have a promising future. Siemens will be investing €5.6 billion in research and development in fiscal 2018 – more than ever before. And this money is flowing into future technologies such as blockchain technology, autonomous machines, and distributed energy systems – all of which are crucial for ensuring the viability of our company in the digital future.

The Fourth Industrial Revolution poses great risks for those who stand on the sidelines, who rather wait and see, and who get stuck in endless discussions. But it offers great opportunities for those who actively shape it. I think we should seize these opportunities.


Gary O’Callaghan is CEO of Siemens Ltd, Dublin

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