The vast troves of data made available by smart technologies will change the way all sectors of the modern economy operate, and this digitalisation promises to be a boon for industrialised nations like Australia in particular, Dr Roland Busch, executive member of the Managing Board of Siemens AG, says.

With the next 50 years forecast to yield just 0.3 percent increase in labour, economies will rely on efficiency gains, and not expanding labour numbers, to sustain growth.

“Digitalisation is the most important element of our business in the future,” Dr Busch, a thought leader on how digital technologies are being integrated into infrastructure, said in a keynote presentation at Siemens Australia’s inaugural Digitalization Forum.

“There is not so much labour coming into the market. If we want to maintain our growth rate on roughly the same level, we have to compensate a productivity gap of 1.2 per cent going forward. This is about digitalisation, the way we use technology in order to really drive growth.”

On the plus side, for markets like Australia’s, digitalisation offers a chance to bring back manufacturing value-add because digitalisation will change the playing field completely. It offers  new opportunities for another way of manufacturing.

In this way, the Internet of Things (IoT) will enable countries with higher labour costs to compete in manufacturing against emerging economies via improved productivity and efficiency.

“This is why mature countries are looking so much into it (digitalisation),” said Dr Busch, who holds a master’s degree in physics and a doctorate of natural sciences.

“Productivity, efficiency, time to market is the driver and it will change a lot. The business models are changing completely and that together brings us to a point where people are talking about this exponential development of organisations.”

Attendees at the forum were told there are already 3.8 billion objects connected to the IoT, and that will accelerate to 25 billion by the decade’s end. This will enable the digitalisation that Dr Busch expects to transform every economic sector, from healthcare to manufacturing to energy, building technology and construction, mobility and automation.

“It is clear that digitalisation is not a nice-to-have thing, it is a must,” Dr Busch said.

Siemens forecasts massive efficiency gains on the back of digitalisation, including reductions in energy costs by as much as 40 per cent as a result of intelligent building technologies, and a halving of the time to market for new products as a result of life cycle management software. Siemens aims to be the world’s first major industrial company to achieve net zero carbon footprint by 2030.

But the focus areas, where Siemens put its money, was driven by the digital agenda, and the firm is working on 3-D printing, which Busch says can change manufacturing and supplying of parts completely, and can change business models.

“Digitalisation is something small yet, but with the highest growth rate, that comes on top and driving our agenda,” Dr Busch said.

“Distributed electrification, connected mobility, e-mobility, autonomous machines, artificial intelligence or block chain applications. All of them have the headline of digitalisation and this is exactly where we put money in order to see how we can really create some fast start-up companies and we are investing in that.”