Data sovereignty in the Industrial Internet of Things

How industrial partners can create future-proof cooperation

The digital transformation of the last decade has primarily connected people; the current decade marks the start of the age of the Internet of Things. The interconnection of industry and infrastructure is accelerating significantly and already offering fascinating opportunities. Here are four examples:

• Intuitive buildings that respond to their inhabitants’ needs and increase efficiency.
• Smart factories where machines operate independently and communicate with each other.
• Critical infrastructures such as decentralized, smart networks that independently manage renewable energy sources.
• Capacity in public transport can be increased by 20% without having to build new physical structures.

All these examples have the same three-step logic: hardware that sends data, local or central aggregation, and smart algorithms or applications. Today, there are already billions of interconnected devices generating a valuable data pool that’s still unused in many areas. At the same time, new ways of collaborating in ecosystems are emerging and enabling completely new business models. Rigid company boundaries are being dissolved – both horizontally (in other words, companies on the same value-added level / industry) and vertically (between suppliers and customers).

However, I also think there are challenges. Around 60% of companies (small, medium or large enterprises) have not yet implemented industrial IoT technologies to a significant degree. In many areas, it’s still customary to keep manufacturing IT separate from office IT. According to “Data management in Germany,” a study recently published by The Federation of German Industries (BDI), there’s a great deal of legal uncertainty that hinders data sharing. And in this connection, data sovereignty is as important as highest data security. For end customers, data sovereignty means that, as a consumer, every individual can actively and autonomously manage how his or her personal data is used. In B2B business, this means that companies autonomously manage how their data is accessed and utilized. In other words, they can decide who gets what data and for what purpose.

Industrial data, mostly from machines, is an asset worth protecting: it requires investment and may reveal trade secrets.

Digital twins – that is, virtual representations of real machines or of structures like buildings – are good examples of what I mean. Working together with our customers, we can use digital twins to optimize industrial processes and create new business models. The data underlying digital twins often originates from different partners – for example, a machine owner, a machine manufacturer and a maintenance provider.

It’s crucial to strike a good balance between the partners’ data sovereignty and what’s necessary for their collaboration. In my opinion, there are three essential points that must be considered:

First, a robust infrastructure with the highest data security requirements must be provided (see also the Charter of Trust initiative, of which Siemens is a founding member). For this purpose, the industrial sector must further develop its common standards and, for example, enable trusted access control. A highly relevant infrastructure topic is industrial 5G: 5G brings new experience in bandwidth (eMBB – extreme mobile broadband) and number of devices (mMTC – massive machine type communication). But the real game changer is the Industrial 5G capability (uRLLC – ultra reliable low latency communications) with highest availability, reliability and Quality-of-Service. Applications benefitting most from industrial 5G are in smart manufacturing, or Industrie 4.0 as we call it in Germany. Many applications across all domains Siemens is serving will be enabled by 5G in the future. First solutions are available today.

Second, data sovereignty will be achieved in the industrial sector through contractual arrangements. These are preferably cooperative agreements that take adequate account of the interests of all partners as well as the specific and often very complex industrial frameworks for data use. All our activities are guided by the principle of responsible data management. On our industrial platform, for example, we’re working with a large number of partners to develop uniform contract templates for shared data pools. Here, we decide – among other things – which project roles, project obligations, data usage rights, IP rights to results, liability agreements and protection concepts for trade secrets must be defined. We want to strike a balance between good practicability (as in B2C) and the comprehensive protection of interests (as is common in B2B). The data sovereignty gained in this way creates new added value and digital ecosystems, while boosting a business’s innovative strength and the willingness to share data.

Third, the legal and political frameworks have got to be right. In principle, I welcome the latest political initiatives of the European Commission and the German government to improve the use of data and create supportive framework conditions for this purpose. Here, it’s important to empower the players and reduce legal uncertainties such as those due to high antitrust hurdles for B2B data cooperation or to anonymization and pseudonymization. The creation of cross-industry standards, infrastructures and ecosystems, as in the European Gaia-X initiative, is also a positive step.

The German and European economies can decisively strengthen their innovative power and competitiveness.

The recently published study by the European Investment Bank (Digitalisation in Europe 2020 – 2021) showed a 10% difference between Europe and the United States when it comes to the level of digitalization (63% vs. 73% respectively). If industry, policymakers and companies are smart and work together to drive data sovereignty, the German and European economies will be able to decisively boost their innovative power and competitiveness, while not only promoting economic prosperity but also fostering sustainability, efficiency and resource conservation. Knowledge and data silos will also have to open in a controlled manner so that all industrial partners can join forces to create value and drive innovation within ecosystems.

The data security and data sovereignty of all participants are indispensable for value creation and innovation. Trust in these two areas must grow and be earned through correct decision-making.

[A previous version of this article can be found at Fraunhofer magazine 1.2021]