4/4 - How can you harness Digital Twins for your products, processes & services? Perspectives on a comprehensive implementation approach

Digital Twins as a cornerstone of reimagining their processes and products, true digital transformation

As consumer demand, supply chains and automation continue to evolve in the post-pandemic landscape, more and more companies are seeing Digital Twins as a cornerstone of reimagining their processes and products. Forecasts for the market of digital twins expected to grow from $3B in 2020, to $7B in 2022, and to anywhere between $110B in 2028. That is a 36x increase, but not surprising given the breadth of application – a digital twin can be anything from a product, facility, metaverse experience or ecosystem simulation, in several forms and with different goals or use-cases.

1   From current to Next-Gen Digital Twins

In our previous articles, we outlined the business value of digital twins in cost savings, developing meta-products and enhanced monetization potential.

• The first article describes how the complexity of new products demand new digital capabilities capable of learning and upgrading. It is illustrated by the case of Automated Driving.
• The second article unveils the technical challenges of creating digital twins, and the case for creating them incrementally, by balancing the investment in solid foundations with the progressive returns of the new capabilities enabled by the Digital Twin.
• In our third article we describe the full potential of Digital Twins by describing the value they can create when used for large scale systems and in highly realistic environments

Since complexity (both software and hardware) and connectivity (sensors, actuators) are expected to continuously increase, most of the growth in the digital twins’ market is expected to come from Next-Gen Digital Twins.

A Next-Gen Digital Twin is a digital simulation that precedes hardware or manufacturing process development and assists by continuously interacting in development and application. These can be seen as leveraging model-based systems engineering practices used in industries with complex processes and development, enhancing via IoT devices and delivering a product/process capable of frequent updates.

Next-Gen Digital Twins have potential use cases across the value chain of an enterprise, from research, design, manufacturing, and operations all the way to marketing & sales, and value-added after-sales. 

It is crucial to note that the extent to which an enterprise will be able to harness the use of Next-gen Digital Twins across the business value chain will be dependent on the scope of data collection and use. Data collection can vary from a single component level to the product lifecycle, and can be expanded to the company ecosystem, or further to data from the end-user environment.

For example, Tesla maintains digital twins for each of its 2M cars on the road with an aim to provide continuous improvements, enable analytics driven enhancement and to serve as a prototype for industry-leading testing and rollouts. These capabilities at Tesla are strongly supported by comprehensive data-collection from a variety of sources (cars, apps, superchargers, factories etc.), data-aggregation to a single source of truth for very car and data-use by different groups in the company.

2   How can companies get started on Next-Gen Digital Twins?

When starting your digital twin journey, it is important to start and pilot an MVP for high-value use cases that have data readily available. The fundamental thing with an MVP is to ensure appropriate architecture by building a foundational MVP that all future use-cases can leverage. Your MVP will progress from visualizing (seeing data), to analyzing (what is happening), to predicting (what will happen) and finally to adapting (autonomous self-response) as it progresses in maturity and expands across all use-cases.

If you are considering harnessing digital twins to transform your product lifecycle and/or manufacturing process, it is imperative to ask where you currently stand on key dimensions of a successful Next-Gen Digital Twin strategy. BCG has identified a framework centered around four dimensions of a Next-Gen Digital Twin strategy:

• Start with high value use cases, and, if you have already started, think about expanding based on business value - For example, in an oil & gas field, start with a digital twin as a subsurface model before expanding to include surface equipment.
• Think about product development in a platform-oriented approach, with an intentional pivot from a hardware-focused approach to a product-map based software-focused approach.
• Robust data collection across the entire ecosystem and availability of relevant data for end users is key to realizing goals of the use cases, as discussed in the Tesla example.
• Last, it is important to include people and processes for successful product delivery by adopting software-first, agile ways of working with processes that guarantee compliance and security. In agile terms, the digital twin will be their DevOps chain.

3   How to consider levels of Maturity: 4 ambition levels for use cases

The journey that takes companies from physical products to fully connected products can be summarized by a few key steps, that reflect the evolution of products, manufacturing, connectivity and the organization itself.

AMBITION LEVEL 1 - Product Optimization

Logically, companies first focus on the optimization of what they already have, by automating their product development lifecycle processes and tools, and better leveraging data they can easily collect to improve the design of their products. They can also optimize manufacturing engineering, the methods to produce, as long as they leverage the existing facilities. Doing so gives predictable results, does not require big changes in the ways of working, nor investments in tooling, but has a limited impact.

AMBITION LEVEL 2 - Product Innovation

But, when some fair level of optimization is achieved, should a company further optimize the current capabilities, or start investing on larger opportunities, becoming more innovative? For instance, introduce new features by augmenting the product with an interface with the customer (like a customer-facing app directly communicating to the digital twin). This transformative step towards product innovation is difficult to make, because it does not only require more technical enablers or more connectivity, but also significant move towards software, which itself requires much more agility in the ways of working. It can also imply to design a much more configurable manufacturing capability, to make it possible to constantly evolve and innovate on the product side without being constrained by heavy CAPEX manufacturing investments that lock you in. The return is significant in terms of capacity to open new fields for the customers.

AMBITION LEVEL 3 - Customer Loyalty

Make the Customer Experience not only punctually augmented, but structurally, constantly enriched with features in the digital twin of the physical product. This level of innovation is the foundation to push further on the softwarization of the company on all aspects:

• In the product: The product connectivity makes it possible to update it more frequently, and progressively enhance the product’s value with more and more on-demand software capabilities
• In manufacturing: The ability to better configure production makes it possible to manage more options, and be more adaptive with demand
• In Services: Virtual stores are supplied and animated just as flagships stores. The Services are fully part of the twin proposition, allowing for continuity between the physical or on-board and the virtual or off-board experience

All this results in a greater intimacy in the customer relationship, across several journeys, and thereby more stickiness due to more frequent product or service updates, that nurture the relationship and opens the door to new business models, such as subscription or shared ownership

AMBITION LEVEL 4 - Personalization at scale

Finally, the ultimate benefit of digital twins is the ability to leverage the pervasiveness of software in the product, toward systematic personalization – at least as much as possible according to the context. Digital twins demultiply the field of possible product configurations, as soon as you consider the product as firstly digital and with physical print(s). Adapting the Product to the context, to the Customer is thereby possible, and changes the game. Being able to access or tokenize a digital twin in the metaverse or 3D-print a bespoke version of a digital product in the physical world are emerging trends with strong momentum.

4   How to move forward? 

In our client interactions, we have observed that most companies have a head start in 1-2 dimensions out of the four identified above that are required for a successful Next-Gen Digital Twin strategy (Product use cases/portfolio; People and Processes; Product and technical architecture; Data, Systems & Tools). BCG has developed a proprietary tool to assess the maturity on current capabilities on each dimension.

Further, one can define how a progressive increase in capabilities will go hand-in-hand with supporting increasingly complex and wide-ranging use-cases. For example, once one identifies what use-cases to aim for, one can build a plan to sequentially develop capabilities and deliver on prioritized use cases.

For instance, recently, we have worked with a large global mining company in implementing a digital twin strategy to improve efficiency in operations. Starting with an objective of improving sub-optimal truck scheduling, we were able to implement a solution that leveraged live data to confidently schedule trucks, enabled a leaner fleet, provided a virtual environment for testing new technologies or system changes and can be expanded to all mine sites without modification.

Starting with product optimization to innovation in development, then to customer experience driven stickiness and finally at-scale personalization, use cases will increase in maturity and value. Just as for digital transformations, execution should be guided by a North Star of return on investment, agility in execution and delivering long-term value. 

The critical success factors of such transformations are the following:

• Endorsement of the C-suite,
• Ability to align technology, business and operations,
• Ability to work incrementally and demonstrate successes as you go
• Evolutive transformation roadmap according to the current situation, the target, and the time-to-market ambition.

As of today, the impact of Digital Twins even outside the companies is such that they should be considered a new wave of digital transformations. They must be managed with much wider insight of the overall context in which the products will operate, and their impact on people, the environment, and other systems.  

Authors:

• Vanessa Lyon, BCG, Managing Director and Senior Partner 
• Mika?l Le Mou?llic, BCG, Managing Director and Partner
• Jean-Christophe Laissy, BCG, Partner and Director
• Laurent Alt, BCG, Associate Director, Enterprise Agility & Systems Engineering
• Nicolas Tanaka, BCG, Partner
• Quentin de Waziers, BCG, Project Leader

Related links: