Why digital engineering is the new growth area for manufacturers

Manufacturers believe that nearly half of their products will be smart and connected by 2020 and they intend spending a lot of money to make it so.

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A new report by Capgemini suggests that nearly half of the manufacturing industry worldwide will be powered by smart, connected systems by 2020.

This will come at a cost with half of the surveyed companies planning to spend more than 100 million euros over the next two years in order to make it happen. It also means big business model changes: nearly one in five manufacturers said they plan to stop manufacturing products altogether and move to a pure service-based business model. And the report said that to make the most of service-driven opportunities, manufacturers will need to improve their digital capabilities alongside their traditional engineering skills base.

The survey, Digital Engineering: The new growth engine for discrete manufacturing, looks at the forward plans of over 1,000 engineering companies worldwide. ZDNet spoke to Nigel Thomas, Head of Aerospace and Defence, at Capgemini, to find out more.

ZDNet: Where do you think industry is in the "digital transformation journey" as the report puts it?

Thomas: It's a fairly robust survey of over 1,000 IT professionals. Its findings are very reminiscent of what people know as the TRL -- technology-readiness level -- of a business or a product and how you go from ideation through the concepts and development phase to making it an industrialised product. But there are many good inventions that died in that valley.

And I think that is where we are on that digital transformation journey. It's now become the zeitgeist -- you must be doing digital, you must be doing things in a digital way.

SEE: Digital transformation: A CXO's guide (ZDNet special report) | Download the report as a PDF (TechRepublic)

Actually, in business, we have been using digital products to solve problems for decades. What's the difference? The difference is that digital is now connecting the different parts of an enterprise so that you get the ability to make decisions at a business level based on an enabled, end-to-end, front-to-back, top-to-bottom strategy. Now that may sound great but that is what is causing consternation.

The challenge is to realise the value. Everybody knows that it is going this way -- we've seen what's happened with what's called "Uber-isation". It's somebody taking a completely left-field view to solve a problem that they didn't know was a problem in the first place.

For example, you've always been able to walk through a street in London, raise your hand and get a cab within seconds. But the ability to book one yourself, on your own private piece of technology? Nobody ever thought that was a need.

How do you go and grab a technology to give you an Uber-like advantage in the market? I think that is where people are stuck at the moment. They are stuck trying to decide on being a leader, or a follower or someone just waiting to see what happens sometime in the future.

That's sort of where we are now. Everybody thinks it's a good idea, but everybody is waiting for everybody else to make the leap.

Is this report trying to provide the information that people might need in order to find a way to prioritise things?

capgemeni-nigel-thomas.jpg

Thomas: Digital has become the zeitgeist

Photo: Capgemini

Yes. You really have to gather together all the information you can from all of the resources that are available. You need to talk to people in manufacturing and other industries, in different markets. Even the consumer market.

You've got to bring all of those together otherwise you end up rushing off with, I don't know, a Sinclair C5. You end up with something that looks like a good idea, but nobody actually wants.

And I think that is why the biggest challenge is not about technology, it's now about understanding an holistic approach to it, making sure that you've got the skills to deliver the promises of technology.

And then that goes right back down an organisation to schools and STEM and digital education in schools.

There's a whole range of factors in play here and the front runners are such a small number. You could probably guess that it would be less than 20 percent, but its only 17 percent of people surveyed.

Now that's because it's so complex. This is not a one technology play but something that makes it a truly transformational time that we are in.

Is it possible that thinking about these things globally isn't the best way to progress? Might it not be better to deal with one small thing at a time?

I think there's a lot in that. I think that typically your SME -- something with less than 50 employees in the business -- will be thinking locally. It will be thinking: "OK, out of all this big range of tech, what can I do that's going to give me an advantage in my market? That's going to reduce my costs, so I can make more profit -- or stay in profit?"

With bigger organisations I think you're right. When they try and look at everything they might not see the one thing that could make a really big difference and completely transform the organisation. And I think that that is why a lot of the regional business are struggling at the moment because they are not wholly sure about which areas they should be focusing on.

Is it about connecting all my machines in my factory so that I get data out of them? Or is it about employing Millennials or Generation Z employees who can come and re-fresh from the inside out? I have a view of a future world optimising the use of current and new technologies.

There seems to be a case for looking to adopt some ideas that come from different parts of the business and then fitting them together afterwards?

I think you're right that innovations will happen on the shop floor or someone will say, "Hang on a moment boss, I can take 40 percent out of our new product-introduction process by doing X, Y and Z differently." Or, "If I link this machine to that process, we can get better sight of incoming demand and make ourselves leaner and slicker in the factory." But people have been doing that for years. That's where that whole Kaizen Events, Six Sigma Lean approach comes in.

I don't think that's going to go away. I don't think you can ever remove what we've done over the last 20 years. You can't go forward into the digital transformation era without being lean and optimised on the shop floor.

Generally, how do you think the UK is doing in this area? Are we behind or doing pretty well?

In terms of UK plc, I think that we are amongst the leaders, but I wouldn't say that we are at the front of the pack. I think that you would have to say that places like China and Germany are ahead of us there. But that's my opinion, I have no evidence to support that opinion.

However, I think that we are doing well. I took an industrial customer of ours to meet with GE in November. We have a partnership with GE where we help them with the development of Predix

That's all about predictive analytics and trying to work out what's going to happen before a thing breaks. Whether that thing's a power plant or an engine for an aircraft. We went to see the development centre in Paris before going to Italy to have a look at what they call their Brilliant Factory where these technologies are deployed on the shop floor.

SEE: Sensor'd enterprise: IoT, ML, and big data (ZDNet special report) | Download the report as a PDF (TechRepublic)

We help them develop the apps that sit around the technology that interact with the machinery that provide the information to a human being. It's that man/machine interface piece and in that area we are doing as well as anybody. Nobody in France or Italy or the US is doing better than us and we are helping to develop these technologies so they become real and deliver real value.

It's all about digital skills and getting people -- young people, Generation Z, people who have been born since the year 2000 -- and making sure that they are getting the digital skills that are required now and are going to be required in the next five to 10 years.

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