Project report:
Process industry I4.0 ecosystems DigiProcess provides support for SMEs and industry partners in collaboration and cooperation. This is done by building a digitalization ecosystem for SMEs and industry partners for different business areas like steel, mining, bio, forest, and energy. More info: www.digiprocess.eu
I4.0 ECOSYSTEMS Ecosystems are cooperation structures of partners that cooperate towards a shared goal. In business ecosystems, this shared goal often aims to increase the value of partners´ services and products. Business partners in business ecosystems rely on each other´s contributions to a greater degree than in traditional value chains where partners can more easily be replaced (Adner, 2017). Development of I4.0 technologies change demands for products, services, business models, innovation processes, and the very nature of business activities in process industry ecosystems (Coreynen et al., 2020; Gebauer et al., 2021). To face these demands caused by I4.0, process industry companies are developing their business ecosystems to gain better access to digital capabilities (Sklyar et al., 2019), accelerate development of new digital offerings (Jovanovic et al., 2021), and to ensure delivery capability of I4.0 solutions across global markets (Raja et al., 2018). Benefits of I4.0 ecosystems By developing their ecosystems for I4.0 demands, process industry companies acquire capabilities to co-innovate and provide greater value for their customers (Berthet et al., 2018; Rukanova et al., 2021) and help to ensure the successful provision of their digitallyenabled services and solutions (Kohtamäki et al., 2020; Paiola & Gebauer, 2020). Through these I4.0-ready business ecosystems, process industry companies can co-evolve capabilities around new I4.0 innovations, work cooperatively and competitively to support new I4.0 offerings, satisfy customers' I4.0 needs, and eventually develop the next round of innovation. “Ecosystems and transactions are key for the most efficient digitalization activities in the future” - Juha-Matti Pesonen, Outokumpu
Virkkala P. & Saarela M. (2022). Project report: Process Industry I4.0 ecosystems
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Project report:
Process industry I4.0 ecosystems
The industry digitalization ecosystem is complex: companies have to cooperate extensively to provide digital solutions for the industry´s needs
Platform suppliers
Internet of things (IoT) solutions
Machine suppliers
Automation solutions
Cloud Computing solutions
Challenges of I4.0 ecosystems Transforming existing business ecosystems to I4.0-ready is a difficult task (Gebauer et al., 2021). • Existing ecosystem partners and traditional product-centric business models may conflict with the new I4.0 partnerships (Sklyar et al., 2019). • I4.0 increases the complexity of ecosystem partnerships which makes management of ecosystem activities increasingly difficult (Breslin et al., 2021; Kamalaldin et al., 2021). • Adapting ecosystem partners´ routines, strategies and cultures to I4.0-ready ecosystems pose risks to the establishment of coherent principles and rules in the ecosystem (Tsujimoto et al., 2018). "We cannot realize digitalization with separated IT systems” - Ulf Degerstedt, Boliden
Virkkala P. & Saarela M. (2022). Project report: Process Industry I4.0 ecosystems
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Project report:
Process industry I4.0 ecosystems Development of I4.0 technologies and process industry I4.0 ecosystems has been one of the key topics of the DigiProcess –project. Here are some learnings of these topics from large process industry companies taking part to the projects Ulf Öhlund & Robert Ekberg, Smurfit Kappa (Forest & Bio webinar, 19.11.2020) Smurfit Kappa´s digital vision is built around a smart digital ecosystem where factories, warehouses, customers, and consumers act together in a cycle with the help of digital technologies like analytics and IoT. When transforming to an I4.0-ready ecosystem • Legacy systems cause a lot of challenges • Tasks and profiles for staff may change • It is important to set standard requirements for customers to simplify information sharing • It is important to set a clear approach to how staff access information
Juha-Matti Pesonen, Outokumpu (Value Steel webinar, 23.3.2021) Outokumpu develops and offers opportunities on its Outukumpu Digital Platform (ODP). AI and automation are important investment areas in ODP. They include technologies like camera solutions, smart sensors, and data collection tools Outokumpu´s roadmap to a digital factory consists of seven roadmap milestones • Data collection, data archive, visualization, advanced analytics, modeling and simulation, digital twin, and closed loop By completing these milestones both in the organization´s digital infrastructure and alignment of organization and skills, Outokumpu aims to achieve its digital factory goals.
Sakari Pahkala, SSAB Europe (Value Steel webinar, 23.3.2021) Currently, the main focus in the development is the implementation of the data platform. Data platform (Data Management System as called in SSAB) serves as the foundation for scaling up production digitalization initiatives related to asset utilization, product quality, and process optimization. In SSAB´s continuous improvement program, digital initiatives have an important role. Through digital initiatives and development activities, SSAB seeks to improve e.g. production stability, process safety, and yield. According to Sakari, benchmarking other industry actors is one of the most important things to do to gather the courage to push digital initiatives forward.
Virkkala P. & Saarela M. (2022). Project report: Process Industry I4.0 ecosystems
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Project report:
Process industry I4.0 ecosystems
HOW SMEs CAN SUCCESS IN PROCESS INDUSTRY I4.0 ECOSYSTEMS? Kolagar et al., (2022) propose an organizing framework for structuring the research on digital servitization and ecosystem transformation. They encourage managers of SMEs to place emphasis on firm-level ecosystem enablers to success in process industry I4.0 ecosystem transformation (Figure 1)
Firm-level enablers for ecosytem transformation Culture Transparency & openness •
Facilate openness by transparent data and knowledge sharing
Accountability & trust •
Foster accountability and self-regulation
Business model Business model elements evaluation • • •
Assess current business model for optimal functionality Look for and understand the challenges Evaluate new business model opportunities
Business model innovation • • • •
Have the ability to change and design new business models Reconfigurate offers, resources, and revenue streams Find new ways of delivering outputs Adapt the organization to new technical possibilities
Capabilities Digitalization capabilities • • • • •
Have the ability to design and build digital platforms Enhance intelligent functionalities through smart components Enhance connectivity functionalities through inter-connected assets Predict customer insights through logical data processing Achieve value visualization and reporting through analytics
Relational capabilities • • •
Provide internal coordination and maintain external visibility Learn the ability to integrate and coordinate value activities Exploit current actor competencies through effective knowledge transformation
Figure 1: Firm-level enablers for ecosytem transformation according to Kolagar et al., (2022)
Virkkala P. & Saarela M. (2022). Project report: Process Industry I4.0 ecosystems
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Project report:
Process industry I4.0 ecosystems Through their research, Sjödin et al., (2022) identified key challenges related to ecosystem revitalization and realization which process industry companies should take into account when they orchestrate their I4.0 ecosystem transformation. To become competent I4.0 business ecosystem partner, SMEs should help process industry to solve these challenges by answering these questions and making them clear for process industry companies:
• • • • • •
How do we improve the digital value creation of process industry companies? Which digital value propositions we can develop and scale quickly? How do we emphasize our development needs to other partners in the ecosystem? How we can align our processes with other partners in the ecosystem to maximize value creation potential? How do we join forces with ecosystem partners to renew the ecosystem? How do we ensure that the ecosystem remains productive for all of its partners as it develops?
REFERENCES Adner, R. (2017). Ecosystem as structure: An actionable construct for strategy. Journal of management, 43(1), 39-58. Berthet, E. T., Hickey, G. M., & Klerkx, L. (2018). Opening design and innovation processes in agriculture: Insights from design and management sciences and future directions. Agricultural Systems, 165, 111-115. Breslin, D., Kask, J., Schlaile, M., & Abatecola, G. (2021). Developing a coevolutionary account of innovation ecosystems. Industrial Marketing Management, 98, 59-68. Coreynen, W., Matthyssens, P., Vanderstraeten, J., & van Witteloostuijn, A. (2020). Unravelling the internal and external drivers of digital servitization: A dynamic capabilities and contingency perspective on firm strategy. Industrial Marketing Management, 89, 265-277. Gebauer, H., Paiola, M., Saccani, N., & Rapaccini, M. (2021). Digital servitization: Crossing the perspectives of digitization and servitization. Industrial Marketing Management, 93, 382-388. Jovanovic, M., Sjödin, D., & Parida, V. (2021). Co-evolution of platform architecture, platform services, and platform governance: Expanding the platform value of industrial digital platforms. Technovation, 102218. Kamalaldin, A., Sjödin, D., Hullova, D., & Parida, V. (2021). Configuring ecosystem strategies for digitally enabled process innovation: A framework for equipment suppliers in the process industries. Technovation, 105, 102250. Kohtamäki, M., Parida, V., Patel, P. C., & Gebauer, H. (2020). The relationship between digitalization and servitization: The role of servitization in capturing the financial potential of digitalization. Technological Forecasting and Social Change, 151, 119804. Kolagar, M., Reim, W., Parida, V., & Sjödin, D. (2021). Digital servitization strategies for SME internationalization: the interplay between digital service maturity and ecosystem involvement. Journal of Service Paiola, M., & Gebauer, H. (2020). Internet of things technologies, digital servitization and business model innovation in BtoB manufacturing firms. Industrial Marketing Management, 89, 245-264. Raja, J. Z., Chakkol, M., Johnson, M., & Beltagui, A. (2018). Organizing for servitization: examining front-and back-end design configurations. International Journal of Operations & Production Management. Rukanova, B., Tan, Y. H., Slegt, M., Molenhuis, M., van Rijnsoever, B., Migeotte, J., ... & Post, S. (2021). Identifying the value of data analytics in the context of government supervision: Insights from the customs domain. Government Information Quarterly, 38(1), 101496. Sjödin, D., Parida, V., & Visnjic, I. (2022). How Can Large Manufacturers Digitalize Their Business Models? A Framework for Orchestrating Industrial Ecosystems. California Management Review, 64(3), 49-77. Sklyar, A., Kowalkowski, C., Tronvoll, B., & Sörhammar, D. (2019). Organizing for digital servitization: A service ecosystem perspective. Journal of Business Research, 104, 450-460. Tsujimoto, M., Kajikawa, Y., Tomita, J., & Matsumoto, Y. (2018). A review of the ecosystem concept—Towards coherent ecosystem design. Technological Forecasting and Social Change, 136, 49-58.
Statement: This project report is based on project material eg. event publications and blogs previously published on Digiprocess –project website. To learn more about process industry I4.0 trends, challenges and opportunities, visit www.digiprocess.eu
Virkkala P. & Saarela M. (2022). Project report: Process Industry I4.0 ecosystems
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