Omdia Industrial Megatrends Series: Digitalization

Digitalization is a basic requirement for growth. Over the past years, businesses have been embracing digital solutions to drive sustainability and support new business models, unlocking new commercial opportunities. Deep dive into this megatrend to know more.

Omdia Commissioned Research | This piece of research was commissioned by Siemens

Powered by the exponential momentum of Moore’s Law, digitalization will be pivotal in addressing the accelerating challenges and megatrends of our era. By harnessing digital tools, we can swiftly and effectively tackle, for instance, climate change, urbanization, and population growth. The key to this transformation is a secure, interconnected digital ecosystem, ensuring data integrity and fostering collaboration.

Digitalization is a basic requirement for growth

Over the past years, businesses have been embracing digital solutions to drive sustainability and support new business models, unlocking new commercial opportunities. As a result, market growth in sensing and metering equipment (IoT) is generating orders of magnitude more digital data. In sectors such as manufacturing, infrastructure, energy, and healthcare, real world impacts of this transformation can be assessed. For instance, operations can be tested and optimized in a digital environment before deployment. In smart cities, this kind of digital learning can improve the outcomes for citizens living and working in urban environments. Organizations, cities and economies not taking advantage of this trend will find that they are at a competitive disadvantage.

Digitalization presents market challenges

Greater connectivity of devices also means greater vulnerability to cyberattacks. This was perceived to be the most significant challenge to digitalization for manufacturers, according to Omdia’s IT Enterprise Insights survey (published in 2024). As organizations introduce digitalization projects and technologies, a cybersecure environment is essential to mitigate this challenge.

Challenges and drivers of digitalization

Beyond the security of data, deriving meaning from the data collected, and a lack of cooperation between IT and OT teams, were other challenges considered by manufacturers. An open ecosystem, like Siemens Xcelerator, with collaboration as a guiding principle, will help manufacturers to generate insight and intelligence from their data. People management is also an important consideration and new job roles, such as data scientists, will be required to take full advantage of the opportunity. Furthermore, collaboration across job roles and ecosystem providers will be necessary to bring IT and OT teams together. Digital platforms that are also interoperable, best of breed, and cybersecure will be critical to meet the challenges associated with digitalization.

Despite these challenges, there are opportunities. Manufacturers identified the improved productivity that digitalization can bring as a market driver. They also referenced energy management benefits and customer engagement as important. There is demand for digitalization from industry.

Digitalization has the potential to transform industries

Opportunities and challenges will vary by sector. In smart buildings, operators will apply analytics to the digital datasets generated by connected devices in buildings. Property technology (Proptech) solutions will manage building occupancy, energy use and building operations in real time. Energy management providers will deliver energy as a service (EaaS) to private sector commercial and industrial buildings. Digitalization initiatives will help building operators to accelerate their path toward sustainability.

Moving beyond buildings, smart cities will benefit from digitalization too. According to the World Bank, 56% of the world’s population currently lives in a city, and by 2050, this number will increase to nearly seven in ten people. As cities grow, they will need to embrace new solutions. These will include monitoring transportation to maximize the efficiency of roads and public infrastructure, measuring emissions to ensure clean air, and mobility and the sharing society, where services are more readily shared across citizens. Healthcare will also benefit from more accurate diagnosis supporting citizens to lead longer, healthier lives.

Finally, digitalization will play a role in navigating broader societal challenges. An ageing workforce means businesses need to find ways to be more efficient. In manufacturing, operational roles will begin to change. Hazardous, dangerous, dull and distant jobs will be supported with more automation and AI, creating the opportunity for workers to upskill. This will require management and training. Digitalization can also help with remote working, providing another tool to manage skills shortages and help people to live more flexibly.

Case study: Siemensstadt Square

A graph showing industrial megatrends with digitalization as a key focus.

While digitalization offers vast potential, many projects fall short of fully leveraging its capabilities. Siemensstadt Square in Berlin aims to fully exploit these possibilities. Planned for completion by 2035, this ambitious urban quarter will be home to 35,000 residents and workers, with digitalization being the very foundation of its transformation.

Central to this development is the digital business platform Siemens Xcelerator, supporting a portfolio of IoT enabled hardware, software and services and an ecosystem of partners. In particular, the district will connect the physical and digital world through a comprehensive digital twin ecosystem that includes three dynamic layers:

Building Twin: This layer provides detailed 3D visualizations of buildings within the district. It helps in optimizing design and maintenance, ensuring that both new and old structures meet modern standards of efficiency and sustainability.
Energy Twin: This layer simulates and optimizes energy flows within the district's nearly 11 million square feet of mixed-use space projected for 2035. It predicts energy demands, identifies potential savings, and integrates renewable energy sources.
Campus Twin: Serving as a central platform facilitating comprehensive urban management, this layer combines data from the Building and Energy Twins with additional data on infrastructure and existing stock in the area.

Enabled by strategic digitalization the project aims to achieve carbon neutrality for heating and cooling, with buildings meeting LEED (Leadership in Energy and Environmental Design) certification standards, including water management, indoor environmental quality, and innovative design. The Siemensstadt Square project exemplifies how cities can harness digitalization to create smarter, more sustainable, and resilient urban environments.

Technology underpinning the transition to digitalization

Growing adoption of connected devices and sensors across industry means digitized data is increasingly available. According to Omdia, by 2030 there is forecast to be an installed base of 15.5 billion connected devices across the industrial automation, physical security and building automation sectors.

Software will play an important role in managing the convergence of these connected devices, technologies, and data. It turns data into insight and insight into action. It will manage the integration of datasets from diverse technologies such as robots, machinery and PLCs, security cameras, environmental sensors, drones, and wearables.
In the future, generative AI advancements will make data training easier and large language models will change the way users interact with solutions. Chat bots and virtual assistants will help to integrate these disparate datasets.

The next stage of the technology story is the merging, or combination, of the physical and virtual world. Digital twins enable the simulation and testing of different performance conditions as well as providing a real-time view of operations. In manufacturing, digital twin technology will be the key building block of industrial digitalization. It will be used to control and adjust production lines, monitor system health, and support supply chain and lifecycle management. Digital twins can also be used for crowd safety in a safe city and deliver energy management solutions in a smart building. Finally, there is potential for robotics to automate processes and implement solutions already tested in the virtual environment more successfully.

Across all these technology solutions, there will be a need for cybersecurity solutions. Legislation, more awareness of cyberthreats, and a larger attack surface will drive investment in cybersecurity. This will include cybersecurity training for users and new job roles managing these solutions.

A cloud computing diagram showing various services and their availability percentages.

Looking to the future

The rapid evolution of technology will drive profound changes across various sectors. AI will enable more autonomous and flexible systems, particularly in robotic systems, transforming them from simple task automation to sophisticated, adaptive operations. Digital twins will evolve into the industrial metaverse, providing immersive and comprehensive simulations that integrate every aspect of industrial processes for holistic decision-making.

Software-defined automation will revolutionize control systems by virtualizing and centralizing them, allowing for innovation at the speed of software updates. This shift will enable rapid adaptation and enhancement of operational processes, significantly boosting efficiency and responsiveness.

Digital business platforms will serve as the foundation for these advancements. They will integrate hardware, software, and services, creating a seamless ecosystem that supports the factories, buildings, and cities of the future. Embracing these platforms is essential for maintaining a competitive edge and fully leveraging the benefits of digital transformation.