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Connected technology, connected world: Social and commercial opportunities

Asian big city in a connected world. Source: iStock/Xavier Arnau

Self-driving cars, products that manufacture themselves and control factories – for a long time this has been the stuff of science fiction. Some of you might remember KITT, the talking car from the TV series Knight Rider, or the intelligent machine-type creatures that appeared in the movie Matrix Reloaded. Today however, fiction is being outpaced by reality when it comes to developing new technologies mainly through advances relating to the Internet of Things (IoT). But unlike fiction, reality delivers economic and social value: cars that warn one another of potential hazards make our roads safer, and connected factories offer increased flexibility and productivity.

What drives our roughly 306,000 associates worldwide is our “Invented for life” vision. Unlike most other companies, Bosch is ideally positioned to play a key role in the IoT: we are the world’s largest supplier of micromechanical sensors to the automotive industry, and the second largest to the consumer goods industry. By 2015, over 6 billion IP-enabled devices will be connected to the internet, but this can only be a source of additional value for people if the relevant information about these objects is automatically collected and transmitted. What we need is connectivity that delivers value in each relevant domain. And this is where Bosch is taking a decisive step forward: each year, we produce half a billion micromechanical sensors capable of capturing data in real time. The knowledge gained from these data can be applied to generate new business models.

So getting to the bottom line, what does this interconnected future mean for Bosch? As you might expect, we plan to produce IP-enabled devices and systems including everything from heating systems to household appliances and video cameras. Our automotive strength will allow us to improve safety and provide a wider range of services for connected mobility. Our efforts in the energy sector will make it easier to balance power generation and demand more efficiently, and our telemedicine activities are already improving the quality of life of more than 150,000 patients in North America and Germany.

The one thing that Bosch has been doing for more than 125 years is making things. And we know both sides of the business: not only do we manufacture our own products, but as machine and plant engineers we also support our customers in a variety of business sectors including Bosch Rexroth and Bosch Packaging Technology.

With the IoT influencing so many aspects of our daily lives, it comes as no surprise that its effect on manufacturing will be a positive one. In fact, I believe that the IoT will revolutionize industrial manufacturing just as electricity and information technology did. Industry leaders, researchers, and industry associations are already talking about the fourth industrial revolution, or Industry 4.0 as it is called in Germany: by connecting machines, products, workpieces, and different players along the value chain, we are creating intelligent production networks that can control each other autonomously.

But the intention here is not to have production processes that are entirely automated. Instead, it’s about finding ways to increase agility. Putting that into figures, optimizing resource allocation within a more flexible production process can result in a jump in productivity of as much as 30 percent. Our goal is to be able to customize even the smallest unit volumes while retaining optimum productivity, and ultimately leading to achieve optimized multi-variant series production.

I fully expect that connected production will drastically change how established processes are organized. We’re going to see a shift away from centralized control toward decentralized self-organization. And I’m convinced that this shift will provide opportunities for established companies to offer new business models. But they too need to watch out: the IoT is shaking up what until now has been very much a closed market, opening it up for entirely new players such as IT companies. Here, the IoT is not just about connecting objects, machines, and systems. On the contrary, it’s also about how to use the data that this connectivity generates. And instead of using this information only within the plant itself, now everyone along the manufacturing chain can be given access to the data over the internet. Once again, the knowledge gained from these data can be applied to generate new business models.

Predictive maintenance is a good example of a new Industry 4.0 business model: by connecting machines and analyzing their sensor data in real time, faults can be predicted long before they occur. Having such a solution in place allows organizations to offer their customers new and improved levels of service, including a guarantee of reduced downtimes. Our systems and software unit Bosch.IO is currently working on a predictive maintenance solution and is well aware that most industrial customers are concerned about security. There is no doubt that security for protecting sensitive data and managing access control for machines must be airtight. Only when we’ve managed this will industrial customers accept these new business models.

My personal conclusion is that the IoT will drastically improve manufacturing industry’s engineering, production, logistics, and life-cycle management processes. But there are still some challenges left to overcome:

  1. We know that connected technology is usually complex technology. But this technology must make life and work simpler, not more complex.
  2. We have to address the arising concerns that there will be no control over autonomous behavior of machines and intelligent objects and concentrate on ensuring that communication among people, machines, and products works as naturally as it does in a social network.

I am convinced that we won’t ever see a time when we have fully automated factories completely devoid of human beings. Manufacturing will continue to follow the pace we as people set.

The Internet of Things from a CEO perspective

Executive interview: Leadership in digital transformation.

The connected world is not some distant dream. It’s already here.


  • 17. June 2013 at 9:19

    Thanks a lot for your post. China is pushing with a lot of investment and political support from top. A few days back I participated in the IoT Shanghai 2013 conference and there you can see and feel it. You might have a look at my post about China IoT.
    I think you nail business requirements down very well

    “To compete with IT company and to provide service and solution to clients requires flexible organization structure, quick response time and deep domain knowledge” and
    “It’d be great to breakdown the barrier among BUs, but ‘pooling’ the different experts and organize them on project-based to serve local clients”.

    Within Bosch we have set up a special start-up organizational structure called “innovation cluster” in 2011 to deliver on your above business requirements.

  • 17. June 2013 at 7:32

    Very inspiring article! Similar concept promoted by GE called “Industrial Internet“. “Machine-based analytics: physicsbased,deep domain expertise, automated, predictive”. World’s largest manufacturing economic entity, China, so called “world factory” is now facing the increasing human cost and needs to upgrade current manufacturing systems. For example, Foxconn, one of the largest manufacture company, has 1.2 million employees in China. It plans to replace it’s employees with “affordable, low cost robot” which produced by Foxconn itself, 10,000 “Foxbot” produced in 2012. Using latest technology, China can upgrade it’s manufacturing system via “affordable solution”. IoT in China is also hot topic with lots government support. “Smart City”, “Smart Grid” are highly visible projects from top-down, and strong interesting for “one-stop” service provider, such as IBM, HP. To compete with IT company and to provide service and solution to clients requires flexible organization structure, quick response time and deep domain knowledge, especially if we talking about IT-related project. And how to integrate and partner with other vendors would be key successful factor to provide solution. It’d be great to breakdown the barrier among BUs, but “pooling” the different experts and organize them on project-based to serve local clients. Not sure whether a “shock” therapy would fit Bosch or not, but definitely we are changing towards the “connected business” and “connected world” direction.

  • 16. June 2013 at 11:23

    Dear Mr. Dorst
    You add a very relevant – I think for Germany particularly relevant – aspect of embracing SME to the business of the emerging technology in Internet of Things & Services and “Industrie 4.0”. I believe that our platform Industrie 4.0 is a very valuable starting point for the production side. But I still miss something similar for the other sectors like mobility and transport, agriculture, health, and many more verticals. Do you see movement in any other verticals, too?

  • 15. June 2013 at 12:42

    The article combines in a very comprehensive way the existing term “IoTS” with the new term “Industrie 4.0”. Beside technology the given description points to the powerful impact on jobs caused by autonomous behavior of machines. Additionally the author quotes an excellent example of benefits of the transformation of ideas into new products. Those innovations can lead to new economic opportunities also for small and medium sized enterprises (SME) to improve manufacturing process, supply chain positioning, exploitation of new techniques and technologies. The challenge will be to connect SME with these innovative concepts.

  • 11. June 2013 at 15:50

    Good point in your line of thoughts: management has to take responsibility to use the technology and lead the change. I hope you feel responsible yourself?

  • 10. June 2013 at 8:57

    It’s perfectly right, that “…technology must make life and work simpler” because this will be THE chance for these new developments to become successful. As soon as people see benefits for themselves they want to use new technologies and they will ask for it in their daily work. There will be a rising demand (pull) for these technologies.

    Concerning communication and pace, I believe that new technologies provide “free” time and new/more information for Users. The question will be how we use it – see social networks: It’s every users choice to use them in an appropriate way. In business the decision how to handle “free” time and the new/ more information is a management task. It’s up to us to use the opportunities wisely so that companies and their employees will benefit.

  • 9. June 2013 at 11:48

    Thanks for extending the thought to the organizational structure for companies developing, operating, and using Internet of Things & Service solutions. It’s the first time I hear the term “Buckyball Management” which depicts the required peer-2-peer communication in organizations quite well.
    According to Conway’s law, organizations and the architecture of systems they build are isomorphic. Therefore, connected system architectures require the same connectives within the organization. There is a nice book about it: “Connected Company” by Dave Gray. I asked Dave already to write here in our blog…

  • 7. June 2013 at 19:52

    I couldn’t agree more, especially about how it will lead to decentralized management styles. I call this Buckyball Management:

  • 7. June 2013 at 19:49

    Thanks for your post and providing your insights from Latin America. I didn’t know that IoT technology is already used to secure assets there. I agree with your suggestion to leverage one connectivity solution like securing assets with additional uses cases like tracking & tracing for operation of the assets. I believe that this is the big difference between today’s closed M2M solutions and Internet of Things & Services. There, the assets have an IP-address reachable for multiple applications and services which companies can deploy even after the assets are sold and already in operation.

  • 7. June 2013 at 18:38

    Nice article on the future of IoTS, Volkmar. I like the focus on all the different types of solutions you mention. You say in your blog, “….it’s also about how to use the data that this connectivity generates.” I think this is one of the most important aspects of IoTS. I live in Latin America and see IoTS solutions here as well. Maybe of the solutions are used to secure assets — unfortunately a lot gets stolen in emerging world countries. But those same data also provide interesting insights for the enterprise. For example, a tracking solution to secure agricultural shipments to processing plants also helps operations managers best utilize trucks, combines and remote assets. This allows the enterprise to reduce costs from both minimizing theft as well as efficient routing and maintenance of the vehicles.

    Thanks again for the blog.