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Reimagining Innovative Business Models of the Future with Digital Engineering
Reimagining Innovative Business Models of the Future with Digital Engineering

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Recalibration of global supply chains, evolving consumer preferences, innovative distribution models, and an intensified focus on sustainability have led to profound change in the landscape of the ER&D.

Traditional business models have been disrupted, paving the way for novel approaches that champion agility, collaboration, co-creation and value creation. As indicated by nasscom’s report on the Indian design and engineering industry, the sector is poised to achieve an impressive Compound Annual Growth Rate (CAGR) of 13-15% by 2025, reaching a market value of USD 45-50 billion. This presents exciting opportunities as organizations reimagine and reinvent their business models to thrive in this dynamic environment, primarily by embracing digital technology. Continuous digital transformation has become imperative, driving enterprises to digitize their core at an accelerated pace to remain competitive. This evolution forms the foundation for transformative changes, not only in products but also in pioneering business models that redefine how organizations create, deliver, and profit from their solutions.

So what are the key drivers leading to reimagining business models?

Digital Transformation: The digital revolution has reshaped organizational operations, offering avenues for product and service innovation, enhancing customer experiences, and streamlining operations. An international analyst firm survey highlights that 81% of engineering and design companies deem digital transformation a top priority.

Disruptive Technologies: Emerging technologies like Artificial Intelligence (AI), Internet of Things (IoT), robotics, and blockchain have unlocked disruptive potential, streamlining processes, automating tasks, and creating new revenue streams. Gartner predicts that by 2025, 75% of organizations will have incorporated AI and IoT into their business models.

Shift towards Servitization: The transition from product-centric to service-centric business models has gained momentum. By offering solutions as services, organizations establish recurring revenue streams, cultivate long-term customer relationships, and provide sustained value. nasscom’s survey underscores that 67% of design and engineering companies are exploring or implementing servitization models.

Talking about innovation in business models, we have commonly seen the following innovative models emerging:

Outcome-based Models: Departing from traditional product-centric approaches, organizations adopt outcome-based models where they deliver quantifiable results or specific outcomes to customers. ABB, an engineering technology pioneer, has introduced the "ABB Ability™" platform, combining data analytics, AI, and industrial automation to yield outcomes such as enhanced operational efficiency, reduced downtime, and improved asset performance. Through this platform, customers have achieved remarkable reductions of up to 50% in maintenance costs and a substantial 30% increase in energy efficiency.

Supply Chain-as-a-service powered by Digital Twin: Supply Chain as a Service (SCaaS) utilizes digital twins to cover the entire supply chain. These digital twins monitor assets and shipments, provide data for better inventory management, demand forecasting and operational efficiency. They can also prevent damage, contamination, and manage conditions like temperature and humidity. SupplyChainX, a global supply chain management company, improved its operations with SCaaS powered by digital twins. This allowed real-time visibility, enhanced demand forecasting, and minimized waste through emissions reduction and route optimization. SCaaS, supported by digital twins, gave them a competitive edge, attracting clients and cutting costs.

Eco-Friendly & Sustainable Models: Rooted in sustainability, circular economy models strive to minimize waste while maximizing resource value. Organizations adopt strategies such as product life extension, remanufacturing, and recycling to create closed-loop systems. A tangible illustration of this model is IKEA's commitment to becoming a circular and climate-positive business by 2030. They are exploring designs that facilitate repair and recycling and are introducing furniture rental and refurbishment services.

These innovative business models wield substantial industry influence. They elevate customer value through outcome-oriented services, diversify revenue streams, enhance scalability and adaptability, and advance sustainability by embracing circular economy principles, all while reducing waste and optimizing resource utilization. These transformations accrue benefits for both customers and organizations, driving the evolution of the design and engineering sector into an era of boundless possibilities.

Conclusion:

In conclusion, the landscape of the ER&D sector is undergoing a remarkable transformation, with traditional business models giving way to innovative approaches driven by digital engineering.

However, as organizations adapt to the dynamic environment, several factors will influence the evolution of these business models. Disruptive technologies will continue to play a pivotal role, offering opportunities for automation and new revenue streams. The shift towards servitization, offering solutions as services, will foster recurring revenue and customer relationships.

Yet, challenges like data security concerns, regulatory complexities, and the need for a skilled workforce to harness the potential of digital engineering will persist. Additionally, the sustainability imperative will drive organizations to navigate the complexities of eco-friendly and circular economy models, requiring a commitment to long-term environmental goals.

In my opinion, the successful evolution of these business models hinges on a proactive approach to addressing these challenges. The future of business models in this sector is indeed one of boundless possibilities, driven by technology, innovation, and a commitment to positive change.

To delve deeper into these innovative models and the latest developments in the ER&D sector, we invite you to subscribe to our YouTube channel and watch the session videos from the recently concluded nasscom Design and Engineering Summit. Thought leaders from around the globe shared their insights and perspectives on the most pressing issues.

The videos of these sessions will be accessible on our YouTube channel in a few weeks. To stay updated and receive notifications when the videos are uploaded, please subscribe to our channel and follow NASSCOMVideos by visiting: https://www.youtube.com/c/nasscom/playlists


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