Digital twins – where are we now and what are the benefits?

Key drivers

So then – what’s the current status? A recent report by the Capgemini Research Institute (CRI) aimed to find out. It’s called “Digital Twins: Adding Intelligence to the Real World ,” and it examines where organizations are now, and what results they are seeing.

In a survey of 1,000 organizations worldwide, the CRI found that over 80% of them have an on-going digital twin program, and the rest are planning to start one. As many as 60% said they consider digital twins a strategic element of their overall digital transformation.

What’s prompting this enthusiasm? The key drivers relate as much to horizontal processes such as customer operations and finance as they do to vertical sectors such as manufacturing and life sciences. Around two-thirds of respondents said introducing new business models (67%) and customer-centricity (65%) were top-line drivers, and even more of them (73%) mentioned reducing time to market.

Bottom-line drivers are also pretty much universal, and are probably as predictable as those top-line factors. A sizeable 79% mentioned cost savings, while almost as many (71%) mentioned improvements in operational efficiency.

Value…

To what extent are these ambitions being achieved? The reported benefits of digital twins are impressive. On average, survey respondents said they were seeing a 17% increase in customer engagement and satisfaction, and the same increase in operational efficiency; a 16% increase in sales; a 15% decrease in turnaround time; and a 14% decrease in costs.

The report breaks down the benefits by digital twins by types in the physical world – in other words, in the areas of product development, of asset management, and of logistics performance.

But once again, there’s nothing exclusive about these performance gains. A service-based business, or a horizontal administrative function such as accounts payable or an employee helpdesk, can also employ digital twins and achieve similar outcomes in terms of, say, supplier and staff satisfaction, or of overall efficiency.

… and sustainability

Similarly, the sustainability benefits of digital twins aren’t restricted to physical environments. Yes, digital simulations in manufacturing, aviation, automotive industries and building management can help to identify and reduce product and energy waste – but gains are possible in other areas, and in other ways.

For instance, take accounts payable (AP) processes. AP is a key element of sustainability best-in-class practice. It means resource efficiency and the best use of scare materials to minimize impact on environment as well as reduce risk of finance supply chain disruption caused by climate change.

When digital twins are applied to AP processes, it helps to streamline operations, resulting in the elimination of paper invoices and a reduced need to send documents physically via post or courier, which creates a reduction in CO₂ emissions. The same approach can be applied to other sectors of F&A. Everybody wins.

In the cash conversion cycle, AP is the mechanism for sustainable business practice and financing of debt and ratios of solvency, etc. It provides adaptability to circumstances for example diversification in markets and ensuring financial certainty, as well as diversification to give competitive advantage and strong stakeholder support – cash flow is critical to sustainability of any business and attention to detail in AP yields positive sustainability benefits.

Bringing it all together

Digital twins bring all kinds of specific benefits and incremental gains in efficiency, productivity, and quality. But one of the most important deliverables is holistic by nature.

For instance, digital twins can identify the bottlenecks from the purchase request/purchase order side and the various types of spend (e.g., maverick spend), which has a negative impact on processing AP invoices. As the core of all processes, digital twins enable us to discover the inefficiencies in master data that help to further streamline the payment processing.

A digital twin can replicate and demonstrate this cause-and-effect while everything is still in the pilot phase. But – and this is an important but – it can only do this if everything is connected. The specific supply chain function can’t be twinned and trialed in isolation. To address the potential wider problem, it needs to be part of a fully integrated model.

It needs, in short, to be part of what we at Capgemini call the Frictionless Enterprise  – and in the second and final article in this short series, I’ll be looking at how it can be achieved, and at how the transformation it delivers can be accelerated.

To learn more about the benefits of digital twins and how they can help your organization to drive improved business operations and transition to the Frictionless Enterprise, contact: mariia.nalapko@capgemini.com