Strategic focus and experimentation with customers are crucial for the successful development of digital services. SmartAdvantage project partners and collaboration network members shared their thoughts and prospects on future advancements.
Digitalisation is a major global trend that is crucially transforming many sectors, including manufacturing, energy and several public services and media. Digitalisation will radically change the way the companies operate, and enabling technologies give rise to disruptive business models and entrant companies. As an example, according to the latest statistics of the World Bank there are 100 mobile cellular phone subscriptions per 100 people globally. The quick spreading of smart phones has led to major changes in the consumer behavior for the benefit of on-line media and loss of printed media like newspapers. This transformation has reflected also to the distribution of the advertisement income: in USA, the online media ad revenue exceeded that of the printed media already in 2009. While print advertising revenue’s share decreases, content is increasingly becoming the key source of revenue for many publishers.
The fact that the consumers read the news rather in the internet and mobile applications than newspapers has impacts all over the value chains. The companies producing newsprint paper have been struggling with declining demand and have reacted by closing down factories or changing production to fit new products. Digitalisation challenges incumbent companies to deploy emerging technological advancements and to renew their business. Digital transformation and opportunities were discussed in the SmartAdvantage project seminar in spring 2018. The seminar offered a forum to the SmartAdvantage project partners VTT Technical Research Centre of Finland, Tampere University of Technology, Pesmel Oy, Chiller Oy, Huurre Oy, SW Development Oy and Delete Finland Oy to share their thoughts, ideas and latest achievements in the area of digitalisation with the collaboration partners.
The forerunners´ digital strategies are not limited to technology development, but digitalization changes the way business is done. The next disruptive technology may be awaiting around the corner. The forerunners emphasize innovation and decision-making. Data, information and knowledge are in the core of this transformation. The role of the strategy is also central to the acquisition of ICT, software and enabling technologies for digitalization. Implementing acquisitions in small and manageable entities, within the framework of strategic policies, helps to implement cost-effective procurement practices and reduce risk. The development of digital services emphasizes the importance of the long-term vision, thorough understanding of customer and business benefits, and innovative approach with experimentations.
In the digital world, agility is indispensable. Silicon Valley’s start-up companies emphasize the importance of quick experimentation and failure as they boost learning: “fail fast, fail forward thinking”. SmartAdvantage project offers the companies an arena to develop and experiment with digital solutions together with their customers and other stakeholders. The experimentations reveal a variety of benefits and sources of customer value that may arise for example from improving the fleet management capabilities or optimizing total energy consumption. The customer may also benefit through the collaborative development of operational excellence, and by improved occupational safety. The experiments may also reveal benefits beyond original application. As an example, energy generated by cooling of ice rinks is used to heat other arena functions. In addition to economic value, the digital solutions may contribute to sustainable development and reduce CO2 emissions.
Not all digital solutions get air under their wings, but companies can learn also from failed experiments. Ultimately, the customer decides the benefits of digital solutions. A well-known indicator of the overall efficiency is OEE (Overall equipment effectiveness). From the client’s point of view, every OEE-percentage surge has equal value, but the cost required to achieve the benefits depends on how and by which technology the efficiency-enhancing service is being implemented. Agile methods and experiments with the customer have become part of the development of digital services. The strategy, portfolio thinking and the development of business models must be closely linked to service development. Significant, disruptive innovations are usually based on new knowledge that quickly replaces the technology or business model in use. Industrial digital transformation emphasizes entrepreneurial activity, continuous learning and the courageous ability to innovate.
SmartAdvantage – the project: https://www.vtt.fi/sites/smartadvantage
Smart asset management as a service – the report: https://www.vtt.fi/sites/smartadvantage/PublishingImages/publications/SMACC_SmartAssetManagement_julkaisu_032018_web.pdf
The World Bank indicators: https://data.worldbank.org/indicator/IT.CEL.SETS.P2
Principal Scientist, VTT