Realizing “Blue Ocean Strategy” through Digital Twin

Sandeep Bhan

Digital Twin Program Mgr. / Global B&PS CTO Industry 4.0

Murli Mohan Srinivas

Digital Twin Lead / Head Industry 4.0 - Germany and member of the Scientific Community

Posted on: February 10, 2020

The fourth industry revolution (Industry 4.0) is set bring sweeping technological changes in the IT landscape in the manufacturing industry. However, most businesses do not recognize that these changes due to digitization are an effective instrument to optimize cost or increase revenue, and will act as a game-changer in offering new business models.

Offering new business models is all about demonstrating clear value differentiators among peer companies. The Digital Twin is an effective instrument to apply Industry 4.0 principles through a top-down business approach on baselined business challenge or KPI. Through this approach one can establish a closed-loop relationship between virtual and physical world to constantly improve performance through inputs in the real (physical) world. Hence talking about technology gaps with businesses while undertaking digitization should be kept out of the discussion.

Industry value curves have constantly been under pressure due to diverse influencers such as globalization, personalization, time to market, cost, and shifting innovation towards suppliers. In braving these challenges most organizations have struggled to show value differentiators against cutting costs. Such companies are said to be operating in “Red Ocean”, referring to industries operating on the same value curve and competing against each other.

The Digital Twin can help industries move from "Red Ocean" to "Blue Ocean" domain, which can empower them to identify and add value differentiation in addition to reducing cost. By identifying business influencers and relating them to data sources and establishing semantics between digital threads (Information Technology and Operating Technology) across the product value chain, organizations can help bring transparency and capture business best practices. For example, this could involve a wind renewable industry product value chain range across original equipment manufacturer (OEP), engineering procurement construction (EPC), supplier, independent service providers (ISP), the owner/investor, and beyond.

Based on our experience while working with ISPs we realized that operational KPIs of wind turbine are offered based on availability of asset, mean time to repair (MTTR), or the mean time between failures (MTBF), for example. Globally, most ISPs across this industry are rewarded or penalized based on one or more these KPIs. Which means competing against same value curve and struggling to bring down cost.

The Digital Twin of a wind farm and turbines has been able to shift business strategy from "Red Ocean" to "Blue Ocean" by bringing one or more differentiator in value curve. Most significant is that digital twin has brought data transparency helping our customer to take a well-qualified risk by changing business model and embarking on unique value curve.

Year after year, our customer had been in the “Red ocean”, under a lot of pressure in managing costs and compromising on reduced operating margins. After digitization through Digital Twin, our customer moved away from “Red Ocean” to “Blue Ocean” by offering services based on asset availability and energy production rather than being measured based on standard KPIs. Being in the “Blue Ocean” has changed the playing field for our customer and help attract premium prices for the same service which they have been offering over several years.

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About Sandeep Bhan
Digital Twin Program Mgr. / Global B&PS CTO Industry 4.0
Sandeep Bhan has over two decades of experience in product development, business development in manufacturing business IT domain; involving key account / project/ program Management with an oversight of P/L of strategic accounts. Currently Sandeep is managing the strategic Atos-Siemens investment program - Digital Twin. He is also a member of Atos’ Expert Community. He likes to work with cross-cultural teams in distributed virtual environment. Sandeep is passionate about technology and is a keen learner. Sandeep is married and lives in Munich with his two daughters.

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About Murli Mohan Srinivas
Digital Twin Lead / Head Industry 4.0 - Germany and member of the Scientific Community
Murli has over two decades of manufacturing industry experience in providing business IT solutions in the area of product development, production and after-sales services. After leading Atos’ global PLM Practice for several years, he stepped into the role as business owner for the Atos-Siemens strategic investment program - Digital Twin. In addition, he also heads Atos Germany Industry 4.0 practice. In the past he has been involved in leadership roles involving practice management, key account / large deals & business development engagements. He is a member of Atos’ Scientific Community since 2011. In the past Murli has worked for Siemens (> 15 years), Bechtel Corp. Inc. globally justifying his global citizen status. He lives in Munich, Germany with his family and is an active social networker holding wide range of industry network.

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