The role of digital twins in business transformation and operational excellence
A digital twin can help provide end-to-end transparency on all sides of an organization to key stakeholders and overcome unexpected challenges
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In cities, intersections are often the main hub where many “initiatives” converge. Look at Times Square: it is the buzzing intersection of Broadway and Seventh Avenue in NYC, “where it all happens”.
Since Software AG has just published an ebook on the megatrends in business transformation and operational excellence, I would like to look at the intersections of these trends. In this first post, I will look at what the digital twin concept trend means for business transformation and operational excellence.
Within their context, Industry 4.0 and the Internet of Things (IoT) have recognized the concept and metaphor of a “digital twin”, first attributed to Michael Grieves in 2002, for some time. It refers to a digital representation of physical assets, systems and devices that can include wind turbines, aircrafts, power plants and smartphones.
In industry, this is used to plan, test and optimize systems, but also to train employees in their use. In production-related industries, this is used to plan, test and optimize systems, but also to train employees in their use. A digital twin can also be linked to real-time information for a holistic view of the system. Typical applications include asset monitoring, predictive maintenance and virtual simulations to optimize system performance by changing parameters such as temperatures, pressure or energy consumption.
What is Enterprise management system?
This concept has been applied as a digital twin of an organization (DTO), as outlined by Gartner, to organizational units, cities (for example, there is a digital twin of Singapore), or even countries and companies.
The term enterprise management system (EMS) is often used synonymously. The DTO is the basis for a holistic approach that allows various scenarios for change to be run through before being implemented. According to estimates by the market research institute IDC, digital transformation spending will have reached US$2.3 tn by 2023. Against this backdrop, a DTO is central for planning successful changes on a strategic and operational level in a company.
What are the characteristics of a DTO/EMS and what is it used for? A DTO is a software-based representation of an organization. It includes knowledge of the key interdependencies between the business assets such as products, business operations and resources, and is supplied with operational data and contextual information.
Often the analogy to a navigation system is used, which allows to run through different routes on the way to a destination, for example, the fastest way or the one without tolls. The scope of a DTO can be, for example, a single business process like procurement, an entire supply chain including dependencies on suppliers and distribution partners, or the entire company, including its business ecosystem.
Within the trend map, the DTO/EMS concept is important for strategic transformations, business model innovation and operational optimization through business process excellence. For example, a virtual map of a supply chain can provide end-to-end transparency so that all stakeholders know exactly where a delivery is, which route it has taken and when it will arrive at its destination. When problems arise, the digital twin can be used to run through solution scenarios.
Business resilience has currently taken on a prominent importance against the backdrop of the Covid-19 pandemic and at-risk global supply chains. Current security and regulatory requirements can also be integrated into a DTO for regulatory compliance.
Source: Software AG
In summary, the digital twin is a central concept of Industry 4.0. It is now also becoming a key concept for creating a virtual representation of a company as part of an ecosystem, to plan and run scenarios for successful transformation and operational excellence.
