Business ecosystems "ecosystems first"—a new era for the industry?

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In a fragmented world, mutual trust becomes the foundation for successful collaboration within the industry. Thinking in ecosystems can offer immediate benefits and provide the building blocks for the next level of industrial digitalization.

In 2024, industrial companies must thrive in a world that presents new challenges daily. The pervasive geopolitical conflicts, economic crises, and rapid technological advancements test politics, the economy, and society alike. It is all the more important that events like the UN Climate Conference, the World Economic Forum in Davos, or the Hannover Messe serve as anchor points for a clear yet collaborative discourse on the issues of our time. The recurring message is: only together can we make progress. We need partners from other countries, other sectors, or other parts of our supply chain.

The global industry has recognized this. Now, it is beginning to create ecosystems where different actors can collaborate and be part of integrated value chains. In the business context, such a network requires one thing above all: mutual trust. Those who collaborate beyond their own company boundaries and strategically exchange information with partners, suppliers, customers, or authorities need a secure, reliable digital environment. The attitude is clear—every part of this ecosystem contributes to the success of the others and is dependent on them.

The drivers of industrial ecosystems

Ecosystems and business success are closely linked. This is demonstrated by a PWC survey of more than2,000 executives from global companies with an average revenue of over USD 650 million. Among the top performers, 72 percent—more than twice the average—stated that their revenue heavily depends on their participation in ecosystems. They cite potential competitive advantages as motivation. Examples include access to new customers and markets, privileged insights into data on customer needs, desires, and experiences, as well as complementary skills and capabilities.

And a study by IDC ("Future of Industry Ecosystems 2023") shows that the industry is increasingly relying on connected data ecosystems. The vast majority (90%) of respondents stated that they want to maintain or accelerate their investments in this area. In the study, 1,288 executives and decision-makers from the energy sector, construction, manufacturing, and other industries worldwide were surveyed. For them, the following aspects are also key drivers:

• the increase in business flexibility,

• greater process automation,

• optimized system integration and

• enhanced shared data usage with partners, also for ESG reasons.

The data foundation

Data is the crucial keyword here: they provide connected ecosystems with their unique added value and form a shared digital foundation. Companies can link them across organizational boundaries and value chains. This allows teams at different companies, locations, or departments to access the same data in real-time. Hosted in the cloud, such an approach provides each unit with the previously unavailable overview of their own information as well as a clear understanding of the big picture. Armed with comprehensive insights, actors across the ecosystem can make rapid, evidence-based decisions.

What does this mean for the industrial economy? Nothing less than the democratization of industrial intelligence. In practice, we already see that this approach to digital collaboration is successful. Companies like Pfizer and AstraZeneca were able to research, (further) develop, and produce a vaccine against Covid-19 in large quantities within a short time. At the same time, leading energy companies like Shell, as well as chemical companies like Henkel and Covestro, are using the digital twin to contribute to decarbonization through cross-team efforts.

In the case of Henkel, the oldest business unit, Laundry & Home Care, was particularly in focus. The production was to meet the ISO-50001 standard at all sites. By the end of 2020, more than 4,000 physical and virtual sensors were integrated into the system. These measure electricity, fossil fuels, compressed air, steam, water, and wastewater. More than one million data points are collected per day. These measurements show energy consumption at a plant-wide level, as well as in individual production areas and technologies. Consumption is now measured more accurately, and the results can be analyzed and assessed in meaningful parameters. In manufacturing, relevant information is displayed on touchscreen devices, allowing work teams to regularly discuss performance. This enables Henkel to take corrective actions that lead to reduced energy consumption. In this way, they have optimized energy consumption and emission data throughout the supply chain. The entire project was implemented in less than 18 months. As a result, the resource efficiency of the supply chain in on-site production has improved by five to six percent per year.

Real-time data unlock new revenues

In investment projects, a unified data ecosystem based on a digital twin enables engineers from various disciplines to work in parallel with a single database. All documents and models are automatically updated as teams make changes. This minimizes risk and maximizes return on investment, as up to 30 percent of engineering efforts can be saved during the construction and design phase.

Even greater competitive advantages arise from integrating artificial intelligence (AI) into the entire system. Predictive and prescriptive analytics not only offer the ability to experiment with new concepts and predict potential outcomes in detail. AI algorithms can also iteratively drive continuous improvement. They can ensure that products and services are designed in alignment with customer expectations and ESG regulations.

The energy consulting company Z Global and its partner Silicon Valley Clean Energy from California also rely on a common system. They have created a connected environment for sharing data using the cloud and a Plant Information (PI) system.

From energy producers to buyers, planners, suppliers, and customers, every authorized stakeholder benefits from a holistic view of the value chain, with improved energy transparency, traceability, and system-wide security. Thousands of dollars are saved in electricity purchasing while the companies drive the energy transition in North America.

Ecosystems as opportunity catalysts

Industrial companies must contend with increasing operational complexity, ranging from stricter sustainability goals to persistent labor shortages, supply chain disruptions, and rising prices. Data from Aveva show that integrated ecosystem thinking allows industry leaders to increase profitability by 10 percent. Additionally, it can triple the return on investment and achieve up to a 20 percent higher sustainability performance.

It is not without reason that the World Economic Forum's common theme for 2024 was "Rebuilding Trust," as trust is more important than ever for making progress. By providing transparency, consistency, and accountability, unified digital insights support collective and sustainable growth for every connected entity. Challenges thereby become opportunities.

Connected industrial ecosystems will support sustainable economic growth in the next decade. We need them to develop robust, sustainable outcomes for society as a whole for a new era of industrial digitalization.

*Caspar Herzberg is CEO at Aveva.

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