Bosch CEO: German companies need to drive ‘Industry 4.0’ connectivity

Speaking at the Bosch ConnectedWorld 2015, a global annual conference on the subject of the internet of things in Berlin, Dr Volkmar Denner, CEO, Bosch, has called on German industry to improve its connectivity.

“Connectivity is an all-encompassing trend, one that will affect all walks of life. Especially for a strong economy like Germany, this connectivity offers major business opportunities,” he said. “However, this opportunity will pass us by if German companies are too slow to take action. Germany has to quickly meet the requirements for connected industry; otherwise, the country will be squandering the competitive advantage its strengths currently give it over other regions,” he added. 

At the two-day industry conference which began yesterday, Bosch and companies including Cisco, Volkswagen, Trumpf, GE, and Daimler are presenting a range of new solutions in areas such as connected industry and connected mobility. Around 800 experts are meeting to discuss business models and technical solutions, and to exchange experience. Industry 4.0 (connected industry) in particular offers Germany an opportunity to improve its competitiveness as an industrial location.

Globally, engineers are developing solutions for the internet of things (IoT). “At present developments are very much driven by technology. But in an area like this, technological know-how and excellent work alone are not enough. We have found that the right systemic understanding is decisive for the internet of things,” Denner said.

Bosch says, when developing connected solutions, it takes three levels into consideration: the first is connected things, which use sensors to collect data and in this way help create a virtual image of the real world. The second is secure software platforms that connect these things with the internet and with each other, that analyze data, and that make new services possible. The third is the applications and services that are developed on the software platforms and create value-added for customers. 

Focus on users 
In Denner's view, customer focus and customer benefit are critical for successful solutions on the internet of things: “Any connected solution has to focus constantly on users and their problems, and less on products or technologies.” For this reason, he said, a company's first thought when developing new solutions should always be its customers and their wishes.

“We have to offer our customers solutions and functions that make their lives safer, more secure, and more convenient.” In Denner's view, a consistent user focus is crucial if connectivity is to succeed. Moreover, he added, alliances involving different companies are an important driver of connected solutions. Joint projects and “eco-systems” need uniform standards and open platforms as a basis, Denner said, since only then can fully compatible solutions deliver the greatest benefit for customers and consumers.
In Denner's opinion, it is precisely this cooperation among companies, even those in different industries, that forms one of Germany's major strengths. “For example, we have to build broad clusters for Industry 4.0 in order to pool expertise, knowledge, and resources,” Denner said. 

The Bosch CEO is concerned that established industries are increasingly being challenged by new providers with clever business ideas. It was for this reason that Bosch set up the IoT Lab with the University of St. Gallen in 2012. On a scientifically sound basis, this joint ‘think-tank’ explores and tries out new business models for the internet of things.
“German industry is still technologically innovative. But to hold its own on the internet of things, it also has to create new, innovative business models,” Denner said. One thing that might help here would be if traditional industrial companies were to collaborate more closely with internet start-ups. For their part, internet start-ups need more financial support as they scale their business ideas up to the relevant market size. “Europe has waited long enough for a functioning venture capital industry rich in financial resources,” Denner said. If they cannot be assured investment, German or European start-ups will never be as big or successful as their U.S. counterparts. 

Fragmented European market
Denner sees a further crucial disadvantage for European companies in the extremely fragmented European market, which is the result of differences in data and consumer protection regulations. “We need a single digital market in Europe. This will allow us to launch connected solutions just as successfully in our home market as US or Chinese companies can in theirs,” he said.