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Breaking the Mould! A New Business Model for the 21st Century

November 13, 2017 • TECHNOLOGY, SPECIAL FEATURES, Digital Transformation, Editors' Pick, Emerging Ideas, Internet of Things, Strategic Spotlight

By Karl-Heinz Streibich

The pace of change in the digital era is too fast, and survival is the main objective.  Software AG CEO Karl-Heinz Streibich shares a new business model for the 21st century, strategies we can learn from the foundation of ADAMOS, and the future of the software industry as it engages others more.

Every great idea needs the right time and the right participants to come to full fruition. Every invention or innovation needs the right business, social or economic conditions if it is to make the full impact that its potential promises. Every ground breaking concept needs the right actors to bring it to life, the right interpretation to capture the imagination and to fly.
I have been personally proposing for over a decade that Europe’s software industry must follow the Airbus or Star Alliance1 principal if it is to flourish. That the continent must pool its Information Technology (IT) resources if it is to be the global force that it should. But the reality has proven to be bigger than that.

A Star Alliance of software vendors and industry will give Europe a wealth creating platform fit for the 21st Century.

In a recent article2 in this esteemed journal I proposed that Europe need not try to copy Silicon Valley if it is to reap the awards of a thriving software industry with a huge global impact. I argued that the elements needed for success of a magnitude never before achieved by Europe’s software industry lie in our own hands, our own back yard so to say, and in our own industrial, engineering and manufacturing heritage. I proposed that the marriage of the manufacturing sectors and the high-tech industries, a Star Alliance of software vendors and industry, will give Europe a wealth creating platform fit for the 21st Century. But the reality has proven to be bigger than that too.

The reality is a global alliance of Software AG with a who’s who of international machine manufacturing – and the reality was launched in September with the foundation of ADAMOS3: Software AG Dürr AG, DMG Mori, Zeiss AG and ASM Pacific Technology; leading visionary manufacturers from Germany, Singapore and Japan jointly addressing the huge opportunities of the Industrial Internet of Things (IIOT) markets. ADAMOS: bringing leading edge IT, operational technology (OT) and industry expertise together and making it available to any manufacturing company. Together we will set the standard for IIOT adoption. This is not a take it or leave it approach, this is not one size fits all business model, this is from the manufacturing industry for the manufacturing industry.

ADAMOS is the strategic alliance for machinery and plant engineering and stands for ADAptive Manufacturing Open Solutions. The joint venture was founded by DMG MORI, Dürr, Software AG and ZEISS as well as ASM PT.

Why is this the right time? Because technology developments are changing the landscape of every industry at an accelerating pace. It could be called the perfect storm: a whirlwind of digital disruption and innovation unleashed by the increasingly pervasive use of ever more intelligent software, devices and digital sensors. Throw in the globalisation of the software industry, the threat from the “born digital” generation of enterprises currently dominating stock markets, the urgent need to “in-source” enterprise software architecture capabilities – reversing a decades long trend – the arrival of artificial, or at least augmented, intelligence and you have a bewildering convergence of technology issues that must be dealt with at a board level by every enterprise.

Secondly, because the IIOT business opportunity is so huge: It is in Industry 4.0, or the Industrial Internet, that the real profit from digitalisation lays. IT today provides the customer interface, the customer feedback loop, social sentiment monitoring, the integration of external data sources, the real-time analytics of unfolding business events and the dynamic automated process to respond to them. OT operates the manufacturing processes, real-time identification of manufacturing events, the near real-time isolation of quality aberrations, the robotic assistants that dramatically reduces the dangers inherent in many jobs or eliminates the tediousness of repetitive tasks. It improves the accuracy of repetitive jobs freeing real people to add more value to the business chain.

Bringing these together allowing dynamic manufacturing based on real-time demand, basing product design on how machines or devices, anything really, is actually used as opposed to how they were supposed to be used, allowing the total integration of the full business value creation chain and back again, is the real pot of gold at the end of the Industry 4.0 rainbow.

Thirdly, because if every company must become a software company – and this idea has been on the table for a number of years now – then every CEO must become a software expert. In a nutshell: the age of the non-technology savvy executives is over. It starts at the top – the CEO must take personal responsibility for enterprise digitalisation strategy. But the pace of change is too fast for any but the largest companies to keep up and time waits for no one. Most decision-makers know they have to act but only a minority have well defined plans today. (see exhibit below)

These are the forces driving the foundation of a new constellation of software expertise and industry knowledge, behind taking Software AG’s market approach of co-innovation (software vendor and industrial enterprise jointly exploring the possibilities of IIOT) to the next level. This is industry level, or industrial strength, co-innovation. ADAMOS3 is a joint venture bringing the machine industry and software industry together to jointly navigate a path through ever changing technology currents and sharing the results with all industry players.

ADAMOS provides not only an open, entry level and scalable IIOT infrastructure but the APP factory that enables any company to kick-start its own IIOT adventure.

This is the future of the software industry’s engagement with other industry sectors, a fully, and I do mean fully, open software platform, a fully open approach to sharing IT infrastructure and industry expertise. This is the only way the technology and industry expertise needed to not just compete, but to simply survive, in this ever accelerating digital world and it can be made available to the medium and small enterprise.

ADAMOS provides not only an open, entry level and scalable IIOT infrastructure but the APP factory that enables any company to kick-start its own IIOT adventure. APPS produced by the industry itself – APPS that can operate with any existing IT or OT technology.

This allows manufacturers to focus on what they do best: innovate. Innovation with lower risk, with minimal entry barriers to IIoT, with a learning approach that does not bet the company’s future, that will accelerate IIOT adoption and ultimately benefit everyone.
So the Star Alliance of software industry and the manufacturing industry has been born. It only took the right constellation of events, technology developments and the combined innovative vision of five CEOs. It has been worth the wait.

About the Author
Karl-Heinz Streibich has been Chief Executive Officer of Software AG since October 2003. In this role he is also responsible for the following functions: Global Human Resources, Global Legal, Global Information Services (IT), Corporate Communications, Global Processes, Audits & Quality and Corporate Office. Throughout his career, Karl-Heinz Streibich held various management positions in Information and Communication Technology. He is a member of the Supervisory Board (Aufsichtsrat) at Deutsche Telekom AG, Dürr AG, Deutsche Messe AG and holds several honorary positions including Member of the Presidency of the German IT Association BITKOM., Co-Chairman of the Platform “Digital administration and public IT” within the framework of the German Chancellor’s IT summit and he is a co-founder of the German Software Cluster of Excellence.

References
1. https://www.technologybreakingnews.com/2007/03/software-ag-plans-soa-alliance/
2. http://www.europeanbusinessreview.com/who-needs-silicon-valley-made-in-digital- germany-is-europes-big-hope/
3. https://en.adamos.com/

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