The Digital Transformation of Industry

Our life has gone digital.

For consumers, digitization – in the form of e‑commerce, the mobile internet and social media, to name but three of many examples – has long since been part and parcel of everyday life.

Now, the digital transformation is also permeating every link in the industrial value chain, from logistics through production to service provision.

Germany’s and Europe’s industrial core stands on the threshold of fundamental change – change that promises fresh growth, prosperity for large parts of the population and greater resource productivity.

Alternatively, that same change could see German and European industrial companies forfeit their global market leadership.

We understand the digital transformation as the seamless, end-to-end connectivity of all areas of the economy, and as the way in which the various players adapt to the new conditions that prevail in the digital economy.

Decisions made in connected systems affect data exchange and analytics, the calculation and assessment of options, the initiation of actions and their consequences. In line with Schumpeter’s principle of creative destruction, these new tools will bring fundamental change to many established business models and value-added processes.

This is the first study to explore the causes and effects of the digital transformation with regard to the “industrial heart” of Germany and Europe, by which we mean the automotive industry, logistics, mechanical and plant engineering, medical technology, electrical engineering, energy systems, the chemical industry and aerospace.

To this end, we performed an extensive strategic analysis supported by workshops involving industry experts, received questionnaire responses from more than 300 key decision-makers at German companies, and interviewed 30 board members and chief technology officers at DAX-listed companies and leading medium-sized players.

On this basis, we were for the first time able to measure the overall effect of digitization on the German and European economy.

The findings reveal the dramatic consequences of the changes currently in progress.